Archive for the ‘Hyperion’ Category

by Matt Margolis

If you paid close attention a week ago to my Merrimack plant expansion and renovation news, you would be in my camp that we knew some sort of deal was coming.  I fully expect the expansion in Merrimack will be outfitting the manufacturing operations announced in today’s press release.  For full disclosure, I was kind enough to share Merrimack expansion news with a NH Business Review and they followed up with GTAT, asked some questions and put out a report.  Additionally, I took my efforts to Seeking Alpha to further expand the reach of the news.  I don’t believe GT was expecting someone to report on its planned and approved expansion before GT had a chance to “formally” announce its plans to the public.  Investors should be expecting GT’s management to touch upon both topics (Merrimack and today’s announcement) next week during the Q1 2014 conference call.

The biggest question I think everyone has is what is the size of the announcement and when will revenue hit?  GT’s CEO has already informed investors that he doesn’t build a mouse trap and wait for the mice.  Instead he works with the customers and gives them what they want.  GT put together a comprehensive expansion plan in just a few weeks for their Merrimack location.  GT was granted approval on April 1st and they want this project completed in 6 months or less. Reading between the lines and thinking outside the box (still haven’t found the box) I believe we could see some contribution of revenue in Q4 of 2014 in the neighborhood of $25 to $75m.  The key to sizing up today’s news is understanding the target markets along with the new products and adoption of those products that will occur.  If GT can sell the entire package of furnaces, Hyperion and bonding equipment to each interested party the value of today’s press release may add $500m or more in revenue to GT’s top line as soon as 2015.  GT would not shutter all or some of their R&D operations unless their was a significant slice of pie to be had.  I am very curious for an update on GT’s expected Hyperion market adoption rate.   GT is now selling a complete solution (growth, exfoliate and bond) versus just the selling the furnaces to grow materials.

According to Hyperion Lamina Production Technology press release:

The company has entered into a memorandum of understanding (“MOU”) with European-based EV Group (“EVG”), a global leader in specialty bonding and material handling equipment, to work together in various collaborative arrangements including jointly developing high volume production processes and equipment necessary to bond the ultra-thin sapphire and SiC lamina, produced by GT’s Hyperion™ technology, to engineered substrates such as glass, silicon, and plastics.

GT’s business model will be focused on selling the bonding and coating equipment developed through these initiatives.

“Our sapphire composite material development program is focused on leveraging the combined expertise of GT and our technology partners in order to build a new market for low-cost and highly-durable substrate solutions for next generation consumer and industrial products,” said Tom Gutierrez, GT’s president and CEO. “These programs enhance our technology portfolio and leverage our significant investment in our Hyperion technology.”

The announcement today regarding GT’s strategic initiatives surrounding Hyperion Lamina Production Technology was partially on my radar.  From reading previous conference call transcripts (see GT’s management comments at bottom) I knew GT was working on composite glass, however I had no idea they would enter the bonding market.  GT’s entry into the bonding market makes complete sense, if you think about how GT focuses on the entire product life cycle, from birth to end product.  GT’s announcement today allows them to own three significant processes within this entirely new product life cycle; material growth, exfoliating material in lamina and bonding the lamina onto various substrates (surfaces) including glass, plastics and silicon.  GT may produce composite material or sell equipment to produce composite glass, however this one item it still very unclear based on the press release.

#1 Selling Material Growth Equipment – GT can sell their SiC furnaces to produce Silicon Carbide and they can sell ASF furnaces to produce sapphire (under the exclusivity of the Apple deal consumer electronics is NOT an available marketplace)

#2 Selling Exfoliating Material Equipment – GT can sell Hyperion to exfoliate SiC and Sapphire into 25-50 micron thick lamina

#3 Selling Bonding Lamina Equipment – GT can sell equipment that will bond the lamina to various substrates (glass, plastics, silicon)

#4 Selling Composite Glass Equipment or Producing Composite Glass? – This one seems a little ambiguous but it looks like GT is partnering with a glass substrate maker to produce composite glass.  My open question is whether GT will produce or sell the equipment that will produce this new material.

GT’s announcement today and focus is broken into 3 product segments, Sapphire and Sic on glass, plastics and silicon.  Sapphire laminate on composite glass and Aluminum Oxide Coating.

Sapphire and SiC on glass, plastics and silicon

The company has entered into a memorandum of understanding (“MOU”) with European-based EV Group (“EVG”), a global leader in specialty bonding and material handling equipment, to work together in various collaborative arrangements including jointly developing high volume production processes and equipment necessary to bond the ultra-thin sapphire and SiC lamina, produced by GT’s Hyperion™ technology, to engineered substrates such as glass, silicon, and plastics.

Sapphire laminate on composite glass

GT announced it will begin working with a leading glass substrate producer to develop specially engineered substrate materials that can be bonded to ultra-thin sapphire lamina to create unique composite solutions that expand the reach of sapphire into a broader set of applications.

Aluminum Oxide Coating (Sapphire in a coating form) (Al2O3)

The company also announced that it has acquired patent-pending technology for producing low-cost, scratch-resistant aluminum oxide coatings for various substrates including glass and plastics. These coatings are expected to provide some of the durability and scratch-resistant properties of crystalline sapphire at a lower price point to address market opportunities where cost is paramount and not all of the properties of sapphire are required.

 

Below are some comments made by GT regarding their Sapphire business beyond Apple and LED over the last year (Comments via Seeking Alpha)

Q1 2013

In addition, we believe that, over time, our Hyperion solution, currently in the R&D phase, could enable further cost reductions that could bring sapphire solutions to cost parity with strengthened glass, further broadening the array of applications and actually increasing the demand for sapphire. Our early progress gives us added confidence that Hyperion will achieve these milestones.

Q2 2013

Well, I think there’s no gigantic bump in R&D for us to complete development of the project. I mean, we’ve moved around and prioritized our R&D spending accordingly. Hyperion is not a first-generation product. Hyperion is a follow-on second- and potentially third-generation product. And it won’t be the same as pure sapphire. There’s pure sapphire and then there will be these composite structures that will come out. And so we think it’s significant, but we don’t believe it will have an impact on first-generation adoption. It’s more of how does the — how do these applications unfold later. And Hyperion is — it is a tool that can be used with sapphire. But we’re just as excited, if not more excited about the applications of silicon carbide and silicon and other monocrystalline materials where, for example, silicon carbide wafer today and epi-ready wafer cost $800 to $900. We believe that we could substantially change that equation if we’re successful with silicon carbide lamina. So very exciting opportunities outside of sapphire, again, but not a short-term implication to it in the market.

Q3 2013

In support of the new materials business, we have accelerated the development of our next-generation launch capacity, low-cost ASF furnaces. Not only will these efforts support our initiative with Apple, we expect that it will enable the expansion of our LED, industrial and specialty sapphire businesses, positioning GT and its equipment customers as the industry’s lowest-cost sapphire producers. We’re very excited about the opportunities that lie ahead for our sapphire business.

Q4 2014

As strong as our sapphire opportunities maybe, the GT story is not just about our emerging sapphire business. In fact, our entry into the sapphire materials business may enable us to expand into other material segments whilst (sp?) we have fully ramped the operation in Arizona.

 

Full Disclosure: I am long GTAT and plan on using the money generated from this blog to buy additional shares of GTAT!

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by Matt Margolis

During the March 14 GT Advanced Technologies New Product and Technology Briefing, GT’s CEO Tom Gutierrez was asked whether or not Hyperion 4 was included within the exclusivity clause with Apple.  His response was that Hyperion was not currently covered within the exclusivity under the Apple agreement.  The million dollar question that remains open is, what is covered or not covered under the Apple exclusivity clause within the current contract?

According to the contract GTAT cannot enter into performing the “same” or “similar Development Services in the Consumer Electronic Field” while performing “Development Services for Apple, and for 3 years following the date that GTAT ceases to perform the Development Services for Apple”.  Development Services definition seems to be very specific and I would correlate this to mean that GT cannot enter into a materials agreement to grow sapphire and develop sapphire materials for consumer electronics while performing the same service for Apple or until 3 years after GT ceases to grow sapphire and develop sapphire materials for Apple.

The next part of the exclusivity contract language may require some legal interpretation.  In addition to restricting GT’s ability to grow sapphire materials for the Consumer Electronic Field the contract also states GT cannot “assist, enable or in any way facilitate any other person or party in its provision of the same or similar Development Services for any other person or party”.  This could be interpreted to mean that GT cannot sell any ASF sapphire growth furnaces that could land in consumer electronic products, which means that GT’s ASF furnaces could only be sold for LED purposes.  Another interpretation on the other end of the spectrum is that GT simply cannot enter into a sapphire materials contract similar to Apple within the Consumer Electronic Field.  The key words to digest in the second part of the exclusivity contract language are “assist, enable and facilitate”.  When GT sells a ASF furnace to a customer they do go to the customer site and train the customer to help them maximize their results using GT’s equipment so I’m not sure where to draw the appropriate line.   I’m curious what everyone else thinks?

 

1.4.   GTAT agrees that while performing the Development Services for Apple, and for 3 years following the date that GTAT ceases to perform the Development Services for Apple, it will not to the best of its knowledge, after conducting reasonable due diligence, perform the same or similar Development Services in the Consumer Electronic Products Field for any other person or party, nor will GTAT assist, enable or in any way facilitate any other person or party in its provision of the same or similar Development Services for any other person or party. “Consumer Electronic Products” [***].

Intellectual Property (IP)

According to the master supply agreement Apple has granted GTAT a “limited, non-exclusive, worldwide, royalty-free license to Apple’s IP rights including Apple’s patents and/or any other trade secrets, data or materials that are necessary to perform the Development Services and other obligations under the Agreement.  What this means is that every patent that Apple has filed related to sapphire and various other uses, if GT needs to use them as a result of Apple’s development services needs than GT will have the rights to do so.


4.1.   Except as otherwise provided herein, no right or license to Apple’s Intellectual Property Rights is granted or implied as a result of the Agreement or the Development Services, except that Apple hereby grants to GTAT a limited, non-exclusive, worldwide, royalty-free license to use Apple’s Intellectual Property Rights (including Project Work Product) solely to the extent necessary to perform Development Services and other obligations under the Agreement.  The transfer or license of Project Materials or GTAT Background Technology provided herein does not constitute a public disclosure. “Intellectual Property Rights” means the rights in and to all (i) U.S. and foreign patents and patent applications claiming any inventions or discoveries made, developed, conceived, or reduced to practice, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations and extensions thereof; (ii) copyrights; (iii) unpatented information, trade secrets, data, or materials; (iv) mask work rights; and (v) any other intellectual or other proprietary rights of any kind now known or hereafter recognized in any jurisdiction.

On the GTAT side of the fence Apple will be sole property owner to “all results, reports, findings, conclusions, work papers, notebooks, electronic records, samples, prototypes, deliverables, and any other information or materials,” that arise from the performance of the Development Services by GTAT.  However, Apple will not have the rights to GTAT Background Technology, which includes Hyperion 4.

All results, reports, findings, conclusions, work papers, notebooks, electronic records, samples, prototypes, deliverables, and any other information or materials in any form or format arising out of performance of the Development Services by or for GTAT (the “Project Work Product”) except GTAT Background Technology (defined below) will be the sole property of Apple and will become part of the Confidential Information to be protected under the Agreement.

What will not be the sole property of Apple will be GTAT’s Background Technology, which will be “will be owned by GTAT and is not being transferred or assigned to Apple under the Agreement”.  GTAT’s Hyperion 4 technology falls within GTAT’s Background Technology and is it therefore not currently covered within GT’s exclusivity agreement with Apple just as GT’s CEO indicated so clearly during the March 14th Technology Briefing.    GTAT’s Background Technology includes, inventions, data, improvements, discoveries, etc. that were “created or developed by or for GTAT either (i) prior to the date of the Agreement or (ii) subsequent to the date of the Agreement,” assuming that these inventions were “created or developed by GTAT separately and independently” from GTAT’s Development Services work performed on behalf of Apple or any “Apple Confidential Information or Project Materials, and all Intellectual Property Rights”.  Essentially any inventions, processes and methodologies that GT had already developed prior to their agreement with Apple will continue to be owned by GT and the rights to these technologies will not be transferred to Apple.  I have read some comments that GT gave away everything in the deal but it looks like GT will retain the rights to all of their proprietary knowledge and inventions related to sapphire growth, inspection and processing methodology and know-how.

“GTAT Background Technology” means GTAT’s inventions, data, improvements, discoveries, ideas, processes, methodologies, formulas, techniques, works of authorship, trade secrets and know-how, whether patentable or not, conceived, reduced to practice, authored, or otherwise created or developed by or for GTAT either (i) prior to the date of the Agreement or (ii) subsequent to the date of the Agreement if conceived, reduced to practice, authored, or otherwise created or developed by GTAT separately and independently of its provision of any Development Services and any Apple Confidential Information or Project Materials, and all Intellectual Property Rights therein or thereto.  GTAT Background Technology is and will be owned by GTAT and is not being transferred or assigned to Apple under the Agreement.  For the avoidance of doubt, any Sapphire Technology that is conceived, reduced to practice, authored, or otherwise created or developed by or for GTAT using (i) any of Apple’s Confidential Information or (ii) any GTAT personnel or contractors who had access to Apple’s Confidential Information will be deemed Project Work Product.

 

 

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours

 

Hyperion’s next frontier: BIPV?

Posted: March 2, 2014 by mattmargolis24 in Hyperion
Tags: ,

Twin Creeks was looking into Building-integrated photovoltaics (BIPV) as a downstream opportunity for Hyperion 3. How long until this opportunity ripens?

Over time, the combination of lower cost and lighter packaging will allow Twin Creeks customers to expand into other markets such as building-integrated photovoltaics (BIPV) and consumer electronics.

The global BIPV and BAPV market will grow from just over 400MW in 2012 to 2,250MW in 2017 representing a five-fold increase, Pike Research forecasts. (Courtesy of PV Tech)

http://www.pv-tech.org/news/report_global_bipv_and_bapv_market_to_reach_2.25gw_by_2017)

BIPV definition:

Building-integrated photovoltaics (BIPV) are photovoltaic materials that are used to replace conventional building materials in parts of the building envelope such as the roof, skylights, or facades.[1] They are increasingly being incorporated into the construction of new buildings as a principal or ancillary source of electrical power, although existing buildings may be retrofitted with similar technology. The advantage of integrated photovoltaics over more common non-integrated systems is that the initial cost can be offset by reducing the amount spent on building materials and labor that would normally be used to construct the part of the building that the BIPV modules replace. These advantages make BIPV one of the fastest growing segments of the photovoltaic industry

http://en.m.wikipedia.org/wiki/Building-integrated_photovoltaics

The term building-applied photovoltaics (BAPV) is sometimes used to refer to photovoltaics that are a retrofit – integrated into the building after construction is complete. Most building-integrated installations are actually BAPV. Some manufacturers and builders differentiate new construction BIPV from BAPV.[2]