remember that Twin Creeks Technologies burned close to $100 mln developing the technology and still it seems to be at least 2 years from generating ANY revenues. So how much money GTAT will have to invest to finalize development ? Most likely another $100 mln or even more as the technology was sold at a fire sale price of just $10 mln by the senior lenders of the now defunct company. If final development costs would have been moderate the lenders would have likely chosen to invest some more money to get a commerzialization ready "game changing" technology. So expect the ongoing development cost to be material.
remember also that nobody can foresee the state of the solar market eight quarters from now - at least GTAT management can't as they have proven in recent months - they were the last one to admit that their business faces challenges. So there are additional risks that the technology might not be needed anymore or will be outdated when finalized. There's also competition in the ion implant technology space - with commerzialization at least two years from now they most likely won't be the first to market.
so today GTAT acquired an unproven, early development stage, highly cost intensive technology with future market success questionable at this point.
in fact the company should concentrate on the core business and preserve as much cash as possible to make it through this severe downturn - they will need every single dollar of the recent convertible offering to stay afloat over the next few quarters WITHOUT investing this heavily into an unproven technology.
Good post, Hagen. The first question that came to my mind is what good is it to have the best technology if the solar sector has been trashed, glutted with over supply, many companies now unable to obtain financing, new tariffs with more likely coming from Europe, subsidies now gone? Who is there to sell to?
Perhaps a couple years down the road this acquisition could be beneficial to GTAT, but how much money will they have to invest before it becomes marketable, as you suggest. Does GTAT have the capital to finish the job? What will be the status of GTAT within a couple years?
To me it is similar to Solar World winning a battle but possibly losing the war. Company is piling up substantial losses, is now a $1 stock, lost their German gov. subsidies (like they complained about China receiving), is spending large sums to update and improve their non-competitive product technology, still selling panels at non-competitive prices in an over supplied market. What did they gain, a moral victory? Too late IMO. I Believe GTAT will survive, largely because of the future of sapphire, but I seriously question if Solar World will survive. GTAT is more than a one pony act, unlike SW and others.
If I take their foray in sapphire as a benchmark -- a $90mm purchase generating $800mm in business within two years, and placing them on the cusp of new applications beyond lighting -- then I attach this recent acquisition and the recent loan as another credible expansion with solid, accretive potential. I have to trust that their world-class expertise in solar and sapphire furnaces showed them a new avenue, perhaps even a game changer. They know their markets, have understood that structural problem as early as '09. Worse would be a firm that continues to spending scarce funds gaining marginal improvements in an existing technology, right down to the bottom. All the best.
Science!: A new way to pare down silicon wafers is up to ten times more powerful than standard methods.
Engineers at Twin Creeks Technologies have unveiled a manufacturing system which can ‘slice’ single-crystal material wafers (such as silicon) to sizes 10x smaller than traditional methods, using a technique called Proton Induced Exfoliation (PIE).
Hyperion is the hydrogen ion particle accelerator responsible for performing this technique, and it’s not just a fantastical concept either; Twin Creeks has plans to sell the equipment to manufacturers.
The PIE process involves a ‘donor’ wafer which is embedded with high energy hydrogen ions just under the surface of the material, without altering the original properties. When these ions are heated, they lift off a thin layer of the donor (a lamina), ultimately allowing a single wafer to produce several thinner laminae. The thickness of the laminae can be controlled by the voltage applied when embedding the ions. Twin Creeks achieved a thickness of 20 microns compared to 200 microns currently used in industry.
Perhaps the most surprising tidbit about this technology is that the resultant laminae perform just as well as the original donor, without the excess waste.
Twin Creeks claims that this new process can significantly reduce the cost of producing semi-conductor products such as LEDs, CMOS sensors, power electronics, and their main focus - photovoltaics.
The original aim of producing Hyperion was to narrow the price/watt gap between fossil fuel and solar energy sources. It is expected that solar panels will cost approximately half as much to produce (40c per watt), with a yearly output of 1.5 million wafers or 6 megawatts of solar equipment.
With any luck, the benefits of the technology could trickle down into computing gear in order to produce cost effective parts.
You are so right, hangeneriksson. GTAT is burning through cash at an alarming rate, and could soon be knocking on BK's door at this pace. LONG's will tell you this deal is a winner, but they have been losing money all year.....listen and learn, question and challenge, look at the insider sales/bonuses/salaries of this management team, and compare it to the return on your investment in GTAT...what was your dividend this quarter? How much has the stock gone up this year? You are shareholders, this team works for you, would you know it by their actions? Pause for a moment....reflect and answer these questions, then decide your move.