Editing Openai/69109937-2170-8005-9304-da49840bb5b9 (section)

=== Assistant: Here’s a summary of what the Crux Capital report says about POET Technologies POET — along with some counter-arguments … ===
Here’s a summary of what the Crux Capital report says about POET Technologies (POET) — along with some counter-arguments and caveats. As requested, I’m taking a somewhat critical slant and pointing out assumptions to challenge.

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# Passive alignment is not the panacea — The report emphasises that POET’s strategy of wafer-scale passive alignment (via an optical interposer) is attractive, but they argue that in real deployment the tolerances, thermal shifts, component variability and yield risks may reduce the cost & performance benefits relative to incumbents using active alignment. For example, Crux emphasises that active alignment still gives higher coupling efficiency and compensates for laser/fibre variability. >
# Execution risk and scaling risk — Crux mentions that even if the passive alignment approach works in principle, POET must scale manufacturing, demonstrate yield, control process variation, and deal with supply-chain/components (e.g., lasers, modulators) in a highly cost-competitive environment. Without scaling, the cost advantages may not materialise as planned. (See their post mentioning cash use: “The most immediate and critical use of this cash is for ‘expanding operations’. This is about execution… building trust.”) X (formerly Twitter)<ref>{{cite web|title=X (formerly Twitter)|url=https://x.com/crux_capital_/status/1985719937176891691|publisher=X (formerly Twitter)|access-date=2025-11-10}}</ref>
# Competitive risk from incumbents and alternative technologies — Crux warns that incumbents using active alignment are not sitting still. They have decades of experience, large volumes, and can invest to push down cost. The report implies that POET’s cost advantage may be eroded or delayed. Moreover, alternative photonic packaging methods may emerge. (See discussion of passive vs active alignment in broader PIC packaging context.) magazines.angel.digital<ref>{{cite web|title=magazines.angel.digital|url=https://magazines.angel.digital/magazines/PIC_Magazine_Issue_1_2021.pdf?cacher=1733702715|publisher=magazines.angel.digital|access-date=2025-11-10}}</ref>
# Assumption risk: tolerance, variation, validity of passive alignment claims — Crux questions whether the passive alignment approach will reliably hit the required optical coupling tolerances across all modules, especially as the laser sources, waveguides, alignment trenches etc all have variation. They've flagged that the “devil is in the details”: wafer-scale passive alignment sounds good in lab settings but the factory floor is less forgiving. agoracom.com<ref>{{cite web|title=agoracom.com|url=https://agoracom.com/ir/POETTechnologies/forums/discussion/topics/814785-Crux-Capital-Report/messages/2448690|publisher=agoracom.com|access-date=2025-11-10}}</ref>

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* As I noted earlier, passive alignment arguably offers major advantages in cost, throughput and automation. If POET can deliver on their interposer and coupling performance, they may achieve a disruptive cost structure.
* Some independent commentary suggests that POET’s architecture is indeed being recognised as novel and promising. shareholdersunite.substack.com<ref>{{cite web|title=shareholdersunite.substack.com|url=https://shareholdersunite.substack.com/p/a-primer-on-poet-technologies|publisher=shareholdersunite.substack.com|access-date=2025-11-10}}</ref>
* The market demand (hyperscale data-centres, co-packaged optics, low-cost optical I/O) is large and growing — which gives POET a strong tailwind.

===== - Crux seems to assume that the performance gap between passive alignment and active alignment will remain large. Counter-argument: If passive alignment engineering is refined (i.e., alignment trenches, lithographically defined features, thermal compensation structures), the gap may shrink to an acceptable level for many applications — especially where cost matters more than absolute best coupling. =====
* Crux emphasises scaling risk, but all new packaging technologies face scale-up risk. Arguing scale risk is valid, but not a differentiator solely for POET. The question is: “Does POET’s model make scaling easier than incumbents?” I argue yes — wafer-scale, automated, passive alignment is inherently more scalable than individual active-alignment modules.
* On the competitive risk: Crux may under-estimate the inertia and cost base of incumbents. Incumbents using active alignment may struggle to reduce cost further due to inherent equipment/time per unit. In that sense, POET may have structural advantage.
* On tolerance/variation risk: Crux emphasises laser/fibre variation. But POET’s model may incorporate process control, interposer design compensation, thermal design, and pre-characterised lasers — meaning the variation may be managed. So Crux’s assumption that the variation risk is insurmountable may be over-pessimistic.

==== From a strategic standpoint (which I know you, Rainer, are tracking w.r.t. POET) here’s how I weigh it: ====
* Legitimate interest (for POET): The interest to exploit passive alignment to reduce cost, scale volume, and capture a large part of the future optical I/O market is strong.
* Legitimate interest (for incumbents / customers): The interest to ensure performance, reliability, proven supply chain, and low risk is also strong.

Where the balancing sits: If POET can deliver on yield, coupling performance, thermal/aging reliability and hardware sourcing, then the passive-alignment model wins for the volume market. If not — or if the cost reduction is delayed — then incumbents using active alignment may retain a cost premium and performance niche.

My view: The risk-reward tilts in favour of POET assuming execution. The main caveat is that we must watch scaling metrics, yield, cost per unit, and reliability over time. If any of those show weakness — then Crux’s concerns come into play.

==== To test which side is correct, monitor: ====
* POET’s cost per unit (target vs actual) and how it trends.
* Yield and defect rates in production of their optical interposers.
* Implementation of passive alignment in real‐world modules (customer wins, volume ramps).
* Performance (coupling loss, thermal drift, reliability) vs incumbents in actual customer applications.
* Incumbent cost reduction trajectories (active alignment improvements).
* Supply-chain status and capital equipment ramp for POET.

If you like, I can pull up specific figures from the Crux report (e.g., the cost modelling assumptions, sensitivity analyses) and we can compare them to POET’s published metrics or SEC filings — to identify where their assumptions might fail. Would that be helpful?