Kopin Overview
Long post. Everything I know about the company after 1.5 years of holding stock.
I've held Kopin for a year and a half and am breaking even. I bought because they seemed to have a really good technology which they could leverage two ways. As I understand the company, they have two businesses. Their older business is GaAs wafer production. You tell them what to grow and they grow it. You make it into a device. I imagine business here has been strong recently as the whole III-V industry has shown great strength for several years. However, I don't believe Kopin has a great competitive advantage in this business, and margins could shrink quickly. There is no great value add.
Their interesting technology is based on MIT SOI (Silicon on Insulator) patents which they have licensed. Controlling these patents could lead to a good SOI OEM business, and is presently being leveraged to make their record density LCD chips.
First the SOI. A Si wafer is implanted with oxygen such that a largely SiO2 layer is sandwiched between a thin upper largely Si layer and the Si substrate below. Kopin's technology is a method of recrystallizing the top Si layer to create a several hundred nanometer layer of high quality single crystalline Si which rests on a good dielectric oxide below: thus the name SOI. SOI technology is of great interest for increasing device speeds since parasitic capacitances and leakage currents are reduced compared to bulk Si devices. It will become more important as devices continue to shrink, and therefore can tolerate less parasitics. Thus I see a potential for an OEM business in which they sell SOI wafers or relicense this technology.
Finally, they fabricate their own SOI wafers into active matrix arrays composed of single crystal Si devices. c-Si has much higher mobility than either poly or amorphous Si, and therefore a much smaller transistor suffices to drive an LCD pixel. A smaller transistor translates into a higher aperture ratio, i.e. less of the light valve area is consumed by the transistor, so more light can be transmitted. In addition, the circuits are much faster, and more peripheral electronics (drivers, frame buffers...) can be integrated on the display chip edge. Thus, their approach yields a system on a chip, whereas others need additional chipsets for many functions.
The next key point is that the SOI layer can be removed from the underlying Si and transferred onto glass. At these thicknesses, Si is highly tranparent to visible light (a little yellowish, actually, so the Kopn blue is a little weak) which enables Kopin displays to function in transmissive mode. From this point on, the Si/glass is processed like a normal LCD panel.
They key technological advantage of the Kopin approach is that they achieve c-Si performance in a transmissive panel. No one else can do this, although many are know using c-Si in reflective mode. Replacing p- or a-Si with c-Si enables high aperture ratios to be maintained at extremely small pixel sizes, thus the extraordinary pixel densities of the Kopin product line. Area is expensive due to the Si wafer processing however, so Kopin's only niche is in head mounted or projection displays where the spatial light modulator can be tiny.
They have a nifty product, Smart Slide, which is insrerted into a std. slide projector which illuminates the LCD panel onto a normal slide screen. Thus you can give a presentation from your laptop to a group. Another approach attainable with std. technology is removing your 12" LCD screen and laying it onto a foil projector. Smart slide is a little more elegant, but I don't think it's a killer app. in comp. to what you can do with std. LCD panels.
I tried their head mounted product on at SID and was very disappointed in the ergonomics. A virtual image of the panel is projected onto your eye, but the physical positioning of the head set is critical for focus and orientation. Thus, you had a feeling that the image was floating in space, and any slight shift of the headgear greatly increased the difficulty of viewing the virtual image. This will be a problem with any virtual image head mount display, but was particularly bad in the Kopin/Forte VFX1 device.
This illustrates the difficulty of betting on an HMD company, like Forte to market Kopin's LCD. Very little is known about HMD human factors. I am sure the Forte HMD would make me ill in a short while. It also created considerable eye strain as I tried to keep a focus each time the bulky headset shifted around on my head. The headset was bulky because the LCD still needs a high voltage backlight and transformers are heavy.
Finally to Bob's questions: It's transmissive, semitransparent c-Si. I don't know anything about the LC, I don't expect it's too important. Display's are on the order of 1", 1000 lpi.
I wish I'd sold KOPN at 18 last fall, but I guess we all passed on some good prices then. I have mixed feelings today. Revenue is growing steadily, the technology is terrific, but the product is not good. No killer app. out there, but a great possibility of growth if they aren't blindsided by a new technology. KOPN has two important strategic investors: Rockwell and a Thai Telecom company. Rockwell wants to sell high end HMDs to the military of course. I'd bet on the new Kopn fab being in Thailand, since the state owned strategic investor can probably wangle some tax breaks. However, the president of Kopn is Chinese, John Fan, so I imagine Asian connections are good all around, and a fab could be done most anywhere in Asia.
Kopn has a wad of cash due to the Thai investment, and is burning it by building capacity, buying up Forte etc. In turn, revenue is clipping along. No talk of profitability yet however.
If things continue like this, I'd say a couple of years before KOPN is in the black. Stock might move long before that if they can swing some big OEM deals either for their panels or SOI. I'm going to hold on and watch for a while longer. I see it as a 2-4x upside and little downside, but is not my favorite investment at the moment despite this. Other technologies are catching up. Kopin's probably only got 2 years to win the mindshare before comparable products with other technologies are on the scene.
$10 is pretty cheap based on recent history. Happy investing. TS |
