BluGlass’ (ASX:BLG) Fremont fab passes another important milestone

BluGlass‘ (ASX:BLG) latest shareholder update should give its investors significant cause for optimism. The company’s passed yet another major milestone en route to commercialisation. Specifically, the first lasers produced from its Fremont fab were meeting or exceeding performance benchmarks that BluGlass has set for its contract manufacturers.

 

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BluGlass is on track for vertical integration

BLG is aspiring to commercialise its gallium nitride (GaN) laser diodes. For further background on the company and its technology, check out these reports from our friends at Pitt Street Research.

One of the key steps the company took last year was the acquisition a 19,000 square ft commercial laser diode production facility in Fremont, California.

Before this acquisition, BLG was outsourcing several steps of the manufacturing process – five of the nine to be exact. The move to in-house will eliminate supply chain variability, improve laser diode quality and provide BLG with greater control over product development. 

 

Fremont lasers are meeting performance benchmarks

One question left unresolved was whether or not the lasers produced at Fremont would be in-line or better than previous iterations. 

This morning BluGlass revealed the results of testing of the first lasers processed there. To put it simply, they were holding up – achieving or exceeding contract manufacturer performance benchmarks. The company also reiterated that vertical integration was on track by the end of FY23, in other words, exclusive in-house manufacturing.

 

Moving production in-house is good for margins

While contract manufacturing is very convenient if you don’t have your own production facilities, it also limits the upside when it comes to margins. Simply put, contract manufacturing is expensive, so if you can bring it in-house, that should drive up margins once you reach a certain production scale. That is exactly what BLG will be doing.

 

2023 set to be another solid year

Shareholders have plenty more milestones from the company to look forward to in CY23. Now that BluGlass has proven that the performance of its lasers from Fremont are equal or superior to those produced by its contract manufacturers, it can ramp up production at Fremont.

We could also see the launch of beta products and early-stage commercialisation!

 

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