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Aug. 25, 2003 — Axsun Technologies makes MEMS components for the telecommunications industry. To put it mildly, that does not seem to be the best business plan these days.
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Jack Kay, Axsun’s own chief executive, knows this and he is unafraid to say it could be years before the telecom industry revives — not just one or two years, but possibly five or six. “What nobody knows … is when it will re-emerge,” he said. “Anyone who says otherwise is a liar, a fool, or an analyst paid to say so.”
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One year into his tenure as top dog at Axsun, Kay is on a mission to drive the four-year-old company toward profits. He banished telecom to Axsun’s back burner while the company pitches its capacity to manufacture MEMS components to other industries such as health care and defense. If all goes according to Kay’s plan, Axsun will establish itself as a components supplier for customers across the board.
“I’m not banking on the telecom industry in any way, shape or form,” he said. “I refuse to bet the company on it. That would be foolhardy.”
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The telecom industry did give Axsun a head start: money. The company was formed in 1999, just as “new economy” hysteria hit fever pitch. Axsun raised $157 million within two years, including a staggering $111 million round at the start of 2001.
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Axsun also cut its teeth in MEMS manufacturing by making optical components. It started with channel monitors, mirrors and lenses, and introduced a line of tunable filters this spring. A handful of customers, including Lucent Technologies Inc., signed contracts. Axsun will not disclose the names of most of its customers.
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Axsun uses a LIGA process licensed from Sandia National Laboratories in New Mexico.
LIGA is a micromachining technique used to create very tall, straight-walled structures for microsystems. Axsun combined that with manufacturing gear that can quickly align components with an accuracy of 0.1 micron.
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Now, Kay wants to leverage Axsun’s telecom experience to win customers in other industries. “We happened to use it for the optical bench, but you can do all sorts of things with LIGA,” Kay said.
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Exactly what sort of things he wants to do, Kay won’t discuss. He will say that medical and military applications are two targets and that since he started, he has talked to 50 potential customers in five industries.
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When pressed, Kay will give one example: Axsun has a contract with the U.S. Army to help it develop a new rifle that can fire 20 millimeter artillery shells. Axsun makes safety components so the shell will not detonate until it is actually fired — a project unrelated to optics.
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Others say LIGA could eventually be used to make all manner of components. Dean Guidry, microsystems design engineer at Mezzo Systems Inc. in Louisiana, said the challenge now is in waiting for various industries to embrace the technology and figure out specific products to make.
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“It’s a relatively new technology. … The demand for applications is still catching up to the technology,” he said.
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Mezzo Systems, for example, uses LIGA to make heat exchangers, generators for cryocoolers and DNA separators. Mezzo can hone features down to a few microns in size, although the smallest feature it needs to make currently is 10 microns.
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Kay began his turnaround plan at the start of the year, increasing Axsun’s business development department from one person to 10. Kay expects to have his plan in place fully by 2004 and to be cash-flow positive by late 2005.
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Kay said he did not decide on a turnaround plan until months after he joined the company. In other words, he took over a telecom company while telecom was going down the tubes. What was he thinking?
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Kay lists three reasons: the technology, the team and the huge pile of cash. True, Axsun didn’t have a fully developed product and marketing strategy, “but I’ve been there before, so what the hell,” Kay quips. “I’m having more fun at this job than any other in my life.”
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Company file: Axsun Technologies
(last updated Aug. 25, 2003)
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Company
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Headquarters
1 Fortune Drive
Billerica, Mass. 01821
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History
Axsun was founded in 1998 to design and manufacture photonic micro-instruments. Since its incorporation in February 1999, the company has used proprietary design, manufacturing, alignment, assembly and packaging processes to create integrated subsystems meeting a wide range of manufacturing volume needs across multiple industries. Part of its base MEMS technology was licensed from Sandia National Laboratories.
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Industry
MEMS-based photonic components and subsystems
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Employees
102
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Small tech-related products and services
Axsun has served the telecommunications industry with its micro-optical and micromechanical components, including optical monitors, tunable filters, and LIGA parts (LIGA is a European production process that is now being adopted by some U.S. manufacturing firms).
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Investment history
Since February 1999, Axsun has garnered roughly $157 million in three rounds of private funding. Participating in the company’s $10 million first round were individual investors as well as:
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In January 2000, Axsun announced the closure of its $36 million second round of funding. Participants included first-round funding sources as well as:
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For its $111 million third round, closing in January 2001, Axsun added these new investors (while also receiving a capital loan from Silicon Valley Bank:
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Selected strategic partners and customers
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Selected competitors
Some firms developing MEMS-based micro-optical components, and/or using LIGA processes, include:
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Relevant patents
Silicon on insulator optical membrane structure for fabry-perot MOEMS filter
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Contact
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— Research by Gretchen McNeely