Kopin’s early success with LEDs bolsters bottom line

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TAUNTON, Mass., Oct. 6, 2003 — John C.C. Fan always likes to have a few dishes cooking at the same time.

 That’s why he divided up the workings of his company, Kopin Corp., into several different product lines. First came low-power transistors for wireless devices; next came miniature display screens for camcorders, cell phones and other handheld devices. Last summer Fan introduced Kopin’s latest entrée: a light-emitting diode that exploits nanotechnology to generate more light with less power.

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One year later, with real revenues now coming through the door, the message is clear: the market has an appetite for what Kopin is selling.

“Suffice to say we’re quite pleased,” says Fan, who remains tight-lipped about precisely what his sales projections are for the LEDs, formally known as the CyberLite. But he will confirm that Kopin has already shipped about 40 million of the chips priced at 10 cents each — a $4 million revenue stream, a respectable bit of change for a company with total 2002 revenues of $76.8 million.

Fan described the initial reception as “very exciting” since many players in the LED industry thought the CyberLite wouldn’t work. Not until Kopin began shipping its product to a paying customer (which Fan won’t identify, although he did say the CyberLites go into cell phone displays) did skeptics take Kopin’s claims on their merits.

“That surprised many people,” he said.

Every LED chip has defects, which disrupt the motion of electrons that create light. Rather than struggle to correct those defects, Fan developed what he calls “nanopocket” technology to exploit them: divots on the chip 50 nanometers across and a few nanometers deep. The nanopockets collect electrons away from the defects, boosting the light output. As a result, Kopin’s CyberLite LEDs run on 2.9 volts to create the same brightness generated by 3.3 volts.

“It was a totally novel approach” to incorporate chip defects into the LED design, Fan said.

The CyberLites themselves are about 300 microns square.
The technology took several years to develop. Fan knew he wanted to make blue-light LEDs on gallium arsenide, and Kopin had a long history of combining gallium arsenide with silicon nitride to make chips. What the company could not do was grow gallium arsenide in the first place — so Kopin purchased Super Epy Inc. in 2000 to acquire that expertise. The combined know-how provided the underpinnings of nanopocket technology.

Fan and many others expect LEDs to displace incandescent bulbs in the next 10 or 20 years. They already appear in some cell phones and other miniature displays. Next up is likely to be the automotive market, which uses an increasing number of LEDs in cars and trucks for indicators or warning lights.

“It’s a very good growth market. We’re very competitive there,” Fan says.

Beyond that, the LED’s path to mainstream use is less clear. Lumileds Lighting Corp. in San Jose makes much larger diodes that use 3.5 to 4 volts, for car headlights or commercial lighting in an office. Company spokeswoman Fran Douros, however, warned that many such applications are still in the prototype stage. For example, she said, Detroit automakers don’t plan to make LEDs standard in headlights until 2007 or so.

“The general purpose use, that’s still a few years away,” she said.
More direct competitors to Kopin include Cree Inc. in Durham, N.C., as well as Nichia Corp. in Japan and several other Asian manufacturers. None use quite the same approach as Kopin, but competition is fierce. In September Cree introduced its XThin LED, which will go after the same cyber-display market as Kopin’s CyberLite.

“The growth right now is in mobile appliances,” company spokeswoman Frances Barsky said.

Both LEDS are 300 microns square, although the XThin uses 3.2 volts rather than CyberLite’s 2.9.

In the future, Fan wants to expand to green LEDs and increase the electrostatic discharge threshold beyond the 1,000 to 2,000 volts CyberLite has now. And for use in households — Fan’s ultimate goal — Kopin will need an LED about three times brighter and 10 times cheaper.

“There’s plenty of work for all our Ph.D.s,” he quips.


Company file: Kopin Corp.
(last updated Oct. 6, 2003)

Kopin Corporation

Ticker symbol

695 Myles Standish Blvd.
Myles Standish Industrial Park
Taunton, MA 02780

Founded in late 1984, Kopin went public in a $15 million April 1992 IPO. In 2000, the company purchased Super Epy in order to gain expertise in GaAs development.

Advanced integrated circuit manufacturing


Small tech-related products and services
Kopin’s LED product, the CyberLite, takes advantage of existing chip defects to increase the brightness output of the LED. The CyberLite is the latest in a stream of Kopin products, including HBT transistor wafers and CyberDisplay miniature displays, to use the company’s proprietary Wafer-Engineering technology.

John C.C. Fan: president, chief executive officer, chairman and founder
Richard Sneider: chief financial officer and treasurer
Hong Choi: vice president and chief technology officer

Investment history
Prior to its IPO, Kopin completed the following funding rounds:

  • April 1995: $1.6 million with selected participants Post Venture Associates, Cardinal Partners, Venrock Associates and Equity Ventures
  • December 1985: $300,000 with Cardinal and Venrock
    – April 1987: $8 million, adding new participants State Farm Insurance, Charles River Ventures, BancBoston Ventures, Eberstadt Fleming
  • December 1992: $2.6 million in a common stock deal with AT&T State Street

$76.8 million (2002)

Selected strategic partners and customers

Selected competitors

Barriers to market
While its CyberLite revenues are helping offset HBT transistor losses in a weak handset market, it is likely that Kopin will have to wait several years before the automobile industry adopts LEDs as a standard. While fending off Cree’s competitive LED product, the company will also need to put its energies toward development of a higher-power, less expensive LED for household use.

Relevant patents
High density electronic circuit modules
Three dimensional processor using transferred thin film circuits

URL: http://www.kopin.com/
Tel: 508-824-6696
Fax: 508-824-6958
Email: [email protected]

– Research by Gretchen McNeely



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