POET Technologies CEO Dr. Suresh Venkatesan on the “sweet spot” for the optical communications company in the AI boom

In the AI boom, everyone knows the big players: your trillion-dollar hyperscalers and chip designers, as well as the private market giants playing a starring role in the build-out and deployment of this new technology.

With many of those stocks enjoying explosive growth over the past few years, however, investors’ eyes have been focused on finding smaller, emerging companies that have the potential to benefit from this rising tide as best supporting actors — your Kieran Culkins or Zoe Saldañas, if you will.

Enter POET Technologies. The company’s name, which was changed from Opel Technologies in 2013, doesn’t come from any deep affinity for the likes of Emily Dickinson, but rather as a nod to Planar Opto-Electronic Technology, which reflects the current focus of its business: optical communications. If you think of an AI data center as a factory putting together a widget along an assembly line, POET’s offerings aim to make the conveyor belt run faster and more efficiently.

The name caught on with retail traders recently, with interest surging last week after the Toronto-based company announced that it raised $75 million from a single institutional investor. Since then, the ticker has been among the most mentioned on Reddit’s r/WallStreetBets to surge more than 65% at its October peak to hit multi-year highs.

In an interview with Sherwood News, Executive Chairman and CEO Dr. Suresh Venkatesan said he’s been “very pleased with the level of interest in POET by investors of all types,” arguing that the AI boom has created a “sweet spot” for the company as it looks to provide solutions to address the challenge of making data centers run as efficiently as possible.

POET’s operating in a space where the pace of progress has been rapid. Since Venkatesan joined the company in 2016, the speed of standard commercially available optical communication has gone up 20x.

“When we talk about Moore’s Law, people talk about a 2x increase every three years,” he told us. “Here we’re looking at a 2x increase every year.”

Moving out the technological frontier is one thing, but making sure those innovations are readily available for and adopted by potential customers is what will really move the needle in driving financial performance that justifies the fresh optimism embedded in POET’s stock price.

“Honestly, technology doesn’t mean anything unless you can manufacture it,” he said. “So our focus really this year has been to cross that last hurdle of ensuring that the technology that we’re developing is truly manufacturable at scale and at wafer scale.”

We discussed the company’s technology, how POET has positioned itself to capitalize on the AI boom, the company’s plans for the future, and more with Venkatesan.

This transcript has lightly edited for clarity. Emphasis added.

Sherwood News: I’ll start by asking about your flagship platform technology, the POET Optical Interposer. Could you explain how this product works and how you really see it fitting into and being accelerated by the AI and data center boom we’re in the midst of?

Dr. Suresh Venkatesan: We’ve developed this platform technology that we call the POET Optical Interposer. It’s fundamentally a technology that relies on light as opposed to copper wires as a means to move data around. 

Optical communications, we believe, is really required for the boom in AI fundamentally due to power and performance reasons, and our technology, the optical interposer, makes it easy to co-integrate optical devices, electrical devices, and provide the means to optical communications. We’ve been developing this technology for a few years, but we are just in a sweet spot now — we’ve got the right technology that people need to support the growth in AI and simultaneously there’s this explosive growth in AI happening about the same time, and so there’s been a lot of interest in what we’re doing for not just the current generation of products, but also the next generation of products required for future growth.

Sherwood: Now that you mentioned the next generation of products, what does your product road map look like from here? 

Venkatesan: The AI networks largely fall into two categories, potentially three depending on how you look at it. One is what they call scale-out networks, which is scaling out the networks within the data center.

The other is what they call a scale-up network, which is largely providing connectivity inside of a particular server as opposed to scaling out server to server. We’ve got products supporting both of those growth vectors. I think on the scale-out side, it’s all about high-bandwidth communications. Today, our flagship product is the POET Teralight, which is a 1.6-terabit-per-second communication optical link. And then, of course, the future generations just go up from there, so the next generation would be a 3.2-terabit link and beyond. And as the speed of communication increases, the value of our interposer and the applicability of that interposer becomes more ubiquitous and far more persuasive, and so we’re seeing a lot of interest there. The scale-up network is all about replacing copper inside of server racks to provide connectivity between GPUs or between GPUs and other electronic components. And there our flagship product is our Starlight series of external light sources.

Of course, we’ve got a significant road map from a development perspective there. We just announced the availability of a revolutionary product based on our interposer called the POET Blazar. That is intended to provide high-power, multi-wavelength light sources for the scale-up networks, and doing it at wafer scale, at very low cost, and high-volume scale capabilities. 

I think our flagship products today are underpinned by the POET Teralight on the scale-out network side, and then the POET Blazar on the scale-up side.

Sherwood: How do you look to position yourself as a newer — well, not newer; POET’s been around for a while — but as an emerging company trying to break into this space? How do you market the benefits of POET’s technology to potential partners, potential customers? You’ve mentioned the photon versus copper wire benefits that you’re able to facilitate. What else do you try to use to position POET? 

Venkatesan: I think there are inflections in the industry, and inflection points in the industry usually result in new companies coming in and providing significant value.

We believe that we’ve got the technology to provide the cost and scale needed first for that growth to occur. When the automobile was first invented, it couldn’t have been successful if there wasn’t a means for the masses to gain access to it.

I think what POET does is provide a platform technology that’s highly flexible, highly scalable, and enables a broad use and application of optical connectivity. We believe we’re well positioned to service the needs of that industry going forward.

Sherwood: And you mentioned the development within optical connectivity. How fast are technological improvements coming, and have there been any particular breakthroughs that have led to a quickening pace of progress in the industry, so to speak? 

Venkatesan: There are always innovations in technology that accelerate the adoption. I think in the optical world, I could say when I first joined POET, the primary speed of communication honestly was 40 gigabits per second, and that was in 2016. So in nine years, we’ve gone from 40 gigabits per second to now 800 gigabits per second.

So that’s 20x and not even 10 years. When we talk about Moore’s Law, people talk about a 2x increase every three years. Here we’re looking at a 2x increase every year. And prior to that, the 10-gigabit was deployed for almost 10 years. I think the pace at which optical connectivity is being adopted and the pace at which the frequencies are going up is quite staggering.

It’s a challenge and an opportunity, right? It’s a challenge because the needs of the market are constantly changing every year, and the technology keeps progressing every year. But it also gives us the opportunity to have multiple points of penetration at multiple inflections in these industry growth trends. I would say that as long as there is a compelling need, which there is with this explosiveness in AI, companies like us will be rewarded for our innovations, and that’s what we’re all about. 

Sherwood: And to that point, you recently announced the closing of a $75 million capital raise. What’s the first thing you do with an influx of cash like that when you get it?

Venkatesan: First of all, you know, we’ve been very pleased with the level of interest in POET by investors of all types — retail, institutional — and that level of interest, especially with the AI revolution being what it is, is at an all-time high. So we’re happy to be in that position. 

And of course we look for capital for strategic reasons, right? I think it’s either to support expansion of capacity and growth, expansion of our teams, or to procure technology that we think can be very complementary to POET and to be able to make those investments.

So the infusion of capital is one thing. How we utilize that capital to accelerate our growth, to accelerate our presence in the industry, and to grow our capabilities and the teams is where we will be spending much of our time over the course of the next several months. 

Sherwood: When I look at the ecosystem you’re operating in, you have other specialized photonics firms. You also have tech giants themselves, like the Nvidias and the Broadcoms, which effectively do try to provide a one-stop shop for a lot of their AI tech for data center purposes. How do you either compete or break into those supply chains so that you are effectively part of those one-stop solutions? Or is there another way you’re approaching the competitive landscape? What kind of partnerships and relationships are the most important for POET to be developing?

Venkatesan: The growth in the industry, just as in semiconductors — semiconductors is a trillion-dollar industry today, and it’s not just one company. It’s the entire supply chain of many, many companies that are interrelated and interconnected that all support a very large ecosystem. Likewise in the optical space, there are the end users and, you know, Broadcom drives its own requirements in terms of co-packaged optics, and so does Nvidia and so do a bunch of the different hyperscalers, as well as the enterprise networks. So it’s a very, very large community, though we tend to think of it as one or two players, but that’s not right; it’s a lot of different players that come together. And there’s a large supply chain feeding them. 

But I think the pace at which new technologies are needed provides room for smaller companies such as ourselves to put our innovations into the hat, so to speak, and gives us a chance to be able to be part of that broader supply chain. 

That’s what we’re seeing. We’re seeing systematic adoption of our technology across a number of different verticals. We established our manufacturing presence and are gearing up for manufacturing, especially in the scale-out and scale-up segments.

We just announced a big collaboration with NTT, a telecom giant in Japan. That’s a new market entry for us, in the world of telecom as opposed to data communications. And they’re both important because telecom is ultimately the backbone network that supports everything.

All of these different wins that we’ve had over the course of this year culminate into production over the course of the next year, which is what we’re gearing up to do. It’s what part of our raise is about, to ensure that we have the right team and the right capability to leverage all these opportunities that we have.

Sherwood: One of the other things that strikes me about the AI ecosystem right now is we’re seeing a lot of very creative deals, creative partnerships, a lot of implicit or explicit vertical integration within the space. Do you see yourself as a potential M&A target or a target for strategic investment from some of these firms given the state of the industry?

Venkatesan: Well, companies are bought, they’re not sold. So we need to focus on our business. We need to do what we can with our technology and grow the business. What happens after that — you don’t strategically set yourself and say, “OK, I’m going to be acquired on such and such a date by such and such company.”

That’s not our goal. Our goal is to build a robust business utilizing the capabilities of our technology and continue to innovate in this space. 

Sherwood: Do you notice any differences in marketing to potential public versus private clients, or in different geographies?

Venkatesan: Broadly, I would say much of the AI market demands today are still primarily in the United States. I think China is slowly starting to ramp up. The 800-gig market is only now beginning in China, whereas in the United States, it’s already transitioning into a 1.6-terabit. 

But they’re the big giants. That’s where the large markets are, and we’re set to serve the markets and all geographies with moving our manufacturing to get out of China and establish it in a more neutral and acceptable territory in Malaysia. But I think those are going to be the large markets for AI going forward for the next few years, anyway. 

Sherwood: And when you look toward the future – it’s difficult, five years ago I doubt many people were predicting something like ChatGPT — but where do you see yourselves if you can wave your magic wand? What does POET look like in five years? What kind of position has it established for itself in the marketplace, and what are some of the milestones that you would love to see hit as you look forward?

Venkatesan: We’re focused on growing the business, so yeah, you can look five years out and try to make projections of what the company is going to be like. But I think we’re focused on continuing to win customers, and honestly, technology doesn’t mean anything unless you can manufacture it. So our focus really this year has been to cross that last hurdle of ensuring that the technology that we’re developing is truly manufacturable at scale and at wafer scale. That’s where our focus has been. So we’re going to transition into manufacturing next year, continuing to win more customers and really deploy our technology in the scale-out region and where we’re seeing very, very high-growth trajectories in 2027, especially for co-packaged optics. And we’ve got a technology that is resonating very strongly with customers.

We were at the European show just two weeks ago, and just the amount of interest in what we’re doing is terrific. I think if we just execute on our goals over the next year, what the company will be in five years will just take care of itself. We’re being recognized; we just recently won an award at the ECOC for the most innovative platform supporting optical communications and AI. I think that that’s great, to get that kind of acknowledgement from a peer group. So things are all lining up well for the company.

Sherwood: I’m a big believer in, you know, the long run is just a series of short runs where we try and do the best we can — I’m all for that. And to just zero in on your sales approach a little more, your technology is one part within a large and very complicated whole, I think, for a lot of folks. So when you’re targeting sales opportunities, do you focus more efforts on the original equipment manufacturers, or are you engaging more with hyperscalers directly? Or more of an all of the above approach?  

Venkatesan: Our technology is currently targeted toward what we call optical transceiver modules, or external light source modules. To a certain extent, we interact with hyperscalers to understand their requirements, but what we sell is sold to transceiver module makers or people who want to get into the transceiver module business. So most of our sales are direct sales through direct communication with people in the supply chain.

Sherwood: Thanks so much. Just to wrap up, is there anything out there you want investors, the media, the public, to know better about POET? Anything you want to clear up? 

Venkatesan: Obviously we’re doing the right things, because the investors are rewarding us and I think the shareholders have been pretty happy with the progress over the past year. I think we’re starting to not be a pre-revenue company soon, and I think as we get into that phase of our business, things will be even better than they are today. 

I think the investors understand where we are in terms of our technology’s progression toward commercialization. I think we are also well positioned in the market of AI, both from a scale-out and a scale-up perspective. We’re participating in both ends of that market, which is also really interesting and which goes to show how our platform is quite robust and flexible in that context. We’re not a one-trick pony, from that perspective. We’ve got opportunities along multiple vectors that allow this company to grow.