Item 1. Business
Item 1. Business.
Unless otherwise stated or the context otherwise
indicates, references to “Aeluma,” the “Company,” “we,” “our,” “us,” or similar
terms refer to Aeluma, Inc. and Subsidiary.
Overview
We
develop novel optoelectronic devices for sensing and communications applications. Aeluma has pioneered a technique to manufacture devices
using high performance compound semiconductor materials on large-diameter substrates that are commonly used to manufacture mass market
microelectronics. This enables cost effective manufacturing of high-performance photodetector array circuits for imaging applications
in mobile devices, as well as other technologies. Photodetector devices may be used as image sensors that generate an image by detecting
light, in a manner similar to a digital camera taking pictures. Our devices may incorporate additional functionality for 3D image capture
when integrated into various system architectures. This technology has the potential to enhance the performance and capability of camera
image sensors, light detection and ranging (LiDAR), augmented reality/virtual reality (AR/VR), facial recognition, and other applications.
Aeluma has acquired key manufacturing equipment, and has headquarters
in Goleta, California with a manufacturing cleanroom to house this equipment.
Because we will leverage compound semiconductor
materials, our devices may operate out to longer wavelengths, up to at least 1600 nm, which is advantageous for a number of reasons including
eye safety. Beyond 1400 nm is considered eye safe at significantly higher optical power levels relative to that at shorter wavelengths.
Therefore, for LiDAR sensing systems, the range (the detectable object distance) can be increased significantly. Operating at specific
longer wavelengths (for example, near 1550 nm) also enables imaging both in low light (dark) conditions, as well as in direct sunlight.
Therefore, images could be captured outdoors and in various conditions.
Our Strategy
We will continue to develop our technology that
includes novel materials and devices based on those novel materials. Our primary focus is to manufacture high-performance photodetector
array circuits for image sensors and other optoelectronic devices. Initial efforts aim to penetrate the 3D imaging and sensing (mobile
and consumer, defense and aerospace, industrial, medical, auto), LiDAR (robotic vehicles, autonomous driving (AD), advanced driver assistance
systems (ADAS), topography, wind, industrial), and communications (telecommunications, data center communication, artificial intelligence
(AI) communications, and quantum processing and communications) markets.
Our Technology
Our technology is based on heterogeneous integration
of compound semiconductor materials on large-diameter substrates such as silicon. This heterogeneous integration enables the subsequent
device fabrication and manufacturing in large-scale manufacturing environments that are suited to mass markets.
Competition
There are two primary classes of image sensors
currently on the market: low-cost silicon sensors for mass market applications, and high-performance compound semiconductor (ex. InGaAs)
sensors deployed primarily in specialty applications. The major suppliers of silicon CMOS image sensors include Sony, Samsung, Omnivision,
On Semi, STM, Panasonic, Canon, SK Hynix, and others (Source: Yole Development, www.yole.fr). The major suppliers of InGaAs sensors include
Hamamatsu, Sumitomo, Teledyne/FLIR, Excelitas, and others (Source: Markets and Markets, www.marketsandmarkets.com).
We believe that our technology will be able to
compete effectively because we are uniquely positioned to outperform silicon CMOS image sensors while achieving a cost of manufacturing
that is lower than that for traditional InGaAs sensors. Compared to silicon, InGaAs demonstrates higher detection sensitivity and a broader
wavelength absorption spectrum. Silicon absorbs or detects light in the visible spectral region (400-750 nm) and partially in the near
infrared (NIR) spectral region (greater than 750 nm), cutting off near 940 nm. InGaAs not only demonstrates higher absorption in the
NIR, but also extends well into the shortwave infrared (SWIR) spectrum (900-1700 nm), cutting off near 1700 nm, with the ability to extend
to near 2500 nm.
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We believe that we are also positioned to win
on price in competing with current InGaAs sensors while having the ability to realize much larger area photodetector arrays because of
our ability to manufacture on up to 12-inch silicon substrates, whereas competing InGaAs photodetectors are manufactured on indium phosphide
(InP) substrates that are typically 2-4 inches in size. Therefore, in addition to realizing many more sensor chips per wafer, we have
the ability to realize array sizes that are larger than what is possible with traditional InGaAs manufacturing on InP wafers.
Existing and potential competitors have or could
have advantages such as greater name recognition, longer operating histories, broader and deeper product portfolios, larger customer
bases, substantially greater financial and other resources, and larger scale manufacturing operations. However, we believe that our products
will have the potential to compete because of our unique ability to manufacture high performance devices at scale and at low cost.
Customers
Aeluma has customer engagements that involve
development of wafers, delivery of engineering samples for evaluation, and delivery of small volumes of chips. Aeluma’s technology
is broadly applicable. Potential markets include automotive LiDAR, industrial LiDAR, robotics, mobile, AR/VR, AI, communications, and
defense and aerospace. Our current strategy is to pursue partnerships with system integrators, including LiDAR companies and Tier 1 automotive
suppliers, or semiconductor manufacturing companies. Aeluma is pursuing direct sales relationships.
Potential customers include those in the mobile
market (both mobile phone manufacturers and companies that sell integrated solutions to them), LiDAR for cars and other vehicles, and
defense and aerospace.
Markets
The
CMOS image sensors market is projected to be $30B in 2026 (Source: Yole Development). In terms of total market unit sales, the
following are projected for 2024: 1.73 billion mobile phones, 131 million tablets, and 113 automotive vehicles (Source:
www.idc.com). Manufacturers of mobile phones, tablets, and LiDAR for automotive vehicles may be prospective customers for Aeluma. In
the mobile market, Apple arguably leads in terms of deploying advanced capabilities such as LiDAR sensing in their devices; Apple
does not use our technology. Apple leverages VCSEL emitters in conjunction with SPAD detectors for a LiDAR scanner in smartphones
and tablets and such technology “helps to deliver faster, more realistic augmented reality experiences and improves autofocus
in low-light scenes in photos and videos”
(https://www.apple.com/newsroom/2021/05/apple-awards-an-additional-410-million-from-its-advanced-manufacturing-fund-to-ii-vi/).
Other major smartphone suppliers include Samsung, Xiaomi, OPPO, vivo, Huawei, and realme (Source: www.counterpointresearch.com). The
automotive LiDAR market is projected to be between $5-80B in
2030
(https://www.bloomberg.com/press-releases/2022-05-31/lidar-market-size-to-be-worth-4-71-billion-by-2030-grand-view-research-inc;
AEye Presentation, LD Micro Invitational 2022; Estimate by Velodyne).
Intellectual Property
Aeluma has filed several patent applications
with the United States Patent and Trademark Office (USPTO). We have filed trademarks for the name “Aeluma” and the slogan
“Sensing Reimagined” with the USPTO. We maintain protection of trade secrets that include “know-how” and process
recipes.
Our Intellectual Property Approach
Our strategy for the protection of our proprietary
technology is to seek worldwide patent protection with a focus on jurisdictions that represent significant global semiconductor markets.
However, we will assess on a case-by-case basis whether it is strategically more favorable to maintain trade secret protection for our
inventions and “know-how” rather than pursue patent protection. Generally, patents have a term of twenty years from the earliest
priority date, assuming that all maintenance fees are paid, no portion of the patent has been terminally disclaimed and the patent has
not been invalidated. In certain jurisdictions, and in certain circumstances, patent terms can be extended or shortened.
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Governmental & Environmental Regulations
Our primary products are anticipated to be compound
semiconductor optoelectronic devices manufactured on silicon substrates, including InGaAs photodetectors and photodetector arrays. To
the extent that our products are or become subject to U.S. export controls and regulations, these regulations may limit the export of
our products and technology, and provision of our services outside of the United States, or may require export authorizations, including
by license, a license exception, or other appropriate government authorizations and conditions, including annual or semi-annual reporting.
Export control and economic sanctions laws may also include prohibitions on the sale or supply of certain of our products to embargoed
or sanctioned countries, regions, governments, persons, and entities. In addition, various countries regulate the importation of certain
products, through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our
products. The exportation, re-exportation, and importation of our products and technology and the provision of services, including by
our partners, must comply with these laws or else we may be adversely affected, through reputational harm, government investigations,
penalties, and a denial or curtailment of our ability to export our products and technology. Complying with export control and sanctions
laws may be time-consuming and may result in the delay or loss of sales opportunities. Although we take precautions to prevent our products
and technology from being provided in violation of such laws, our products and technology may have previously been, and could in the
future be, provided inadvertently in violation of such laws, despite the precautions we take. If we are found to be in violation of U.S.
sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. Export
or import laws or sanctions policies are subject to rapid change and have been the subject of recent U.S. and non-U.S. government actions.
Changes in export or import laws or sanctions policies, may adversely impact our operations, delay the introduction and sale of our products
in international markets, or, in some cases, prevent the export or import of our products and technology to certain countries, regions,
governments, persons, or entities altogether, which could adversely affect our business, financial condition and results of operations.
We seek to comply with all applicable statutory
and administrative requirements concerning environmental quality. Expenditures for compliance with federal state and local environmental
laws have not had, and are not expected to have, a material effect on our capital expenditures, results of operations or competitive
position.
In addition, to the extent that our facilities
and operations are or become subject to the plant and laboratory safety requirements of various environmental and occupational safety
and health laws in the U.S., we believe we are in compliance with all such laws and regulations, and to date, those regulations have
not materially restricted or impeded operations. Further, we believe our processes to be highly efficient, generating very low levels
of waste and emissions. For this reason, we do not view issues surrounding climate change and any currently foreseeable related regulations
as materially impacting our business and financial statements, beyond any inestimable impact on the macro-economic environment.
We are also generally subject to other industry
and environmental regulations for electronic and semiconductor products such as the Restriction of Hazardous Substances Directive 2002/95/EC.
Manufacturing
We have established a manufacturing and research
and development facility at our headquarters in Goleta, California. We have installed key equipment and we plan to control our core materials
manufacturing and development. In addition to our facility, we work with a variety of vendors and are establishing relationships with
industrial foundries to build out our manufacturing supply chain.
Sales
We are now delivering wafers and chips to some
customers, primarily for research and development and sampling purposes.
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Marketing
Marketing activities include direct relationships
with potential customers and partners. We are under nondisclosure agreement (NDA) with a number of potential customers and partners,
several of which have either visited Aeluma or hosted a visit by Aeluma representatives at their sites.
Employees
At June 30, 2023, Aeluma had 11 full-time employees,
2 part-time employees, and consultants. The majority of employees work in engineering. We plan to hire additional persons on an as-needed
basis. On a case-by-case basis, Aeluma may offer stock options to employees for attraction and retention.
Litigation
There is no material litigation, arbitration,
governmental proceeding or any other legal proceeding currently pending or known to be contemplated against us or any members of our
management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding
in the 10 years preceding the date of this Report. We may however be involved, from time to time, in claims and lawsuits incidental to
the conduct of our business in the ordinary course. We carry insurance coverage in such amounts as we believe to be reasonable under
the circumstances and that may or may not cover any or all of our liabilities in respect of these matters. We do not believe that the
ultimate resolution of these matters will have a material adverse impact on our consolidated financial position, cash flows or results
of operations, but cannot guarantee the same.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required
to provide the information called for by this Item. However, we encourage you to review the risk factors included in our registration
statement on Form S-1 (File No. 333-273149) that was filed with the SEC on July 6, 2023.
Item 1B. Unresolved Staff Comments.
None.