Aeluma CEO on Semiconductors Powering the AI Boom

**SPEAKER_1** (0:00)
Jonathan, thank you so much for your time. Just explain exactly where you sit in the semiconductor supply chain.

**Jonathan Klamkin** (0:08)
Aeluma, thank you very much. Aeluma, ticker ALMU builds transformative semiconductors. We specialize in the high-performance compound semiconductors, but what we do is we've invented ways to manufacture those components at scale. So think of components like lasers and photodetectors that are used in specialty applications, but are also being used in this massive AI data center build out, manufactured by companies like Coherent and Lumentum.
There are supply chain issues today. Raw materials sourced from China, substrates produced in Japan and in China. There are export bands, so much of the supply can't come to the US, to some of those manufacturers. We use a different technology. We build those same components on other substrates, more mainstream substrates like silicon, that's used in mainstream microelectronics. So we don't need those indium-phosphide semiconductors. And again, these are so critical for infrastructure projects like the Massive AI Data Center build out.

**SPEAKER_1** (1:08)
Yeah, it's interesting you just mentioned Coherent because we heard from that company just in the last few minutes or so. Lamentum is another one we saw today. I mean, these companies have been getting a lot of praise, particularly from NVIDIA, which validated their picks and shovels positioning here right now. But are you a direct challenge to them?
Are you saying, are you engineering a way to bypass the constraints that they face entirely?

**Jonathan Klamkin** (1:38)
That's correct. We don't use indium phosphide substrates, the incumbent technology. And you mentioned NVIDIA. NVIDIA made multi-billion dollar investments in both of those companies and a few others to secure supply of critical components and materials.
We don't use those indium phosphide substrates. We've invented ways to manufacture those core components, lasers, photodetectors, and so on, on other substrates like silicon that aren't subject to the same supply chain constraints. And so this is in part why the government is so interested in partnering with us and we've been working with the government since our inception about five years ago because our technology not only is valuable for defense and aerospace applications, but could really support this massive AI and high-performance computing infrastructure build-out. So our technology is about supply chain resilience, national security, economic security, and also innovation security. There's a lot of IP behind what we've developed.

**SPEAKER_1** (2:41)
Right. And so last month, the Department of Commerce announced these letters of intent with seven companies, am I right, for $874 million to accelerate R&D for AI and advanced compute supply chain. You were one of them. What is exactly the result of that? What does that mean?

**Jonathan Klamkin** (3:00)
So letter of intent means that we are in negotiations with the government right now. They announced those seven companies that they executed letters of intent with.
And this cohort of companies that was announced are intended to develop critical technologies for AI and advanced compute. And we're one of the few photonics companies part of that cohort. And if you look at the announcement made by the government, they speak to indium phosphide-free substrate technology that we could use to build photodetectors and lasers so critical to optical networking inside data center. So we're very happy to partner with the government. We've been working with them, as I mentioned, for a number of years to build some of these technologies for defense systems. And now they've become so critical for AI data centers.

**SPEAKER_1** (3:50)
How easy is it to do all of this? As a matter of national security, this on-shoring, obviously, companies wanting to align themselves with US policy to take on China's hegemony, but also because of some of the risks involved in doing this offshore. I mean, how easy is it to manufacture this stuff here on US soil and compete with China and not have to rely on China?

**Jonathan Klamkin** (4:16)
That's a great question. And I would say it's not very easy at all.
Unfortunately, we used to do a lot of this manufacturing on shore and some of it sort of went away.
I mean, that's the impact of globalization. And to sort of build some of it back up again does take time. The good news is that we invent a lot of these technologies. We invented, we pioneered a lot of these technologies. We invest so heavily in the development of these technologies. And the more manufacturing we do here, the more secure we'll be. Not only because we need the supply, we don't want to be blocked by export bans and the like, but we need to protect that intellectual property. So I would say not so easy. But the good news is that our government seems to be very committed to supporting this. And it is nice to see not only investments being made in US companies, but incentives being provided for some of those foreign companies to do the manufacturing within US borders as well. It's a little easier for us to protect it if the chips are built here.