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Photon control (TSX: PHO) is a leading developer and supplier of optical sensor position and temperature measurement systems to the Original Equipment Manufacturers (OEM) industry. Photon products are designed to perform in extreme conditions and are backed by a team of experts who provide custom design, rapid prototyping, on-site installation, training and support. Photon also provides engineering services for custom optical measurement systems.

Through the company’s subsidiary, Micronor, it also supplies fiber optic kinetic sensors for medical applications and various industrial market segments including energy, transportation and process. The semiconductor capital goods industry offers several important and growing applications for the company’s technology and is the primary source of revenue for Photon’s business.

High volume manufacturing capabilities

The company designs and manufactures precision temperature and position sensors used by semiconductor manufacturers. Manufacturing silicon wafers for semiconductors involves a multitude of complex processes. Monitoring and maintaining the correct insert position and temperature during these processes is critical to achieving the yield and product productivity required for high volume manufacturing.

The measurement accuracies required of these sensors are increasingly difficult as semiconductor devices adapt to atomic-level dimensions and become increasingly three-dimensional (3D) in nature. In addition, these sensors must maintain their accuracy in the harsh environments encountered in critical semiconductor equipment.

Important factors in product demand

Photon fiber optic sensors are immune to radio interference and thus are able to provide the high accuracies required for state-of-the-art process control. The need to scale semiconductor devices to atomic level dimensions has also created a need for more measurement points inside the chamber. Temperature and position anomalies have a greater impact on efficiency at atomic level dimensions and must be measured and controlled more precisely, increasing the value and use of fiber optic sensors.

In addition, as the semiconductor process nodes get smaller, the number of measurement points has more than quadrupled. Likewise, the proliferation of 3D and advanced memory chip designs has become more common and represents a growing percentage of total chips manufactured. These factors are expected to continue to drive demand for the Company’s products.

Increase in market share

Photon sells products worldwide with sales to OEMs primarily in the United States and Japan, who in turn sell products to manufacturers in the United States, Asia, and Europe. Revenue for 2020 was $ 64.7 million, an increase of $ 32.0 million, or 98%, from the $ 32.7 million reported in 2019. The increase in reported income for the year was heavily influenced by overall capital spending in the semiconductor industry, reflecting the company’s success in increasing its market share.

The global semiconductor industry is fast, competitive, and is constantly innovating to increase the processing speed and power of semiconductor devices. The density of memory bits and the number of logic transistors is increasing every year to meet the demands brought about by the proliferation of artificial intelligence, high performance computing, the Internet of Things and 5G. The ability to anticipate these technological developments and meet customer needs without compromising quality is a major competitive advantage for Photon. This should serve shareholders well in the long run.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool service or advisor. We are Motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we’re posting sometimes articles that may not conform to recommendations, rankings or other content.

Silly contributor Nikhil kumar has no position in any of the listed securities. The Motley Fool owns shares of Photon Control Inc.


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