LNL Technologies Announces $7.1 Million in Funding to Develop Monolithically Integrated Optoelectronic Chips.

Business Editors/High-Tech Writers

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 13, 2003

Investors Include Sandy Robertson, Larry Mohr and Dr. Adam

Chowaniec; Company's Groundbreaking Miniaturization Platform

Integrates 10,000 Photonic Functions on a Square Centimeter Chip

LNL Technologies (www.lnltech.com), developer of monolithically integrated photonic and optoelectronic chips, today announced that it has raised $7.1 million in seed funding to date.

LNL's investors include members of the management team; Dr. Adam Chowaniec, chairman and founder of Tundra Semiconductor; Larry Mohr, founder of Mohr, Davidow Ventures; and Sandy Robertson, founder of Robertson Stephens and chairman of Francisco Partners. LNL will use the funding to commercialize its photonic miniaturization platform. The company has already demonstrated commercially manufactured prototypes that enable the integration of 10,000 photonic functions on a single square-centimeter (cm2) chip - representing an improvement of several orders of magnitude beyond any commercial technology to date.

LNL was founded in 2001 as a culmination of work at MIT by the company's founders Dr. Lionel Kimerling, Dr. Kazumi Wada, Dr. Kevin Lee and Dr. Desmond Lim. LNL's demonstrated technologies solve the two fundamental problems facing commercial photonic miniaturization: reducing the size and bend radius of a photonic "wire" (waveguide) by several orders of magnitude - from the current 1 cm to a few microns; and, sending light from a fiber cable into a miniaturized waveguide with minimal power loss (coupling). These significant technical accomplishments drive key business benefits such as increased chip density, higher yields and lower packaging costs.

LNL's technology platform is protected by an extensive intellectual property portfolio of more than 170 patents, filings and licenses. This portfolio includes patents essential to large-scale monolithic integration of photonic and optoelectronic functions. Although LNL is currently focusing its development efforts in silicon, its core intellectual property covers all materials platforms.

"We set three key business goals when we founded LNL: secure funding from prominent individual investors on good terms, manufacture working prototypes of our core technology at our silicon-CMOS fab in Singapore, and maintain and enhance our leading IP position," said Mark Noorzai, founder and CEO of LNL. "Given the current market environment, achieving these goals in less than 18 months is a true testament to the tenacity of our team and our collective faith in the impact of our technology."

Business Benefits of the LNL Platform

Fundamentally, LNL's miniaturization leverages the production geometries of chip manufacturing to enable lower-cost products. Smaller, more integrated chips result in:

-- Increased Chip Density: Current technologies have 5-30 chips on each wafer; LNL can fit between 500-3,000 chips on each wafer via greater levels of photonic miniaturization.

-- Higher Yields: LNL's dramatically smaller chip sizes lead to higher manufacturing yields as they limit the impact of wafer defects and non-uniformities - critical factors for photonic chip yields.

-- Lower Packaging Costs: Packaging is currently the most significant factor in the cost of photonic and optoelectronic products. Integration of formerly discrete components will lower packaging costs.

The most distinctive element of LNL's miniaturization platform is its ability to leverage the existing equipment and processes of standard semiconductor foundries for manufacturing. By utilizing the existing manufacturing assets of third parties, LNL is able to operate a "fabless" production model - a rarity in advanced photonics. LNL plans to pass along significant cost savings to customers as a result of its manufacturing model and high levels of miniaturization and integration.

"LNL has all of the elements of an attractive investment opportunity with its core technical advantage, strong patent protection, high gross margin potential and dynamic management team," said Sandy Robertson, LNL investor and founder of Robertson Stephens and chairman of Francisco Partners. "Recovery in this market will be driven by low-cost productivity advances like LNL's, and the company's ability to use conventional foundries while delivering such dramatic advances is an enormous competitive advantage."

Technical Advantage of the LNL Platform

Miniaturization in photonics, unlike electronics, is driven primarily by one physical characteristic - the index difference between the core and cladding of an optical "wire." LNL's silicon-based high-index technology gives it a dramatic miniaturization advantage over competing approaches. LNL's technology also facilitates the monolithic integration of photonic functions onto very-large-scale-integration (VLSI) electronic chips through its germanium detector on-silicon technology. Germanium detectors are the key technology that allows for the monolithic transformation of optical signals into electronic signals on silicon chips.

"LNL's vision is consistent with the original vision of the MIT Microphotonics Center - enabling the evolution of photonics components from discrete devices to monolithically integrated photonic and optoelectronic circuits," said Professor Lionel C. Kimerling, director of the MIT Microphotonics Consortium and Thomas Lord Professor of Materials Science at MIT. "MIT has been one of the few institutions collaborating with industry in the study of high-index contrast materials systems. We have spent more than a decade developing solutions to challenges that most researchers believed were beyond current feasibility. LNL's demonstration is a validation of both MIT's research and its industry focus; and more importantly, they provide the first evidence that our results can be effectively manufactured and rapidly commercialized."

Modest levels of photonic and optoelectronic integration have been achieved by many companies to date. These integration efforts, however, have not resulted in dramatic cost reductions as they require the use of substantially more expensive compound semiconductors, such as Indium Phosphide or Gallium Arsenide. Additionally, these costly alternatives have not achieved miniaturization of the same order of magnitude as LNL's technology.

LNL Products

LNL is developing products for markets where the use of optical communications is increasing within systems and equipment. LNL's first products will be based on its exclusive echelle grating WDM technology developed by the National Research Council (NRC) of Canada. LNL has already fabricated alpha versions of echelle grating products and will launch a broad range of multiplexing/demultiplexing and monitoring products based on the echelle grating in 2003.

"LNL's technology platform is enabling unprecedented levels of photonic integration," said Arvind Chhatbar, director of the National Research Council of Canada's Regional Innovation Centre in Ottawa. "The NRC is fully committed to supporting LNL's ongoing operations in Ottawa and we look forward to working closely with the management team to advance the company's revolutionary technology."

LNL has also developed a patent-pending on-wafer testing methodology, which had not previously existed, that enables LNL to identify good chips before wafer dicing, polishing and test preparation - avoiding investments of time and resources in chips that do not work. Beyond integrating this yield management technology into its manufacturing processes over the next year, LNL plans to license this technology to optical test and measurement companies.

As LNL further develops its photonic miniaturization and germanium detector technology, LNL will launch a series of monolithically integrated photonic and optoelectronic products for applications in wide-area networks, datacom networks, backplane interconnects and on-chip interconnects.

About LNL Technologies, Inc.

LNL (www.lnltech.com) develops monolithically integrated photonic and optoelectronic chips for communications and computing companies. LNL's groundbreaking photonic miniaturization platform produces high-performance chips at dramatically lower cost through innovations in conventional silicon and silicon germanium semiconductor manufacturing. Founded out of MIT in 2001 as a charter member of the MIT Microphotonics Consortium, LNL is a privately-held company headquartered in Cambridge, Mass. with product development and manufacturing operations in Ottawa and Singapore.

NOTE TO EDITORS: The "2" in "cm2" at the end of the second graph should be a superscript.