Kanata-based photonics firm Enablence Technologies has put a proposal to potentially build a 50,000-square-foot chip fabrication plant in the National Capital Region on the back burner and is focusing on upgrading its existing production facility in California instead, the company says. Enablence vice-president of marketing Stewart Chalmers told Techopia Wednesday that a new facility in […]
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Kanata-based photonics firm Enablence Technologies has put a proposal to potentially build a 50,000-square-foot chip fabrication plant in the National Capital Region on the back burner and is focusing on upgrading its existing production facility in California instead, the company says.
Enablence vice-president of marketing Stewart Chalmers told Techopia Wednesday that a new facility in the Ottawa region would require a “massive investment.”
While Enablence will continue to hire more engineers at its main R&D centre on March Road, the company has “no plan” to build any new facilities in Ottawa in the foreseeable future, Chalmers said.
He said management believes it makes more financial sense to expand capacity at Enablence’s current chip-fabrication plant in Fremont, Calif., as the publicly traded company pushes toward its goal of becoming gross-margin positive by the third quarter of fiscal 2025.
“We have a (fabrication plant) right now that’s filled out, and demand has gone through the roof,” Chalmers said. “We want to continue down that track. Trying to build a brand-new fab would take significant resources and investment, and right now our focus is on growing the company in the direction that we’re headed.”
It appears to be a change of course for Enablence, which was founded in 2006 and produces optical chip components used in data centres that serve tech giants such as Apple, Google and Meta.
In an interview with Techopia in the spring of 2023, CEO Todd Haugen said the company was scouting potential sites in the National Capital Region for a new chip-production facility that would cost up to $150 million to build and would employ more than 100 people.
At the time, Haugen and then-chief financial officer Paul Rowland said Enablence was raising capital for the new fabrication plant in response to an expected surge in demand for its optical photonics components from customers in emerging sectors such as medical technology and autonomous vehicles.
“The optics industry is on the verge of exploding,” Haugen, a longtime Microsoft executive who took over the top job at Enablence more than two years ago, said in the May 2023 interview. “There are so many new use cases for it.”
Rowland told Techopia the Ottawa region was a natural choice for a new facility as the company, which assembles its chips in China, was looking to consolidate design, production and assembly on this side of the Pacific.
“When we started looking at where in North America it would make sense for us to build a plant, we felt strongly that Ottawa was one of our top choices – primarily because of the access to (engineering) talent, which is absolutely critical in our line of work,” said Rowland, who left Enablence later in 2023 and was replaced by former high-ranking Cisco executive Stan Besko.
The company, which trades on the TSX Venture Exchange, continues to seek new investment in order to expand its manufacturing capacity and implement the latest chip-making technology at its California fabrication plant.
In a news release Tuesday announcing its financial results for its fiscal 2024 year ended June 30, Enablence said investors have pumped more than $6.6 million (all terms US) in new funding into the company.
Enablence says the upgrades to its plant will boost its output from 100 wafer starts per week to 700 over the next 12 months. The firm is predicting its revenues will grow more than 300 per cent to $5.5 million in fiscal 2025, up from $1.6 million last year.
Enablence is hoping it has finally found its niche after years of stagnation that saw the company churn through a series of C-suite leaders in the hope of hitting on a formula for success.
Haugen told Techopia last year he believes Enablence is on the cutting edge of technology that will fuel the coming autonomous vehicle revolution and power next-generation medical devices that will be small enough to hold in your hand while scanning for conditions such as macular degeneration in a patient’s eye.
He said at that time that the firm was poised to go all in on the “advanced vision” market – for example, focusing on chips that will help manufacturers produce faster, more accurate Lidar systems that use lasers and reflected light to allow self-driving vehicles to detect cars, pedestrians and other objects.
At the same time, Enablence sees huge growth opportunities in serving data centres, traditionally its main market.
The company said in Tuesday’s news release that the explosion in artificial-intelligence-powered applications is accelerating the rollout of “hyperscale” data centres that require the latest in chip technology.
“AI demands for high bandwidth communications, precise data, and efficient matrix multiplication, we believe will drive our business across optical communications, optical sensing, and optical compute market segments well into the future,” the company said.
While Enablence posted a larger net loss in fiscal 2024 than the previous year – $14.1 million compared with $8.6 million in 2023 – it said the increased loss resulted from “critical investments in manufacturing capacity and technical resources” that will pay off in the long run.
Chalmers reiterated that point on Wednesday.
“The key for us is investing in technology and then getting product in the market as quickly as possible so we can meet those long-term objectives,” he said. “We feel like now we’ve turned the corner and got the company headed in the right direction.”
