Ten years developing a business in photonics: ‘If we are successful, much of this technology will soon come from the Netherlands’
Brabant companies and knowledge institutions are at the forefront of the development of integrated photonics. EFFECT Photonics is a good example. Last year, the former TU/e spin-off raised a multimillion investment from Innovation Industries and existing shareholder BOM Brabant Ventures, among others. Following nearly ten years of development, the Eindhoven-based company is now ready for its first product launch. Founder and CTO Boudewijn Docter talks to Gert-Jan Vaessen, manager BOM Brabant Ventures (The BOM is an implementation agency of the Province of North-Brabant and the Ministry of Economic Affairs & Climate of the Netherlands) in an interview about EFFECT’s Photonics innovative technology and looks back on the biggest challenges the company faced along the way.
EFFECT will launch its first product this year. What do we make, exactly?
“We develop microchips that work with beams of light rather than electricity. Our primary focus is the telecommunications sector, where fibre-optic technology has been in use for some time. Our first product is an optical transceiver, a small box that can send and receive data. This allows network builders, such as Ericsson and Nokia, to connect mobile communication masts to exchanges, enabling end-users to play games or watch Netflix for example.”
What is the added value of our technology?
‘Intercontinental internet traffic runs through enormous cables on the ocean floor. As you can imagine, laying such cables is extremely expensive, so there is a strong desire to get the most out of the existing capacity before adding a new cable. There are very expensive installations on both sides of the ocean with all kinds of optical components for just this purpose. These work by packaging data in different colours of light, for example, which allows a lot more data to be sent over the same connection. Thanks to photonic integration, we can package all these functions in one chip, making this technology affordable even for shorter distances.’
How does that benefit our customers?
‘End users expect their internet speed to increase every year without having to pay extra for it. As mobile operators transition from 4G to 5G, they want to avoid having to replace their network infrastructure all at one time. Our chip technology enables them to upgrade and optimize their existing transmission masts and exchanges without major network investments. Moreover, our chips are much more energy efficient than existing technology, so they can play a key role in the growth of global data traffic.’
What is the relationship between energy savings and the growth of data traffic?
‘Data centres require a tremendous amount of electricity and cooling. In fact, they already account for up to 10% of our total energy consumption. Seeing as how data traffic is increasing by 50% each year, we will soon run out of energy to run the data centres. Integrated photonic chips are not only more economical but also generate less heat. As a result, less cooling is needed, which results in significantly lower energy consumption per gigabyte.’
What else can you do with integrated photonics?
‘Wherever there is a need to transport or accurately measure data, there is an opportunity for photonics. I expect this technology will initially be used on a large scale in the telecom sector, and then you will see a lot of spin-offs, in medical technology and aviation for example. For the time being, we are focusing on telecom, but I certainly wouldn’t rule out expansion into other markets in the future.’
From concept to market launch in photonics
As the culmination of nearly ten years of development, EFFECT Photonics will have its first market launch in 2019. CTO Boudewijn Docter looks back on the biggest challenges the company has faced since it was founded in 2010.
Before you know it, you’ve missed the boat
‘We initially considered developing technology for the medical sector or aviation industry, but through our contact with Google we knew the customer demand from the telecom sector had the most urgency. That became our focus. Developments in this sector follow one another at breakneck speed. Before you know it, you’ve missed the boat. Products that are relevant now will be outdated in two years’ time.
From the outset, we’ve been working with a platform technology that can be relevant to multiple products. This will allow us to quickly switch to another product, if necessary. We were initially working on a transceiver to connect data centres, but that market has since switched to a different type of technology. That’s why we’ve shifted our focus to the end user and are launching our transceiver for masts and data centres this year.’
Facilities are essential
‘A potential customer wants to see how you’re going to scale up. The time and expense required to transfer your entire technology to another factory at that point can be a huge hurdle, so it’s beneficial to be able to make your prototypes at a facility where you can scale up to mass production when the time arrives. This is something we were initially lacking; it was a bottleneck. Now we’re working with Smart Photonics, which can do an initial validation here in Eindhoven and also have plans to produce high volumes.
Apart from anything else, the Brabant ecosystem played a very important role in enabling us to get started. We made our first chip ourselves, in the TU/e’s NanoLab, and we also had access to the university’s measuring facilities, which enabled us to show results even without our own measuring lab. In the coming years, we expect a lot from PhotonDelta , which among other things is intended to ensure that the university and NanoLab can continue to invest in facilities that are also accessible to companies.’
The war for talent
‘If all you can do is make a chip, you’re not going to survive long in integrated photonics. You also need knowledge of design, manufacturing, electronics, and the application. This complexity means we’re constantly looking for highly qualified personnel, whom we try to retain for as long as possible.
The fact that we’re in Brabant also helps in this regard. We have a good talent pool here, and the presence of ASML, Philips, NXP, and FEI makes it easier for us to attract foreign talent. If things don’t work out for them at our company, there are plenty of other options and they don’t have to move straight away. Our company is not likely to leave the area either, because all our knowledge is here. We currently have around 65 people in Brabant; in five years’ time, I expect we will have grown to 200 to 300 employees here. The field of photonics has enormous potential, and if we’re successful, much of this technology will soon come from the Netherlands.’
There were no photonics companies, so I started my own
‘I got started in photonics somewhat by chance. When I was a student at the University of Twente in Enschede, I worked for a small company that made design software for optical chips. At a certain point, more than half of the employees were let go, and I was among them. I would have preferred to work for a photonics company again, but at that point there wasn’t much happening in the field in the Netherlands. Then, I ended up doing a post-graduate research project on photonics at the TU/e, which at least enabled me to continue working with the subject.
After my PhD, I asked myself, “How is it possible that so little is done with this technology on an industrial scale in the Netherlands?” The push I needed came from Jan-Hein van Twist of the Technology Transfer Office who said, “Go see what you can do.” So that’s when Tim Koene and I got started. Soon after that, we started looking for commercial expertise and found James Regan, who has been our CEO since 2012.’
Before you have a working prototype, you’ll have spent a lot of time and money
‘Integrated photonics is very capital-intensive. Customers want to see that the chip works, but that’s difficult to achieve without financing. Before you have a working prototype, you’ll have spent a heck of a lot of time and money. What’s more, potential investors want to know who your customers are and what their commitment is. That was the chicken and egg situation we were dealing with in the beginning.
All that changed when we visited Google. Through my PhD research, I knew someone at the head office in the US, where we managed to get a half hour for an elevator pitch in 2011. Afterwards, we thought, “Yeah, right. Google as our first customer. We won’t be hearing anything more from them.” But a week later we were surprised to receive an e-mail asking when they could expect our project proposal. In the end, that project never got off the ground, but it did make a huge difference. Thanks to Google’s interest, for example, we were approved for a loan from Bright Move, which enabled us to make our first chips.’
The promise of integrated photonics
Integrated photonic chips use light particles (photons) rather than electrical signals. As a result, they are more accurate, faster, more economical, and more reliable than conventional chips for transmitting large volumes of data and accurately measuring aspects such as temperature, pressure, distance, or displacement. The application possibilities of this technology are endless: from cheaper and more economical data centres to self-driving vehicles, sensors to measure deformations in aircraft wings, and affordable, compact medical scanners.
In order to accelerate the development of this promising technology, BOM has been supporting innovative companies such as EFFECT directly, with knowledge, skills, and capital, for many years. Through innovation projects, we also contribute to the development of an ecosystem that helps new businesses thrive.
One way we do this is through PhotonDelta. In 2018, this platform raised €236 million from the national government, a number of provinces, companies, and knowledge institutions. PhotonDelta seeks to ensure that Dutch pioneers convert their technological lead in integrated photonics into commercial ventures so they can truly develop into world players. The intention is for this to lead to an ecosystem of more than 25 companies by 2026, with a combined turnover of €1 billion and 4,000 jobs.