SYDNEY, AUSTRALIA: Global semiconductor developer BluGlass Limited (ASX: BLG) has reached an agreement to acquire its commercial contract manufacturing partner, GaNWorks Foundry Inc. for US$800,000.

Under the agreement, BluGlass will acquire core gallium nitride (GaN) wafer processing equipment and processes from GaNWorks Foundry, completing vertical integration of its Silicon Valley laser fabrication facility (the Fab).

The acquisition includes the purchase of specialty GaN wafer processing equipment for n-side wafer thinning and  laser bar cleave capabilities, both critical and complex processes in BluGlass’ laser manufacturing supply chain.

These processes have previously been outsourced to Silicon Valley based GaNWorks – BluGlass’ only remaining wafer processing contract manufacturer.

In addition to equipment and installation, the transaction includes the transition of an experienced GaN engineer, ensuring complete knowledge and process transfer to BluGlass.

In-sourcing of n-side wafer thinning and laser bar cleave processes will speed development and production cycles of these steps by over 30% and will deliver annualised savings of more than US$400K.

Operationally, vertical integration will further fast-track the Company’s growth strategy, increase laser production capacity, and accelerate advanced technical roadmaps.

Commenting on the strategic acquisition, BluGlass’ CEO Jim Haden said: “Bringing GaNWorks in-house is another incredibly rare opportunity. These processes are critical to our manufacturing supply chain, with the equipment alone costing on the order of US$3 million to purchase new.

Our acquisition of GaNWorks Foundry represents exceptional shareholder value, providing us with the necessary equipment, along with invaluable process, knowledge transfer and hands-on expertise.

As one of just a handful of gallium nitride laser diode manufacturers globally, our acquisition of a specialist GaN contract manufacturer also increases barriers to entry for new players.

“The acquisition represents the final step in our plan to in-source wafer processing, and further accelerates our long-term growth plans within the fast-growing GaN market, forecast to reach US$2.5 billion by 2025. Vertical integration eliminates operational complexity, reduces process variability, and speeds product development.

Dedicated in-house resources will further improve the quality and consistency of our lasers, while also enabling us to execute our strategic vision of becoming the industry’s easiest-to-use laser light, offering product development and manufacturing flexibility.”