Silicon wafer startup 1366 Technologies said it's teaming up with big Japanese silicon producer Tokuyama for a research and development deal that should boost 1366's sales after it starts mass production.
The agreement will help 1366 gain a large corporate partner who also happens to be headquartered in one of the hottest solar markets now, said Frank van Mierlo, CEO of 1366. The agreement doesn't involve any equity investment in 1366 at this point, though that doesn't mean it won't happen down the road.
1366 opened a 25-MW factory in its hometown of Bedford, Mass., earlier this year, and the success of ramping up that production will be key to gaining access to a $150 million federal loan guarantee to build a 1-GW factory. The startup needs to show that it could mass produce wafers with its novel technology and line up customers in order to start drawing the federal loan, which will cover roughly half the cost of building and outfitting the factory.
Though it opened the factory, it still needs to test and debug the equipment and gradually increase the production rate. That process should be completed around the middle of next year.
The company, founded in 2007 as a spinoff of MIT, has developed equipment it says will reduce the production time, the amount of waste and the cost of making silicon wafers. The company’s manufacturing process is so efficient that its equipment will only need about a quarter of the space of the more conventional machines, van Mierlo told me earlier this year. A 1-GW factory will likely need about 200,000 square feet of space.
Neither 1366 nor Tokuyama is saying much about the agreement, however. Van Mierlo said a lot of the details of "exactly who does what and where" will be worked out in the next 12 months.
"We are engaged. Rings have been exchanged. But we are not married yet," van Mierlo said. "That will come later."
That answer, of course, sparks all sorts of potential scenarios of how this partnership will benefit both companies. It doesn't sound like Tokuyama is in it just to be a silicon supplier. Does it want to get into wafer manufacturing, take a stake in 1366 or even buy the startup? Maybe 1366 won't even make use of the federal loan if the partnership with Tokyuama leads the startup to build its big factory outside of the U.S.
The company would "love to build a plant in the U.S.," van Mierlo said, but he also said he won't rule out locating that factory elsewhere.
As for 1366's exit strategy, the CEO was coy and said half jokingly, "You always disappoint me! Why do you ask about exit? This is not about exit. It's about moving faster and pooling resources and doing things together because you can get more done than doing it alone."