> Chris Lumb, President and CEO

Mr. Lumb graduated from the University of Waterloo with a Bachelor of Applied Science in Chemical Engineering in 1982. He has been the CEO of Micralyne since 1994. Mr. Lumb has been involved in all aspects of Micralyne's development, including leading its transition from a university-owned not-forprofit to a privately held commercial company, generating long-term revenue growth throughout the company’s history, and delivering profitable net income and return on equity since the company’s inception. He has been responsible for major business development initiatives that have resulted in long-term business relationships in place with market leading customers. Mr. Lumb also served as Chairman of the Board of Directors of CMC Microsystems, and on the Board of Trustees of the National Institute for Nanotechnology. In addition, he is Co-Chair of NanoMEMS Edmonton, a public-private-partnership focused on development of micro- and nano-tech companies in the region. Overall, Mr. Lumb's career has been centered around building long-term commercial success for advanced technologies, and management of technology organizations to ensure they are profitably focused on addressing market needs.

Can you present Micralyne to our readers?

Micralyne is an award winning independent Micro-Electro-Mechanical Systems (MEMS) developer and manufacturer in: • Fabrication and design services • Optical and switching devices • Life Sciences and Microfluidics • Sensors We are based in Edmonton, Alberta, Canada, and we employ about 200 people in a 55,000 sq ft facility that undertakes custom development through to volume manufacturing.

 

Micralyne announced a strong growth in 2008: about 30% in US$. Can you explain this result?

We saw exceptional growth last year, which put us in Yole’s “Top 30” MEMS company rankings. We attribute our growth directly to our focus on doing what it takes to meet our customers’ needs, and our ability to contribute to our customers’ long-term success. Even though our customers range from Fortune 500 members to innovative start-ups, we believe they’re all looking for the same things: a supplier that has a proven track record in development and innovation to support their custom requirements; a supplier that demonstrates creativity, long-term success, and sustainability; and a supplier that continues to support them when market growth occurs. We believe we’re running a marathon, not a sprint, and that our focus on serving customer needs for the long-term is one of the major reasons why we’ve been thriving. Our rich legacy of diverse development activities and proven manufacturing expertise has allowed us to succeed through difficult economies in the past and we are well positioned to support a growing market well into the future.

 

According to you, what are today the market drivers of the MEMS field?

There are many applications that will drive growth of MEMS in the next few years. In addition to the highprofile areas of consumer, mobile, and automotive applications, we also see good growth in optical products, especially as optical fiber networks shift to dynamic controlled elements with MEMS switches. We expect to see continued growth across our other product sectors as well, (for example, seismic sensors, advanced memory storage devices, and microfluidics for biomedical applications and gas flow control), partly because of increased market acceptance on MEMS technology to create product solutions. That being said, the global economy will certainly affect growth and innovation in companies wishing to exploit the benefits of MEMS technology. As many companies are tightening their fiscal budgets, innovation in the world of VC-backed start-ups is slowing down, with exceptions in Biomedical/Life Science applications and certain environmental sensors. Established companies will continue to outsource a lot of their R&D initiatives in MEMS and nanotechnology, as well as continue to secure robust suppliers for their future and ongoing needs.

 

In the MEMS industry, Micralyne is recognized as an “open” foundry. Can you explain to our readers this business model? In this economic context, do you expect some specific changes for this business model? Can you describe them?

Historically, we have taken on diverse development and manufacturing applications with the attitude of “if you can think it, we can build it” which is a very open concept without constraints. We will continue to support these “Fabrication and Development” service opportunities within our business model. Additionally, we are increasing focus on three specific market segments: “Optical Devices & Switching”, “Sensors”, and “Life Sciences & Microfluidics”. In each of these areas, we offer processes and design platforms that our customers can leverage to get their ideas to market faster and cheaper than by doing full custom developments.

 

According to Yole Développement, the MEMS fabs are currently thinking about the transfer to 8” production line. What is your feeling on this technological trend? Do you think that MEMS foundries have to organize similar change in their fab? Do you think the trend to 8” fab will create an overcapacity of production on the MEMS market?

8” production is inevitable for some applications. As well, the higher non-recurring-engineering costs associated with 8” will mean that many applications will continue to be economically served by 6” solutions. The same trends that occurred within the semiconductor business will also occur within MEMS. 8” growth will occur where there are high volume demands for products. We have adopted a phased approach to address this. While our in-house 6” wafer facility will still fully serve our customers, we have established a strategic partnership with SVTC of San Jose to transfer designs and processes onto 8" wafers, as customer demand necessitates. The benefit of our partnership is that process development occurs quickly and cheaply using 6” technology at our facility. This helps our customers’ get their products to market quickly. We then have a strong path to address volume growth as market traction matures. Given the status of the global economy, we think there is over-capacity and under-utilization within the MEMS fab industry. However, we are already seeing signs of increasing demand and new growth opportunities. Some of this is through the outsourcing of in-house activities, some is through the consolidation of customers’ activities at a single provider such as Micralyne, some is driven by financial concerns over the stability of other suppliers, and then of course there are all of the new development opportunities.

 

At the same time, we saw different business developments, in Taiwan for the MEMS foundries. According to you, what is the added-value of Taiwan area? Can you comment this phenomenon?

Taiwan is geared toward addressing ultrahigh- volume requirements. With a single process/ single product requirement, they are able to increase output and reduce costs. In addition, we believe that we offer stronger development capabilities than Taiwanese suppliers.

 

What can Yole Développement wish you for 2009? Do you have new projects?

Can Yole grant us a crystal ball? 2009 is going to have its twists and turns and the uncertainty in the capital market is still causing large volatility within the industry. We think stability in the financial markets and a return to “normal” practice will help our customers forecast demand with more clarity and certainty, which will allow everyone to plan for the future. We are very fortunate amongst the world of MEMS service providers as we already have a wellestablished customer base. We also have a supportive fiscal environment in Canada and Alberta, which enables us to accelerate our business and will allow us to continue to be a strong player for years to come. We are leveraging these programs to step up some of our new “platform” initiatives in the fields of optical switch platforms and to accelerate advanced Wafer Level Packaging technologies for sensors.