A glance at recent posts on the Discussion Forum might lead someone to surmise that the decision of POET to join with Sanan in October of 2020 to announce the formation of Super Photonics has been accepted without reservation by all, or at least most, of POET investors like the groom at an arranged wedding who has not peeked under the bride's veil yet to assess whether she is indeed beautiful beyond measure or ugliness personified.

Certainly a perfunctory analysis would lead most POET investors to perceive that the company has obtained the "Brass Ring" that will shine like a light to lead POET into financial success and worldwide corporate recognition as the future shining star in the world of Photonics.

That analysis may very well prove to be prescient to the future for POET Technologies, but I would submit that a more circumspect view of at least an alternative possibility might be justified, if by nothing else than a modicum of caution before we proceed to paint the tiger by our representation of it as merely a "cat".

October 22, 2020, the formal announcement:  POET and Sanan IC Sign Definitive Agreement to Form Joint (globenewswire.com)

The stated goal:  "JV Aims to Disrupt the Data Center Transceiver Market with Superior Economics and Scale"

Wow!  The POET Technologies investor community's excitement over the news was unbounded and anticipation was at a fever pitch after years of waiting for the NDA's to drop!

From the 27 January 2021 PR:

Super Photonics is one of the pieces of a multinational operation that POET has steadfastly pulled together to serve what it anticipates will be a massive market. [https://poet-technologies.com/docs/presentations/2020%20POET%20Annual%20General%20Meeting_FINAL.pdf] The facilities include:

• Singapore: Optical interposer process and design, platform design, supply chain management
• Allentown, Pennsylvania: Optical engine design and product development, device design, supply chain and manufacturing engineering, product management and marketing, and customer technical support for Europe and North America
• Shenzhen, China: Optical engine design and validation, module reference design and applications engineering, customer technical support for China
• Xiamen, China: Optical engine assembly and testing through Super Photonics.

I want to emphasize that phrase: "one of the pieces of a multinational operation".  That would mean that other pieces in other nations are part of the overall puzzle that has become, and hopefully will be, POET Technologies.  

After an exhaustive search on the internet, however, I can't find a single reference that says anything about POET Technologies contemplating the construction of a North American manufacturing plant for its Optical Interposer, Waveguide or any other POET Technologies product. I could almost swear that there were posts on Agoracom's POET Hub in the past indicating that POET was considering a North American manufacturing facility "sometime" in the future.  Guess I was wring, eh?

OK, the Allentown facility is described above, but optical equipment design is not the same as optical equipment manufacture.

Just for the sake of argument let's take a look at the positive and negative of manufacturing in China from the perspective of possible "involvement" of the CCP.

The first article to review would be one from Australia that downplays the possibility of the Chinese Communist Party interfering or otherwise influencing decisions made by companies doing business in China.  Professor Colin Hawes has claimed that Chinese companies are "unjustly" labeled as Communist Party plants:

China's private companies are unjustly labeled as Communist Party plants (theconversation.com)

Hawes quotes Li Zhangzhu with the following:

"What the boss of a private enterprise cares about most is business results. The boss will only pay attention to and support [Chinese Communist Party] building if it helps to promote the growth of the business and increases profits."

Of course, Hawes article was written in 2017 in "The Conversation".

About The Conversation

  Perhaps he might view things differently in 2023, perhaps.

At any rate, a balanced approach to the question of how much is the liklihood of the CCP to interfere in a non government owned company in China should include some opinions at variance to those of Professor Hawes.  That variance of opinion is offered in the links provided below for anyone interested in an opinion at variance to the Professor's:

Starting with one that is highly biased toward the issue of ESG:

ESG and the CCP: Why Investors Should Care about the Chinese Communist Party Incorporated (csis.org)

Now, for those readers who find the hair standing on the back of their heads at the mention of ESG (and for those who don't give a flip regarding ESG as well) there are other voices concerned about possible "interferrence" by CCP into Chinese companies that don't simultaneously wave the flag of ESG:

Politics in the Boardroom: The Role of Chinese Communist Party Committees – The Diplomat

One very interesting paragraph in the article from "The Diplomat" does provide a little focus on the JV in China.  The POET-Sanan Joint Venture came to mind for at least myself when reading this paragraph:

"But the Party Committee has an explicit role even within foreign companies, where its nature has raised debates especially among the community of investors involved in joint ventures (JVs) with state-owned enterprises. Even if Chinese Company Law regulates the establishment of Party units in foreign invested enterprises (both JVs and fully owned) without requiring governance roles for their members, recent trends  in officials’ attitude — which are oriented toward the demand for more power — indicate accelerating interference. That suggests that these positions are not merely symbolic, but rather an eventual source of political pressure around the boardroom."

The counter argument to the above paragraph would, of course be, that the POET-Sanan isn't a JV between POET and a S.O.E.

Flashback to that October 2020 PR:

  "TORONTO and XIAMEN, People's Republic of China, Oct. 22, 2020 (GLOBE NEWSWIRE) -- POET Technologies Inc. (“POET” or the “Company”) (TSX Venture: PTK; OTCQX: POETF), and Xiamen Sanan Integrated Circuit Co. Ltd. (”Sanan IC”), a wholly owned subsidiary of Sanan Optoelectronics Co., Ltd."

If one were to peruse the San'an Optoelectronics "News Center" the he or she wold come across the following news item:

Vice Premier Ma Kai Visits Tianjin San’an - San'an Optoelectronics Co., Ltd. (sanan-e.com)

Of  course, that doesn't prove that there is a "marriage" of the CCP and San'an Optoelectronics Co., Ltd.  It only shows that San'an Optoelectronics is just one of the many Chinese companies that is "chasing the bear".

"Chasing the bear" is better explained in the following article, linked below:

"How the state runs business in China"   How the state runs business in China | China | The Guardian

"For a reliable benchmark about the power of the party in China, you only need to listen to wealthy entrepreneurs hold forth on politics. These otherwise all-powerful CEOs go to abject lengths to praise the party."

 “They act as if they are being chased by a bear,” wrote Zhang Lin, a Beijing political commentator, in response to these comments. “They are powerless to control the bear, so they are competing to outrun each other to escape the animal.”

Reflecting back on where this post started with an article by Professor Colin Hawes, Hawes stated in his article:

"It’s true that if there are more than three party members within any organisation in China, those members have the right to set up a Communist Party branch. This includes employees of private corporations....."

I used bold type to emphasize that last bit of the Hawes quote, Professor Hawes did not see fit to provide that emphasis himself.

So, I guess it boils down to a question of will the POET-Sanan JV have a "party", that is, will it have a Communist Party branch in its own organization.  Then a follow up queston also arises, if there is no Comunist Party branch within the POET-Sanan JV then will the JV be just another one of the many Chinese companies "chasing the bear"?

Drawing a cat to represent a Tiger!  Maybe, maybe not.  You decide.

Okiedo