Bluglass Limited (ASX:BLG) has developed aproprietary low-temperature process - remote plasma chemical vapour deposition(RPCVD) - for fabricating light emission diode (LED) semi-conductors. Thetechnology has inherent advantages that can increase LED performance (lightoutput), and critically can either replace or complement the incumbenthigher-temperature technology to maximise manufacturing options. Since November2015, BLG and US-based Lumileds – one of the world’s biggest manufacturers of highbrightness (HB) automotive LEDS – have been in an exhaustive collaborationprocess, involving multiple testing of RPCVD semiconductor wafers manufactured atBLG’s facilities in Sydney, and performance testing the RPCVD technology and LEDwafers produced at Lumileds’ own manufacturing facilities in the US.

While the processhas undoubtedly been slower than expected, a critical breakthrough has beenmade. On 19 November 2018 at BLG’s AGM, MD Giles Bourne announced that the twoparties had commenced commercial negotiations. Although the timeframe aroundthese negotiations was not disclosed, we suggest that after three years ofcollaboration and data testing, BLG will be eager to get a quick outcome oneway or the other. Importantly, we note management’s statement that “a keyconsideration for BluGlass in these negotiations is assessing the potentialvalue of extending the company’s exclusive collaboration with Lumileds comparedto the potential value of engaging with others in the LED industry”. Thisindicates to us that management is confident that other, even bigger LED manufacturers(i.e. Osram), could step-in if commercial discussions with Lumileds prove unsuccessful.