VIGO Photonics mutually terminates grant agreement with NCBR for the HyperPIC project under the IPCEI framework

The Management Board of VIGO Photonics S.A. has decided to discontinue the implementation of the project "HyperPIC – Photonic Integrated Circuits for Mid-Infrared Applications" under the existing IPCEI framework, resulting in the termination by mutual consent of the grant agreement concluded with the National Centre for Research and Development (NCBR).

In the assessment of VIGO's Management Board, the level and terms of the granted financial support are, under current business conditions, inadequate given the scale of required expenditure and the high technological and market risks associated with executing such a capital-intensive undertaking. This decision also stems from the Company’s intensive involvement in projects critical to the interests of the Polish defense sector.

The initial assumptions of the HyperPIC project required an equity commitment exceeding PLN 150 million in the research and development (R&D) phase alone, which would have resulted in a long-term tie-up of working capital. To mitigate this risk, VIGO held intensive talks with an international industry partner to establish a joint venture. However, shifts in the global macroeconomic environment and a realignment of investment priorities across the semiconductor industry prevented final agreements from being reached on terms satisfactory to VIGO's shareholders.

Our decision was also influenced by the Company's intensive commitment to strategic projects that are crucial from the perspective of the Polish defense sector's interests and currently represent a key operational priority, says Adam Piotrowski, President of the Management Board of VIGO Photonics S.A.

Photonic integrated circuit (PIC) technology remains one of the pillars of the Company's long-term product strategy. VIGO is not abandoning the development of competencies in this field - R&D activities will continue organically, tailored to current budgetary capabilities and based on alternative, more flexible grant programs, both domestic and EU-funded, emphasizes Adam Piotrowski.

The decision to withdraw from participation in the IPCEI mechanism will not have an adverse impact on the Company's financial standing. Previous expenditures on the development of HyperPIC technology were recognized on an ongoing basis in the profit and loss statement as R&D operating expenses, meaning no significant intangible assets related to this project are carried on the balance sheet. Since the Company did not draw any advances or reimbursements under the awarded funding, the termination of the agreement involves neither a repayment of funds nor the need to recognize impairment write-downs, adds Łukasz Piekarski, Member of the Management Board of VIGO Photonics.

Upon signing the mutual termination agreement with NCBR, the Company also concluded the strategic options review previously announced in the report dated September 20, 2024 (Current Report No. 27/2024).