Lumera to Provide Building Blocks for High Speed All-Optical Networks

Source: Microvision, Inc.

Microvision Launches Subsidiary to Commercialize Groundbreaking Platform Technology for High-Performance Fiber-Optic Components

Bothell, WA. Microvision, Inc. (Nasdaq: MVIS) today announced the formal launch of a subsidiary company, Lumera Corporation (www.lumera.com), that is engaged in the development of high-performance active and passive components for optical networks. The company s superior optical component technology is based on breakthrough work in proprietary electro-optic polymer materials conducted by the company and its research partners at the University of Washington.

Lumera s polymer materials are uniquely engineered at the molecular level to enable active components, such as electro-optic modulators used in fiber-optic transmission, that feature a combination of the fastest switching speeds with the lowest drive voltages and optical losses in the industry. The company is also applying its innovative materials engineering to develop novel waveguide amplifiers, low-loss passive devices, ultra-fast photonic packet switches and a variety of integrated devices featuring both planar (single layer) integration and unique multi-layer structures. The combination of high-bandwidth, low-voltage and integration is a key to enabling the faster data rates, longer transmission distances and lower costs sought after by network systems providers and network operators, as they roll out the new generation of all-optical networks to meet explosive demand for communications bandwidth.

According to industry analysts the market for fiber-optic components is expected to show dramatic growth from $5.5 billion today to nearly $23 billion by 2003 and to $150 billion by 2005.

"There are four predominant themes in the component marketplace right now," said Todd McIntyre, Lumera Vice President for business development. "Faster speed, more integration, smaller size and lower cost. Lumera has a disruptive technology that can deliver substantial gains in all of these areas. The improved signal quality and unique gain features offered by our planned products are also important to the industry s objectives of greater transmission distances and all-optical signal processing."

"While several companies provide optical components today, they re all based on the same basic materials so none of them really has a fundamental advantage," said Microvision s President and CEO, Rick Rutkowski. "Lumera has established a leadership position with a proprietary platform technology that will enable components and systems that are not only superior but are also competitively unique. We believe these advantages place the company in an excellent competitive position."

Prototype devices based on materials developed by Lumera s research team have already achieved record-setting bandwidth (in excess of 100 GHz) and operating voltages (below 1 volt) in demonstrations at commercial and government research labs. Lumera expects to make prototype devices available to customers for testing during 2001 with commercial production scheduled to begin during 2002.

The company will market its unique high performance optical components to optical systems providers who are moving aggressively to gain a competitive edge in the emerging market for 40 gigabit per second (Gbps) transmission over multi-channel (WDM and DWDM) optical networks. Devices currently available in the market are based on older lithium niobate or gallium arsenide materials technology and have difficulty achieving the required data rates without requiring prohibitively high operating voltages. Current materials are also not well suited to higher levels of device integration.

"40 gigabit transmission is quickly becoming the sweet spot in the market," McIntyre added. "10 gigabit systems have been central in establishing the competitive landscape in the systems business over last several years. Having grown tenfold in just two years, the market for 10 gigabit modulators has already surpassed the 2.5 gigabit market. All of the major players are now looking to get a leg up on 40 gigabit systems, and Lumera has the best way to deliver the right combination of performance and cost. We intend to be the first company to successfully commercialize polymer-based electro-optic devices, and we think our leadership in materials will keep us way out in front."

Lumera is completing the first phase of a contract with the U.S. Air Force to support development of a very innovative phased-array antenna system. The materials developed by the company s researchers and partners have also been used to demonstrate ultra-stable tunable oscillators, ultra-fast analog to digital conversion and other powerful effects that are the basic building blocks for all manner of microphotonic signal processors."

"The shift from electronics to photonics is just getting started," offered Lumera s Chairman Bill Owens. "This is a company with lots of opportunities. It s a company that is in the right place, at the right time, with the right technology."

Lumera has obtained an exclusive worldwide license from the University of Washington (UW) to key intellectual property based on the highly publicized developments by UW professors Dr. Larry Dalton and Dr. Bruce Robinson. Dalton and Robinson are widely acknowledged as being world leaders in the development of electro-optic materials development. James Grote, an electrical engineer with the Air Force Research Laboratory at Wright Patterson Air Force Base, says the work of Dalton and his coworkers is a major milestone. No one else in the world has come close to what they have achieved.

The company has also entered into an agreement to sponsor ongoing materials research at the UW under Dr. Dalton s technical leadership. Under the agreement, the university owns an equity position in Lumera and will hold a seat on the company s board of directors.

Lumera will operate independently as a subsidiary of Microvision, with a separate management team reporting to Lumera s own board of directors. The subsidiary company expects to complete a private round of financing during the current quarter. Microvision currently owns more than 75% of Lumera s outstanding stock. Other shareholders include the UW, Dr. Dalton and Dr. Robinson and a small group of founding shareholders including members of Lumera s board of directors.

Microvision will host an Internet presentation and telephone conference call today at 8:00 am PT. The presentation can be accessed via the web at www.vcall.com (enter ticker symbol MVIS). The conference call can be accessed via phone at 913-981-4903 (enter code 552730).

About Microvision: www.mvis.com

Headquartered in Bothell, Wash., Microvision Inc. is the developer of the patented Retinal Scanning Display technology and a world leader in micro miniature optical scanning technology for display and imaging applications. The company s technology has application in a broad range of military, medical, industrial, professional and consumer information products. (Photo: http://www.newscom.com/cgi-bin/prnh/20001030/HSM018LOGO)

Forward-Looking Statements

The information set forth in this release includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by those sections. Certain factors that realistically could cause results to differ materially from those projected in the company s forward-looking statements are set forth in the company s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.

Contact: Matt Nichols, media mattn@mvis.com or Holly Ash, investors hollya@mvis.com, both of Microvision Tel: 425-415-6847 or Randy Balogh of Parker LePla Tel: 206-285-5280 randyb@parkerlepla.com for Microvision