Nordic Semiconductor ASA (NOD) Earnings Call Transcript & Summary

Good afternoon you guys. Welcome to Nordic Semiconductor's Capital Markets Day for 2021. My name is Kine-Elena Reigstad. I work as a Finance Manager in Nordic Semiconductor, and it is my honor to welcome you here today. So we have people joining from the web and we also have a lot of people physically here with us at Oslo Konserthus. For those of you who are here, a bit of housekeeping rules. If there is a fire, the fire alarm will go off and you will exit the same way you entered the building, and we got that under control. So we are very pleased to have you back. It's been 2 years since our last Capital Markets Day back in October 2019. We see some familiar faces, but we also have a lot of new faces here today, which is exciting. I think I talk on behalf of all Nordicers when I say that the past 2 years has been an exciting journey, but we are even more excited for the journey ahead. That being said, this presentation do include a lot of forward-looking statements. So careful, we do not control the future, so invest at your own risk. And if we would know the future 100%, we would all be billionaires. So let's dive into the agenda. So we will start with Svenn-Tore Larsen, our CEO. He will give you a proper introduction to Nordic Semiconductor, a globally leading IoT enabler. Then Geir will take over and cover a bit of the customer journey and verticals in addition to some thoughts on the current markets. Then our EVP of Product Management, Kjetil Holstad; and our CTO, Svein-Egil Nielsen, will give a presentation on innovating for IoT. I think after that, we've earned a break to stretch our legs and really take in the newly acquired knowledge. So after a 10-minute break, we will come back Katarina Finneng, our EVP of People & Communications will give a presentation on people and sustainability. Then our CFO, Pal Elstad, will take us through the financials. Svenn-Tore Larsen will give a short wrap-up and summary before we will open the floor for a Q&A. I am not going to drag this out any longer. The first speaker is a known face for most of you in here, our brilliant CEO, Svenn-Tore Larsen, who has been with Nordic and led Nordic since 2002. The stage is yours, Svenn-Tore.

Thanks, Kine. I don't work in Nordic, I live Nordic. It's not only me, I think most of the people in the company really love the company, and Katarina will go into depth of why that is. So I will start today with an overview before leaving the floor to the rest of the management to take you through the market strategy. I mean, we do -- going through the product technology map with Svein-Egil and Kjetil; organization and people with Katarina; and finally, Pal will do the financials. I mean, we are a globally leading IoT enabler. We've been speaking IoT before people even knew what it was. We are working to provide intelligent ultra-low power wireless connectivity for all things out there. And keep that in mind, I think you're going to see more and more things connected with Nordic technology in years to come. We have a broad portfolio of product and solution, combining low-power high-performance ICs, featured embedded software and a range of development tools. And our development platform is unified across long, short, and also medium-range applications. We've been investing through the last decades, a lot into developer zone, where our customers can come in and get answers from other customers. What does it mean for customer? Short term to develop their products, shorter to the market, more value into our customers' pocket. That's what it's all about for Nordic. We want to give value-add to our customers. As you know, we've grown rapidly over the years. And we are approximately 1,200 people as of today. 70% of these people are developing new solutions every day. 70% is great. I mean, coming into the office now, 7 out of 10 are R&D engineers or actually 8 out of 11 almost. It's so fantastic. And I happen to walk into the office from the 12th floor and I meet them every day, and it's such a nice pleasure to have a couple of minutes to chat with them. They are as enthusiastic guys that present today. 1,200 super enthusiastic people is nice to lead. I said, we were globally leading IoT enabler. This means that we serve customers, our end users in a very, very large and growing market. I mean, if you look at something called IoT analytics, that outlined the growth of this trend of number of connected IoT, I say IoT devices everywhere, IoT analytics, a little bit more specific. But I said, number of connected IoT devices has shown tripling from 2015 to 2020, and almost the same number again until 2025. If you look at the total volume or value of this, the total space of IoT is nearing $1 trillion. That's some analytics, per se. I mean, if you look at all the numbers from different that -- differ, but if you take a common factor, it's huge. And Nordic is in the middle of this. We are a leading position in this space. We believe there is three major interlink trends driving this market: it's industry IoT; it's sustainability; and platform ecosystems. Industrial IoT is working to bridge the gap between the physical world and the digital world. If you look at the slide here is basically showing that all the activity that happens on the right-hand side is the building up huge platforms. 5G, somebody heard about 5G, is exploding. Everybody basically expand 5G. Nordics can take advantage of that with our some of our key products, but we also show a new product today that's going to take advantage of the 5G deployment. We are using and learning this data that we collect with sensors and Nordic radio gifts to the cloud, that's the use case everywhere. And bringing the physical data to the cloud, it's Nordic's job. We can and know how to do this. And if you look at -- we have seen a huge growth around, I would say, most applications, but we see the strongest interest for IoT now is within industrial applications, which we really embrace. Good thing with industrial applications is you need to design it once and you're in there for a long time. And you will hear much more from -- about this from Geir and Kjetil later on today. I said there was three. The second one is the global drive for more sustainable economy across all industries. We want to support, we want to contribute to get a good environment. We want our next generation and the generation after to have a good world to take over. And I'm pretty sure that disruptive IoT projects will contribute immensely to obtain the UN Sustainability Development Goals, and we shall help on that way. And I'm sure, within a few years, you will find Nordic that fits -- Nordic application that fit into each and every one of the 17 goals. Over here, we just put some few products out there. And Katarina will speak even more about our ESG commitment a little bit later. And we think we go well beyond the footprint of our own production and organization. We, obviously, do whatever we can do in our own house. But I think we're going to help the rest of the globe to clean up in that house. My favorite slide. Have you seen this before? Those who follow us, have. It's really the ecosystems that are [indiscernible] major growth driver. We have been working with the guys in the middle, the ones that provide the platforms. We form commercial relationships with these guys. We're into their hubs. And if you look at these companies, I think 5 of the 6 most valuable companies today are platform companies, and they keep growing. They keep investing. Why do they invest? Because they see there is something going to hook up to this system. We have been spending more than 10 years building a strong, strong position in the broad market. We have as a fresh out of this quarter, we just showed that we 42% market share on Bluetooth Low Energy design wins. We have almost been as strong building relationship to Tier 1 customers. And that's why you sees -- partly why you've seen our backlogs ramping so rapidly, is because these companies are now starting to enable or bringing the hubs and the products to the market. And Geir will discuss even more about this in his presentation. So this is the strategic pillars of Nordic. How are we working to secure our position in a growth environment and benefit from our strengths and advantages? Our market efforts are [indiscernible] leading connectivity technology with the low high performance at the right cost. It should bring value to the customer to use our parts. And obviously, we like to excite everyone we meet. I think that comes to any person walking on the street. We want to excite the earnings or revenue. We want to excite developers. So what we need to do is make sure our products and solutions are scalable across technology, market and customers. And we have to ensure we combine the broad market and Tier 1 customer engagement models. We want to be in the forefront of innovation. These guys over here, Svein-Egil and Kjetil, will show you that we really mean that we're going to be in the forefront. I mean, what we did with our proprietary and with our Bluetooth, this is what we're going to do with seller. And we extended our investment into Wi-Fi. And today, if you listened, I announced that we are introducing DECT, the old standards coming back. Again, driven by Nordic, it was a disruptive moment. It's been dead for a long time, and we took advantage of this moment. We -- those of you who were here in the Capital Markets Day in 2019 saw this slide. And I said, a strong growth story, just about to see the effect of emerging IoT market. That was the exact words I used 2 years ago. Anyone remember? This is how it looks today. Am I right? Yes, it really showed during this 2 years period that we have more than doubled, and we believe the continued spread of IoT across new markets application will offer the opportunity, continue this strong growth. And if you look at my next slide. This is how Bluetooth SIG reflects the market and the outlook. They expect a tripling of annual shipment of single-mode Bluetooth Low Energy, Bluetooth Low Energy is what it's called, from '21 to '25. We are a clear leader today in Bluetooth Low Energy with more than 40% share. We like to be in that position. This is not built on a broad -- this is basically built on a broad product portfolio of multi-protocol system ownerships. We talked very early about Bluetooth Low Energy, that was where we started. But if you look at all the protocols we've been adding on, why are we adding on all this protocol? Because the ecosystem is out there, and we are basically fitting straight into the ecosystem independent of what kind of protocol because Nordic is reporting it. And we are confident that we will play as leading role going forward as we have done up till now. I'm not going to show you the slide for the next Capital Markets Day yet because we need to wait for 2 years. We're looking forward to do that in 2023. If you just look at our backlog, I mean, it's huge. And given the supply chain changes, I'm sure you all are aware of it, the development might give an even more precise picture of how the current market expanded. And I will say that if you listen to Geir, even he's going to discuss the order backlog and how we've been handling it, how we've been able to support our customer through an extremely challenging time. We will continue to do that, and I'll come back and comment on that when we talk about outlook. I mean, this backlog reflects orders from Tier 1, but also a very, very strong broad market demand. Remember the figure when we said you have the platform in the middle and you have all the gadgets around, it's no point having a platform unless you have gadgets. And there's no point having gadgets unless the platform is there. So we have to support both Tier 1s and the broad market. So if you short it down, we see a strong demand from all types of customers and verticals. And unfortunately, I'm very sorry and I would like to apologize to some of our customers, we are not getting all you require of volumes. We work as hard as possible to correct that. And if you look, sitting there, having product going to production, not getting product from Nordic today, we work and do distribution of products, try to align to ensure no one got line stops. That's really the work Geir and his team is doing every day. We want to avoid any line stop. But if you look further ahead, see the investment programs that have been launched across the semiconductor industry, I consider this as a road band. This will ease up, but we don't know when. But we know they're working to extend the capacity. And when that time comes, we still have a huge amount of design wins we're going to ship to. So we showed you that we would reach $1 billion, 2 years ago, in 2024. After seeing our customer base growing significantly stronger than expected and after working extremely hard with our vendors, we are really happy to announce that we have wafer supplies to meet this target already in 2023. So basically, we have got commit for wafers to be able to grow to reach the $1 billion already in 2023. So what we want to do now is to outline a little bit what kind of opportunity and why are you investing into this innovation. I mean, currently, most of our business are Bluetooth Low Energy. We've been investing in hardware and software [indiscernible] since 2016. And what we really do is that we are broadening technology expansion by cellular IoT, Wi-Fi, power management and other adjacent components. So we make our product line wider. But we also see that we are widening our verticals. So basically, we are growing in multiple directions. I can tell you all, it's a nice place to be. You can use Bluetooth for more than consumer. You can use Bluetooth for more than industrial. You can Bluetooth -- you basically use it everywhere. So what do Nordic do when we're going to invest and not growing blindly, but we have sound investment criteria for our expansions. The market we move into needs to add size and add growth. Where we have invested $420 million in the last years in R&D., obviously, it has to lead to growth. The market we need in -- move in needs to add size and growth. That's number one, the need to offer opportunity to establish good margin business. We need to understand that there is room there for Nordic to take market share. We won't go straight in where we have the toughest competition. We look for opportunities where we can basically have the advantage of being who we are. And obviously, it has to be feasible, both from a technical and financial viewpoint. And important, in number three, we have to ensure we meet the timeline for our customers. As I said, $420 million in R&D., and we continue to invest. As you saw from our Q3 presentation, we've grown significant through this year. We added in a Wi-Fi team. We continue to invest. I mean, if you look at this slide, our revenue in the last 12 months, 97% on Bluetooth. If you look at the investment we did on R&D resources we used these last 3 months, 40% were towards new technology. We continue develop technology, which we unfortunately now been able to speak to our customers to say what is the next generation of technology you demand. When we started off in Nordic, we had to sort of find this out ourselves. But now we have so direct contact to our customers that we can get that information and we can act upon it. Obviously, since we are investing so much, we need to see there is a market because that's part of our response to invest. And we believe that in short-range market today, approximately $4 billion. If you look forward with all the technology, Wi-Fi, cellular IoT and services you see has a huge expansion. And we will capture more space on the circuit board with power management and other adjacent projects also. So Nordic is becoming, I would say, a connectivity company with more adjacent component. We're going to take more of the total spending of our customer. Simultaneously, we make it cheaper for the customer to get a good solution. And I don't know anyone they don't want more for less. That's what we're working to achieve. Similarly, in Tier 2, we basically go even more into this. We have really high financial ambitions. I mean, you don't do such investments with those who have expectations of return. And I showed you earlier that we should be $1 in '23. I expect that we are able to grow maybe doubling without -- within the timeframe '23 to '26. We're going to continue to have strong growth in Bluetooth. We're going to accelerate traction in cellular IoT, and we will see early reward in Wi-Fi. And gradually, on top of that, we're going to have revenue contribution from power management and other adjacent products and technology. And given the long-term nature of our innovation, we don't see us stopping here or there. We'll continue to innovate to expand our growth journey through both this and the next decade. Nordic is here to become a large semiconductor company. So summing up, we are a global leading IoT enabler. We've seen strong demand and increased order backlog that offers us a solid platform for continued revenue growth. Our market is supported by very strong trends, you will agree on that: industrial; sustainability; and other platform ecosystems. We are a market leader in short-range. We are getting new adjacent technologies in place. And by migrating up to value and into services, we are opening a new revenue stream for Nordic. So I will leave you a bit repetition. We are going to reach a $1 billion revenue target ahead of time. We're going to more than double the revenue in the 3 years from now through 2026. So that was my introduction. All the good guys in the management team will take over and really show how we get where I want us to be get. Thank you.

Thank you, Svenn-Tore. So we will continue with our EVP of Sales & Marketing, Geir Langeland. He's actually been with Nordic for a longer time than Svenn-Tore. He joined Nordic back in 1999, and he has almost 3 decades of experience from the global semiconductor company -- not company, but industry. And I think, Geir, you are probably one of the sportiest persons in the management team as well. You'll beat me on the treadmill any day. So Geir, take the stage.

Thank you. Well, what an interesting, right, it's been to be with Nordic and see all the changes happening in the company and the growth with great customers. So thanks for the intro. Thank you to all the viewers online and in the room. Let me take you back to our last Capital Markets Day. We took you through the customer journey and concluded that the customer is at the center of everything we do. These insights about Nordic come from customer research and feedback as well as experience. We truly believe that this DNA we have at Nordic has never been more important than in the last 2 years. During the pandemic, we have supported our customers virtually through online tools such as our DevZone portal and old-fashioned telephone rather than physically on-site. It's also been a challenging time due to the scarcity of material. And the experience has brought us a lot closer to our long-term customers and new customers alike, and it's really led to a rapid growth. We've seen revenue more than double over the last 2 years with an accelerating growth from '20 through '21. This, obviously, reflects strong demand across the short-range markets, but primarily, ramp-up projects we and our customers have had in the pipeline for a long time. And these are also projects that happen to be within the market trends that Svenn-Tore mentioned earlier, across both the industrial IoT and the platform ecosystems. As was previously mentioned, the growth comes from customer projects that we worked on for several years and with Nordic products where features and maturity go hand-in-hand. COVID-19 has had multiple effects on our business. It's been a catalyst for the widespread uptake of a range of new technologies, which were considered a novelty a couple of years back. Over the last 2 years, we've seen a heavy ramp in applications connected to gaming, digital healthcare, working from home, and very importantly, virtual reality and augmented reality as well as shipments and tracking. On the subject of virtual reality, one shining example of attaining acceptance can be seen with Facebook with its Oculus 2 headset. You might have seen Facebook announcing a new project to build a 10,000-strong team here in Europe to build its part of the metaverse to offer collaboration and virtual experiences beyond gaming. Well, the gateway into that metaverse happens to be a VR headset, and we're really proud that the Oculus team chose Nordic when building the latest VR system, the Oculus Quest 2. The Oculus Quest 2 VR system is untethered and cable-free. It uses 3 Nordic nRF52 devices to power the critical interface between the hand controllers and the headset through a low latency wireless nRF52 link. The headset deploys a number of new innovative solutions and is the first VR headset, which is basically manufactured on a grand scale. This unique system has gained more and more traction with its great technology and titles, and it's led to a growth in the number of users across demographics and subsequent increase in sales. Now let's talk about ecosystems. If I may take you back to our Capital Markets Day presentation 2 years ago, we announced that we were strengthening the ties with Tier 1 customers, that Nordic was targeting platforms and ecosystems, driven by the short-range portfolio and product volumes. We did claim that there was a symbiosis between our wide customer base and Tier 1 hubs and the ways our customers could connect into ecosystems. And we can state that Nordic is proving to be an attractive key partner for the global leaders as well as the broad market players. So what do we mean by this? Well, we connect platform ecosystems by virtue of our technology by making sound technology choices and investing in application software support that targets Tier 1 ecosystems. Because of our broad and extensive customer base, we're at the center of these ecosystems. Some examples are shown here with the core technology that we have today, such as Bluetooth, Thread and cellular IoT, and in the future, Wi-Fi, coupled with application software support such as software development kit for Matter, Amazon Sidewalk, the Apple HomeKit and the Apple Find My system (sic) [ Find My network ]. We basically accelerate development. The Tier 1s are then providing the ecosystems, which partners can connect into. So what do we mean by this? Well, take Matter as an example. Nordic has been deeply involved in the development of this new smart home standard coming out of the connectivity standards alliance. The specification is not released to the public, but we already have customers with products in the market ready to update and support Matter when the ecosystem becomes available. What's great about Matter is that finally, there is a common standard for smart home that the three big ecosystem providers, Google, Amazon and Apple, will support, making it possible for device manufacturers like LEEDARSON and Eve to make one product that is compatible across all three platforms. So whether you, as a consumer, prefer Google, Alexa or Siri in your home, you can be sure that the Matter light bulb or thermostat or any other Matter certified equipment will work with any of them. Nordic is also supporting the rollout of Amazon Sidewalk. As an exciting aspect of sidewalk that sets it aside from Matter or any other smart home ecosystem is that it goes beyond the smart home by basically supporting devices physically outside your home, but also by supporting other device categories like asset trackers and healthcare applications that we normally couldn't target. This is very attractive to a broad customer base with applications in all kinds of different verticals. For example, applications that want to or need to connect to the cloud through an Echo or a ring device from Amazon Ring. But let's listen to what the Amazon Sidewalk team has to say instead of taking it from me. [Presentation]

So this is a great example of an ecosystem where Nordic offers value with our customer base that can then connect into the cloud or any other system by using the Tier 1 ecosystems. Another ecosystem where we've made some significant investments, if we're ready to move on, yes, is Apple Find My network, which enables customers and consumers to find their misplaced or lost items like keys, earbuds, bikes, et cetera. Again, this is a very attractive technology for the broad range of applications that our portfolio of customers are developing, either as a new product or as an add-on to an existing product. Some public examples are the Chipolo ONE Spot tracker and the Belkin Soundform Freedom Wireless Earbuds that are public. Both of these applications were developed and they were using the Nordic Find My network software development kit as a starting point for implementing the solution. I think I'm correct in saying that working with and listening to our customers has yielded some good results. We're a clear market leader in this growth market, both in the number of designs and unit volumes. We regularly show up our market share in terms of design wins, which has remained steady at above 40%. And the most recent figures from industry analyst, Omdia, indicate that we are roughly at the same level measured in unit market share. This goes to show our strong position, which we're working to develop further every day. Just over the past quarter, we have seen customers launch a variety of new products. This quarter, we have again announced customers that sort of fits nicely into our growth strategy. We have SiBionics in disease monitoring. We have LEEDARSON with their smart light bulb, which connects into the gateways. We had three cellular products falling into different categories. We have the tracking application with Link Tracker. We have an industrial IoT from Metasphere, which is basically a sewer monitoring sensor that's dropped into the sewers and pipelines to monitor whatever goes through that. And finally, there's a power controller connected to the cloud that could basically lower the power consumption on remote sensing applications. If you look at the composition of our customers, we're proud to announce that we've managed to retain our DNA. I think in 2019, we spoke about how important it is for us to basically keep some kind of a balance. Over the last 12 months, we've seen a rapid growth. And to us, at Nordic, it's been extremely important to see that our customer base is growing with revenue and also that the value per customer is growing. So for us, it's important to have a balanced growth between the top 10 players and the long tail. And then we get to the next one, which is sort of this increase in revenue obviously comes with an increase in orders. So during the onset of the pandemic, we saw that forecast from our customers rose sharply due to an increase in demand. What followed was an influx of new orders. There was a little bit of panic and psychology in the market. And it soon became clear that we had to increase our lead times to 52 weeks. This then resulted in another influx of orders further out where our customers are growing, right? They have 12-month plans, so they're growing. And so the overall backlog then started increasing. Now we are confident that the current backlog is balanced. It shows a healthy relationship between incoming and outgoing orders and is in line with our projections. Demand is still very strong and demand still outstrips supply, and it will continue to do so for the foreseeable future. But what is good is that our customers all report strong forecast for 2022. We see good incremental growth, obviously, with existing customers. And we're also tracking customers with new projects, which are ramping up. And this then leads us into the next topic, managing the market under a constrained supply. Our allocation is not based just on agreements with customers, but it's also based on what we see as a moral obligation to support them. Some of the principles underpinning our decisions during the supply strain include fielding high-volume customers, who show long-term commitments to Nordic in return. We're seeding and feeding as many as possible of the new exciting high-potential new projects as we can. And likewise, and it shouldn't come as a surprise, we have to cap allocation towards low-margin, low-growth products that have substitutes or second sources or are easily substitutable. We are also adjusting our resale prices from the 1st of December 2021 to reflect increases in wafer costs, assembly test and shipping from our subcontractors. Two years ago, we pointed out some application areas where we could see disruptive growth. We mentioned the industrial IoT space where we an influx in industrial applications. And there's been a change during the last 24 months where we've seen the smart home market with great collaboration between players leading to a promise of equipment, which is interoperable. We're coming out of a pandemic with a need and acceptance of advanced logistics, and tracking has been accelerated. Smart lighting is still there, but maybe with a rebound waiting to happen in the post-COVID construction period. And last, but not least, we mentioned drug delivery and disease monitoring. We would like to highlight one of them here today, which holds a special importance to us. Enter, the new Dexcom G7. So this is basically one of the fastest-growing markets in healthcare, which is diabetes management. Dexcom being the leader in transforming diabetes care and management by providing real-time continuous glucose mirroring, CGM, as opposed to the traditional strip meters that most customers would use. Dexcom CGM has improved more than 1 million lives as of June 2021. The G7 uses an nRF52 device to interface to smartphones or dedicated screens where users can then take their glucose meter readings. There is an NHS report in the U.K. that stipulates that treating diabetes costs more than any other health condition. It amounts to 13% of the total cost of prescriptions across the U.K. With a proper CGM, you can control medicines and very importantly, also limit the secondary effects of a glucose level, which is not where it should be. So moving on to the cellular IoT architecture. Our cellular IoT revenue is beginning to ramp. When you analyze the Nordic cellular IoT revenue last 12 months, you see a pattern with steady growth, from $4 million a year ago to about $14 million last 12 months end of Q3 '21. The growth is spread across multiple customers ramping up projects over time. Many of the projects use GPS capabilities inside the nRF9160, and we see that a lot of the revenue comes from tracking and logistics or tracking assets, such as pets or other valuable objects. Furthermore, as we've shown, there are various sensor applications in industrial as well as environmental applications that are driving this revenue. We're shipping into hundreds of unique customers and their projects across a variety of applications. The Nordic cellular IoT solution has found a home in industrial applications where it has great value. What we see, like Svenn-Tore pointed out, is that the industrial customers have a longer cycle. The design and selection process is longer, it's typically years and not months. And in cellular projects, you have to build up certification libraries for your products and you have to make ecosystems internally. So it takes longer time. The flip side, of course, which is positive, is that you do get very long product life cycles, typically 10 to 15 years, whereas a consumer project could be anything from 1 to 3 years. One example that you should think of is mirroring. So once you're in a mirror, they continue to ship that for more than a decade. We're also glad to report that the number of volume customers has increased sixfold over the last year alone. So we're on a curve, which we think is really good. Moving forward, we remain confident that cellular IoT will be a driver for the digitalization of society and that the technologies we have invested in will open up new markets for both machine-to-machine and machine-to-people application. Our focus areas in CAT-M and narrowband-Iot technologies, are expected to be among the most rapidly growing cellular technologies. And we have an industry-leading offering in terms of power consumption, small form factor, software and support. We will also, like Svenn-Tore, pointed out, continue to invest and expand our product and services portfolio going ahead. We're looking at technologies, which are adjacent to what we're already making, and Wi-Fi is a good example. The customer base is typically very similar. So I can share the same sales team selling into a Wi-Fi solution as I could in nRF52 as with the cellular offering. We can leverage our support and DevZone forum, so it's very easily scalable across technology. On a different scale, you'll find cloud services and power management, which both complement our current connectivity portfolio, and they're there, right? There's something that our customers need, it's like bread and butter. So we sell that as well. And I think we see that the cloud connectivity is essential and it's an extremely good fit for virtually all cellular IoT applications. And it solidifies our share of the customer board space and spending with some scalability. So to sum up, we have strong growth built on years of technology, software development and very importantly, long-term customer relationships. We're a proven and attractive partner like we've shown for Tier 1s and broad market players. There are strong megatrends supporting our continued growth. There are several high-volume markets gaining traction as we speak and as we've shown you over the last 2 years. And we are expanding our opportunity pipeline with investments into adjacent technologies, products and people. Thank you.

Thank you, Geir. That was very interesting. We got a very tight schedule, so we're just going to continue to our next dynamic duo. We've got our EVP of Product Management, Kjetil Holstad; and our CTO or EVP of R&D & Sales, Svein-Egil Nielsen. Kjetil joined Nordic a long time ago as well, and he's been at the executive management team since 2019. And he as well has more than 2 decades of experience within the global semiconductor industry. Svein-Egil joined Nordic in 2001 as the Head of Sales & Marketing. And in 2006, he became the Director of R&D, and he's been our CTO since 2013, I believe. So with that, I'll hand it over to you guys. Take it away.

Thank you, Kine. So Kjetil is going to share the presentation because we figured out that there's so many things that we work on together that it makes sense to do it together. We may look the same. And if you get confused by who's who, Kjetil is the one with the beard. All right. So we have seen this slide before, and we like to talk about the journey we've been on for the last 20 years. The 20 years of history from when we've been a company that has focused on making ICs for a mass market worldwide. We started 20 years ago, making 2.4 gigahertz proprietary devices. And we became -- with that device family, we became the de facto standard, if you can call it that, for wireless keyboard in mice and in game pads. And as strange is my sound, many of these components are still in production today. In 2006, we joined forces with Nokia and started developing a new interoperable standard for low-power connectivity. That data become Bluetooth Low Energy, and that's something that we started to see revenue in 2010 or 2011 timeframe. It also goes to show that some of these things take a long time from a standards development point of view. So building on the good position we had in Bluetooth Low Energy, which I guess you already heard about plenty of times, we've introduced additional technologies such as Zigbee, Thread, Matter. And of course, we've done significant investments in cellar IoT. So it all builds upon the story of what we have been doing. The core of what we do is wireless connectivity. That's the core of how we approach the business. And not only providing just the ICs themselves or the modules, we're actually providing the solutions all the way to what the customer needs. That means that we have to provide protocol stacks, which is very comprehensive software development tasks. We develop SDK level code, example code and so forth, and tie it all together with very advanced development tools, tools, I think, that's better than anyone else. And in the endgame of that is, of course, to allow the customers to focus on making their products and not all the other things. We will take care of that, customer can focus on bringing value-add in that space. If you think about the wireless technology, as I said, we started off with proprietary 2.4 gigahertz technology. But today, we support a range of wireless connectivities, all the way from Bluetooth to LTE. And now, as with the latest introduction this year, of course, Wi-Fi. And with the Bluetooth, the Wi-Fi, the LTE, we sort of think about that as the whole trinity of wireless connectivity. We also support everything in that space. But those are the core technologies that, in a way, it dominates the space right now. And we have a foot in all these 3 technologies and adjacent technologies as well, and I think it goes to show the platform of technologies we support. So I guess, you know that we, here at Nordic, is a very proud bunch. We love generating revenue, winning customers. But of course, we also love winning awards, and that's something that makes us very happy. And every year, we bring home a long list of awards in different spaces and categories. But the one that really sticks out, especially to me, is the awards that we've been nominated and won from the Global Semiconductor Association. So the Global Semiconductor Association is our association, industry association. And I think about the GSA awards as the world championship of semiconductors. This is not a specific product or technology thing, this is the company that gets judged, right? And we get judged by our peers. And also [indiscernible] we will vote in these categories as well and so does the other guys. They vote for who they think is great. And as you've been following, as you know that the first prize we won in 2015, which was a regional prize. And then, subsequently, we did 3 years where we have won the Most Respected Emerging Public Semiconductor Company Award. It's a big deal, right? And last year, we were nominated for two more prizes. We didn't reach it all the way up. I think we all believe that they thought we got too many prizes already, so this wasn't our time, but we will be back at the GSA, I think. The other thing that I think is from an award point of view, I'm very happy with the awards we have got for the nRF91 series device. We decided to make that device as a groundbreaking device that transformed and thought differently about cellular IoT. I think if you look at the awards themselves, you'll see that, that is recognized by those giving us award that we came out with a product that was very different than what other people had done before, from a usability point of view and certainly from a power consumption point of view, and that's recognized in a number of these prizes. With that, let's bring on Kjetil, who'll start to talk more about the right products in the right markets.

Thank you, Svein-Egil. So over the next couple of minutes, we're going to spend talking about the right products in right markets because fundamentally, that's what this is all about, right? Geir has talked about all our customers, all the markets and applications we're in. And these customers and markets, this requires high-quality product with the right specification coming at the right time, and that is what we do. So that's why this section is called this, right product for right markets. The Internet of Things has been a concept that has been around for a long, long time. It's really now firstly becoming a thing and can be found everywhere. It's driven by, as Svenn-Tore pointed out, these mega drivers with sustainability, platform ecosystems and industrial IoT. But these are obviously complemented by smaller underlying trends, some of which Geir talked about in his presentation. And if you look at all of this. This is really unlocked by the technology advancements and the solution that Nordic and our partners bring to the market. This is reflected in an evolving landscape you can see in growing end user markets. I showed this to the left at the previous Capital Markets Day, where we showed that for our short-range markets, we had an opportunity that was roughly around 1.3 billion units. Since then, we have seen that the market, obviously, has grown. Now it's approximately 2 billion units. And we still say it's dominated by large markets like HID devices, wearables and remote controls, continue to make this large share. But we see that other areas like smart home, building automation, consumer health, disease monitoring and some of the applications to guide [indiscernible] is growing in relative importance. There's, obviously, here new markets that we, in Nordic, closely monitor to see what they need and how they develop. We know that all these different applications and our customer base require us to do different product qualities. And this leaves ample room for us to both innovate and differentiate to grow. In other words, again, making sure we have the right products for the right markets. I've exemplified a little bit about what we have done here in the short-range landscape. To the left, you have our entry-level nRF52805 device. And to the right, you have our flagship nRF5340. Since introducing the first nRF52 back in 2015, we have now a broad portfolio covering all kinds of applications. The differences in terms of processing capacity, memory, security features, connectivity standards that we support is very, very broad, but so is also the complexity of the application we support at our customers. Each of these SoCs are targeted to support different things. So basically, there is not one product that you go and do what Nordic has done over the last couple of years, you really need a lineup and a span of capabilities. Back in the Capital Markets Day, 2 years ago, I also told you that the nRF52 family was just starting and have a few years of growth ahead. And the development so far proves us right. Because if you look at this graph showing the revenue development of nRF51 series and nRF52 series since launch, we can explain the significantly stronger growth for the nRF52 series of that breadth we see and depth of the product portfolio where we cover a full range of applications from simple cost constraints to the most complex IoT application you can imagine today. Throughout these years, we have continuously improved, both on the hardware and on the software side, to add value, obviously, preserving our average sales price and our margins. And as Geir talked a lot about, we believe that this portfolio of active customer projects that we have has a lot of room for further growth. Taking also the resilience we see of nRF51, we are very excited to see how the graph will continue for the nRF52, not only for the years to come, but for the next decade. Geir talked a little bit about our market share in Bluetooth and how that has actually grown to more than 40% in terms of units. But we, in the same period, continue to be the market leader in terms of number of designs with more than 40% market share. This, obviously, comes both through the expansion we have done on the product side, but also the expansion in terms of our customer base and our growth. The value per design over this year has also grown seeing that our unit share has gone up. It's this breadth of the science and customers and experiencing and building a line of a product to serve those that provides a valuable insight that we're now looking at where we can grow and expand their opportunity landscape. And with that, I'll leave it back to you, Svein-Egil.

Thank you, Kjetil. So Svenn-Tore started talking a little bit about how we think about expanding the opportunity set or the newer things and how it holds together, and I'll try to bring some more color to that. Really, when you talk about how we expand and look at our portfolio, we do really look at them on the three axis. The technology expansion in terms of the ICs and the hardware itself or really what becomes a product that we monetize, right? That could be in our short-range devices or cellular IoT devices, [indiscernible] devices. The axis of the kind of product you deliver, the second axis, is what is it that we actually deliver. You think -- when we look upon this image, we try to do a very simplification of it. But from having been a hardware and focus on IC, we have, of course, invested significantly in software and solutions on top of our chips, and a significant amount of R&D effort, which goes into this space. Certainly because it's an expectation from our customers to provide protocol stacks and software to get it done, it's part of the package. But also because it provides an opportunity for us to differentiate our product and actually be competitive on it. We believe that our software and support solutions today is better than anyone else. And that gives you more resilience when you look at the whole portfolio of products. The top on the second axis is what we call services. And what I think is the most alluring or interesting about that space is it's tightly coupled with the rest of the offering we do. So services is something that complements and enhances the features in the hardware or software we're delivering, right? Something that falls in tightly with the products, and Kjetil will talk more about the first thing we've launched, which is location service and how it can make our hardware and software and everything in between better. And it becomes this logical level that makes all kinds of sense. So if you have a hard time understanding why will we do something like a service level, when we think about it in the products or services we offer, there is a red line there. There's a line between that, that makes sense. Of course, the third axis is certainly expansion in different verticals. We make products that are fairly vertical-agnostic, if I can call that word. It's a product that are fairly general purpose, really chips are. But we do, of course, have software solutions and other solutions on top the target-specific verticals, and Geir and Svenn-Tore have talked about smart home and other spaces where there are special solutions being developed to address specific markets. And of course, it's a very logical opportunity to look at the verticals. Another natural expansion point, this is the -- as Geir alluded to, is to capture more board based on a customer PCB. And really, the beauty of this is that in many designs out there, many of our customers designed, the Nordic SoC is the most sophisticated device or the brains of the system itself. It's the device that the customers are most engaged in. So I took up an example here of our upcoming Nordic Thingy:53, and you might have heard of what Thingy is before. There's a new one coming, so look forward to that. That's the Thingy:53. And looking at that board and how we built that, you'll see that we have the nRF5340 as the main SoC on that board, supporting short-range -- all our short-range protocols. But at this time, we've complemented it with the nRF21540 , which is our range extender or RF front-end chip that gives that solution longer range. And if we go on the backside, the nPM1100, which is our first power management IC for mass market that controls chargings and it complements the system. On the rest of this board is literally only some sensors and some buses and other things. And in many ways, although this is a proof-of-concept platform, it very often mimics the system of our customers. So I jokingly say to Geir, "Geir, you got a really easy job here, right, because you've got the sales force out there that understands this and they have the customer relationship, and how hard can it be to upsell a couple of these extra components." Of course, put some pressure on him, but there is something through that. And what we also can do in not just relying on Geir's sales force, we can also make sure that we make special solutions that make our chips work together better, and therefore, increasing the value-added functions in that system. A very, very logical expansion, which really leverages in so many ways we already know something about, but certainly, the organization will be built over so many years. Hold on a second. Did I jump on? I did. So back 2020 has been talked about earlier today. And for those who follow us, we saw that we did a press release on this on Tuesday. What's going on? Someone made a wireless technology that isn't that good, right? Hold on a second. All right. So looking at this one, so you saw the press release on Tuesday on DECT-2020. That's parts [indiscernible], part opportunistic. Suddenly, we get engaged by the DECT forum to be part of developing a new standard for wireless technology that address IoT. And for those who know DECT, you think about the old phones, right, the ones that you had a dect phone. But this is the same forum, but focusing on a different space on the -- what I call the medium-range or long-range, medium-to-long, it's the kilometer range type of application, fairly good data rate, operating in a wireless spectrum that is controlled by dect and not by carriers or not by anything else, but it's available for DECT technology and it's fairly worldwide. There's a lot of good things to that. And we worked with the standard for the last couple of years. We've got significant contribution to that standard, and we are building our initial solution based on a 91 Series. It's opportunistic, but it has a very logical expansion into a new wireless technology that isn't that far from where we want to go. Then this one, right? Perfect. So of course, One of the things that is a challenge is that really, we do have too many opportunities to choose from. I think, there's a lot of things to do, we could be doing. And of course, when we try to look at these things when we build our workshops, we come up with a lot of ideas, and some of them are obvious, some of them are not so obvious. We try to rate them, of course, on the feasibility and the attractiveness, how easy can it be done, how attractive are, from the market growth, the size, our ability to compete and so forth and so forth, right? And then some of these trickle up. I just want to make sure that this picture is illustrative, but it shows some of the thinking behind some of these places where we are investing right now. And if you wanted to know what those other blue boxes are, I can't remember actually at the moment, but would be the second best ones, but there are more things in the pipeline. The other thing that we need to think about when we do this is that we need to find the right balance between the existing core businesses and the new business in order to make sure that we don't lose focus or that for some reason, we are relying on limited resources in certain areas. So there's always a focus on making sure that we will continue to be the leader in short-range wireless and cellular IoT before we start thinking about new things. We like to target lower investment options, and I'm sure that makes sense, right? But some of them are also lower revenue in terms of return, but short and small options are good to do. We want to be able to quickly react to industry events to step M&A or other things. We were successful building our organization in Finland on the backs of massive layoffs of mobile chipset designers when the two big companies exited that business. We were able to get immediately access to Imagination's Wi-Fi assets and team, and they decided that, that wasn't something they wanted to do. And there may be other of these opportunities that come in the forward, and we'll be adapting and looking at that and see how they fit in the strategy. Finally, we also do skunkworks. We have small teams that work on things that little bit uncertain about could be a market, but we want to be early on. So to give you a little bit more learnings on the details of the product strategies, back to Kjetil, again.

Sure. So looking at the product strategy, we can't really do that without, again, looking a little bit on what we have done over the last couple of years because as alluded to earlier, our short-range products strategy has really been about doing a broad range of IC, covering all the needs of the different applications. And since the 2015 introduction of the 52832, that product lineup, if you include the 5340, consists of 8 devices, and even more, if you count all the different smaller variations that we do to target, very strategically, opportunities are out there. We spent these years by adding value to this series, right? So we're not just spending and spending, but we are constantly adding more value, either through improvements of hardware or in software to cater for higher-end devices or optimizing for more constrained applications. On the radio side, as been discussed, we started out with Bluetooth and proprietary, but we have since added new protocols when we see there's new initiatives in the market where we want to play. And recently, we've done things like Bluetooth mesh, Bluetooth direction finding, Thread, Zigbee, and most recently, we also started to look into audio over Bluetooth LE on these, say, type of products. We are the industry leader in terms of power consumption, performance and features across this portfolio, something we clearly have seen has been appreciated by our customers. And we aim to strengthen that leadership, obviously, when we spend major efforts on our next-generation SoCs. But we also have to talk about the software and as Svein-Egil referred to as the interface in his previous slides. This is actually equally important, or not, more important than we are out there trying to win the hearts and minds of our customers and their engineers. Over the past years, we have done a major makeover of our software offering to really have a unified common experience across all our ICs and different wireless technologies. We also made sure that the platform is not only scalable across our breadth of portfolio, but also for our customers and their applications. At the heart of this is a modern open source real-time operating system for constrained devices. It's called the Zephyr. It's governed by something called a Zephyr Project, where Nordic saw an early opportunity to come in and influence and took a platinum membership alongside a company like Google, Facebook and Intel to really drive their innovative OS for the years to come in IoT. We will continue to drive this forward for the years to come. It's also in this kind of open source and modern places of software where we meet the new breed of developers and coders out there who come from a different school than what we did many, many years ago. They have a totally different approach to how they develop a code, how they maintain code, how they share between them and how they distribute their work. So as we're moving into other technologies, we aim to follow a lot of the same winning product strategies, both from the hardware and the software side. In cellular IoT, we have started winning in 9160 and work to strengthen both the product robustness and software performance over the past years. And going forward, we will only expand and add more complex devices that also cater to more cost-conserving cellular solutions, just, again, to make sure that we have the right products for the right customers in the right market space. With power management, we introduced our first nPM1100 earlier this year. We have stated that we are committing to building a family of power management products, and that's for a reason, right? We want to help solve customers -- help customers solve their real problems and really believe we need a family of devices to cater to all the problems that our customers are seeing and unlock the ambitions that we have on power management. And lastly, when we're looking at our customer base and the markets we're in, that's where we find a lot of opportunities for Wi-Fi, and we don't see any reason why our approach to Wi-Fi wouldn't be different, right? We haven't yet launched our first product. I'm going to talk a little bit more about it in a few seconds, but the existing opportunities in our customer base and market verticals, yes, a similar approach will be applied there. So in the end, we will have a product family of Wi-Fi devices to cater to different needs. Looking closer into power management. We actually believe that we are somewhat on a home turf. Like for you to see as a new product, but for us, we already have extensive expertise in this domain, from power management built into every nRF product that we have had throughout the years. We also have a deep understanding, working with our customers, to understand how the full system works. Svein-Egil showed an example of the Thingy:53 that makes a real-life application. So we have that understanding. And we now see an additional opportunity to bring that experience externally, adding more value-added features and to save more board space and build materials for our customers. So we're very excited for what we're doing in this space. One of the intuitive approaches to think about wireless that wireless is portable and portable is battery-driven. And if things are battery driven, they will need the power management solution. So there's a potential for a very, very high attach rates to our own devices when you're starting in this space. We started with looking at the rechargeable batteries because we have a good footprint in markets that recur rechargeable batteries, and we'll expand on that looking at different battery sizes and types. But beyond this, we also see a need for power management for all kind of non-rechargeable primary cells and also in the future, looking into energy harvesting solutions where we can get rid of the batteries once and for all. We're also in the home terms in terms of customers. The PMIC line-up that we're doing is fully complementary to our existing products, and with Geir's excellent sales team and our customer reach, we see, again, a high potential if we can start to bundle this with our SoC sales. Moving on to Wi-Fi. I have to say, I will not yet at a stage where we are comfortable in sharing a lot of product details. We haven't launched yet, and for competitive reasons, we do not want to share a lot. But what I can say is that when we acquired the Wi-Fi teams and assets from Imagination Technologies, we said you couldn't expect revenue until 2023. But what I can say today is we are on track for market introduction of our first Wi-Fi 6 products during the second half of next year. This is, obviously, a major milestone in achieving revenue already starting in '23. Getting into the market early for us is very essentially. We've seen from other technologies that harvesting experience and gaining experience in new technologies is very important for us. So getting to the market early, we will seek to find this experience where we are selling our existing SoCs today and we have customers already. While we are doing this, we will move forward with our plans to bring Wi-Fi into the Nordic ICM software platforms, basically working towards one experience many technologies. That goes across Bluetooth, Wi-Fi and cellular. We will also repeat some of the things we have said before. When we acquired the cellular team and build cellular companies, we said we are going to marry the low-power DNA of Nordic with the cellular competence of the team in Finland. Now we're doing the same thing. Obviously, it's the low-power DNA of Nordic with a new Wi-Fi skill set from the new Nordicers that came on board from Imagination Technologies. Obviously, with most wireless standards, Wi-Fi is evolving. You've probably seen that beyond Wi-Fi 6, there is a Wi-Fi 7, and beyond Wi-Fi 7, there is something new. Innovation in all these standards that we are in is very important to Nordic, whether it comes through standardization or through working with customers and understanding how we can help solve their problems tomorrow. So we believe also for Wi-Fi that this will grow into a solution where we have a family of products, some that are tailored towards certain market verticals towards certain customers and some that are tailing more generic and broadly. And before leaving the floor back to Svein-Egil, just a few words on our cloud-based services. Now there's obvious -- sometimes a misconception. We are not going to build a cloud. We are not going to build an Amazon cloud or a Microsoft cloud, but we are building services that reside in the cloud. This is not all new. We have been having and developed an extended cloud-based developer experience for many, many years already. And any engineer who have touched on our cellular solution have, at some point, been in contact with the angle of cloud. This has been a good learning curve for us to understand how the connectivity from the device to cloud can be optimized and how we can leverage that to build value-added services. And we're also learning that going up in service business is different than selling ICs, both from a go-to-market model and from a business model. Here we are, in essence, taking part of the lifetime of the product. When you're selling an IC, you sell the IC and the customer goes away. But when you're doing services, you're participating in the life of the product, and continuously doing update, continuously doing services for those products as they move on. This is -- obviously, have obligation in terms of operation, 24/7, support and all that. But the flip side there is, if we do this correctly, it can generate a long-term recurring revenue stream for Nordic. We launched our first services this summer. It was around location services that's basically about expanding the location capabilities built into our nRF9160. We have a lot of customers in doing asset tracking and tracking assets of various forms. If these customers start using these services, they can either get rid of the GPS and do locationing basically out of the cell tower and the cell infrastructure, saving important power consumption for their batteries in the long lifetime. If they are using GPS for getting very good accuracy, these services can allow them to get quicker fix. And I think if you guys are working with Garmin watches or [indiscernible] watches, you know that getting fixed earlier waiting for two minutes, three minutes, we cannot fix, a huge, huge difference. So now that we've started to have this in place with gaining experience, we envision, obviously, we can earn more services where we have this device to cloud perspective. This is where we really can differentiate on performance and add value on top of the ICs, the red line that Svein-Egil talked about. Whether it's firmer or over-the-air updates, device management or other things, we want to help those customers over the lifetime of the products. There's also an opportunity here to expand this into the short-range side. So in cellular, you need the cloud connectivity. But as we move from a consumer to a nonconsumer for our short-range side, we see a lot of our customers are in demand of similar things. So we obviously want to go there and expand. Bluetooth device cannot connect directly to the Internet, so need a gateway. And beyond that, there isn't any real difference between the cellular and the short-range side. We want them connected and managed also over the lifetime. So building on all the things that I have talked about today, we do want to become this one-stop-shop for our customers, where we tightly integrate services from the device all the way to the cloud. And with that, thank you for your attention. I'll hand it back to Svein-Egil to wrap this part up.

Thank you, Kjetil. So we talked -- Svenn-Tore talked to us about what we're doing in terms of investment for R&D. And of course, investing in R&D is how we think we can reach the targets that we aim for in the coming years. I sometimes talk about sort of R&D spending. And I think that sometimes, one can feel that R&D is like this bottomless pit, where it doesn't matter how much money you put in, how much effort you put in, nothing comes out. I'm sure maybe some of you have invested in those kind of companies, right, where you felt that nothing ever came up. And that's I feel that too actually when I'm frustrated that it takes a lot, a lot of money and a lot of time to get somewhere. But typically, there is a plan. And when you look at us and how we work, there's history, right? And hopefully, we can replicate a good plan and make another good history out of it. And just to bring it home, I brought this image of how our long lifetime of the product actually works. And it can be a little academic or no one wanted me to professor here today to teach you about how things are. I'm sure you understand all these things. There's a couple of things I want to highlight on this picture. First of all, the biggest investment goes into getting the first device out, that's the plan. And we put a lot of effort into getting something out. We move that device to production. Typically, in the families, and you've seen the families that Kjetil [indiscernible], we go ahead then and develop subsequent devices in the same family, which require less investment because they leverage a lot of the existing in hardware and software that's already been made. And over time, our R&D's involvement gets smaller and smaller. We do smaller new variants, maybe package [indiscernible] and so forth, until we actually stop doing any work on the family at all. As from a revenue point of view, we -- after you move to production, there's a ramp and the ramp can be either slower or faster, depending a little bit on product, but it does take some time before we get revenue. And -- but as you get in a steady state, revenue keeps growing, margins keep growing, you get in a pretty good shape. So if you think about this in the context of nRF52 series, we started that development on that investment since 2011. First device was with the production in 2015 and then subsequent devices came after that. And right now, in my team, we have very little attention on the nRF52 series, although as Kjetil has talked about, hasn't even peaked in terms of revenue for us, right? So if you think about that situation, that's a good example of how you want it to be in the semiconductor industry. This is when thing works very well. And this is, as Kjetil says, what we are trying to replicate with the new things we're doing, significant investments, families and expansion move on, make a lot of money produced forever kind of thing. And this is sometimes while things takes time to get going because it is a big investment to get there. But hopefully, if everything goes right, becomes very lucrative. So we're continuing to invest, Svenn-Tore said that. We're broadening our range of short-range devices, cellular devices. We're expansion our Wi-Fi portfolio, and we're building new products. When I look at the spending in R&D right now, more than 80% of all efforts goes into product that will be launched in '23 or beyond. So -- whereas the other parts of the organization is concerned about getting the revenues in '22 and '23, here in R&D, we really don't think much about it because we're all for the '24, '25, '26, '27 right now. As all our investments, all the thinking, all the planning that goes into securing the revenue, that's going to take us from '23 to '26. And I think that's something that hopefully replicate the picture we show on the previous slide by doing what we know works and branching out into new products. We had an interesting year. It was COVID, then we got a new team members from many different locations. In fact, if you look at the R&D locations right now, we have 9 new locations that came in '21. We got additional locations in Finland and in Poland to augment the existing teams. We got 2 new offices in the U.K. out of the Imagination, 2 in Sweden, we got Taipei and our center of excellence for WiFi in Hyderabad, India. And as a part of the PMIC investments, we also opened another office in Sweden and U.K. So it's 9 new offices altogether. And of course, people have been asking is, how can you manage? Oh, we think we manage very well. Our company has always been used to working across offices, Trondheim, Oslo, then Trondheim, Oulu then Trondheim, Krakow. And some of this is pretty similar. I think COVID probably made us even better working remote and working together. And by having built very sufficient, and Katarina will talk more about that later, infrastructure for establishing offices and rolling it out, that's gone very well. I, of course, missed meeting the new team members face to face. I had the opportunity recently to go to U.K., so we'll try and catch up and meet the people that work for us, and that would be great. I also think that when you looked at these offices, and it wasn't just hardship. It was actually some very good things, too. Some of these offices, many of them are in great locations, locations that we were thinking about before and locations that serves us opportunity for further growth. So most of the R&D growth in the offices we have has always been organic, right? Everything apart from the team from the Imagination has been organic growth at Nordic. And we've been very successful in attracting great people, and our focus, and Katarina will talk more about it, that is on skills, experience and passion, right? That's what we're looking for. We leverage a worldwide field of expertise, and we seek for diversity. And if you go to a location, you will see that reflected. When we look at future growth, the new office locations, we'll -- we will continue to recruit there as well, and we'll start to build and do the same things that we've been doing very well in the existing locations. We will also, of course, as I mentioned before, continue to assess inorganic growth opportunities should something come across that we think makes sense and aligns with our strategic planning. So we are almost at break time. But before that, and this is because I'll say this. The R&D guys think they get a very little attention at this Capital Markets Day, right? They think we are sort of, okay, there's all talk about sales and all these other things. But they wanted to show you what we're doing. So we sent a video team to Trondheim last week to give you a glimpse of what's going on and see a little bit about sort of day-to-day things. Now Trondheim is our largest office, and it's also the place where we have the most cool stuff for machines and so forth. Oops, all right. This is going to fix that. Is it going? One more. No, okay. And it is going. Or should I go one more back? One more back. Okay. Here we go, and your time. And then again. Here we go. So of course, when you do chip design, there's a lot of people involved, and they have teams across various locations working together. This is in the beginning of a platform development, there's a lot about the IC development itself. But of course, our software teams are very deeply embedded early, make sure the software runs, and we get test manufacturing supply chain very early so we can ramp production early. Some of the things that -- it's very hard to get right, and what we spend a lot of time is on low power. And making sure that the device we have is -- can produce very long battery lifetime, be smaller batteries and really being the part of our DNA. And that involves using old techniques and new techniques, mix them together, new innovation, making sure no one beats us on power. The other thing that we work a lot on, and you've seen the numbers, right? We've got to be able to produce in high volumes, produce significant things, making sure it works in Sahara, making sure it works in Siberia, everything like that. And finally, we invest a lot in our tools, right? We invest in tools. We invest in facilities. And what you're just seeing here now is the new antenna lab that we have got in Trondheim, which gives us the opportunity to do better, higher-performing RF systems and build also confidence. We also have a very extensive FA lab. The failure analysis lab that allows us to be having an extremely quick turnaround on any failure reports we get from our customers. But of course, it also gives us ability and our designers the ability to understand the physics of the thing they only stimulated on their computer, to see what's going on. We are able to build around test systems, around boards. We managed to run high-volume testing. All these things is what Pal will report on the catalyst spending. But it really is if you want to be a semiconductor vendor today, right, you got to be able to build great solutions with a great team, great tools and great equipment. Thank you.

Thank you, Svein-Egil and Kjetil. So before we break, I just want to give some practical information. [Operator Instructions] Yes. So we're ready to stretch our legs. So for those of you who are here, you can get out, get some coffee, get some tea. There's a small snack as well. For those of you at home, I hope you can fill up your coffees as well. We'll see you back in 10 minutes. [Break]

Welcome back. I hope you all got your blood sugar slightly raised. So our next speaker is actually the newest addition to the executive management team. It's Katarina Finneng. She is our EVP of HR and Communications. Katarina has experience from several international companies within HR, public relations and communications. So Katarina, with that, I'll hand the floor to you.

Thank you so much, [ Gina ]. I was actually reflecting a bit upon what we've heard so far today. It started off with a focus on revenues numbers. And then we moved on to customers, and then we continued to products. And who uses products? People does. And who are our customers? People are. And who uses, hopefully, revenue and money? Well, we do, people. So hi, everyone. Everyone in this room but also all out there on the webcast, all colleagues watching and all potential colleagues watching, also all other stakeholders watching us from elsewhere today. I am really proud of being here today together with my management peers and to be able to address the actual fundament for all numbers and customers and products that naturally are in focus for such an event. And in my 2 years here, I have come to know Nordic as an amazing company with such exciting ambitions, a challenging growth, fantastic people and not the least, a true contributor to simplifying lives. That's also the vision of ours, simplifying lives through all things connected. And this means that we are committed to IoT in everything we do, but not the least to the people using what we create. And to guide us, we have our strategic pillars in full bloom, all nurtured by our people. And the fabless and also fabulous organization we have is continuing to grow from the fundament of our people engagement. That is what our people agenda is about. And we have developed this foundation through a long history of innovation. In 1983, our 4 founders started our company out of Trondheim, which remains our headquarters, and it's our largest office to date with about 1/3 of all our employees. And 2 of our founders are still in the company, Trond and Frank, working in key positions within R&D with Svein-Egil. And for perspective, I allow myself to quote one of the founders, Jan Meyer, from the speech he held. The date was 22nd July 1983. Nordic VLSI was founded as a company of limited liability with office in Trondheim. Share capital was established. The founders bought 750 shares each and fully paid at NOK 100. I still have the document from the bank that approved my application for a loan of NOK 75,000 at an interest rate of 15%. Four other stakeholders bought 500 shares each priced at NOK 200. That was the very beginning. The company then had slow and steady growth during the first decades and employing several people that actually still work in the company today. And what's quite cool despite our enormous growth in the past years, we have a global company seniority average of 5% -- 5 years, sorry. That was quite cool. And this number is especially interesting, considering the onboardings in recent years. We are now about 1,150 employees in Nordic, a rough doubling of our organization since 2017 and almost a 50% growth in FTE, full-time equivalents, during the pandemic. And this is, obviously, challenging, and remote work has affected us all, everyone, not only new onboards. And we are now speaking about reboarding in Nordic. However, we cannot rest on our laurels. Market trends actually predict higher turnover in general, and we are positioning ourselves to continue a modest turnover below 5%. And in this competitive market, it is important to adapt to the ever-changing environment. And with an even scarce talent pool that we are in competing about, we need measures to continue building this history of ours. Compensation and total rewards with increased relevance towards our different demographics, work-life balance, new office location, increased leadership support, diversity and inclusion, et cetera, et cetera. All in all, promoting a sustainable growth culture, and to achieve this, our ecosystem needs to stay relevant at all times. So going back to 1983, the fifth person to be hired in the company was supporting staff after the 4 founders. From the small organization, which sprung out of the 4 developers in Trondheim, we are now truly global, as Svein-Egil showed you, and have continued to complement competencies to spend our time at what each competency area does the best to add value. To this day, approximately 1/5 of all R&D -- of all employees are non-R&D. And when we speak of that, this picture is what's relevant to consider. We today have strategic presence in 17 countries across 4 continents. And perspective, awareness and understanding of what matters and to whom, that is what we need to mirror for competitiveness and continued relevance. And to further develop this, we need to be innovative not only in our core business, as my colleagues have presented, but also to keep our competitive edge as an employer and for the relevant bandwidth in our market. So grasping opportunities accordingly is something that Nordic has several examples of from the past years. When technology companies in Northern Finland had to lay off people in 2014, which Svein-Egil mentioned earlier, Nordic quickly mobilized and carried out targeted recruitment activities. And Finland's existing world-class cellular engineering competencies provided excellent opportunities for us in Nordic. And we managed to rapidly onboard about 60 people in Ulu, Northern Finland, now having grown to almost 300 in 4 locations across Finland. Furthermore, with the acquisition of Imagination Technologies late last year, Hyderabad became an important R&D hub for WiFi expertise as part of Nordic from January this year. And the team is responsible for all aspects of architecting, implementing and validating WiFi baseline IP. And there is a wealth of WiFi experience in Hyderabad with most Tier 1 WiFi semi companies having a strong presence there. From Imagination, also the fundament for our digital design team in Hatfield in the U.K. came and the Bristol team being established in parallel. So they are both strong digital design teams with focus on WiFi products. Furthermore, in U.K., also, our Sweden team has been rapidly built up during this year as a center of excellence for power management capable of expanding Nordic's PMIC portfolio. So these positionings allow us to utilize the talent opportunities at all these locations, and such growth strategies are something we will also evaluate for the future. We need to evaluate that for the future. And to achieve integration and further expansion in Nordic style, I'll emphasize what Svenn-Tore already pointed out, that building our scope and competencies like this greatly expands our opportunity pipeline and long-term growth of possibilities. And we will continue to add layers to stay relevant focusing on all key enablers, including complementary competencies and our organization and our culture. This is crucial to be able to deliver on the growth expectations we have and driving and supporting the organization and enabling agility and resilience. It is, however, also crucial that we, in general, have a structured, proactive approach to how to best support the delivery and our overall strategic ambitions through employee engagement. And to this day, Nordic has a history of involving our employees in our success, and everyone employed are continuously provided with short- and long-term incentives. Because innovation and success is based on our human capital and employee engagement, finding out what matters most to people is important. And it differs depending on which phase of life they're in, where they live and so on. So this we are on to, and to stay attractive and competitive, We need to have that focus. With the relevant people framework and tools, we enable organizational empowerment and resilience. And for people development, we need a systematic approach to succession planning and growth management with focus on all relevant competencies. We will develop our organization by staying aware and revisit and adjust how we work for best efficiency according to our continuous expansion. And attracting and retaining the right people require employer branding visibility, diversity approach and inclusion. Nordic is strongly acknowledged within connectivity, and we have accelerated our efforts to continue to be attractive in fierce competition also in the future. Then I find it even more satisfactory to see our efforts pay off. And with increased focus on ESG factors, we proactively worked to build capabilities for a sustainable approach overall. Across the 17 countries where we have strategic presence, we are, in total, 57 nationalities. And a crucial part of the organizational balancing act is the fostering of diversity and inclusion in the meaning of everything from different perspectives in mind to the traditional general approach that often are in focus. And these are all actions for in-house focused when we speak of ESG and something that we are in control of ourselves. And as mentioned, we are a fabless organization. This also means that we are exposed to an extensive value chain where we have less impact. However, we work actively to utilize potential impact, both down and upstream our value chain. And with this, we enable our customers to make sustainable solutions for people to simplify their everyday lives. In other words, working closely with our nearest stakeholders, we try to have an impact further up and down the line as well. That is really important. As Svenn-Tore mentioned, we are strong believers that disruptive IoT projects can contribute immensely to the sustainable development goals set by the UN. That's why it's also crucial with a systematic approach to what to prioritize for us. And what's most important for our stakeholders, where we can make a difference, both of that matters. So our analysis shows that number nine, IoT innovation, will let us utilize our contributions the most. However, the selected other 5 are also in scope to deliver high value to our stakeholders and to the society at large. When produced and applied, our products have the potential to deliver a large positive impact to society. And therefore, we stay and are committed to develop the connectivity that can enable these things to lower power consumption and utilize other sustainable opportunities. And as mentioned, our strategic fundament for this is employee engagement. So to illustrate how we foster that to contribute to the bigger picture, let me introduce you to the perhaps the smallest of our sustainable solutions. Working with ESG is about actively contributing to the shift to more sustainable businesses. And in Nordic, we consider this to begin with ourselves. It says nRF Honey. That's actually our colleagues that have named this jar of honey, nRF Honey. And nRF, that's another thing. Because when I started up in Nordic, I couldn't really get why our products were named nRF. You know what it stands for? Nordic radio frequency. Fine. nRF. nRF Honey. By the way, afterwards, we have 10 pounds up for grabs amongst you guys. So if you like honey, please come by for first come first served on the little table over there. It is harvested from our roots in the Oslo office, there's particular jars. So you have to taste it with flower -- honey flower from [indiscernible] mainly, I presume. And our beehive project where this honey that our employees named nRF Honey comes from, is a small contribution for the greater good. The project increases awareness and engagement internally and exemplifies the impact our engineering competency can have by demonstrating generic IoT application, including machine learning. And yes, our largest contributions begin in the small. Our chips are tiny little things with great impact. The examples on this slide shows sustainable solutions that effectively contribute to nature, environment, health and education. However, there are other crucial actions, too, reducing emissions. And that we mustn't forget. In Nordic, we have negligible direct emissions of our own, like on-site fuel combustion, et cetera. And our scope 2 emissions are indirect emissions from the electricity we purchase and use and are factors which we can have a direct impact on ourselves. So our ambitions are to remove all scope 2 emissions by 2025 and backed by renewable energy certificates, we already from last year see a significant development in the right direction, which we're very proud of. However, the greatest footprint is actually from the wafer production up the line. So this is also a concern of ours and something we work to contribute to. Because of the increasing consumption in the world, we work hard to decrease emissions per device and that we are succeeding in. Our long-term ambition is, therefore, also linked to the overall emission footprint and to a contribution for supplier carbon neutrality in 2030. So stakeholder collaboration is, therefore, key as in all other aspects as well. So to sum this up, all in all, our stakeholders are many, and we share the fundamental commitment to all. We commit to deliver value to our customers, investing in our employees and to generate long-term value for our shareholders. It is also important dealing fairly and ethically with our suppliers. And we're dedicated to serving as good partners. Also, we respect the people in the communities where we interact and protect the environment by embracing sustainable practices across our business. So each of our stakeholder is essential to us. We commit to deliver value to all of you for the future success of our company and our communities and our people. With that, I thank you for your attention.

Thank you, Katarina. I sure hope no one else likes honey, so I'm going to grab one if no one else wants. So our next speaker is going to talk about a topic that's close to my heart, obviously, financials. Pal Elstad joined Nordic as the CFO in 2014. He has broad experience within finance with an international focus. And Pal, when you started in Nordic in August 2014, the share price was actually NOK 33.

Yes, it's went quickly to NOK 37, and it stayed there for quite a long time, fortunately. I think we -- when I started, we had one customer, and then we had 2 customers and then suddenly we are 3 and its -- customers came and left and then therefore, the share price went up and up. Now we have 10 customers, big customers, and we have the whole long tail still supporting us. So we're a completely different company now than -- for 7 years ago.

Great. I'll leave the floor with you.

Okay. I'm going to go through the financials or not direct to the financials. I want to spend some time recapping what we said in the Capital Markets Day in 2019, so 2 years ago. I think it's important to set that as the basis for discussing what we see for the future. So in the Capital Markets Day for 2 years ago, we presented sort of a 1 billion target in 2024. We've, obviously, seen that the strong growth we've had since has pushed that -- pulled that earlier. So at that time, we estimated sort of a 32% growth over the year, mainly split between a strong Bluetooth growth of 20% to 30%. We said a small or a modest decline in proprietary. And then cellular IoT, that will ramp and then become soon as biggest [indiscernible]. And then I think we all know that hasn't happened yet. But anyway. So how has that actually ended up? Well, we all know that we had a very strong growth over the period of 46%. It was, of course, driven by the Bluetooth growth of 54%. Proprietary, incredibly, 16% CAGR over the period. Of course, with the home office boom we had last year, a very good market to be in. Cellular, well, small numbers still, but we actually have $13 million the last 12 months in cellular. So we commented on the Q2 presentation that we are seeing meaningful revenues. And then we definitely are. And then Geir also mentioned the customer opportunities we have in cellular. So that will come. Gross margins very briefly. On the Capital Markets Day, we presented a target of 45% to 50% for the short range. We said that cellular will be 35% to 40%, and then the blended gross margin will be somewhere in between. What has happened? Well, we've consistently had gross margins above 50%. In this period, actually, last quarter, it was 53%. How we've been able to do this? Well, I think, it's mainly the fact that we've had this higher share of complex high-margin products, balancing off more influx of Tier 1 customers or larger customers. I think when we guided in 2019, we saw a stronger price pressure and a pressure for going for smaller or cheaper products. R&D intensity quickly, probably the most importantly, right, Svein-Egil? At that time, we were spending 27% of revenues in R&D. That was a mix of close to 20 in short range, and we were also investing around 8% in the cellular revenue -- cellular business with 0 revenue, right? We did communicate expectations that R&D in absolute terms would increase, however, with R&D intensity declining from the peak level. And I think we can see on the slide, that's really what happened. Last quarter, we were down to 22%. So still a strong, good number. Also just briefly on SG&A all or other costs. We communicated that expectations of significant operational leverage. SG&A at that time was at 15%. We were looking for it to move down to 10%, and then that's really where we are, although a flattening curve due to the current revenue constraints is seen in the last quarter, as I commented on the Q3 presentation this morning. Yes. And last time, in 2019, we commented on the midterm or long-term EBITDA margin of 20% during this period. We've gone from overall 9% to the current 19%. How have we been able to achieve this? Well, it's, of course, the high revenue growth combined with better-than-expected gross margin and really good cost containment and operational leverage in the entire business. As Svenn-Tore told you earlier, we are continuing our growth journey and are setting ourselves new long-term targets that I will come more into detail with. We have seen an increasing demand and revenue across all our end user markets over the past years. I'll now give a little bit more light on this, even if this has been discussed previously in the presentation. Over the last years, we've seen the shift in end user market, better products serve. Although we do see growth in all markets, I will highlight a few of the points, main points. Consumer electronics, including these accessories, has shown solid growth and remains the absolute biggest end-user market. Building retail is the one that's grown mostly the last years we see even higher growth over the last few quarters, reflecting both industrial and home automation product. Healthcare, very important market. Had seen short-term strong demand for COVID-19 applications, although most of the COVID effects might be as a catalyst for more connected health care devices, there will be a big revenue contribution going forward. Both Building and Retail, but also Healthcare include a significant part of consumer-related -- or consumer-driven applications like smart home and personal health care. And we're preparing a change in how we report our markets to better reflect the demand across the end customer or the end user of the product. So we will start to split more between consumer and nonconsumer. This will take effect from 2022. Yes. So as I mentioned, the change that we discussed on the previous slide has occurred over the last few years. I think we've tried to show here a rough appropriation between customer, industrial, healthcare and other products over the past few years, showing that consumer-driven products and applications account for roughly 70% of our revenue today. Although industrial IoT and healthcare have an increased importance. We believe these areas are still in early stages in areas such as building automation, logistics, asset tracking and drug delivery and disease monitoring systems will have a great growth potential going forward. So although we continue to see solid growth for the consumer business, we therefore expect that the industrial and healthcare will make up a significantly larger share of total going forward. So we put up illustration for 2026, where we believe these areas can be probably at around 2/3 of the business. And the consumer will stay at about 1/3. And we are investing in new technologies for the long term. Svein-Egil showed the slides, so I'm not going to spend much time on it. Today, 97% of our business is related to the short range part of the business. We are investing 40% of our current R&D in new technologies. And we believe in -- without being exact that going forward, a much bigger part will come from these new technologies. Okay. Svenn-Tore talked you through our revenue goals in his presentation earlier today with a target of $1 billion in 2023. And and an ambition to double that by 2026. And we believe this allows us to revise our targets -- target operating model. We've earlier talked about the EBITDA margin of that's 20% that we guided for in 2019. But we believe our revenue will grow, will generate scale economies and operational leverage, enabling us to move towards 25% EBITDA margin within the guided time period. How are we going to achieve this 25% EBITDA margin? Well, first of all, if you look at the gross margin, gross margin is now becoming much more complex because the span in our products is longer. If you take from the cellular module business, where we sell the module, where we have to share the content with other vendors with the lower gross margin. to the short range to Bluetooth, and then finally, some of the new technologies where we do see significantly higher gross margins. And then, of course, the cloud services on top of that. And we will now try to calculate the blended margin. But as we discussed during the presentation, we invest heavily in innovation and IT. And we expect to get return of at least 50% when we sell these products. That we believe is a fair assumption to take. Also, of course, increased scale shouldn't push SG&A percentage down below 10%, and allow for continued high R&D spending at 15% to 20%. So to sum up all of this, we should be able to move towards 25%. Yes. Very briefly on CapEx, being a fabless semiconductor CapEx is, of course, limited to the test equipment. The labs that Svein-Egil has been showing today, software for design and also some IT. Historically, we've been investing around 5% of revenue in CapEx both related to the test equipment and the labs. A lot of these investments are already done. If you recall, from 2019, we did some serious investments in our lab, and some remain in Asia. So going forward, we expect CapEx intensity to be around the level we saw in 2020 of 4%. We've been focusing on our operating margins throughout the presentation. So I'll now turn a little bit to our sources in cash and use of cash. Starting point would be last CMD again. At that point, we communicated limited cash generating ability in 2020 and 2021, but expectations of improvements going into 2022. This factory corresponds to how we've been performing during the period. Overall, we've increased our cash balance by $160 million. However, we did a capital raise of $121 million. So net capital, and no cash increase in the period is close to $40 million. This came, of course, as effect of strong EBITDA, reduction in net working capital and a good ability to generate cash from our operations. However, net cash flow in 2021 has been around 0 because we are investing heavily in the business. Therefore, it's important to keep flexibility for financing the operations going forward. Okay. My second last slide on finance. I think in the last Capital Markets Day, we commented on the need to have a solid cash position and that we should have at least 1 year's R&D spending in cash. At the time when we were just around just above that target, since then, we've issued more equity. We've had solid overall positive cash flows. So we now have a cash coverage of 2 -- 2x. So given the current phase the company is in, the growth ambitions we have, we believe this is a more correct level going forward. Finally, my slide on capital priorities. We want to balance our growth, funding requirements and shareholder distribution, of course. And with improved EBITDA I just talked about, strong cash conversion and tight capital management, we are set to improve cash flows from 2023 and onwards. So we will continue to reinvest in R&D for the long-term perspective. We need to have a strong balance sheet, that is required to ensure flexibility and resilience in the challenging market. And we are also exploring M&A opportunities. We did a small one last year, but we do see a lot of good things we need to explore more. So based on improving cash flows expected, we do allow for a valuation of returning cash to shareholders in 2023. That's all I had on finance. I think Svenn-Tore, he's going to have a few sum upwards before we turn to Q&A.

Thanks, Pal. Very good. So this is more recap. But don't forget, we still have high growth ambitions. We are not holding back on investment. And despite the fact that we have this situation with supply chain, we are going to meet the goal, as I said earlier today, $1 billion in '23. And we're aiming to more than double the revenue from '23 to '26. Exciting times ahead of us. So the whole day -- or whole afternoon, I'm sorry, has been about Nordic being a globally leading IoT enabler. And I think it's extremely important that technology and customer-driven growth are very much supported by mega trend. And we are the leaders today in short range. We are positioned to be a leader in long range. We are going to tap into the Wi-Fi market in medium range. All the megatrends are supporting the direction we are heading. As I said, we are continuing to invest. This doesn't come easy. We basically need to drive it, and that's what we dedicated to do. We have the board behind us. I also think we have the investor behind us because if you saw how big this pie will be in '26, if everyone recall that the product is widening, we are going to take market share of that large pie. And Katarina went through, we can't do this without the right people, and we are certainly becoming actually pretty attractive as a place to work. There is good values in Nordic. We have extremely exciting customers, and we have leading technology. It's the right organization to go-to if you want to have success in new work life. And finally, but not least, we have this long-term financial ambitions. Reaching USD 1 billion just in 2 years could seem aggressive, but with our customer base, with our commitment from vendors, we feel safe enough to bring that here ahead. And it doesn't stop there. And that's maybe the most important message we try to give today. We are not satisfied being a $1 billion company. We were never satisfied being $1 billion, the recent company either. We strive for more and we get more and more proof that it's achievable. So by this, I would like to open for questions. Look -- and maybe before we do that, I would like to thank my management team that did great presentations during this afternoon. And I ask you to come down and respond to any questions.

So I think we'll do alternating question from the web and from the room here. So we're going to start here. So Stale, will come around. So if you have a question, raise your hand. Yes, there we are.

Yes. So Christoffer from DNB markets. Sorry, still have a lot of questions, and I can start with one and then come in the back of the queue. So I don't really like to be very short or near-term focused, but there's been a lot of focus today among investors that I'll be speaking to at least around the kind of the slowdown in the order intake. And then on the other hand, you are really, really bullish on both '22 and '23. So...

[indiscernible] go ahead. I think better we off the mic. It is so noisy -- your question, I don't really get it. Try to speak clear.

All right. All right. I'll try. Yes. So again, a lot of focus today has been on the slowdown in the order intake for the company? And then on the other side, you are really bullish on '22 and '23 revenues. So could you maybe give some more clarity on the dynamics in the order intake dropping from Q2 to Q3? And why that is not indicating that like the momentum in the business is coming down, why you're still very confident, not only on '23, but on 2022 revenues, so to say?

Yes. We can do that. I think it's a good question for Geir to answer.

Thank you. All right. So basically, when we adjusted up the lead times like I indicated in my presentation, you then had customers placing orders for like -- well into 2022. They have growth ambitions. So the orders were bigger, of course, because they incorporate new growth. A lot of it was driven by psychology. And we've done work with the Tier 1 customers to basically say, okay, linearizing supply in 2022 is the focus of ours. You don't need an influx of orders beyond what we already have communicated, which is 52 weeks. So what you see now is a balanced view of the order backlog. So this is then representative of where we are going to be. And if you look at the backlog, which is $1.3 billion, there's a lot of parts to be shipped. As I mentioned, demand outstrips supply. So we don't need to add a lot of extra on the backlog. You don't need that to grow to $2 billion or beyond. It would just create a picture of something which is not correct. So this is basically a balanced view that reflects the current situation of the company. And slowdown as you see it is basically us managing the backlog with customers.

Okay. We're going to take a question from the web then. So this might be for you, Pal. Will Nordic be actively looking for acquisition and/or merger opportunities? If yes, what kind of entity is of interest?

Yes. As I mentioned, we are looking at M&A alternatives. We also talked about that when we did the capital raise a little bit more than a year ago, but nothing concrete. It's more to work in these technologies. We've already spent the whole day discussing. So there's no -- nothing concrete to talk about today. But we do have things we're looking at.

Øystein Lodgaard, ABG. I have a couple of questions on the power management IC. So how many of the products that your short-range and long-range chips go into, do you think are addressable for the power management IC? And how much have you assumed that, that should contribute to your revenues in 2026?

I think Kjetil can answer that.

Thank you for the question. In terms of what I said, we basically need the lineup of product to kind of bring up the attach rate to meet our ambitions. We have started out very small. We are catering for a certain type of rechargeable batteries for a certain kind of customer and certain kind of market vertical. As we build up this family to more products and more opportunities, we will bring the attach rate up. We haven't said how big this attach rate would be. But we do know that the majority -- and if not all customers need empowerment of some sort. Obviously, we're up against competitors. We're up against people who have done this for a long, long time. So we really need to bring in our expertise to show that we have a value play in this market before we can drive up the revenue. In terms of how big and what our ambition are, we haven't been very vocal in stating that. And I like to keep it like that. But I think you will see more products coming from Nordic, and you will see that we start seeding the market. We show the Thingy:53 as an example. But we know from experience that what we show as example and bring out this development platform for customers, a lot of those customers take them and just productize them. So obviously, eating our own dog food, that's we call it in our industry. It is what we're doing and putting the PMIC next to the nRF wireless chips on all the stuff that we do will help us accelerate this. But no, we are not saying anything about the sizes of -- or our ambitions here.

We can also say, Kjetil, that is, will be seamless interface between other radio and Nordic PMIC. So basically, if we are a designer, you can just plug and play, which you might not -- and can able to do with a third-party PMIC.

Okay. So we'll go back to the web then. So we have a question from Rob Sanders from Deutsche Bank about cellular. In what year will cellular IoT cross the $100 million per annual revenue?

We haven't put it on the slide. And since we're looking already 5 years ahead. But what you saw was that we basically saw a huge contribution from other products than short range in '26. So it will be somewhere between, I would say, '23 to '26. We expect it to be closer to the '23 number.

Okay. Should we go back to Oslo questions?

Henriette Trondsen from Arctic Securities. So I have a question about cellular IoT because you say that this will be a substantial part of your revenue targets, right? Are there any bottlenecks or regulatory certifications or anything that needs to be resolved in order for this to materialize?

Maybe Svein-Egil can answer that best. But currently, we've done most of that work.

Yes. I think that -- I just have to think what we presented before. Did we have an update on any of the quarterly presentation about the certification status recently or not?

We have, to date, we show all the operators or...

So I think that what you're saying is that we have the coverage pretty well taken care of, right? There's a continuous work ongoing for certifications and regulatory so forth. But as far as I look upon it, we are where we want to be with the carriers right now. So ours is guess as in design activity is going strong. So I don't think that's a bottleneck now.

We cover both Europe, U.S., Asia.

Okay. We'll go back to the web then. Let's move on to a few BLE questions. And this is a bit of a math question. If BLE assess $3 billion to $4 billion market by 2026, and you take 40% share. Does that imply $600 million in revenue from the diversification efforts by 2026?

Yes. I think -- this is Svenn-Tore, in 2026 if you look at the slide, it's -- we haven't highlighted exact how we split revenue in 2026. Of course, we know there's going to be a strong growth in BLE short range. We have the cellular IoT, we have the PMIC, et cetera. So we're not giving a specific guidance for 2026.

We. But if we stick to what we say about following market growth, and if you calculate where we basically will be exiting in '23, we see that wouldn't be too far away from reaching a higher number than our ambitions for total business in '26. Yes, do the math.

Okay. Let's move back to any questions in here.

Yes. This is Christoffer again from DNB Markets. So sorry to [indiscernible] just to be completely sure that I understood what you meant. So in terms of the dynamics in the backlog and the order intake, what has essentially happened is that you are now saying you'd not want to take orders with longer than 52 weeks lead time. And hence, there is kind of a one-off adjustment as a duration doesn't expand, which means that order intake comes a bit down, but that doesn't mean like the momentum is slowing down and you're kind of going to see that trend continuing. Now we're kind of at a new level that represent actual underlying demand and then that will continue to grow going forward. You know what I mean?

Yes. It's a good sort of description. I mean as we are not market constrained at the moment, I mean, we are supply constrained. So I mean, if you look at current backlog, we know we won't be getting '22 supply that covers current backlog.

Right. I think somewhat -- I'm sorry to hammer this a lot, but somewhat kind of compare some of the order intakes you've been showing in previous quarters, and then compare that to the order intake in this quarter. But due to the managing of the lead times, those numbers are basically not like comparable on an apple-to-apple comparison.

If you go back a year, we usually had 2 quarters in backlog. We have to look how is the real situation -- how did it use to be as 2 quarters in backlog. Now basically, a lot of what is forecasted has turned into backlog because our customers have insured themselves. But the point is, can you forecast correctly for end of '23? And I don't think anyone within any present business segments are able to forecast the need that should be exact enough to buy any components.

So I think typically, when you look at our backlog, it's sort of reflecting the then current lead time. So basically, what we've done, we extended the lead time. You establish a new level, and we're at the level now where you see the increase in our backlog through the quarter, less the reduction we've had, I mean, through revenue. So it sort of represents the new normal. So if we were to extend it to -- I mean double that, then we would have this new bump up again. And then if we take it down, then you will see it contracting. But the overall new level is there to reflect the new level of revenue in '22.

Okay. Let's go back to the web then. Finance. Can you discuss your working capital expectations until 2026? So Pal, that's for you.

Okay. I can give short flavor on today. Well, working capital is 19% of revenue, which is historically low. The reason is, of course, that our inventories are way too low actually. We only have less than half the quarter of inventory. So we're really producing just in time. At some point, this will increase. And then we've historically said working capital at around 25% of revenue, and then we stick to that level. So yes, working capital will increase when supplies is up.

Great.

Christoffer, you never give up.

We have 2 more questions and we'll wrap up.

So I think -- isn't there 20 minutes left for this, ahead of time?

We said 6, so we're already over time. So I'll give you one more, and then I'll give 2 more on the web.

Yes.

I was thinking maybe it's a long shot, but maybe you could call it a bit, you talked a lot about the technology road map in terms of your strategy, but not too much on like, for instance, process nodes, those kind of things. What are your kind of -- your plans there? When should we expect you to go down [ older ] -- and where are you headed? What kind of level are you going to? That would be very interesting to get some thoughts on.

I think Svein-Egil can respond to that question.

I think it will be very interesting, too. But it's really one of the things that we don't want to talk about. Because we want whatever we do, which is many years ahead to be, company proprietary information as long as we can. So yes, we are working on new platforms. Where and how they're going to be developed? We haven't announced yet, and I hope that we don't have to do that for a little long.

Many years?

Not many.

I guess.

Okay. Let's do a question on gross margin. What are the puts and takes of maintaining margins at or near 52% plus? Will high-volume shipments be dilutive to margins in the next 12 months? And what will be an offset to this going forward. That's actually 3 questions in 1.

Yes. I think the [ resituation ] is that we are selling more of our higher end-ship with higher feature and more IP. And obviously, customers are willing to pay for more features. As our mix of -- with a lower cost, low IP is less. Basically, the margin will increase.

Okay. Last questions here.

Last questions. Okay. Last question, sorry. Okay, what does longer-term success look like for Nordic in Wi-Fi and PMIC in terms of attach rate to nRF or in revenue contribution terms? And at this stage, what do you see as the biggest hurdles to achieving those ambitions? I think everyone is looking at you,Kjetil.

Yes. Sure. So starting with Wi-Fi -- yes, yes,so we would -- we started with Wi-Fi because there was a real opportunity. And when we made the acquisition of the assets and the teams. We talked about this being one of the most asked about future among our customer base. So obviously, we don't go into that space without having a plan for how we want to grow this with customers. But it's -- it is a new technology to Nordic, and we come in where there's established players. So our outline kind of -- outline of how we want to approach it with the harvesting some experience, bringing it into the Nordic platform and kind of using the wealth of experience we have in the wireless, also for Wi-Fi. We again, we have not outlined our ambition in terms of volume targets or how we want to see it. But Wi-Fi is a substantial market today, and we see a lot of our customers needing it, needing cellular, needing in a short range and needing in Wi-Fi. So we think we will be able to grow there.

Just to add on that, I think that if you look at it, what can go wrong, it's the ability for us to make a product that is actually good enough for the customers, right? We sometimes take it for granted that we can always do that. That we can always make a short range product, cellular products, make it, but if you're going to play in this space, you got to make sure you get it right, then we got to make sure it's interoperable. And therefore, we're investing significantly, making sure that we make product that works because Wi-Fi is notorious based on model components that doesn't work very well. We need to make sure there's a product that works, and it connects to routers every time and there is not a lot of problems, making sure it works, making sure it works is the mantra that we're singing through R&D right now.

And I'll give the final leg of this answer. I mean we are a company now that have long range medium range with Wi-Fi, and obviously short range. Nordic has ability to make a complete module, mix and match of these different technologies. And there will be - -- we might have some customers and had some of this on their bucket list. And we can't put this together.

Okay. I think -- do you want to say something else? No? Okay.

PMIC as well, answer that.

Yes.

Should I answer that.

Yes please talk.

Yes. For power management situation is, it's a little bit different. We are talking to a lot of customers. We are selling as we talked about, the central component on many of those applications. That's where the focus is, right? We now come with an extended offering where we really look at the system coverage on how can we optimize between the PMIC and the wireless SoCs that we do whether it's short range, cellular, future Wi-Fi. And kind of optimize that from a systems perspective. And then we use the same goals, sales team and the same strategy when we're selling. That's a central component to also explain the benefit of doing, let's say a bundle for Nordic. So that's kind of where we're going to steer it -- steer the power management. So think about it initially as complementary to what we are doing. If we're successful, obviously, we can branch the above and beyond being complementary and start to attack verticals where we're not playing in the wireless space, where there's even not any wireless. But that's beyond the initial success. First thing first, we have started very small with our first product. We want to expand that portfolio and then take that step by step and hopefully grow that to something that is fundamental to where we're going to be.

Great. With that, I want to thank you all for attending both in Oslo and on the web. You can always tune into the presentation and watch it again online. If there were questions that weren't answered, you can always reach out to our IR team. You'll find their contact on the web. And we look forward to seeing you again. Thank you.