Nordic Semiconductor ASA (NOD) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Nordic Semiconductor's Capital Markets Day 2024. It's really great to see so many people here in person in Oslo, and thank you to everyone online -- joining us online as well. It's a pleasure to have you all here. Can I just add, if the alarm goes off in the room, we have one exit here in the front and an exit back where you all entered, and the assembly point is just outside the building. So now we know that. My name is Anne Gustavsson. I'm the Marketing Communications Manager in Nordic. I will be your host this afternoon. Today's event, we've been really looking forward to it, and it's an important opportunity for us in order to share and engage with you on key strategic priorities and engage with all of you here on Nordic's business direction. I have representatives from Nordic's key executive management here today. Our CEO, Vegard Wollan will start off with an overview of our strategic priorities and growth outlook, followed by Oyvind Strom and Oyvind Birkenes, who are heading Nordic's newly established business units for short-range and long-range. After a 15-minute break, two people from -- or Geir Langeland and Kjetil Holstad will share with us the market strategies and how we will capitalize on innovation, followed by Pal Elstad, CFO, who will cover the financial perspectives. And following the second break, we will have a panel session and Q&A. This will be the first time we do a panel discussion. It will be moderated by Rob Sanders from Deutsche Bank and Christoffer Wang Bjørnsen from DNB. That's something to look forward to. And after the panel session, we will open the floor for Q&A from the audience here in Oslo. And as we proceed, please note our disclaimer regarding forward-looking statements. And then for your information, all the presentation material will be now available for you to download online. And that's -- I would like to -- it's my pleasure to introduce our first speaker. He is regarded as one of Norway's most influential technology leaders and has been a driving force behind groundbreaking technologies. His career has been driven by a passion for engineering and design. He actually started in Nordic Semiconductor as a developer back in the '90s. And after several years leading semiconductor companies, including Atmel, we have been privileged to have him back again in Nordic since January this year as the company's CEO. Today, he will kick off the conference and explain to us how he plans to drive growth and restore profitability in Nordic. Ladies and gentlemen, please give a warm welcome to Nordic Semiconductor CEO, Vegard Wollan.

Thank you, Anne and good afternoon, and again, welcome to all of you in the audience here. Great to see you. And welcome to those of you online. Thank you for joining. Most of my management team is with me here today. And together with the rest of the Nordic team, we are looking forward to present Nordic and will be discussing our way forward with you in today's presentations. As you heard and saw on the video, we are a global leader in wireless connectivity solutions. Our mission is to simplify and improve lives through things connected. We achieve this by innovating and developing for and with the world's leading electronics companies. And to have this position, we need to have the best and competitive products at all points in time. It has been a while since Nordic has launched new chips and SoCs, and that's why I am so confident of the time ahead. Since we finally enter an era of launching new and truly groundbreaking products and chips based on our new 22-nanometer platforms. We are building from recognized strengths that are recognized with our customers, partners and also even our competitors. Nordic has always been committed to ultra-low power and ultra-low power wireless connectivity. Since some 40 years ago, when the company was established, this has been key with Nordic all the way through. I even recall that from my early days with Nordic back in the '90s. We are low power. That's in the company DNA. And this enables the best battery lifetimes possible. But we are much more than low power. We deliver high-performance processing and compute power, same integrated chips, and we deliver this at the right price points. And we have our unique go-to-market model that enables us to create fantastic customer base with the highest customer satisfaction, both among our key customers and in the broad market. Here, you see a great lineup of our multi-protocol products across the wireless technologies and standards. We are enabling some of the world's largest IoT ecosystems run by the tech giants. Apple's Find My, Google Find My Device, Amazon's Sidewalk being great examples. But I said earlier, leadership involve so much more than just being the ultra-low power leader. And ease of use is truly a very important selection criteria for our customers. Our software solutions, and what's on the right part of this page and slide, is a major part of that success, truly to be making our customers, engineers and developers successful. And I had a discussion a few weeks back with an engineer, professional software developer from one of our key customers. And she told me a fantastic story. Building a specific function in our chips in the past took a bit more than 1,000 code lines to develop. With our recent nRF Connect SDK, she did this with less than 10 code lines. And that's truly making our customers' engineers more effective and successful. In our software framework, our customers' engineers are developing, maintaining products, moving between technologies and very importantly, developing their next-generation products based on their previous generations. It's a framework you develop faster and more efficiently, and we enable them to meet their time lines. Finally, we have Nordic's unique and world-class innovative tech support with Nordic's DevZone and the tens of thousands of engineers supporting each other, reaching out and innovating and engineering together online every day. I joined Nordic in the beginning of '24, as Anne said. And throughout the year, I've said a few times that our overarching goal is to be driving growth and restoring profitability. And together with my new and revitalized management team, I've spent a lot of time meeting customers, partners, employees to find what really matters the most to succeed. We have changed our road maps to adapt to our customer needs going forward. We are improving our engineering execution by enabling organizational autonomy and changing some of the ways of work. Today, I hope that I will be able to show you, and together with the team, we can show you that we are on the right track. And we have the right people and plans to move forward towards our goals. My confidence builds on three main points: sharpened priorities, focused product plans, and improved engineering execution, are the first; and secondly, a more market-adaptive, customer-centric organization; and for the third, we have exciting upcoming product launches where we are capitalizing on R&D investments made over many years. With this, we shall be driving profitable growth in the years to come. While we are recognizing our strengths, we also need to acknowledge our challenges in the ways we have adapted to our markets, in our strategic priorities, product road maps and in our resource allocations and the way we have been organized and executing. We must admit that we have been too slow to adapt to our road maps to changing customer demands in a demanding market, and we have been inefficiently organized in certain areas. We have simply not been getting the most out of our excellent engineers. Some programs and projects have been allowed to continue for too long, while others had too little resources to execute on time. We need clear priorities with regard to focus markets, investment levels, and we need to improve and streamline our framework for resource allocation. Further, we need to make sure that our product road maps are aligned with customer demands. Finally, we have built up an organization capable of handling a much larger volumes and revenues than we saw through 2023 and into '24. We have now done a lot of changes within Nordic within these last 9 months, and we are continuously making further improvements and changes. These are a range of bigger and smaller changes, and you will get to learn about some of them here today. Nordic's strategic core remains unchanged. We shall be the leaders in wireless connectivity, we shall excite developers, and we shall engage our entire customer base, both our large key customers and the customers in the broad market. However, we are taking actions to make changes to address three main purposes. First, we are sharpening our strategic focus. This means that we are reallocating more resources to speed up some projects, while other projects and development projects have been put on hold. We have to do a lot of work and changes, and we have done a lot of work and changes to make sure our product road maps are hitting the right value and the right price points of our customers. Secondly, although we have world-class engineers, we are changing how the engineers are organized and some ways of work in the various engineering teams. And thirdly, we are strengthening accountability. The teams are given a great deal of autonomy and when we delegate decisions, we also need to delegate responsibilities. For this to work, we'll monitor project developments closely to make sure we are on track and adjust course when we are not. So these changes will change the way we work with some common themes across the Nordic organization. We are seeking to accelerate time to market for key products, we will focus sharper on selected target markets, and we are building stronger partnerships both upstream and downstream. We have developed clearly outline action plans, and the overarching target of everything we are now doing differently is to improve our return on investment, drive growth and restore profitability on the group level. As part of the reorganizing and the strategic realignment, we expanded the management team and established four new business areas during second quarter. As you know, our established new Short-Range business unit area is headed by Oyvind Strom. Strom came from a career within the semiconductor industry from Microchip in many different positions and leadership roles. The second new business unit is Long-Range, which will be scaled by Oyvind Birkenes. Birkenes Joined us from Airthings and has a long previous experience from the semi industry from Chipcon and Texas Instruments. The two other new businesses, Wi-Fi and PMIC, are still in early stages. And the new Wi-Fi BU is headed by Joakim Ferm. He's been with Nordic for 16 years. And finally, the new power management business, headed by our VP Corporate Strategy, Kjetil Holstad. He's been with Nordic for the last 10 years, and before that, 16 years with Atmel and TI. So together with the rest of the team, these guys have been given the mandate to sharpen our strategic focus and strengthen execution. Before I give an overview of our plan and outlook. Let's have a look at the overall market and some major trends defining our opportunity. A lot of different things will affect our markets, but there are some major trends playing an important role. For the first, hybrid work has come to stay and workers will be equipped with more digital and physical tools wherever they are: at the office, at home or on the go. Our lives are generally becoming more connected, such as within fitness and gaming. Secondly, connected health care remains a disruptive market opportunity. Today, mainly driven by the large and growing markets for continuous glucose monitoring and drug delivery systems such as insulin injection pumps. There are much more to come in this segment. And for the third, we see disruptive potential within industrial applications such as building automation, infrastructure appliances and within asset tracking. Common for these three to the left, so the Consumer, Healthcare and Industrial, is that there is a huge untapped potential here. Many people and businesses haven't yet begun their digital journeys and many have not been enabled with the opportunity to start the adoption of these products and technologies. There are lots of people who will improve their lives with connected health care products in the years to come as an example. Finally, some parts of AI might be a hype. But on AI and machine learning, we are convinced that devices on the edge will become smarter, faster, more powerful, to solve future challenges. We are investing in technology for AI and machine learning, and these capabilities will come in multiple Nordic products which we have in our product road maps. These mega trends continuing will benefit Nordic when we drive growth and restore profitability in the coming years. We have long said that our target financial model should allow us to generate EBITDA margins of 25%, based on gross margins of 50% and R&D costs of 15% to 20%, SG&A costs below 10%. We are not where we should be right now, and we need to do three things across all our business areas to reach our target profitability. For the first, we need to drive growth and capitalize on our upcoming product launches in the growth markets we have defined. For the second, we need to maintain and improve our gross margins in certain areas and regaining traction in the broad market would also support our gross margins. For the third, we need to contain cost and show that we can grow without adding too much cost. Pal will talk more about this. As I said, we established four business units earlier this year. And for the purpose of today, let's split them into three stages in the way we look at them based on their maturity levels. On to the right, you see our established Short-Range business, which currently accounts for close to 95% of our revenues. And with our current road maps, this will continue to be our main growth engine also going forward. In the middle, you have our Long-Range business. And here, we have yet not managed to generate sufficient revenue and the results are negative. Going forward, we're going to scale volumes, gross margins and costs to move this business towards profitability, our way to create a commercially sustainable operation. And to the very left, you have our early-stage businesses in Wi-Fi and Power Management, where we have just begun from moving from development into commercial markets. Having learned from our history in the long-range segment, we are planning to bring these businesses much faster towards profitability. And in the changes we now do within Nordic, we are managing and operating our businesses differently because they are at different maturity stages. And thus, they need to execute differently. So in our playbook, we will monitor and manage these developments with accountability. And please also note that this is also something Nordic has done before as the proprietary wireless business and the short-range BLE business we're also early stage and scale-ups some 10, 20 years back in time. So let's first look at our established business in short-range, where you know we saw high demand during COVID and a sharp cyclical downturn during '23 and '24. We are building our growth scenarios in short-range bottom up based on the road maps we are developing and executing together with our key customers and our growth ambitions in the broad market. However, as a clear market leader, we are also dependent on the market developments. Combining industry analysis from different sources, we see a picture outlining for average annual growth of around 17% in our serviceable market for the years to come. The graph shows a very nice and steady development. Although I think with the volatile markets, we have experienced and seen over the past years, I think we need to allow for some cyclicality and nonlinear growth patterns depending on macroeconomic variables and market conditions. We are working closely with our key customers to innovate and develop future-proof products. However, we develop standard products and not custom silicon. This means that the result of the leading-edge innovation that we do in these collaborations also finds its way to the broad market customers. And as you see on this graph, our top 10 customers have accounted for nearly 60% of our revenue over the past year. And we are extremely glad to see a high activity level with our key customers. But we have also made it one of our top priorities to regain traction in the broad market. With the introduction of the nRF54 series, we will reinforce this customer approach and address the broad market with renewed strength. And Geir will talk more about that later today. To maintain and further develop our leading share of the short-range market, we need to introduce new and market-leading products. And we are extremely excited about the 54 Series product launch coming up towards the end of the year. This is truly an exciting time in Nordic's next growth chapter. We have sampled the two, 1st product versions, the 54H20 and the 54L15, to more than 200 customers each. And the feedback and responses we are getting is just fantastic, very positive responses. All of our key customers are developing with these products and third-party benchmark tests shows that the 54 Series is truly outclassing the competition both on performance and power consumption. This is really groundbreaking technology, which will allow us to renew ourselves, and we look forward to launching a serious of product families with different product variants over the years to come. So how do we see the ramp of the 54 Series? We have high expectations for our new 54 Series and driven by product launches, we have an ambition for the short-range business to grow faster than our markets over time. However, it will take some time before the 54 Series is taking over as the main driver. The 54 products needs to be designed in with our customer products, and our customers' needs to qualify, launch and ramp their productions before we will see a significant effect of the 54 sales in our numbers. So as a result, we expect modest growth with only limited effect of the 54 Series in 2025 and expect growth to accelerate from '26 onwards. As we have tried to illustrate, we expect our existing products to continue to play an important role for a long time also going forward. The 52 SoCs have been designed into many long-lived high-volume products. Please treat this illustration as what it is: an illustration and not as an accurate outline of the expected revenue growth and future split between our product families. Today, we have received many questions to what we mean with the wording modest growth. And the way we see it now, we see that -- our definition of that is somewhat lower than the 17% for the short-range business in 2025. While our ambition to grow faster than the market in the next part of the decade is fully standing. In our long-range business, we are looking to scale with sharper market focus than we have had historically. We see a potentially very strong growth outlook for the asset tracking segment, and we have a great opportunity here to increase our market share further. We are clear leaders of tracking and tags in the short-range market, and with the new and improved products, we are confident that we can take a very strong position in asset tracking also in long-range. We also see customer cases in metering, industrial IoT, enabling us to establish a more substantial market share in these markets, though coming from a smaller share. For us to take significantly higher market share in these growth markets, we also need to strengthen our value proposition. Over the next couple of years, you will see us launch new products with significantly lower cost and price points and significantly higher value for the money. This starts already with our new 9151, which we just launched now in August. At a 20% size reduction and significantly lower cost, this product greatly improves our product market fit within our target markets such as asset tracking and metering. Another important strong point is that the 9151 is manufactured completely in U.S. tariff-free countries of origin, which obviously is a competitive edge for us and for our customers at the moment, particularly in North America and Europe. 9151 also has a performance to handle satellite connectivity, which means full global coverage and solid fallback solution for our customers and products should they be out of coverage. The 9151 is only the first step towards our current product road map. And we will see further improvements in cost reductions with the first products of the 92 Series expected to ramp from 2026 onwards. So when do we plan for profitability in our long-range business? We have set our target for the long-range business to reach profitability in 2028. And to achieve that, we need to establish a revenue base of more than $100 million by penetrating our selected focus markets. This requires successful road map execution, new product introductions to improve our offered value proposition so we can address larger parts of the market, drive growth and strengthen our gross margins. We need to grow without adding cost, and we will monitor the progress closely to make sure we are on track with growth going forward, margins and costs included. And Birkenes will talk more about that bit later. Now moving on to our early-stage businesses, starting with Wi-Fi, where we currently are in an early commercial stage. Like in the long-range market, we are going to apply a sharp focus on selected target markets for ultra-low power Wi-Fi connectivity. We have started out with the nRF7000 as a companion chip to our products in short-range and long-range. We are going to present a significantly stronger value proposition with the launch of the 71 Series, which will leverage Nordic's new 22-nanometer platforms, offer best-in-class power consumption and radio performance, lots of integrated processing, integrated memories, advanced security and AI/ML acceleration. Our selected serviceable markets are expected to grow from around 400 million units to 1 billion units by 2030, and we plan to capture a meaningful part of this market. We have set our financial targets to establish a more than $50 million business and revenue and profitability in 2028. The other early-stage business is our power management or PMIC business unit, which we have built in-house, and where we have set similar targets to establish a $50 million revenue and reach profitability by 2028. Most of our customers' products needs power management aside the wireless SoCs. And with our position as an ultra-low power player, we have world-leading competence in this area. So with a PMIC product line, we take control of the entire energy path from battery to antenna, which will be key to also move up in the value chain to deliver solutions rather than products to our customers. And our Head of Product Strategy -- Head of Strategy, Kjetil Holstad, will talk more about the Wi-Fi and PMIC businesses and other projects and opportunities later today. Technology developments will play a crucial role in creating a more sustainable world, and we work to support our customers and their end customers connect their devices in an efficient and reliable way. A sustainable world needs much more sensors, have the concept of sensing, compute, connect and take some action, which there will be a lot of in this area. Many of our customers' products support sustainable product goals and innovations within industry, infrastructure, agriculture, energy, education, health, clean water and many more. Low energy consumption is an important part of this value proposition also to minimize energy consumption and also to minimize battery waste. Our ambitious greenhouse gas emissions targets were validated by Science Based Targets Initiative this summer, and earlier this year, we were glad to see TIME magazine recognize our efforts and included us among the World's Most Sustainable Companies in their 2024 review. Supply security is high on the agenda for many of our customers, especially after COVID and the shortage with constrained supply. With sourcing from two of the world's leading wafer suppliers and from multiple geographical locations, we are very well positioned going forward, a better position than many of our competitors. On this picture, you see our supply chain manager, Ole-Fredrik, and TSMC CEO, C. C. Wei, at the laying of the cornerstone of the new wafer fab in Germany last month. Moving forward with both TSMC and GlobalFoundries, we also are among the first to transition onto the smaller and more modern 22-nanometer production platforms, which is optimal for our SoC products. This will allow for higher integration, better performance, improved power efficiency on our SoCs, translating into more value for the money, for Nordics customers and for Nordic. Nordic is on a long-lasting growth journey, and our ambitions at the group level are to deliver average annual growth of more than 20% through the decade. And we will move towards our operating model profitability of 25% EBITDA margins within 5 years. This will require us to drive growth, support gross margins and contain cost at the same time. I am confident that we are fully capable of executing our road maps and our action plans that will make this happen. Let me summarize our investment case. We have a clarified strategy with sharper priorities and an organizational setup which is more market adaptive, customer-centric and laser-focused on our product road maps and engineering execution. We are looking forward to introducing groundbreaking new products with the 54 Series just around the corner in the short-range business, and with new generations coming up in our long range and Wi-Fi businesses in the years to come. As I just mentioned, we plan for a profitable growth outlook as a clear market leader in a recovering market, with upside potential in our scale-up and early-stage businesses. I truly look forward to the rest of this Capital Markets Day and look forward to meeting you all during the day. Thank you very much for your attention.

Thank you, Vegard. Let's continue with our next speaker for today. I am pleased to introduce Oyvind Strom, our EVP of the new Short-Range business unit. Oyvind has more than 25 years of experience in the semiconductor industry with both key global products and business leadership roles. He joined Nordic in April this year after several years in Atmel. And with a PhD and a deep expertise in driving innovation, Oyvind brings a wealth of knowledge to our leadership team. Oyvind Strom, the floor is yours.

Thank you, Anne. Thank you, Vegard, for a great start to our Capital Markets Day. I joined Nordic 6 months ago and it has -- and after I've been working for the industry for more than 25 years for two great microcontroller companies. Joining Nordics has been like a dream. There is so much talent, there is so much opportunity in this company. We have the world's greatest team. And despite the bumpy road that we have seen over the last months, our employees come to work every day being proud of their achievements. They are inspired to reach the next targets and they work very hard to get our next generation of products to the market. And I'm happy to say that we are getting there. Tomorrow, the first commercial shipments of the 54L Series leaves our warehouse and being shipped to a key customer. For us, it is marking the start of a new era, and this is also why I'm super excited to be here today. I'm telling you all about our next-generation family. Yes, we have work ahead of us. But we have the best team and the best product. We are starting in a pole position, and it's really up to us to win and winning is why we are all here today. So with that, I will start talking about the short-range business unit and what we are about. Short-range is our main engine and we refer to it as our established business. We have built a global leadership position within Bluetooth Low Energy over the last 2 decades. Still, we are nowhere near fulfilling our potential. Having such a clear leadership position combined with, as I will show you, the very best next-generation products provides us with a unique opportunity to grow. The pandemic led to a wafer shortage, and this affected our ability to serve our customers in the broad market, meaning small customers that are taking midsized volumes over a longer period of time with a price premium. Strengthening both this broad market and at the same time growing our key customer is a priority and something that our EVP of Sales, Geir Langeland, will talk about later today. All in all, this is what leads us to the ambition and the target of growing our revenue above market growth throughout the decade. To achieve this, we have made large investments in our supply chain, moving to 22-nanometer node and expanding our partner portfolio. We also need to execute on our road maps, not only on the hardware side but also on the software side. Remember, our complex products are easy to use and robust seen from the customer side. We need to deliver on our promises to the market both on our software and on our hardware. So what is the opportunity in our markets? You will find different predictions from market analysts out there. And what you see here is a blend of four reports that reflects what we believe is a realistic growth trajectory for our serviceable market. Overall, we come with our products, address the market with an estimated 17% annual growth rate. Breaking it out, Bluetooth Low Energy is predicted to have a 20% growth primarily driven by Healthcare, Wearables, PC peripherals, electronic shelf labels, tracking applications and more. In the IoT space, Thread is showing a growth of 28% primarily driven by smart home and smart building markets. It is rare to have such a growth opportunity in a well-established market. Being in the leadership position puts us in a very, very good position to grow moving forward. So what will now enable this growth journey? The answer to that question is the nRF54 Series. We have over the last years worked on the new processor architectures for a range of existing and new applications. We are very proud to start sharing more details about the two upcoming product families here today. The 54L will be the continuation of the highly successful 52 Series. The 52 Series has become the key reference point in the market today. And although it's aging, it's still very competitive, seen from a technology perspective. The 54L will take the best of the 52 Series and make it better and be a defining wireless microcontroller in the market. With the 54H, we are leapfrogging and lifting performance and security to the next level. It is a true system on a chip that can be tasked to solve advanced applications in the multitude of domains. This is the stuff that gets engineers excited. Let's look a little bit closer on the 54L Series. As I said, it is the continuation of the highly successful 52 Series. We have taken the best of the 52 Series and made it even better. Processing performance, in other words, how fast you can execute your application and how much you can do per time unit has been more than doubled compared to the 52 Series. At the same time, we have reduced the energy consumption by more than half. Why is this important? Generations of end products get new features. They do more and are smaller in size. The 54L Series enable this, and as it can be used as the single MCU in the system, it can handle the application and the communication as a single-chip wireless MCU. Our 54L Series have our latest generation radio technology. Bluetooth SIG, the standardization organization for Bluetooth, just released the Bluetooth 6 specification end of August. Our fourth-generation radio supports Bluetooth 6 out-of-the-box and it is future proof for a whole range of new BLE features expected to be released over the next few years. Security is paramount and increasingly important, not only because our customers require it, but also regulatory requirements are rapidly emerging. We have implemented the latest generation security features and enabling our customers to certify their products on the highest security level with PSA, which is an international recognized security standardization organization. The 54L is manufactured in the 22-nanometer technology. Not only is the process technology state-of-the-art, but we have also implemented proprietary ultra-low power technology and we have IP that ensures our leadership position in the low power domain. This enabled our customers battery-operated devices to run longer. Finally, many of our customers make very small products. That can be tags, it can be trackers, patches, et cetera. Size is therefore important as they do not have much space on their boards. Our ultra-small package technology is a differentiating feature for us in the market. Our 54H technology or 54H Series sets a new market standard and is now our new flagship product. It ups the performance compared to the 52 Series, having 5x more performance and being 6x more energy efficient. It has multiple CPUs and advanced bus systems. It's a true engineering masterpiece, and its low-power architecture and performance makes it a very strong platform for AI/ML on the edge. Applications can be in the sensor fusion space, Healthcare, mobility, Wearable, PC peripherals and the IoT space, all our application areas where we already have customers developing products on this platform. Looking under the hood, the 54H will deliver 4 CPU cores, next-generation radio supporting the latest Bluetooth 6 specification. It ups the game on security, delivering a very flexible and granular security scheme tailored for the needs of the application. It has Nordic IP and technology to maintain ultra-low power leadership. Coupled with advanced peripherals like CAN and high-speed USB, high-speed memory interfaces and state-of-the-art analog-to-digital converters, there is a huge range of products and end application that can be realized through this chip, not only products for today, but also products for tomorrow. In advanced systems today, you will typically have 1 to 2 MCUs, a communication chip and analog circuitry and sensors. The 54H will remove the need for these leading and significant savings in bill of material on the system level can be realized for our customers. This chip is leapfrogging our competition. To illustrate this point, we benchmarked it against some of the highest end embedded MCU systems of our competitors. We found that we have twice as much processor performance, and we are 30% more energy efficient than the products from our competitors that comes the closest. These are staggering results and something we are truly proud of. And looking at the chart, I think they speak for themselves. We have chosen to partner both with TSMC and GlobalFoundries for the 22-nanometer process. In embedded systems space, 22-nanometer is today the state-of-the-art process, where we get all the properties like the radio performance, low power and nonvolatile memory that we need to make the best products. We expect the 22-nanometer to be the new battleground in the market, but we are one of the earliest adopters. We have IP and low power technology in this process node that puts us ahead. 22 nanometers is important because it allows us to have the technically best products in the most cost-efficient wafer technology today. This, coupled with the fact that we have diversified our supply chain, puts us in a pole position for growth in the market. So where are we now today? I'm happy to say that we are in a good place for these products and on track for launch this year. We are currently in the qualification stage preparing the product for mass production. We have the first orders on the books, and we will continue to ship products supporting initial customers on initial ramp volumes and prototype volumes this year. We are also paying special attention to our module partners to allow a scale to the broad market at launch. We have talked a lot about hardware here, and that does not do full justice to the rather large investment we are doing on the software and design enablement side. Customers buying our chip benefit from a huge ecosystem of software to quickly be able to do proof of concept and develop their products. In other words, we enable ease of use for these customers. Nordic is recognized in the industry to deliver the most robust production grade software. This combined with our innovative support and training system, will guide our customers to success every step of the way. One or two products is not enough in the market. As the Bluetooth market grows, there is a need for a whole range of products with different properties adapted to different end markets. We are now in a situation where we have done the heavy lifting on technology development, and we can utilize our engineering force to launch product at a much higher pace compared to previous years. Our ambition is to launch 2 to 4 new product families per year. It will be products in a wide range of properties, enabling us to address the full serviceable market. We in Nordic, we like to see our customers as partners. And as partners, we share road maps and information that allows us to make the best product in the world. We will never make a product for only one customer. But if we make product for the leading customers, they will propagate. So how do we translate all of this into a growth plan? I have said several times that we have a unique growth opportunity with the introduction of the 54 Series products. As we start introducing products in the market, we will start seeing early revenues on the 54 Series in 2025. But since customer designing cycle takes time, the ramp-up speed will vary. We will see a limited effect of the full potential of the 54 Series in 2025. We will introduce more products throughout 2025 and '26, and we will accelerate growth, and we will see that the 54 Series become more and more important, contributing to accelerated growth throughout the decade. To summarize, we have a unique growth opportunity ahead of us, driven by the 54 Series. Strengthening ties and growing customers across our customer base will further accelerate growth. Moving to the cost-competitive 54 Series and 22-nanometer will support our gross margin, and this will be further strengthened as we revitalize the broad market that represent stable higher-margin business. Last but not least, we will continue to invest in our market-leading products, building on our market and technology leadership also being recognized as the reference solution in the future. I would almost say that sky is the limit, but I'm super excited to show you the potential over the next few years. Thank you, everyone.

Thank you, Oyvind Strom. Our tight schedule brings us to our next speaker before we deserve a short break. With more than 15 years of experience from Texas Instruments and nearly a decade as the CEO of Airthings. He brings us huge expertise from the semiconductor industry. Joining us in April this year as part of the structural changes and new leadership team, he has already made strong impact. He also just crossed the finish line of Oslo Half Marathon this past weekend, proving he's always up for a challenge. Oyvind Birkenes, Head of Long-Range business unit, over to you.

Thank you. Thank you, Anne, and I can certainly not run as fast as you. So I think, I'll sign up for the full marathon next year. So when Vegard called me to take on this role to lead the Long-Range business unit, I was first a bit skeptical. Like many of you, I have been disappointed seeing the results from cellular IoT and the revenue growth over the last few years. But I've also been on the other side of the table, building up an IoT product company with Airthings. And there, we were creating IoT connected air quality monitors for consumers and for commercial spaces around the world. And it was very clear back then when we developed those products that if we could utilize cellular IoT in every device instead of just the gateway, the products would be so much better. The user experience would be better, the analytics will be better, and we will create more engaging products. So I'm very excited about what we're about to do. And since I came on board in April, I've been traveling around the world visiting with customers, partners, potential customers, and I also spent a lot of time with our exceptional engineering teams in Finland. I don't think you can find cellular experience like we have in Finland and today with Nordic. And I'm very excited about what we're going to build moving forward. So I will share our assessment of the long-range business and what we are changing to grow both short term and long term. We're going to take market share and we're going to expand the market. I'll also show how we are sharpening our focus to accelerate growth to create a really great business and a differentiated business for Nordic over the coming years. We're going to reach profitability by 2028. But for us, that's just a small milestone on the road ahead for the longer-term goals that we have for this business. So I want to start to talk a little bit on why product companies will look more and more towards cellular connectivity in the future. Cellular connectivity offer the most reliable global network. It's a managed network where there's people actually managing these networks every day with security standards, and it provides more or less global coverage. You can connect any product directly to the cloud without any local gateways. And with cellular IoT, you avoid the risk of connecting devices to your local networks, which is usually prohibited in any commercial space. They don't want to connect for security reason, any IoT devices to your local Wi-Fi networks, for example. We are seeing that for applications like appliances, health care products, we see also for elderly care products, I also see it from my -- even my Nest Protect, fire detectors, smoke detectors at home. That's -- many people connect their devices first time. Let's say, you have a smart oven at home or a smart refrigerator, maybe you connect it with Wi-Fi first time when you install it, it's really cool. But then you change your Wi-Fi router or you get a new network provider, have a new password. And then what we see is that customers don't reconnect their devices. And this is a huge issue for the global brands that are building these products, and for all the OEMs and everybody that wants to see the data from these products. They need the data analytics. They need this for firmware updates. They need is for security updates, to improve their user experience and to make the next-generation products even better. So these issues that we see many times with BLE and Wi-Fi is not an issue with cellular IoT. Products will get automatically connected without any user intervention and they will stay connected. So it's very clear that as the price of cellular IoT comes down, the market will expand into many more applications. And Nordic is certainly at the forefront to capitalize on this opportunity, and it's a bit how we saw the Bluetooth Low Energy market in the early days. It all comes down to cost, to power consumption, ease of use, and that's what we at Nordic are solving. So why has it then taken so long? We see three key reasons why we are, where we are. It's been historically a lack of global coverage for LTE-M and NB-IoT. Customers have been asking for 2G fallback solutions to secure that they have coverage, and we have not been offering that. We see that now 2G is being shut down in country by country, and we see that mobile operators are enabling LTE-M coverage more and more base stations and in more and more countries. We also see now with new satellite technology, we can have a backup solution to satellite networks, and I'll talk more about that in areas where you don't have coverage. So the lack of global coverage we are seeing, this is going to be behind us moving forward. The second issue has been that our cellular IoT solutions have been too costly for wide adoption. We are changing this now with nRF9151 and with our aggressive product road maps moving ahead. The third has been complexity. It's been challenging for product companies to create products with cellular technology. We have learned so much over these last years, and we now finally have solutions that are easy to design in and have very robust software and software stacks for connectivity. So we have great solutions now all the way from the antenna to the cloud. So our approach moving forward, we see that we have gone too broadly with a costly solution and we are changing this. First of all, we are sharpening our focus to three core markets where we see we have three differentiation -- true differentiation and we already have proof points of future growth. And these markets are asset tracking, metering and within industrial IoT. Secondly, we are making it a lot easier to utilize cellular IoT products in any application, into existing applications and in new applications. And we are also making it easier for customers around the world to actually move from incumbent players that already have a high market share and move them over to Nordic. And with geopolitical issues we're seeing right now, we see a big interest in this. Thirdly, we are changing our product road maps to lower cost solutions with higher performance so we can increase the market share but also expand the market of industrial IoT and asset tracking and many other markets with cellular connectivity. And Nordic is highly differentiated with the lowest power cellular IoT connectivity solutions on the market. Low power is very important in these key markets. It enables battery-operated operation with very long battery lifetime. And if you look into asset tracking, it's a market that's going to grow tremendously over the coming years. As the solution cost comes down, we're going to go from tracking very high-end assets that we do today to lower cost assets at much, much higher volumes. And asset tracking provides enhanced operational efficiency, loss prevention. It enables data-driven decisions from logistics companies, improved security and compliance. And Nordic provides fully-integrated asset tracking solutions with now the new nRF9151, the lowest power, it has integrated locationing with GPS and has the smallest size. And if you look into smart meters, these are typically today connected proprietary networks. These are costly to maintain, and we see many utilities are tired of having to run their own proprietary networks, or we see also metering companies that have rolled out meters with modules from China. We see a big uptick in smart metering products, utilizing cellular IoT moving forward, and this is a product that will ramp over the coming years, and they will last for many, many years to call. Low-power, country of origin, radio performance, security are all really important factors to win in this market, where Nordic had a strong play. Industrial IoT is a broad market of remote sensing and control. With our easy-to-use solutions, with low power and, also now, with our nRF Cloud solution and high level of security, we have really what it takes to win in these type of markets. And we also have a lot of synergies with our Bluetooth devices and Wi-Fi solutions for the software, for the tools, but also for customers so we can sell complete solutions. We see that more and more applications are going to use multiple connectivity solutions for their products moving forward. And Nordic is in a unique position here. We have a conservative approach when we look at this serviceable market for cellular IoT. We're still seeing a huge growth in asset tracking over the coming years, and we already have a good share of this market. We'll grow with the market and we will take a bigger market share. If you look on metering, it's a large market overall, but with a wide range of connectivity solutions. So we see the serviceable market is modest but also with big upsides. And we're going to see -- we are already seeing more and more interest in cellular connectivity as coverage is coming and price points are going down for the solutions. And for industrial IoT, there is also a range of connectivity solutions being used today. But as solution costs are coming down, power consumption is coming down and that cellular IoT becomes easier, more and more companies will move to cellular-type connectivity. It's really about the price and ease of use that will enable this type of markets. The great thing is that with Nordic, we deliver a complete solution all the way from the antenna to the cloud, making it really easy for customers to utilize complex cellular technology in their products and to get their products easily connected and make them stay connected. Secure, robust and easy. And we are certainly seeing that we are exciting the engineers and our customers. And also an important part of this is to get higher up in the stack of our products and with our customers. Every customer must have a cloud solution. When they use -- create IoT products. They need it for device management, for software upgrade capabilities. And most customers also want to know the status of their products and where is the location of my products. And customers want to ensure that the products are fully updated to the latest security standards. So over the last few years, we have been developing a cloud solution for customers to use, which we call nRF Cloud. It makes it easier and faster for customers to go to production. So from the start with a project until they go in mass production, it goes faster and it's easier for these customers. While it's only a fraction of our customers that are utilizing and buying these services today, we see an ever-increasing demand and interest for this type of solution, makes it easy and secure for our customers. And it's sticky. Once we get customers into this, they will stay. And it will generate higher margin recurring service revenues that will improve our gross profit margins over time. We talked about coverage, and we see that coverage now becomes truly global. And growing network coverage removes the barrier to utilize cellular IoT. And as I said, the 2G fallback that has been required by many companies is not an issue anymore as 2G is being shut down in country after country. And non-terrestrial network, so satellite communication, is coming up as a backup solution and a great solution to connect and especially where you don't have local coverage. And we will support NTN with 9151 in the future. And we can do this satellite communication from a tiny device like nRF9151 with small batteries and standard small antennas and especially works very well with low orbit satellites, which are coming up in big quantities moving forward. We're also seeing a number of operators are starting to turn on more LTE-M networks or 5G LTE-M networks. And just a few weeks ago, Vodafone confirmed that they are turning on LTE-M in the U.K., and U.K. has been a hurdle for many European rollouts so far. We're very excited to talk about nRF9151. So I just got a call yesterday from Asia that it's now running in full production in our production facilities. And this is the smallest and lowest power wireless MCU and lowest power solution for cellular IoT in the industry. It supports 5G LTE-M and NB-IoT and it also includes GNSS for locationing. And it supports DECT NR+ for local networks. It's 70% smaller than our biggest competitor and it supports both Power Class 3 and Power Class 5. And we will support non-terrestrial networks for global coverage moving forward. And it's also being produced in a U.S. tariff-free country of origin. To grow and gain share, we are executing on some near-term actions. First of all, we are simplifying migration from incumbent players to Nordic. There are some incumbent players out there with much higher market share than us. And we are working with companies and we are helping to make it easier to do these migrations with everything from guide, software to evaluation sockets to, of course, doing training and helping out our sales and distribution networks. We're also focusing a lot on NTN and getting this out on the 9151 as we see this is going to open up many more design-ins for our cellular connectivity. Then we're going to capture a significant share of growth by enabling partnerships with telecom operators and IoT platform providers. And we are also doing bundled solution, which is unique for Nordic, with our BLE solutions, Bluetooth solutions and Wi-Fi solutions and our nRF Cloud solution. So as we just launched nRF9151, we also have a very exciting product road map moving forward. We are transitioning as well over to 22-nanometer to also create the next-generation cellular wireless MCUs. We're going to utilize the application MCUs that you saw Oyvind Strom presented from the 54 Series. And we already have samples in our labs in Finland of the new 22-nanometer platform. We are very excited to get this out in the market. It comes with improved performance, much higher level of integration, lower power and lower costs. It certainly have higher value at lower cost to drive market expansion, and also over market share of cellular IoT. It's very clear that with all the benefits we see with cellular IoT technology, it's really the price and ease of use that is the current barrier to market expansion. With the nRF9151, we can win a larger share of the market and also enable the market to grow. And finally now, it's in mass production. And we'll take this to the next level with our next-generation 22-nanometer platform, the nRF92 Series. So as I said, I just came onboard earlier this year, and I've been traveling around the world to meet with a lot of customers and a lot of potential customers. With nRF9151 and our future road map, we will unleash a large part of the cellular IoT market. We will continue to make it easier for our product companies and OEMs to move to cellular IoT. And it's really the way we look at it now a bit how we saw the Bluetooth Low Energy market in the early days. We will work to reach profitability by 2028. But for us, that's just a milestone on our longer-term ambitions and our longer-term goals: to gain a lot of market share in our core markets like asset tracking, metering and industrial IoT. So to summarize, it's really three keys to turn a long-range business into a profitable business by 2028. Number one, we're going to drive growth by taking share and expanding the market of cellular IoT. We're going to focus on three markets: asset tracking, metering and industrial IoT, and we're going to work a lot on awareness and utilize our excellent marketing teams to also drive this. We're going to increase margins over time. We have an aggressive product road map to lower cost solutions, and by increasing also the share of nRF Cloud recurring service revenues over time. And thirdly, we're going to sell more of what we have, utilize the investments we have done to come quicker to market with new solutions. We'll reallocate some resources to support critical programs in other BUs when required. And we will certainly raise the bar. In our teams, we are going to create customer-obsessed business units and implementing full accountability and cost control. The long-range business will be a truly great business for Nordic moving forward. And we have our milestones to reach profitability and more than $100 million of revenue, but that's just one little step ahead for us to meet our longer-term targets. Thank you.

Thank you, Oyvind Birkenes. Okay. Let's take a 15 minutes break. For you here in Oslo, there will be some coffee and snacks just outside the room. For our online audience, we'll be back in 15 minutes. So don't leave us. Thanks. [Break]

Welcome back, everyone. I hope you're ready for another insightful hour. Now we will dive into market strategies, how innovation is going to shape our future and the financial updates. First out, I would like to introduce our EVP of Sales and Marketing. With an incredible 25 years at Nordic, he has been at the forefront of building and maintaining relationships with all our key customers globally. As one of our longest-serving members of the executive management team, he brings deep insights into the company, perfectly balancing the first perspectives from the new members that you have met earlier today. And knowing Geir, he has likely knocked out a few hundred [indiscernible] this morning. Geir Langeland, over to you.

Thank you. I think you're wrong. And I only do that on Mondays, Wednesdays and Fridays, I think. I've been serving for a long time with Nordic. I think to the people in the room and the people listening in online, I was here when we launched our first 2.4 gig products in 2002. We also announced Bluetooth products in the middle of the decade. It's been very, very important moments of the company, and I feel we're in the same place today with the 54 Series and all the good stuff we got going. There is this level of enthusiasm in the company and enjoyment that we feel every day. So out of all the minutes, I worked in Nordic, I've been given 20 minutes here today. I'll be spending time with you and speaking of our core values, the segments we address and where we can grow our customer count in a profitable fashion. At the same time, I look a little bit backward, where we come from. So it makes sense to look at our DNA. Some of you will have seen this before. The customer is at the front and center of everything we do. But as you know, there's always some kind of evolution in DNA. Since Vegard joined, we've added business units that really sharpens the customer side of things. Our customers expect us to add value across the board from where they start investigating our products, developing with it, shipping it. We've added DevZone and DevAcademy where they can get support and training 24/7 with our products. And with the upcoming launch of the 54 Series, we are at a really breaking point where we're going to elevate the bar from what customers can expect from Nordic. Through our partners, we're now offering a complete portfolio of third-party modules shipping globally, enabling them to put down our components on the board in an easy-to-use fashion. The customers can count on Nordic to deliver. In order to see what's going to lead us to growth, we have to look at some of the trends. We -- and I've done that for more than 2 decades, strategically focus on areas with really high growth potential, but of course being smart, with fundamentals supporting Nordic's ability to win. In Consumer, which is a Nordic stronghold, the penetration rate in some segments could be said to be high. However, there's still room for organic growth. This combined with new and exciting opportunities coming out in the Consumer segment means that the potential to grow is still there. We believe that the Healthcare electronic device market will continue to grow in the foreseeable future with continuous glucose monitoring as a real driving application. As Vegard mentioned, the Industrial market opportunity is big, it's diverse with many types of different applications. And I think people are having problems really understanding how encompassing and wide this area is. It's often in the broad market, which is served by our distributors, supporting remote monitoring and access. And finally, which I think is also very important, is the AI/ML at the edge. It's a buzzword. But if you look at it, it's really looking for two key components that our company delivers. Connectivity, and I think Oyvind Strom used high computation efficiency, et cetera. So we are primed in the market that does look exciting. In order to succeed in these major trends or areas, we are going to need solutions. There is no doubt about it. We're going to need some good solutions. Our customers expect Nordic to be able to offer solutions. With increasing system complexity, our customers focus expand to include system level aspects, in addition to all the megahertz and megaflops or microamps that the other guys have been covering. In order for Nordic to win, we need to support a wide range of technologies. We need to adhere to standards in order to integrate seamlessly into our customers' ecosystem of choice. Whenever you use a part or a component or a system from Nordic, it's got to work. Quality is part of our DNA. As a company, we're embracing the transition from product to solution. We have the focus and the skill set to do so. It's also part of our DNA. Looking ahead, we're very strong in consumer. It is our strategy to strengthen our presence in healthcare and industrial while maintaining this consumer stronghold. Our focus on healthcare and industrial provide Nordic with the opportunity to continue to expand our global customer base and generate a long-term stable revenue. These types of application areas typically have a product life cycle of 10 to 15 years, which is a lot longer than what you would see in the consumer space. Achieving this goal is very closely linked to our ambitions to increase our presence in the broad market. And this is the engine for our long-term success in healthcare and industrial. We'll of course continue to focus on balancing our end market presence to ensure the long-term success of the company. So I can promise you I'm not going to be here 20 more years, but we are going to enjoy a long-term success. We have a very high conviction that the market for healthcare electronic devices will continue to grow in the foreseeable future. Vegard touched on some of these drivers. It's going to be driven by applications such as continuous glucose monitoring, drug delivery, it being insulin, inhalers, et cetera. It's a global opportunity. There is national governments, there are insurance companies driving these applications ahead. And with the outstanding performance of the nRF54 Series, we are going to take this market. And this, combined with the 54 Series dual-sourcing strategy, will provide customers with a geographically diverse and resilient supply chain. If you all remember the crunch we've been through since 2020, it's the #1 thing that's come up from customers. How can you ensure my supply going ahead? Moving on to Industrial. Industrial market opportunity is big, and so is our aspiration. We aspire to be the market leader in wireless IT solutions for the industrial market. This requires a breadth in the product offering. You can't corner this market if you only possess one wireless technology. And as you all should know by now, we have short-range connectivity, we have long-range, Wi-Fi and PMIC to add to that picture as well as cloud connectivity. The applications and the customer base is very diverse. The partners in Industrial are in the broad market, which is mostly served through our distribution partners. Very importantly for Nordic is our partners reach, the amount of customers they touch as well as their design-in skills. We also believe that new ESG-type factors will influence our market through the need for energy consumption or reducing the carbon footprint. Oyvind mentioned that we're lowering the power consumption, so the amount of coin cells being used in the market is also going to drive volume for us, simply because people are looking for lower power. We also are introducing the nRF9151 cellular long-rage products. This will further strengthen our value proposition in the industrial IoT market. And we remain optimistic and confident that the industrial application will be one of the key growth drivers in the Industrial market space. So talking about industrial I would like to introduce to you a new and extremely innovative application to you. But instead of me presenting it, I've obtained a video that should explain exactly what it does. All right. [Presentation]

Very nice. There you have it. And this, of course, is the real thing. So it was hard to see from the video, you flick the switch open, you dispose the medicine that needs to be refrigerated. And it's a temperature-controlled environment that would last for days. So just imagine if you had something like this during the pandemic when people were shipping vaccines. And then when you put it in the box, there's actually a button here to press to sender, and then you will have the shipping label. It's just like in display. It looks like a pretty simple device, but it is actually a little bit hard to explain exactly what it does and what's inside it. So invited [ Clay Alexander ] at Ember Life Science to actually give us a short testimonial on what's inside it.

Hi. My name is Clay Alexander. I am the CEO of Ember Life Sciences, and I'm very happy to be here presenting to you on Capital Markets Day. We are very proud to be partnered with Nordic, and we've been partnered with Nordic for many, many years. You may be familiar with the Ember mug, which is a product being sold worldwide, the world's first temperature-controlled coffee mug, which all of our Ember products have Nordic chips and Nordic processors. So more recently, we've invented the world's first self-refrigerated cloud-based shipping box, and we're disrupting the way that the healthcare industry moves medicines around the world and particularly cold and refrigerated medicines. And with this new box or generation 2, we've actually combined a series of Nordic chips, we're actually using 4 different Nordic chips, the Wi-Fi chip, the cellular radio chip, the Bluetooth chip as well as a power management chip. And by combining all those chips together, we've been able to save a significant amount of power and really reduce our power consumption. We also just really enjoy working with Nordic. We've got a great history of working with them, and they've been wonderful partners. The combination of the Nordic chips in this -- in our processor unit here enables the box to just really function quickly and work well and have, like I said earlier, very low power consumption which is great for battery life. We get about 14 days battery life on this Ember cube. This box is designed to be reused. So you can ship medicine directly to patients' doorstep or to a hospital or clinic. And then the shipping label automatically flips to the return label. We use the cellular radio onboard to go up to our cloud and automatically schedule a UPS or FedEx pickup. And then they come and pick up the box and returns back to the distribution center and where it can be reused hundreds and hundreds of times over many, many years. So again, we're very, very proud of our partnership with Nordic, and I'm happy to be presenting the Ember Cube at this show. Thank you.

Thanks. So I think this is an example of something we see with a lot of accounts. First of all, it's an industrial use of cellular. Secondly, it's illustrative of Nordic being scalable and capable of actually expanding with parts. So this customer started with the nRF51 a decade ago. And now they're designing with pretty much everything we have in a new application. So we can create scalability and actually migrate with customers. So moving on from industrial to consumer. Our consumer business has had many years, a nice growth up until the peak in '22. Post the '22 peak period, we now see signs of a gradual recovery driven by continued demand in applications like gaming, work-from-home type devices, smart home, et cetera. And as I mentioned earlier, we continue to view the consumer market as attractive and believe it offers us a lot of good opportunities to grow organically. Also, the 52 Series has been instrumental in establishing Nordic's consumer business. And with the new upcoming 54 Series I mentioned, we're going to have that moment again. We are going to see a new period of growth and successful design wins coming. And with that, I'd like to share another customer story with you in the consumer space, and it's actually a new category for us. It's the ultimate in low-power consumption and desirable design, it's the Galaxy Ring from Samsung that I'm actually wearing on my finger. Its lightweight, provides very, very long battery life. We're talking more than days, it's more than a week. It is Super compact design. It measures a slew of biometric, sleep variables, workout, walking, running and is connected through your phone. And you know the best thing of all? It's actually using the nRF5340 from Nordic for all the critical processing. It's using the 5340 for all the communication with the smartphone. So we're not an appendage in this application. We're the key MCU. And you see it here, it's the Nordic 5340 MCU with Bluetooth Low Energy. I believe it's the first time it's written in this way. And you're going to see multiple examples of these things coming. I think it's a very nice segue into my coverage of our key customers. This is actually a new key customer for Nordic. Our position with our key customers is strong. The revenue with our top 10 customers has nearly tripled since 2019. It's been a major contributor to our revenue growth. We strive to retain and further develop with the key customers through close collaboration and really ensuring that our product roadmaps are aligned with their R&D programs. There is a long interception with our customer, they are may be 2, 3, 4 years ahead, where we have to intercept with our product launches. We've seen it done with Bluetooth Low Energy successfully, and we're going to redo it with the cellular offering in our long-range program. However, the broad market is still lagging a bit behind. Supply and demand imbalance during and post the 2022 peak period did cause and have caused inventory buildup across the supply chain. In addition, the broad market, as you all know, small to medium-sized enterprises, they faced some pretty severe headwinds: interest hikes and demand drop, et cetera. The broad market recovery is ongoing, although with some regional differences. More specifically, we really observed EMEA, Europe lagging behind the other sales regions that we see. And as I said earlier, we do think that the new exciting 54L, the 54H family launch will enable us to capitalize on this ongoing recovery within our existing customer base and by expanding it with new customers, like I've just shown with Samsung. Speaking of our customers, I'd like to show you a chart which is basically a count of our customers, the number of customers buying from Nordic. You see here, there's a nice steady growth. If you went all the way back to where I started, it was almost a 0, and then it grew steadily until 2020. COVID hit us with a flurry of new customers ramping up as well as some of the key customers I think I mentioned at the Capital Markets Day in 2019. The lead times went up, demand increased, wafer allocation, flatlining on top. And then enter '22, '23, the consumer companies are doing pretty well, but the small- to medium-sized enterprises are hurting. So inventories across the board were high. So there's a lot of customers that haven't purchased from us for more than a year. And the situation is pretty bad still in Europe, but we will recover. The good news, when you look at the total amount of customers now, we actually did hit an inflection point in Q2 '23, and this hasn't been shared before. So the amount of customers now buying from Nordic is on the increase again. And we are going to use this for all it's worth. You see we're now above the level we entered into 2020. And this is the time to capitalize on it. When you're on a roll, you introduce some new products and you can generate new designs. We can generate new designs with existing customers and we can generate new designs with the broad market. Can we do it? We certainly believe so. So I'd like to summarize to how are we going to win? I can pledge to you that we will maintain a high and relentless focus across the Nordic organization to prioritize the customer. Product innovation is what brought us to where we are today, and we will relentlessly pursue this path going forward. We do need, like Vegard said, the focus on execution of our product roadmap and the key collaboration programs. And this is where I think the new business unit is already having an effect. And remember, they've been active for less than 6 months. We really do see a huge difference in the execution. And in this way, we will retain the strengthened position with our key customers. In the broad market customer segment, we do have a very solid go-to-market model. We do have international distributors. We are with the broad liners. We're with specialist distributors. So the model doesn't need to be fixed there. We will however increase our support to them so that they're better able to succeed in selling Nordic products and solutions. We also deem the module business to be critical to our business. The nRF54 series that Oyvind covered earlier is going to be supported by breadth of third-party modules available on the day of launch so that broad market customers can simply pick it up and integrate it into their designs very easily. And through increased focus and effort, the modules will drive growth for us in the broad market. And that is how we will win. Thank you very much.

Thank you, Geir. Now I am pleased to introduce you to Kjetil Holstad, Head of Corporate Strategy. Kjetil has been a key player in the semiconductor industry for nearly 25 years, both in Atmel and Texas Instruments with the last decade in Nordic heading the product management team. Similar to Geir, Kjetil's deep experience within Nordic also fits perfectly with our new leadership team. So Kjetil, the stage is yours.

So I'm going to talk about innovation and how innovation is key for a technology company like Nordic. And I'm going to touch upon how the investments we've done over the last years is going to capitalize when we move forward with a new Nordic 2.0 that Vegard outlined. But before we do that, we need to start to talk a little bit about what is Internet of Things. At the heart of IoT is the real world. And if you want to make actionable insights in IT, you need more than connectivity. The real world is analog. And to understand the analog work, you need computation, you need smartness and you need security. And when you look at the customers, some that we have shown you examples of today, their innovation investments, their attention and their differentiation doesn't lie only in the connectivity. There's a lot of elements that goes into building products like this. They think about their product from battery to the antenna, from device to cloud and from the hardware to the ecosystems. So Nordic over the years, if you've been following us, you have seen that we have added compute capabilities to our chip. We had added more connectivity as the years have progressed, Wi-Fi, cellular in addition to our long-range. We have added and stepped up our security, and we saw some examples of that. Software is now an integral piece of what we do in our R&D, building up the software solutions that allow our customers to build products. Machine learning, AI, those are things that are coming, and developing the ecosystem that you have seen here, we do that in partners with our customers. So Nordic has transitioned from being a Bluetooth connectivity company to a broad end-to-end IoT provider. And we do that because we are investing to growth across our portfolio. It may seem that this is very connectivity oriented. We talk about Wi-Fi, long-range, short-range which are connectivity technologies. But you have seen from the presentation that Oyvind Strom did and Oyvind Birkenes that the products are so much more than pure connectivity. And the interesting here is the synergy that comes when you look at innovation not in isolation within the BUs and within the technologies. And when you explore the synergies that comes from looking at this as a total. Our innovation is embedded in a deep understanding of our customers' concerns and our customer needs in the market they serve. And they are not different, whether that's Wi-Fi, cellular or short-range. A lot of them involve around the same things. We are always evaluating both organic and inorganic growth opportunities to how we can improve and increase our value proposition in our customers. And it's this innovation over years that has led us to this world-leading market position in Bluetooth Low Energy. The position that we have today in the market is driven by the innovation we put in over decades with nRF51, nRF52 and the nRF53 series. This graph shows the last 12 months design certification of Bluetooth. And Nordic, for the last 12 months, have seen about 5x as many products with ours, versus the closest competitors. And over the last years, we've been consistently reporting about 40% market share in this space. But we typically don't show that this is quite a feat when you look at all the competitors we have. We are currently tracking more than 60 competitors in this space while maintaining this leadership positions. This success is not solely due to the chips. Geir talked a lot about the solutions, the ecosystems, the technical support. And we spend a lot of effort innovating also in that space. Back in Capital Markets Day 2021, we talked about 80% of our R&D spending was going into products that was going to be launched beyond 2023. We now start to see the fruit of those investments. We have introduced the nRF7000 series for Wi-Fi. Oyvind Birkenes talked about the nRF9151. And obviously, we have to mention the nRF54 Series that Oyvind Strom covered that really have raised the bar on innovation and technology advancements. So our commitment to research continues across all of these technologies. But it's important to say that the lift that we've done now with the 54 Series allows us now to shift the focus lightly. We've done a major technology transition from 55-nanometer to 22-nanometer. We've done a major transition on the architecture. We developed a lot of proprietary IP and technology to maintain and leapfrog competition in terms of low power and other aspects. Going forward now, we will shift our R&D and innovation focusing to get closer to customers, making sure that we spin out products that are tailored to hit customers in the market they operate. And we saw some of those markets with Geir earlier today. Of course, when you build all of this, you cannot forget the software. And Ember Life Science is a good showcase of that. When they develop with 4 chips from Nordic, doing so with a common unified software framework, really helps their approach to making their products. In our industry, the semicon industry, we have to acknowledge that development takes time. So looking at the 54 Series that the rest of the world are now starting to see, and looks like it's at its beginning of the journey. We have spent about 5 years working close with our key customers to understand their needs and challenges to develop this new, innovative and groundbreaking product. Last year, we started our customer sampling. Vegard mentioned, we have sampled 200 customer each of the 54L and the 54H series. This is a really exciting moment for people who are doing innovation because that allows us to start to get feedback on our products. And we have spent the last year refining both the hardware and software, preparing for a commercial launch. And what's really exciting, and we showed some of that right now, but we're now at a stage that not only are we going to see the commercial launch of the initial products, over the next 12 to 18 months, we're going to roll out more products targeting more customers and more verticals. And those products will be enabled by both new ICs and new software that comes supporting these ICs. The commercial launch is also the starting point where our customers can start their product qualification, preparing for their product announcements and launches. And there's nothing better for us as a semiconductor company developing this for 5 years to see the products coming out from our customers. And there's a lot of announcements coming in '25 and '26 of products that is based on this technology. We've seen from the 52 Series and the 53 Series that once you launch, this product lasts for a long time. We are very well prepared, and this 54 Series lays the foundation of the product strategy in short-range for the years to come. I'm not going to repeat all what Oyvind Strom said about the nRF54 and its groundbreaking potential and performance. I'm going to talk a little bit more about the synergies of R&D. Like I've been saying, the customers that are using Wi-Fi, cellular, et cetera, their needs are not that different. So we have spent a lot of effort into the nRF54. We're now ready to capitalize that across our scale-up and established business units. As we develop these roadmaps, we will fully leverage the architecture, the performance and technology that is put into the nRF54. Some of the benefits you start to see Ember again, was a very good example talking about 4 devices from Nordic. On this slide, you have an upcoming evaluation platform on Nordic called the Thingy:91 X. I think we showed a similar one in Capital Markets Day in '21 containing 2 or 3 chips from Nordic. This one is made with asset tracking in mind and contains 5 chips from Nordic, all coming together with this unified platform, making it a really, really good starting point for anyone doing asset tracking. And this integration and the synergies that comes when we look at all of this together is what's crucial. In the long-range space, the 9151, and what we've been doing there has really raised the bar of the connectivity long-range solutions. The level of integration, the level of low power is unheard of. But like Oyvind Birkenes was telling, there are still some challenges with the product market fit when it comes to cost, et cetera. Taking the long development cycles that we are talking about in mind, it's no secret that we already started on the nRF92 Series, and that's going to fully leverage the architecture and the technology improvements of the nRF54. With the focus that we have now on the 3 key markets, asset tracking being the first, where we are on the short range side, we have a really, really strong position. We know their importance of battery lifetime, the location technologies, the ecosystems. In the industrial IoT, Geir talked about our presence there on short range. So we know that they care about connectivity, we know they care about security. We know they care about the criticalities of infrastructure and similar in metering. So this sharpened focused, we're going to take that into the 92 Series and make it extremely good products for the future. So this new focus in long-range, I'm super excited to see what that can do for our long-range business. Going back to the core of what we're doing. We see a strong overlap with Bluetooth Low Energy and Wi-Fi among our customers. And back in the Capital Markets Day 2021, we talked about how we were going to introduce Wi-Fi in the market. And we have done exactly as we said. The nRF7000 accelerated -- was introduced to accelerate our learning and start the market penetration. Initially combined with the 52, 53 Series and the 91 Series. The 91 series in Wi-Fi is now revitalized with the introduction of the 9151. Now that we're on the verge of commercially launching the 54, the nRF54 combined with our nRF7000 is a unique combination as well. And I'm happy to say that we are seeing design-in across all these product combination with our customers today. Similar to long-range, also here, we are working on the next-generation nRF71. We talked about when we did the Wi-Fi acquisition from Imagination, that what we wanted to do was take the Wi-Fi connectivity and marry it with the DNAs of Nordic on low power and performance. The 71 Series is going to do that. Take everything we put into the nRF54 and combine it with a new ultra low-power Wi-Fi 6 radio. And we are certain that this new product will significantly expand the serviceable market for Wi-Fi. Going back a little bit to where I started, talking about the products in IoT and what they constitute of. One thing they pretty much all have in common is they are battery operated. Nordic's commitment to low power is crucial to extending battery lifetime. And for our customers, this is a key decision criteria when they select a partner. Increased battery lifetime for their products means reducing waste, it means improved user experience for their products. So thinking about battery and energy efficiencies from that battery all the way to antenna is crucial to them. And that is the whole premise of why we are doing power management circuit in addition to everything else we do. We are making power management ICs that are optimized for wireless SoCs that take the customers' entire system into account to make sure we prolong that battery life. It is important to understand that for PMICs, there is no one PMIC to rule them all. Our customer needs vary across their applications. So we understand that and are building up a portfolio of devices, starting with rechargeable products, where we now have 2 products in the market and are working on 2 more coming online soon. Our focus is now also shifting towards primary batteries or non-rechargeable batteries, which significantly will open up the serviceable market for our PMICs as well. And again, super crucial that we do this in tight synergies and a tight integration with the roadmaps of the short-range, long-range and Wi-Fi business units. Talking a little bit back again to the Capital Markets Day in 2021. We identified 4 opportunities in 4 key areas that would help us strengthen our core business that will help us increase our competitiveness, expand the connectivity offering and set us out from this journey to become an end-to-end provider for IoT. Since 2021, we have executed on what we said. We acquired Wi-Fi technology from Imagination and established a Wi-Fi business unit. We established ultra low -- we acquired ultra low-power memory technology from Mobile Semiconductor, which is a critical component in the competitiveness of the nRF54 series. Last year, we acquired Edge AI capabilities from Atlazo. And this comes on top of organic growth of PMICs, RF front ends and the cloud offering that you have seen. We are continuing to explore avenues using a similar framework, seeing where we can strengthen our competitiveness, where we can strengthen the journeys that the business units are on and how we can get in a better shape of serving that bigger IoT play. One of the areas that are very dynamic right now is in the Edge AI space. And with Edge AI, I have to define what we at Nordic mean with Edge AI. This is not new products. This is not a new product category. It's the product that Nordic have served for a long time and that our customer will be making that just gets smarter and smarter, smarter. Whether that's in the wearables space with smart watches or in the form factor of a ring that we showed -- Geir showed, whether that's in the health care space through patches and pumps or in industrial, just to name a few, these devices become smarter. When you look at that Galaxy Ring, it's monitoring your health 24/7 and it does so for 7 days without the need for a recharge and look at that form factor. That product was unthinkable 5 years from now -- 5 years ago. So why do these products need to become smarter and why do you need Edge AI to do so? There's many of reasons to do that. A lot of these things care about latency and responsiveness, sending data all the way to the cloud, processing, waiting for the answer and getting it back just takes too much time. That's same reliance on connecting to a cloud requires an always connectivity and you don't always have connectivity with you. So the bandwidth here, it just reduces the reliance if you can do things locally on the edge. Privacy, when you start to connect to the world becomes a very big concern among our customers. Doing things locally and storing those locally helps mitigate some of those concerns versus sending everything to a cloud. I think you're all aware of the problematic things around cost of data sensors and cloud infrastructure. So moving processing from the cloud back to the device significantly improves costs. And you can say the same about energy. The energy needed to run these data centers in the cloud is just unsustainable in the long term. So we want to move the devices at the Edge to become smarter. And we've been talking a lot today about the importance of energy-efficient compute, which is again, embedded in our DNA. And we have talked about the nRF54 and especially how the nRF54H raises the bar in terms of energy efficiency. When you compare it against not only our previous generation, but across all the competitive landscape as well. Similarly, there have been advancement in what's called TinyML, which is tiny Machine Learning Algorithms that are now are so small that they can run on Nordic devices. So we like to bolster and say we increased our compute, et cetera. But in a bigger scheme of things, Nordic devices are still fairly constrained versus some of the big compute chips out there. So you need some advancement in AI as well. And that has happened while we have developed the 54. And we're seeing customers taking that into effect, some examples on this slide here, but they utilize this technology to enhance their products. One thing all of these products have in common is they all run on batteries. So when these customers are looking for a technology partner, they are, again looking at that process efficiency and selecting someone who can prolong the battery lifetime. I think with this backdrop, our acquisition of Atlazo and their acceleration technology makes sense. The nRF54 already makes a significant advancement here on the two critical parameters, and this is a little technical. But these algorithms, they are measured in the latency, how fast can you run them and the power consumption used when you run those. And you can see here how the nRF54 is extremely far ahead of the previous generation Nordic chips. But it does so with a general compute in mind. So the 54 are made to do this, but a whole lot of other things as well. The technology we acquired with Atlazo is specified for machine learning accelerated in our type of devices. And you will see here how we, in a short distance and in future, will come out with an nRF54 variant that fully embeds the Atlazo technology that, that takes power consumption and latency to the next levels. The products that you've seen today will be much more smarter tomorrow. And we are now collaborating with our key customers to see what this potential can unleash on their products, whether that is to eliminate additional compute chips in their products or just embracing the products as a whole. So to summarize, the nRF54 is based on 5 years of high innovation and technology advancement in Nordic. We have leapfrogged competition on the critical parameters like energy efficiency, ultra-low power, RF performance, and we have increased the potential in terms of what application we can cover. We are now set to capitalize on that investment and that platform into the scale-up and early-stage business units, making the nRF92 series and the nRF91, 71 series to be really exciting products going forward. And we are continuing to look for things that can strengthen our competitive position, our core markets and the new business units. And with that, thank you.

Thank you, Kjetil. We are running a bit behind schedules. I apologize for that, but I hope it was worth it to listen to Kjetil and Geir. Last but not least, and before our panel discussion and Q&A, I'd like to introduce our CFO, Pal Elstad. Elstad has been in Nordic and in his current position since 2014 and held several senior financial positions before then both in Norway and abroad. Pal, we're excited to hear about the financial perspectives. The floor is yours.

Thank you, Anne. It's a little bit unfair of Kjetil to let me talk about finance after you've been talking about AI in semiconductors. I think that's a little bit unfair. But anyway, I'm going to do it. I know you all want to jump into the Q&A session, but I'm going to be quick on the financials. I just want to say, it's a little bit like Geir mentioned the situation we're in now. When I started in Nordic a decade ago, we were -- I was sitting and reporting orders from Fitbits on the nRF51 and we were just to embark on the nRF52. That's been the most successful Bluetooth chip amongst all. I think that's one thing we all can agree on today. What I'm going to talk about now, the management team has talked about ambitions, strategy, et cetera. I'm going sum up the targets both on revenue, operating margins and finally, capital allocation that the team has been discussing today. This is the operating model that a lot of the team has been presenting today. And we have EBITDA target of 25%. And we have clearly historically shown that we are able to deliver that. We did that in 2022. So the model actually works if we get volumes up. That's the main thing we need to do now. And Nordic is a growth company, and we need to get growth. And I think driving growth can be done. We have a highly successful BLE or Bluetooth product offering. We're coming with new products, two new major products in late [ 2022 ]. We have the Wi-Fi, we have the cellular, we have the PMIC. Most importantly, we actually have the combination of all of these that Kjetil talked so much about recently. Growth isn't enough. We need to get gross margin expansion. I'm going to talk more about that on a separate slide, but this can be done with the new 22-nanometer node we're coming out with, but it can also be done by selling more in the broad market. Finally, we need to contain costs. We have had significantly higher revenue than today with a lower cost base. So we can actually do it. We just need to get the revenue up so we actually can deliver on it. This is where we are. Just a little bit recap of the Q3 guidance we delivered earlier in August. We are guiding for revenue in Q3 of $150 million to $170 million, which is a growth of 11% to 26% year-over-year. If you take the midpoint, it's actually the highest revenue we've had since 2022, which is a good development at least. Q3 is seasonally stronger than the rest of the year. We saw better demand in Q3. Q4, we have also said will be seasonally weaker than Q3. But we have to acknowledge we are in a difficult market. The macro environment isn't all good. We all can agree to that. So there is uneven traction in the various markets we operate in. We see stronger signs in consumer. We have some really good important customers in the consumer market that are delivering great numbers. You can see that on what they report. Geir showed some very good examples on that. We also see that these companies are buying more value from Nordic. And there's no reason these companies are not going to be really important customers on both the L, but equally important, the H coming out later this year. We see better traction in the U.S. and Asia. Europe is difficult. Europe is where most of the industrial customers are, and that's where the inventory correction situation was the worst. As I said, large customers generally stronger than the broad market, but number of customers is definitely increasing in the broad market. And I'm not going to spend a lot of time on this. It's -- since we're short on time. But what did we say in the Capital Markets Day in 2019? We said we were expecting 20% to 30% growth rates in Bluetooth. A little bit less higher than we were saying now, but still 20% to 30%. What actually happened, we came to 2021, we've had 50% growth rates. And maybe all of us got a little bit excited then because pretty soon, revenue declined again into '23 and '24. But over the period, there's -- we've actually had 15% growth. So if you take a line from 2019 to 2024, it is a good growth rate, of course, less than we expected, but still decent. If we look at the proprietary business, in 2019, we said minus 10% to high single-digit growth. Main reason is that the proprietary business is going to be eaten up by -- or there's going to be a transition to a more advanced Bluetooth products. I'm pretty impressed how strong the proprietary business act has been. This is the chips that Geir mentioned he introduced back when he started 2 decades ago. So extremely good development in this. Long range, had 67% growth since '19. Well, we're not happy with that. But hopefully, bigness has given us confidence that this will grow go going forward. A little bit about our revenue ambitions. First of all, for the short-range. Our ambition is to grow faster than the market over time, driven by new product launches. We have, as I said, two very new exciting products coming out very soon. In the short-range business, Vegard showed the slide of 20% growth. We say modest growth for this -- for next year, meaning that the nRF54 is not going to be a big contributor in next year. The main driver for the growth we're going to see in 2025 is still the nRF52, where we actually still have 40% market share in design wins. But with the introduction of the 54s, we do see growth to accelerate from 2026 and onwards. Vegard talked a lot about putting accountability on the new business units. I think that's the main change from what we've been doing before. We now need to make sure that Oyvind Birkenes and the team delivers on the long-range business. The targets we have set there is really to get profitability in 2028. In order to do that with the given gross margin and cost base, that means $100 million in revenue. It's that simple. You have ambitions to do much more, but that's the target we have, and that's the accountability we're looking at. The same thing for Wi-Fi and PMIC, due to lower cost or cost base, the target there is $50 million for each of these business areas in 2028. And then I want to talk briefly about gross margin. Very important topic. The targets Nordic have had for the decade is above 50%. It's a target we have set as a key indicator for us. Of course, we have ambitions to go higher. We saw in '22, it's actually possible. It was a little bit special market, but we did have 56% in '22. Now we're just below or just around 50%. We have some very important drivers going forward. That will work and help us get gross margin expansion or at least keep us at 50%. First of all, we're transitioning to the new modern 22-nanometer platform. What does that mean? That means that we can give more value to the customers at the right price. I think it's that simple. We just need to get these products out. We are going to get traction in the broader market. We see that it's very important to have a diversified customer base because then you can have a better spread on the pricing in the market. The last point, I think, is very important. We certainly forget about the technology mix. There is a different gross margin in the various technologies. Of course, in the module business, which the cellular market is dominated by, gross margins are lower than in high-value Bluetooth products. So depending on the development of the various technologies and also depending on the various, well, 54L, 54H, gross margins going forward will, of course, depend on the development in revenue. But the main point is that we are maintaining our long-term target to turn our gross margins above 50% despite the very strong competitive situation in the semiconductor industry. Now a little bit about our costs. Kjetil discussed, we had over the last 5 years invested $660 million in R&D. The target has always been to have R&D spending around 20%. That's what we were earlier in the period. This has, of course, creeped upwards when revenue has declined and cost has gone down -- gone up, sorry. I think the most important area is that we have been able to contain costs from late '21, '22 despite a very high inflation in the market. So we are cost conscious and we will continue to be that. Number of employees has doubled since 2019. They peaked in '23, are slightly down now in '24. And we -- our target is really to do the R&D, to deliver the products the team has talked about with the current cost level despite inflation in the market. Very briefly on SG&A, a little bit the same story, had a increase since 2019 but it had been very flat since late 2022. SG&A has historically been very focused on corporate functions and the Bluetooth business. We're going to try to keep it really flat. But of course, there's lots of new products to sell. So we need to build up a team to get those products out. So a small increase in SG&A is expected. EBITDA. We have generated EBITDA margins above the 25% target before. We did that in the COVID period. Unfortunately, they are now at unsustainable levels. So we have lots of plans to get our EBITDA back to the target levels going forward. We've set some ambitious EBITDA targets or operating margin targets going forward. First of all, we want to reach 25% EBITDA margin for the established short-range business in 2027. When we say the established short-range business, that's the Bluetooth business, but we're also including all the SG&A. So this is what we in the APMs, in the quarterly reports call adjusted EBITDA. We also want to reach profitability in the scale-up and early-stage businesses in 2028, as we have mentioned. How does this sum up? Well, we are moving towards operating model profitability of 25% of the group within 5 years. Of course, this all depends on how our new businesses and also the Bluetooth business develops over the years, but this is our target for the 5 years to come. Finally, a little bit about capital structure. Having a strong capital structure is, of course, important for the company. We have a net cash position of $100 million today. Although this is, of course, lower than it was during the peak, slightly explained by higher working capital. Working capital is now $200 million, mainly because we have high inventories. High inventories explained by, well, the period during COVID. We want to have the flexibility to have wafers and products available when growth comes and to manage growth in the future. But we do also have plans to reduce inventories going forward so that our net working capital can go down to the 25% of revenue, which really is the target we've had for many years. Equity at just below 70%. Target there is to keep it above 50%. As discussed throughout the presentation, our core focus is to achieve profitable growth. However, we also need to carefully balance between growth opportunities and the balance sheet strength before we evaluate potentials to either distribute or do other investments, higher investments. So we've set forth on four main capital allocation principles or priorities. These are pretty much the same as we did -- we presented in 2021, but I do want to recap on them. First, as you know, Nordic has a long-term perspective. We do reinvest in R&D. We have a target to have R&D coverage of above 1. We talked a lot about this last Capital Markets Day. And our customers buy our product road map. When guys are out meeting customers, a lot of the time is spent discussing next products, not the current products, what are we going to deliver next, and this is how Nordic really has managed to move from selling to the broader market customers to also have the key, the top biggest customers on our customer list. This is a very important KPI. Secondly, we are committed to have a strong balance sheet. We did a bond in late 2023 and in connection with the bond, we achieved the Nordic credit rating BBB investment-grade. And it's very important for us to maintain that credit rating. Kjetil talked a lot about the three or the main two acquisitions we did for the last few years, pretty small. We did need to have some opportunity or some flexibility to do M&A. We can either do M&A within strengthening the core business, just like we did with Atlazo and the Mobile Semi acquisition but we also need to have or want to have flexibility to explore adjacent tech markets. Finally, subject to capital structure, long-term growth and surplus cash, we will, of course, continuously evaluate cash returns to shareholders. Okay. I think that's my last slide now. I want to sum up, just like Vegard did earlier. We want to deliver, on average, an annual growth of above 20% throughout the decade. That's the ambitious target we have set and we really want to deliver on them. The entire team is working relentlessly on this target. Secondly, this growth needs to come with profitability. We're now at sustainable levels, but the target is to move that to 25% EBITDA within 5 years. That's all I have. I think now we're going to turn to the very important panel discussion. Anne?

Yes. Thank you, Pal. That leaves us to the break. Yes, let's have 15 minutes break -- 5 minutes break. Okay, because we're running late, that's fine. Okay. Once again, we will open up for questions during Q&A from the audience here in Oslo. For you online, there will be additional Q&A group sessions available tomorrow for you to engage. So go to our Investor Relations pages on nordicsemi.com for more information and registration. Okay. See you in 5 minutes. Thank you. [Break]

Okay. Welcome back, everyone, and thank you for staying. It looks like our panel is getting ready. So I'll just give the word over to our two moderators for today, Rob Sanders, Deutsche Bank; and Christoffer Wang Bjørnsen, DNB. We will have Stale Ytterdal or Stale who will manage the Q&A session with on-site audience at the end. The stage is yours.

Yes. Thanks, everyone. Yes, so the format, we're just going to -- Christoffer and myself are going to alternate questions for probably around 20 minutes, and then we're going to open up the floor for your questions. So don't think that we're monopolizing the questions or anything. But -- so Vegard, I'll kick off and maybe we'll ask the first question, which is really just to discuss the nRF54 series and the potential ASP uplift that we could see from the ramp of these products. And if you could just discuss the mix between the H and the L Series, I think there has been a worry in the market that the L Series is really where all the volume is, which is a lower ASP product. So it would be good to get an understanding of how that mix could potentially benefit your ASP, which I think has been around $1.

Thanks, Rob. Great question. And it has probably a dozen different angles to attack, to look at that picture. And I think our ambition is clearly to expand our attack and addressable markets both ways with the 54 series generally. So we are actually expanding from a bit more low end up to a lot more high end compared to our current 52, 53 offering combined. And then of course, there is a range of various things happening at the same time in the market relative to where customers are moving and potentially designing new decides. So we also see some customers that will go fairly horizontally, let's say so, from the 52 series onto the new 54 series, while we also see customers that will upgrade substantially in their memory requirements, in their compute requirements and power -- compute power requirements of their systems, such that what was a entry-level smart ring as an example, a few years back, may be very different in a couple of years in its capability. So it's really a very, very difficult question to answer in a general way. We have just generally said that we assume the mix and the blend of things to move relatively one to one going forward. On the other hand, there is a lot more room for higher-end applications coming with the high-end part of the L and the 54H obviously. But it's -- there isn't a single answer to it.

Yes. I think so one of the things that most people have been trying to kind of understand and impact today is this comment on the moderate growth which you clarified on? And we're kind of coming off the first half where revenues have been kept down by inventory digestion, right? And then as you're saying more normalized from Q3 on the channel inventory, you've been talking about more normal seasonality from here on. And if you basically put in normal seasonality for 2025 from Q3 next 5 quarters, basically end up about 30% growth year-over-year in '25 for the business as a whole. So when you're saying less than 17%, can you just help us understand a bit for the near term, not quantifying it, but what's going in the wrong direction? Is it a loss of a couple of big sockets? You don't want to say which ones, but just are there any thing -- any dynamics like that making it a bit hard for '25 before we head into '26? Or is it more macro thing?

Yes. I understand the question, Christoffer. And yes, we did say modest, we didn't say moderate. There's a little detail there. And I think we are not guiding for 2025. So -- and we won't be doing that clearly. We are also generally seeing that our -- the analysts that we are using and the analysis data we are using is showing this 17% growth over the next 5 to 7 years as a whole. Doesn't need -- doesn't necessarily need to be perfectly that every year, as we all know. We have seen that in the past years. And that's probably what we are hinting towards seeing in the nearer term.

Yes, the next question is just around you've reorganized into four business units. I think though that investors won't be able to see the extent of the losses precisely on a quarterly basis, on an annual basis. I was just wondering like is it possible that you could actually publish those numbers at least on an annual basis, so we can track it. And related to this, I mean, the cellular losses have obviously been very significant on a cumulative basis. How do you avoid a sunk cost fallacy in cellular because a lot of investors see that business as something that should be -- you should be more ruthless about?

Yes, I guess I have to take that, Oyvind, as a question. I think already, Rob, we are fairly generous in the data we share on a quarterly basis in our earnings compared to our competitors. So I'm not going to promise that we are going to be even more generous. But we are going to help you, and we are going to guide you as well, and likely, as we move on, we may show some more data on our various businesses. But there are also competitive reasons why we don't do that. But already, we give you quite a bit of data to capture how things are going in each and all of the businesses. I do think -- I have to say I truly believe in the changes we are seeing and doing in the cellular space. The Nordic has been scheming a part of the market, which is really, really requiring the ultra low power and willing to pay quite substantially for that. We are changing the ways we are attacking that market quite dramatically at the moment, which is a very interesting and appealing change for us. It's also a matter of we don't start from zero there. And of course, we should be able, and we shall show that we are able to drive these businesses in a different way than a start-up would have done. Because, obviously, we are a corporation with all the support infrastructure around that. Having that starting point is truly making me think that with the changes we are doing now, sharpening our road maps, sharpening our market attack and reducing product costs, and we also see the changes in the market with the coverage is going to give us a different journey ahead in that area. Then there is this third item which we promise and put on the table, which is accountability. So we are also now shown and given targets on how we are going to measure and monitor and manage this in the coming time, and that's obviously something we are promising to be keeping ourselves accountable for.

Yes. So maybe a bit more to Pal, but I just have to take a final stab at this '25 thing unfortunately. But it's -- so one of the reasons -- I could -- we could see why there should be limited growth in '25, could be, again, loss of customers. And one of the most visible examples is one of your competitors having talked about having gained traction of one of your health care customers. And then we kind of were a bit interested in this sentence and wanted to press the slide from Pal, where you said health care was a bit more difficult to forecast. You kind of skipped that part of the slide. So anything you can share to help us kind of understand that? Why health care is particularly difficult to forecast? And if that may be why the weakness in '25 perhaps?

Yes. So I wouldn't read too much into the details you're looking at there, Christoffer. And I wouldn't elevate this to be any drama on any major losses or any customers. We are fairly confident in what we see. We actually -- I'm almost asking the question back what you see other people say about the market in the near term.

Are you asking? It's pretty mixed.

Other semiconductor companies.

Yes, it's pretty mixed. But yes, I don't want to spend all the time talking about my view in 20 minutes that we have.

Yes. I mean, us, old timers in the room remember the evolution of CSR, had a great product, was first RF CMOS in Bluetooth, classic, probably should have sold at the top. Then the Combo appeared from Broadcom, their ASP got destroyed. They saw a lot of price erosion. I mean, basically, there is a -- you are perceived as a single product company in a way, is -- how do you see the risk of things like combos? You've obviously seen Qualcomm and much larger companies may take an interest in your domain, they've rather left it alone. Is there an integration or risk that we should be aware of with Bluetooth Low Energy?

Yes, another very good question. I actually would kind of turn that the other way around and see that the way we look at our opportunity now, it's also for us to be able to expand into markets, which hasn't been looked at as typical Nordic markets. And then, of course, I'm obviously thinking about MCU. You noted on one of the slides here, it actually said MCU. We had to do that because our customer asked us to do so. And that is a very large market. And we do see opportunities where that compute side in the Edge compute as well as the connectivity, obviously, is very critical for our customer base. We see ourselves doing excellently on the MCU and compute side of things as well. But if you choose Nordic for the radio performance, you're absolutely safe. So in choosing either between an MCU player or Nordic, you obviously choose Nordic. So that's where we see more of an expansion opportunity for us in that space rather than that being a threat.

Cool. I think that's a good segue to my next question also on the -- so you kind of had this evolution where system -- like level of integration is increasing. And like you did it with the keyboard and mouse first, now like a couple of years ago, we saw Apple going from having Bluetooth plus MCU separately to having one chip from you guys in the remote controller. Now you're doing the same with nRF53 in the Samsung Ring. So what we're trying to understand is like when you move to 54H, you've gone from doing it in remote, doing it in the ring, like so when we go to 54 without saying which customer, just like what kind of application will you have enough power -- compute power to kind of displace the standard MCU and other, let's say, adjacent components into the single chip?

Yes, I can answer that. We see a lot of customer traction on the 54H platform, and it brings us a new range of applications. And I think I mentioned a few of them in my presentation. We have sampled, as we said, more than 200 customers, and we have a large number of those more or less ready to go into production. So we are not -- we are hitting the market pretty well. And what we are seeing is we are enabling new type of handheld applications, industrial applications in -- with the 54H platform. So definitely, we are hitting the market very well.

Just switching to the cellular side. How should we think about your channel development in that area? These are different types of customers? Is it a distribution -- you have to build new distribution connections because these are more B2B markets. Is there a B2C opportunity? I think so far, connected coffee makers hasn't been a winning formula for a lot of consumer devices, but there is a potential angle there, but of course, monetization has been a big challenge.

I mean part of what we talked about -- I mentioned in my presentation as well, like, for example, appliances. We cover that in more an industrial type market, but it's certainly more also kind of bridging into the consumer domain. So we see a lot of applications that are bridging into the more consumer domain as well. But our kind of core focus now is really within asset tracking, metering and the industrial IoT market. That's where we actually see we have true differentiation, can win today. And we will certainly also support consumer applications that we are also seeing coming.

Yes. So still on this kind of increasing complexity and so on. So you have this really exciting example with [ Amber Q ] where you're seeing more -- not only more complex chips with a higher number of your chips in there. Again, it's difficult to talk about specific customers, but you kind of historically have been this $1 per watch company. So every time I buy a watch, probably, you earn $1, right? But with this move, with more complexity, more chips, your kind of average dollar content per end device increases. So can you just help us understand in some of these most recent wins we have cellular, PMIC and so on, what's kind of the magnitude of the upside on kind of the dollar content per end device shipment just to understand the growth potential as all customers maybe goes that path over time?

Well, I could take that. So I think even inside Bluetooth Low Energy, like Vegard said, you're going to see a big dynamic range of pricing from the lowest end of the L Series to the H Series. And typically, for our cellular chipsets compared to the legacy Bluetooth chip, they can be 5x or 7x or 8x more expensive. And I think very importantly for Nordic, it's not just the chip sales that we would see in the future. It's also the cloud component. So you have to take that into account as well. So -- and we have seen gradually, it's taken a much longer time than we anticipated. We do see more of our existing Bluetooth Low Energy customers actually picking up our other chips, our Wi-Fi chips, our long-range chips and the PMICs. And like Oyvind showed, the cloud revenue is growing. So there is a good dynamic range, and it doesn't necessarily stop with just the long-range ICs. It's actually inside the Bluetooth Low Energy range as well.

But then you go like, again, Amber, not asking about Amber, but when you have cellular plus Wi-Fi plus Bluetooth, you're probably well into the mid-teens in dollar content in a product with those.

Yes, it would be.

My last question, and then we can -- after Christoffer's question, we can hand it out. It's just about Edge AI and maybe for Kjetil. When I think about Edge AI, I think about plugged-in terminals that sit in a factory to do like local AI processing or I think about a terminal in a home that can do that. I don't think about coin cell operated devices doing AI processing because it sounds like it would just drain the battery really fast. So help us understand some examples of connected coin cell battery devices that would use that kind of AI functionality?

Yes, it's a good question and it's common to coin the edge as something like you described it and not all the way out in our products. But if you take the example of the Galaxy Ring and I don't know all the inner workings of the ring. But that is surveillancing your health through sensors 24/7, right, almost really, really most small battery. And they do that because the achievements that they get from our computational efficiency and the things that have happened with kind of the algorithms and the smarter things that comes into those products allows them to turn that on a 5340. And that can be things like looking at the heart rate, are there irregularities on the heart rate, right? That is something typically you couldn't do before, but this algorithm actually can detect variances in the signals that they are monitoring all the times. We have customers that are in the cellular space monitoring the electricity lines and actually picking up vibration for things falling on the lines to know if they need to go and do predictive maintenance, et cetera. And that is just sitting there and sensing and looking for abnormalities and whatever they sense. So it's not like a massive what you do with kind of ChatGPT and the generative of AI. It is applications as you typically done before. So when you wanted to count the steps, you counted how many things you were hitting? How it actually knows if you're walking towards the train or if you sits down or what's actually making the vibration? So the evolutionary goal is in just making this product that we've always been supporting just smarter and smarter. And with our technology advancement and what's happening in this space, and now I can do it on small coin cell battery and small rechargeable batteries using our products.

Yes. My final -- I'll piggyback on that one. So for me, it would also be interesting to understand a bit more about like, so this is what your customers can do the stuff you mentioned right, with the chipsets and what you offer. But then, for instance, when you add Atlazo, that technology, can you talk a bit more about like what you're specifically doing with like this? Is it more about like keeping the chip doing all these things, but still sleeping as much as possible, like the whole system sleeping and only the monitoring being awake, just like so people understand how you kind of use it and not your customers?

Yes. So without getting too technical, I mean what we are doing with this technology is accelerating computational math on our chips. So it's a very specific operation that needs to run this kind of Edge AI algorithms. And what we're doing with this technology is to accelerate that. I talked about latencies, I talk about power efficiency. And then you can shorten the time it takes to run some of these algorithms, you can either go back to sleep faster and conserve energy or you can use that time you saved to do more stuff. And we see customers either doing the same and just conserve energy or we see customers just doing more going forward. And again, I take a very naive example with remember the step counters. It's pretty much the same type of products today, but now it actually measures so much more because the computational improvements and what we have brought to the table has accelerated over the years. But it boils down to accelerating mass in hardware.

Okay. I think please raise your hands up and then make sure mic is at your hand before asking it, if you can. Have we got some remote mics? There's some hands up in the front there.

We are going to have some questions from the audience. And with me, I have Thomas and Ina with the microphone. So we can start with Kepler.

Sébastien from Kepler. The global environment is getting a bit tougher, macro condition weakening. Have you seen any specific change in the pricing environment in your main products or main markets? And attached to that, are you discussing -- who are you discussing, I would say, the input cost evolution on your business? Do you have any ability to reduce input cost with the foundry, the wafers? And the second one is on cellular IoT. So the business is still ranging below $20 million, and you forecast $100 million at least by 2028. What kind of backlog do you have? Or how should we think about the self trajectory in the coming years? Should we expect the ramp of the 92 Series before seeing revenue picking up? Or is it more linear trajectory?

Yes, I'll let Oyvind answer the cellular question in a minute. Price pressure, I think, clearly, as we are getting to more balanced markets as we are now in semiconductor generally, where there is competition, there is price pressure, and that's happening right now, something Nordic has been living in for decades and we are used to. So I wouldn't say that that's any abnormal situation. Very normal situation on that side. On the inboard side, my general answer is just that we are -- we have strong partners, we have strong relationships with our partners there. We are working with them on a continuous basis to optimize our inbound costing without commenting more specific on that.

Yes. And we it comes to the cellular, I mean, we don't report on any backlog. But certainly, we see a growth in number of customers utilizing our cellular solutions. We work with both very large customer cases and key customers on this, and we work with a broad set of smaller companies and start-up companies. And what we see is that activity levels are increasing and that we -- and we believe we can win a lot more business with 9151 lower-cost solutions and better integration than before. And then also, we'll have the road map to the 92 Series later. But of course, that's going to come at the end of that period. So we need to grow with what we have today as well.

I don't know if I could add. So I could also add to that, that we see a different mix of customers, right? So you could say that in long-range, it was pet trackers and kind of Amazon retail type items in the past and some industrial products. Now we have design wins with some metering customers and other more substantial things that take 1 year or 2 to roll out and we can put that into our models. So it does create this different layered structure of customers where we can make better projections for the future.

Thank you. And we have another one, please.

Oliver Pisani, Carnegie. Sorry for getting back to 2025 again. But I mean can you then confirm that your guidance for 2025 is driven by a general market assessment and not by, say, a big customer loss or expectations for broader market share losses?

Yes. So obviously, we don't comment on specific changes, but I can just assure that we are in a very good relationship situation with our key customers overall. We are also building our nearer-term plans grounds up. And do that in a more -- in a different way than we look at the analysis data for the remaining part of the period we talk about.

Sandeep Deshpande from JPMorgan. A couple of questions. Firstly, on '25, when you look at what your customers are telling you at this point, clearly, you've seen this correction in the industrial market. So what -- when do you expect the industrial market correction to be ending? That is my first question. And is that contributing to your modest expectations into the -- for the ramp-up of the 54 -- nRF54 next year? Then secondly, regarding the cellular product. I mean you've talked about the price points are not at the correct place. So where do price points need to be to see more widespread adoption because that may be the critical element in terms of take off of the product? And what will enable price points to get to that level?

Yes. So the first question was on the industrial market. So I think what we see in the industrial market is that it's a bit -- particularly in Europe that it is slower than our industrial business in Asia and the U.S., which has recovered and recovered quite a bit better and is stabilizing. So obviously, that is part of what we see on an overall basis for the near term. We do -- we do see, as we talked about, some more customers in the long tail coming on board and buying products every quarter. But we also still expect some of the customers in the long tail and particularly in the industrial market Europe. Some there has inventories for quite a bit into 2025 as far as we see it. 54 adoption, I wouldn't link to specifically to that fact at all. That is more of a nature of designing in. There is a wide timeline here. We -- I think it was mentioned here that we are actually going to ship very soon our first shipments of it. So some customers are at a very high readiness level to take some products there, but most customers will still require a designing time, which is fairly long, qualification, ramp prototyping and ramp at their end before they move to something which becomes substantial for us.

Yes. And when it comes to kind of what's the price you asked for cellular IoT to kind of take off, there is not like a specific price because cellular IoT has a very high value for many customers and many applications. Like you stay connected, you're always connected. We have even wireless MCUs, very powerful devices. So it really has a higher value. But of course, we see that we can enable a bigger part of that market as the prices comes down. So I cannot comment specifically on pricing. But for sure, we see there's not like a step response. It's more like, okay, with -- as the prices comes down, we can certainly grow the share of cellular in the market.

Thank you. Then we have -- let me see. We have one here.

Thank you, [indiscernible], Nordic Delta. On the previous Capital Markets Day, [indiscernible] was joining you to tell about price plans for cellular. And what they told at that time didn't really happened. So a little bit to elaborate on the question on pricing with cellular. Are you seeing that the price plans from the telecom operators are coming down on a level that makes impossible to grow that business?

Yes, we see as well from a lot of the telecom operators and MVNOs and the virtual ones are coming with plans that make sense for a lot of the IoT market. It's improving.

And then a little bit further on 2025 because I get a bit confused and the reason -- at least the only reason I'm here is to be in enlighted, not confused. On one side, you say that you don't guide on 2025. On the other hand, what you are telling us is pushing the price on the share down 25% today. And I think that's not because you talk about 2030, it's what you say about 2025. So I think it's very confusing the message you are sending. So the market is reading what you are saying about 2025 as a major profit warning. And then you say you don't guide on 2025. That's very confusing.

Yes. It's another question on 2025 and we are still sticking with the fact that we don't want to be guiding ahead of the time we are -- have established as the next quarter. And I do think it's fair to say that what we have experienced -- I think we are fairly aligned in a solid growth plan for Nordic in the coming years. That's what we truly believe in. We do see that our growth trajectory with the 54 series as a very important engine for that. It is going to take a little bit of time before it turns on. On the other hand, it's also clear to us that when we look at next year and the relatively near term, it isn't so that everything we see is greenlight and spiking everywhere in the market. We do see slow Europe, we see slow industry. We still have a broad market, which is fairly slow, while we see other aspects of the markets having recovered and stabilizing, like in consumer and some of our larger customers. So that is the picture we communicated after our Q2 call, and that's still what we are saying and what we are seeing.

Yes, I just -- I won't ask more questions on 2025 but even though I would like to. But I have a question regarding the unit economics or economics within the different segments because you talked about 35% to 40% gross margin in 2021 within cellular. So question number one is, is that still kind of the gross margin range within cellular? And secondly, if you can provide similar type of data points on PMIC and Wi-Fi so we can kind of understand the dynamics -- small dynamics within these segments?

All right. Yes, the question, we are not breaking out gross margin between our segments. And until we do that, we don't do that. So I think it has been mentioned previously that there is a different gross margin for cellular. On the other hand, we also have cloud and other services coming on top of that. I think just on a general basis, in our plans, which we have now outlined for '28, '29, we have plans and our overarching goal on that is to drive everything towards a common target operating model for the company.

Because then it's a little bit difficult, at least from my perspective, to get my head around the 25% margin level. Basically assuming that Wi-Fi, PMIC and cellular is at, let's say, 0 or breakeven in '25, then the implied margin that you need on short-range is very high. It's plus 30%. So I'm just curious how you could be able to get to those levels within short-range?

I'm not 100% sure I'm with you on the question there. But what we have said there is that our target for the short-range business, you look at that isolated, is to achieve 25% EBITDA targets for 2027. And we have said for our scale-up business and our early-stage businesses, they will reach profitability in 2028. And obviously, our plan is for them to be moving beyond that at that point in time.

Thank you. Then we have behind you, Thomas, you have one there.

Olivia Honychurch from Jefferies. I just wanted to ask about your market proposition versus peers when it comes to security. We talked in the presentation today about how you've not really released a big new product for quite a few years now. 2016, I think, is when the 52 came out. So I assume that a lot of features there are slightly dated, one of which being security. And as we know, security is incredibly important now for customers, particularly given Edge AI and more compute being done on the device. So I guess two questions really. One is, how does your offering compare to peers. And the second is, do you think or know that you lost any customers in the last couple of years because you had a slightly dated or if you had a slightly dated security system.

Yes. I think it's not correct to assume that we have an outdated security system on the 52 series. The 52 Series fulfills all the security requirements for the products it was designed for. But we do see that there are more security requirements coming and the PSA certification standard is becoming mandatory in some applications. And that's why the 54 series has been designed for a PSA Level 3 certification standard. But we are par or equal to our competitors in this area. So we are not lagging behind, but we are moving forward with the market and the requirements from our customers and regulatory requirements.

Okay. Then we have a question over here, and then we take ABG after that, Thomas.

Yes. So [ Lars Torres ], a private investor. This is a Capital Markets Day. So we're here to understand what the future brings. Vegard, you're recently on board. You've put together a great team, some new faces, revitalized the team. You were talking about the 54 product series. Clearly, that's going to take some time. However, what we're struggling to understand, I think some of us are, it will take time to get the new exciting future on board, but you have had 52 series for a long time. And when I'm looking at unit development and your competitors' indications of where they're moving, it seems like on the 52 product series, you are losing market share. You're not growing '24 and into '25. And I think if that is the case, it would be good to talk about it. That's fine. The future can be exciting, and you can still behind in the short term. But we are trying to interpret now there's a great possibility in the long term, but we can't really understand what you're doing in the short term and why. And I think the conclusion is others are doing better than you in the short term. Can you comment?

Yes, I understand that question, Lars, I appreciate that. We obviously can't sample market share on a quarter either. So that's a difficult question in itself. The thing we do see and what we are seeing is how we are holding up with the registrations, which we share with you on a quarterly basis, which is only being done with the previous generation products of Nordic, so the 52 and 53 series in combination. And that is holding up very well and I have to say it -- if I can look a bit from the outside in, which I probably have to stop with today, but I can still do it one more time, that is impressive that we are keeping that with the 52 and 53. I think we have also a situation where we are working with some of the absolute largest players in the market who are also the companies that are clearly driving and winning and returning to growth patterns earlier than some of the other companies. So with that, I don't see a picture where that is happening, but we clearly see an opportunity for us to take more than our fair share in the market when we get with our 54 series, which are truly much more competitive products than what we have today. It's -- I think there is no secret from our point of view, we wish we had the 54 a bit earlier. But the 52 and 53 has also been keeping up well in the market and the customer base has been developing and working with us on those products until we are now sharing the 54 series with them mostly.

Yes, ABG.

Øystein Lodgaard, ABG. Two questions. First, on dual sourcing. There has been a lot of talk about that lately. Do you see that an increasing share of customers are doing dual sourcing? And both is that a risk, but also is that an opportunity for you to be able to win volumes as a second source? The second question is on Matter. I don't think you almost mentioned that at all today. Do you see that as an opportunity for you as more smart home products are moving over to the Matter standard going forward?

Yes. I think we can clearly say that -- so dual sourcing is generally quite expensive to do in the customer bases we have. So if that happens and when that happens, it's mostly in either more kind of life-critical type products, medical and those type -- health care type of markets. We do see some of that happening there. And obviously, as you say, Øystein, that is as much as a threat for us, that is an opportunity for us, which we obviously are working. Other than in that segment, we don't see much of that. I think I can say. On the Matter question, do you want to?

Yes. So Matter and along with a couple of other standards, we didn't spend a lot of time on that today. But that doesn't mean that -- we showed the trend growth going in. I think the numbers was 28%. That is predominantly driven by Matter. So we're still optimistic what that will do in terms of the smart home, et cetera. But we have to acknowledge that the rollout and the promise of Matter hasn't really materialized fully yet. And the big players there, they are working on fixing those and the standard is evolving. But we see Thread and all our radios are multiprotocol. So Thread and Matter remains an important piece of our offering, an important piece of our customers. And some of the bigger customers we have and some of the revenue that we see on the 52 and 53 series is for Matter-enabled applications.

Perfect. Then we have one behind there.

So get back to the '25 outlook because we need to clarify a couple of things. So one thing is the market, and that's fair, the kind of view there that the market can be slow, but you mentioned that the 54 series is an important growth engine. And what's confusing for me is that it seems like you're saying that customers are halting rollouts or new designs waiting for the 54 series. But I mean, Apple Logic, your customers are going to sell more volumes next year. Or that's at least what analysts are expecting for them and other semiconductors. So I guess my question is, why is the 54 series such an important growth area? Is it ASP uplift or any other things we are missing?

Yes. I just think that the type of figures we see there that are -- have been used exactly for the year we're talking about, I'm not sure you find that in market data.

I can see Silicon Labs...

We're not commenting on what other semiconductors mentioned but...

That's kind of our market data points, right?

The point that matters for us is how much is going to be sold in consumer health care and in the industrial markets. That's what we see. We -- and that's what we work at. I think clearly, for us, we are here to build a long-term growth plan, profitable growth plan for the company, and that's what we truly believe we are doing at the moment.

And the 54 series as a growth driver, is that for -- in addition to market share gains, is there a ASP or anything else?

So obviously, 54 is absolutely vital for us to renew ourselves at the moment. It will -- you just saw the competitiveness levels in performance and power consumption that, that product will offer over our competitors. And then you get that on top of the software ecosystems and all the additional strengths you get with Nordic. So it's going to be much harder to compete with us.

Okay. And if I may, since I have the mic, Oyvind, on cellular, you mentioned an increasing number of customers. Can you compare that level to 2021? Because if I recall, Nordic had a lot of startups and early-stage companies on their customer list that maybe in a hard time when the markets kind of decelerated in second half of '22 and with funding and all that.

Yes. I can't talk specifically about the '21 numbers, but what we see, and of course, there's a lot of start-ups that are not there anymore, and that's clear. But when we look at more of those customers that we're counting and that Geir showed and which are active customers, we see that is growing.

Thank you. We have one last question from [ Harry ].

It's around 2026 and kind of if you wanted to call out the top two, three most tangible things that give you confidence in that acceleration from '25 up towards your over 20% growth target that you're targeting, especially in the context of it being a relatively big step-up from the 15% growth that you experienced kind of through the cycle pre-COVID.

So I think our confidence in the 2026 is based on the customers we are currently working with. And we see -- as we have said, we have sampled more than 200 customers of each of the new 54 families. And so we have a good insight in projects and products to be launched in the '26 time frame, meaning that is really what is driving our confidence there. And this customer designing times are very variable. And that's why we're also saying that we will get a modest contribution from the 54 in 2025 and an accelerated growth in '26.

One kind of follow-up, if I may. With over 20% growth target, what's your ASP assumption there? Is it kind of just low to mid-single digit percentage declines that we've seen historically?

We are not going to comment on the ASP targets.

[indiscernible].

So you mentioned that your '26 outlook and that the growth outlook is based on the insight you have with your customers. So if we jump back 1 year, you said that you had insight for $1 billion in run rate revenue. So what has kind of changed? If you compare that, imply '26 number with last year?

Some of the previous targets, it's probably hard to relate to that and comment specifically on that at the moment. I think what we can say is that we obviously work with market data, and we work with our key customers to look at the forecasting structures we have with them as well as certain assumptions we make in the broad market and also working with our distribution partners in the broad market. That's how we are basing our estimates internally.

Perfect. I think that concludes the Q&A for today. But I would like to inform everyone that we are going to have three group Q&A calls tomorrow depending on where you are, it will be in Europe, U.K. and U.S. So if you go to our website, our IR website, go to the calendar there, you will see all the details on how to register and so forth. With that, I hand over to you on that.

With that, I'm going to steal the word for a moment. I think I just want to say, thank you a lot for your time and your attention, your interest. I think we have had truly great exchanges today. Really appreciate that. We are confident as a team that we will be driving a profitable growth path with innovation. Truly looking forward to that journey, and I appreciate your support on that. We are having a social gathering in the company's offices starting in 15, 20 minutes, which is Drammensveien 126. So I hope to see as many as possible of you there for some foods and drinks. Thanks a lot for the attention and participation on the online audience, really appreciate it. And again, for those of you in the room, I hope to see you in Drammensveien. Thank you.

Good. And that leaves me to thank the audience once again. It's been a pleasure. And this day wouldn't happen without the people behind the scene. I really want to say a big thank you to [indiscernible] and [ David Stone ]. Thank you very much. See you next time. Bye for now.