poLight ASA (PLT) Earnings Call Transcript & Summary

I've been asked to restart due to technical problems. So maybe I was misspelling something. Welcome to poLight's ever first Capital Markets Day. My name is Øyvind Isaksen, I'm the CEO of poLight. The agenda of today is a short welcome from myself, Jon Edwards, the VP of Business Development; will be talking about focus -- market focus and opportunities. We will have our CTO, Pierre Craen, talking about technology platform and road map. We're going to have a short break. Marianne Sandal, the CEO, will talk about operational setup and show you a nice video from -- live from our assembly partners. We're going to have a break -- not a break, we're going to have a Q&A session. We're going to have a demo lab and that will end the webcast, and we will then also serve some snack outside, if you want. Together with me today to start with the top lady, is Chair of the Board, newly elected, Grethe Viksaas, heavily experienced IT business lady; Basefarm, who may know one from Basefarm. She is here today. She will not be presenting, but she will be available when you are mingling outside afterwards. Jon Edwards will do ASL, as I said, Pierre Craen; Marianne Sandal, CEO; and Manager of Lab, Lars Henriksen, okay? So just briefly on the history and the milestone. It's a long story, and we have basically been dependent on a lot of patient shareholders and employees. But what I would like to emphasize on since 2020 and '21, we finally managed to get into commercial products. That has basically been creating a completely different platform for us when communicating to the market, selling to a customer without a reference is so much harder than selling to a customer with a reference. We can ask the customer. We can show them products. We can tell them that we have supplied, we are in mass production. And a lot of the uncertainty and questions are basically answered by itself. It took a long, long -- it was a long, long journey to get there, and there's been so many faces in the company has been technology issues. There have been reliability issues. There have been so many issues. But I'm glad to say that we are now playing in that champions league on a different platform, and that's -- I feel is well deserved from the team. And also thanks to the shareholders, which has been both big and small, and thanks to an IPO, we are able to finance the company to the stage we are today. For those who are new, just quickly, poLight is a part of the space we call tunable optics. We, of course, have the opinion that we have the tunable optics. But we also take a position as we will come back to as being technology neutral if that is shown nice to do. We have been around for a long time, mentioned that. We have a strong IP situation. CTO will talk more about that. We are a growing team, 34 employees, even though still small, very distributed and very dedicated team. I've been impressed with what the team has been able to absorb. If you look at all the activity we are -- carry out. We are headquartered here in Horten in new, nice offices, and we have offices in Finland, and China. And also, employees sitting either in home office or rented offices in France, U.K., U.S.A., Taiwan and Russia. Russia guy is more likely to be transferred to the office in Finland for obvious reasons. Our technology, you will hear so much about it. I would just say 4 words: Extremely fast; very compact, constant field of view; no pumping; and extremely low power consumption. Jon and Pierre will talk about why that is important. I mentioned the design wins, which has been so important for us, which is a really, really fantastic I would see building block and hopefully, [indiscernible]. Technology of poLight goes into many different verticals. I'm not going to go through the details because you will hear from Jon Edwards. Smartphones, barcode/industrial, augmented reality and others. Others being accessories and medical, which has shown maybe the most promising areas. When it comes to the strategic direction, this is something we already communicated in one of the share issue. So definitely, the focus is on organic growth. So we want to grow based on existing products and get profitable. We want to take the same -- very same product into different verticals, which I just mentioned, different market segments. And we have a very clear strategy that we want to be close to the customer and manufacturing partners with high competence. That's why, in a way, the headquarter setup in Horten, we can quickly become actually the smallest part of the whole organization because we're going to build infrastructure and people close to customer and close to manufacturing partners. That is very important for our strategy. We believe in -- not -- we believe in having suitcase for travel will not bundle sufficiently to the customer market and manufacturing product. We have to be the drinking tea or whatever every day with these people and to support our manufacturing partners. So that's a very important dimension. So our international organization is key and has been key during the COVID situation. Being a tech company, Innovation is key for us. We spent a lot in innovation. I would say also the last years, definitely, we had to focus on getting TLens right, fixing issues, fixing manufacturing processes. So we are definitely, which I've been telling in many of the quarterly reports, that majority of the team is working on exactly that, meaning that the development project has been on second priority. But even though in our genetic in our long-term plans, there's a clear plan and Pierre will talk about it, how -- and by the way, I don't believe everything he says because he wants to do everything tomorrow. I'm joking. But anyway, there is definitely a vision here, and we want to innovate new products based on a current technology platform. We also would like to take a position that instead of saying to a customer, we have that particular technology, and we want used to use that. We will also gradually step-by-step take a position of more like a solution provider, say, okay, we are the king of tunable optics, which kind of tunable optics is best for you. And then we sell solution and not necessarily a dedicated component. So that's a little bit the vision we also have. Also, on the right side here, for selected niche market, I think that we even can climb up in the value chain. Today, we are a component supplier. But step by step, we may take a position that we saw give a more than a component, but actually a solution. That solution could be that we take TLens into and integrated into an adapter or even a camera in some niche markets. Some of the camera module suppliers are focusing heavily on high volumes, high volumes only. We would like to be both in high volumes, but also in small volumes. And for the small volume part, we may take a bigger role. This is, again, is a strategic -- it's more like a visionary positioning statement. But that's how we see it, and that's what's keeping us fighting every day. Okay. So that was one and a half welcome from me. Sorry for the technical issues there. So now, we're going to go into 3 very interesting presentation. My intention is that you listen to me every quarter. You talk to me now and then through mails and what else. And it's me you meet. Today, I will give you the opportunity to deep dive into the different verticals in poLight. So you're going to meet not all, but you want to meet some very key people. The first one out is Jon Edwards. Jon Edwards is a very experienced business man, business development. He has been with poLight now for 2.5, 3 years. He is very experienced in similar technology companies like Optotune, which you may know is one of our competitors like Cambridge Mechatronics. He's been also next to micro and also what was Sony Image Sensor. So he is very capable technically speaking also, but in poLight, he is focusing on business development. Jon take them through a fantastic presentation. I wish you a very good luck.

Excellent. Thank you, Øyvind, for that kind introduction. I'll do my best to live up to that. No pressure then. Okay. Good afternoon, everyone, and it's very nice to meet you. It's my first time meeting almost everyone here, I think. So as Øyvind mentioned, I work in business development here at poLight. And also, as Øyvind mentioned, being close to our customers and close to the partners that we work with is extremely important to us. So there's 3 of us that work in business development. in North America, based in the Silicon Valley, San Francisco Bay Area, we have Tristan Joo. Tristan prior to joining poLight was with O-Film, one of the major camera module manufacturers and also companies like AMS, who are very major suppliers into the AR and smartphone space. Based in Shenzhen in China, we have Redfar Yan. Prior to joining poLight, Redfar was with Sony Mobile and also Nikkon. So again, very relevant experience in camera modules and the markets that we're working with. He's based in Shenzhen to be close to not just the partners that we work with, with high-volume manufacturing, but also the major Chinese brands that are potential customers for us. Myself, I'm based in the U.K., in the southern part of the U.K. And I cover all the European market and also Japan and Korea. So first of all, we are going to talk about smartphone. Like many other markets, smartphone, of course, has been very strongly impacted by COVID and the global pandemic. And in the early days, that's through people staying at home, wondering about many other things other than buying a new smartphone. And more recently, through the continuing lockdowns in especially China through constraints and availability of labor, which has knock-on impacts for the supply of components and generally labor into the assembly, which has exacerbated the problem that was already there with the availability of the semiconductors and the general semiconductor shortage. The result is that the markets declined about 9% this quarter year-on-year. And that's actually the third consecutive quarter as we've gone through the COVID epidemic. And the impact of this, we're seeing is that many of the smartphone manufacturers, the OEMs and the brands are either delaying launches of new telephones as they extend the life of existing models. And we're seeing the number of new launches slowing down as well as the delays to projects that we would expect it to be launched -- the phones we'd expect to be launch happening later. But let's remember that this is still a 1.3 billion unit market. 1.3 billion smartphones sold every year. And that's been level at that level for, give or take, a few years now. But that's actually the phones. Each one of those phones has at least 1 camera on the front and an average of about 3 on the back. So potentially, those 4 cameras per smartphone are addressable to us. So it's by far the largest market for cameras on the planet. One of the features of this market, I mentioned the cameras on the front, the front cameras. As of today, very, very few of these have also focused in them for various technological reasons. That means that essentially, that entire 1.3 billion units of front cameras are accessible to us. Currently, there's only something like 100 million of those, and that's from very niche players or in-house technologies that aren't available to other OEMs. And despite being a very large market, it is a market that can change quite quickly. So we give here, for example, if Apple were to introduce autofocus into the next iPhone then the rest of the market would be able to follow very quickly, and we'll be looking to add autofocus into the Android phones as well. And that change could happen really quite quickly. So in summary, smartphone is still the highest volume opportunity for cameras anywhere. And we believe that the poLight and TLens is very uniquely placed to take advantage of this. There are some of the technical characteristics that Øyvind mentioned earlier, which means that TLens is very attractive to these OEMs, and we'll talk about these in this slide. So things like user use cases. So for the front camera specifically, users like to have the shallow depth of field. So when they're taking the selfie image, they like to get themselves in their face, nice and crisp and like that lovely defocusing in bokeh effect for the things run about, so it's not to distract from the image. And that requires a small depth of the field, which in turn from optics implies lower F-numbers. But they very -- fact of including that means that autofocus is more important because if you have a shallow depth of field, then you need to carefully place that depth of field to ensure that the use is there. So we're seeing that the demand for autofocus in those front cameras that historically has been relatively low, it's greatly picking up. And then there's the raw technology and the benefits of that technology. So the OEMs, that we talk to, tell us that TLens allows them a design flexibility in how they design their phones and how they design their handsets that they can't get from other technologies. So for example, on the right-hand side of this slide here, you see one of the camera modules that we've developed for front camera applications. And if you look at that, you'll see that the very top fit, which would be the front element lens that sticks through a hole in display is designed to be extremely small. The reason it's done like that is that allows you to make the punch hole, the opening and the display, also extremely small and much less obtrusive when you're using the phone when you're looking at it. So giving a much slicker design that the smartphone customers tell us that they value. And there are other factors about the technology that also continue that theme of design flexibility that you get from TLens. Our technology is entirely nonmagnetic. So there are no coils or big magnets that you would find in, for example VCM. That means that a TLens camera can be placed close to other magnetic systems. And there are many of these influence, things like the EFP speakers or magnet driven systems, other cameras, of course, might have PCM in them, or things like compasses, which, of course, you need to make sure that you keep magnets away from. So the fact that we can be placed completely flexibly with any of these systems means that they -- the designers of the phone can place the cameras where they want it to be. We had one OEM telling us that TLens allowed them to place the camera on the punch hole right in the corner of the display, which is something they've been trying to do for a long time, wasn't possible with any other technologies. And in addition, once the TLens is designed in and once customers have it, we're finding that there are new applications that they're finding that can be enabled from the benefits of the technology. So the high speed allows them to do things like All in Focus, and we can show you a demo of that later. And we've worked with a company in Spain called Wooptix to develop light field capture from a single camera, and you have time later if you click that link, you'll be able to see a nice demonstration of that. And these are all -- once the TLens is in extra value that the foreign OEM is getting from them. My last point on this slide is I've been talking a lot about front cameras. It would be wrong to give you the impression that it's only front cameras that are of interest to us. We talk about front cameras a lot because essentially, it's an open field for us. They don't have autofocus in them now more or less. So it's an entirely open field that we can address. Back cameras, of course, are very much of interest as well. But the dynamic of that market is different. There, there are established technologies. So we're working to displace or design TLens into cameras that otherwise or previously have had other technologies in them. So for back camera, it's more a matter of evolution rather than revolution. Next, I'd like to talk about AR or augmented reality. And I maybe start by defining what I mean by AR. Many of you guys might be familiar with virtual reality. You might have, for example, a Facebook Meta Oculus, I hope, but my kids do. With virtual reality, it's a headset that you put on and you're an entirely computer-generated a virtual world. You are no way interacting with what's going online about you. What we're more interested in talking about is augmented reality. That's where similarly, you put on a headset, but instead of being transported into an entirely computer-generated world, you're looking through the headset to your real surroundings, but with things overlaid on top of that. Those things might be relatively simple. They might be notifications like you're familiar with from your smartphone. You have a new e-mail, you have meetings about to start, something like that, or they might be more complex. It could be things like virtual characters or objects that are overlaid accurately in the world around you and appear to you as if they're really there. These augmented and mixed reality use cases require much greater capability from the cameras in the systems because they have cameras to both look at what's round about them and pass it on to the user and also to make measurements and judgments about the world round about them. AR is largely focused on U.S. activities, went very many of the major West Coast U.S. technology companies are investing very heavily in this, both in their own development and through acquisition. And there's no doubt it's an emerging market. So short term, we expect the use cases to be driven largely by enterprise and professional use, things like training or telemedicine and things like that. Certainly, in maybe the next 2 years. We're expecting the consumer devices to arrive late '24, early '25. And with the launch of those consumer devices, the market by that point, would have grown, we believe, so about 100 million pieces. That's the general consensus on that number for most of the analysts. So a very large emerging market with the demand for cameras. The dynamics of the market are slightly different to smartphones. So whereas many of the technology benefits that we mentioned before for smartphone carry across to AR, there's no real established solution yet. It's not like in smartphone, but VCM is dominant in the back camera. For AR, nobody has really cracked how to do it well. There's just a list of problems that people are trying to solve and further established technology like VCM, a very poor match for AR headsets. They are heavy. They required a lot of power. And these things mean that it's more likely that we're going to find ourselves competing with other emerging technologies, things like SMA or other suitable lens technologies than with VCM and AR. We're really positioning ourselves as a higher performance, lower risk alternative to these all of technologies. And as I mentioned, TLens, we believe, and we're hearing from the companies that we work with can be the solution to many of the problems that they're currently facing and trying to develop those consumer devices for 2025. We've spoken before about how TLens is very small and can make very compact cameras. And of course, if it's going to be a head-mounted device that you're wearing, then you need small cameras, if you want them to be obtrusive and devices that people are going to wear often. But small size doesn't just mean XY millimeters. Mass is also important. Anything that you're waiting and it's balanced on your nose at -- every microgram of mass is important. So there's a lot of effort to have lower solutions, and that's why things that rely on big magnets and coils are not a good match for this technology. The speeds that can be achieved with the TLens is extremely important. I mentioned before the demo we've done with Wooptix. What that does is it uses the very fast speed of the TLens to take a series of images at different focal depths very quickly, much more quickly than the user can perceive. And then from those different images, you can extrapolate out depth information, so information about how far away things are from you. And in the AR world where you need to have a very good understanding of where you are relative to the other things so that you can place fractal objects on the map spaces. These use cases are really important. So potentially, we've got cameras that are being used not just for imaging but also for sensing and generating data about the world in which it's around about the user. Our lenses are completely insensitive to gravity or acceleration. That's not the case for many other technologies. So with some of the other technologies, the camera will behave differently or it will perform differently depending whether it's facing up the way life right down. And it's not just acceleration due to gravity. We can actually move our hedge relatively quickly. And induced quite a lot of acceleration in that way, and that can interfere with the operation of cameras, none of which is a problem for TLens. It's entirely insensitive to these things. Then moving on to power consumption. As with smartphone, power consumption is always important. People are wanting longer battery lives and for head-mounted devices that may have very small batteries, power consumption is important because it means that the battery last longer. But it's not just about battery life. All the energy that you take out of battery and consume in the system ultimately turns into heat. And that heat needs to be managed in some way, especially on devices that are of small areas we're getting rid of heat and where you would notice that the device itself is getting hot. It's sitting on your head. So our customers tell us that the power consumption is important to minimize the amount of heat generated in device. But more than that, there's a feature of our technology that allows us to develop athermal cameras. What do I mean by that? Basically, what I mean is that we can develop optics that will beat -- that will perform exactly the same no matter of what temperature of the system is at. So the system performance will be the same at 0 degrees, as it is at 40 degrees. That's not the case for most autofocus actuation technologies or lens systems. The historical way of dealing with this in other camera systems has been instead of using plastic rigid lenses to use glass lens elements. But glass lens elements themselves bring lots of problems. They're very much heavier than plastic lenses, which means you need a bigger actuator to move it. If you've got a bigger actuator to move it, you're consuming more power, if you consume more power, you're generating more heat, and you go around that circle again. So using TLens and the features of our polymer, we can go into more detail on this later. But basically, all you need to understand is that it's possible to design cameras that are tolerant of a wide range of temperatures and the performance doesn't change with the temperature. And this is something that has been very important in a lot of the work we've been doing towards the AR market. And just to finish up on this slide, it's important to say that it's not just camera opportunities that we're talking about. All of the things that I've mentioned here applies to optics, in general, whether those optics are in front of a camera or whether they're part of a display system. And we're also doing an awful lot of work for the display systems in augmented reality and mixed reality devices, be that focusing lasers for laser-based displays or super resolution technologies, so-called wobbulator devices that Pierre will talk to you about later on. So there's -- again, potential for many TLens -- many poLight devices in every AR headset. Moving on to machine vision. The module you see in the top right there is the Honeywell EX30 Scan engine that I've talked about earlier on. That's been a fantastic project for us and is going very well. There's some examples of end products there with that device in them and new ones are being launched every day. And that's been a very good foothold in that market and a good reference for other industrial and machine vision applications. So from that initial success, we've got growing traction across many different areas and opportunities in machine vision and which itself is a very rapidly growing market. There's a general need for high-quality cameras to interface computers with the world around them, either for things like automation and robotics or for edge computing and AI where you need to make the interface between computers and the artificial intelligence and the decisions these computers are making. We need to have the best information about what's run about them and cameras play a very large role in that. As with many of the other things we've talked about today, the core benefits of the TLens technology, speed, small size, power consumption are all very important, as is the insensitivity to acceleration. If you take, for example, the example of a camera on the end of a robotic arm that might be doing some automation task. The whole point of doing -- of automating that is the robot can do it faster than a human can move. So that means there's very rapid movement, very fast accelerations that the camera needs to cope with. But also once the automation system, the robot arm has got to where it wants to go, it needs to be -- the camera needs to be able to take an image, capture that image with the lens ready and then move on very quickly as well. So the insensitivity to acceleration, gravity, no dependence on posture or all things that are important also in this market. Sometimes, we find we're competing with established technologies, VCM, other tunable lenses. But equally, as often, we find that TLens is enabling entirely new applications. things like the depth mapping as well, we've spoken about before, where you're able to do things with a lens that enables customers and system integrators using these devices to build new applications and new systems around the features we're doing. And in contrast to the consumer markets, these devices and these markets tend to have a slightly longer life cycles, so the products run for longer and tends to be slightly less cost sensitive than in consumer. Moving on, speaking about health care. Obviously, COVID has greatly accelerated what was already a growth in telemedicine, a market worth almost $280 billion by 2025. And if you're doing healthcare and medicine remotely, then it's quite obvious that the quality of the images you have the ability to capture things and see detail in those and trust the quality of the images are extremely important as is the -- we've been able to make cameras that are useful for the application you want to use them for. So small size, again, can be important. And even if you're not remote from the patient or where the camera is being used, robot-assisted surgery and traditional endoscopy are also areas that are a very good fit for our technologies. Just one example. In 2019, there were 18 million of just one type of endoscopic procedure taken in the U.S. alone, that's just one type in the U.S. Endoscopy is something that we see as a good fit for scaling TLens down in size. And on endoscopy, historically, these have been large systems from Japanese companies that have been autoclaved and cleaned after use. But we're seeing a trend in the market for the endoscopy to move from that type of system, where the whole thing is cleaned and reused with another patient, the obvious implications for infection control and everything. The systems were the camera head, so the camera and the actual bit that's inserted is disposable, single-use. So that's not clean, but it's instead just a separate part that can be separated from the rest of the system and disposed off. And that's a good match for some of the features of our technology, small TLens has been able to make the cameras very small and fitting into those sorts of systems. Again TLens can augment existing applications that it can also enable entirely new ones. On the right-hand side of this slide here, we show a device from the Kavli Institute. Some of you may have seen some of this and some of the quarterly results that Øyvind's presented before or some of the press material. This basically is a brain scanning device that is mounted in rodents and monitors the brain and images the brain of the rodent and as it moves around and does things like go through mazes and other things. For sure, it's not high volume, but it's a good example of how TLens is enabling these technologies and applications that we think are important for our foothold in this market. Øyvind showed this slide earlier on. I'll just show it again as a summary. Of course, smartphone is in terms of numbers and units shipped, the highest volume market. So I mentioned before, give or take, 1.5 billion phones per year, each with at least 1 camera on the front and average of 3 on the back, so 6 billion cameras. If we assume that we can take one of the front and one of the back that's 3 billion-piece opportunity for poLight in that market. Barcode from the establishment of the EX30 project, a very good foundation, and we're building out in that industrial and machine vision applications. Augmented reality, we are very excited about it. As I hope I conveyed in the slides earlier on, augmented reality, really we think TLens is at the very sweet spot of the -- the things we're trying to achieve are right at the sweet spot of what we're good at with TLens. All the challenges that the headset makers are trying to fix and the things they're trying to enable and the devices are all things that TLen's extremely well suited for. And then there's other applications such as webcam and video conferencing as well as the endoscopy and healthcare ones that I spoke about before. So in summary of what I've said, there's TLens as it is today, used in things like webcam, wearables, the smartwatches and machine vision. We're taking those TLenses as they are today and exploring new applications for them. I mentioned, laser focusing, depth mapping through extrapolating depth information from focus, athermalization for both display optics and camera optics, and folded optics, which are the periscope-type cameras used in presumed cameras in the rears of phones. We're also taking that TLens as it is today in developing new markets for the TLens, exploring more in mobile, in healthcare, automation in both domestic and industrial environments and AR and VR. And then the last line here is new products that we're considering developing -- are at reach for us to develop. TLens is a focusing technology. We could also -- instead of focusing light, we can shift it. For beam steering applications that can deliver OIS, optical image stabilization in cameras. It can deliver a super resolution from what we -- so-called wobbulator type devices or anywhere else that a low-power, small-size ultra-high-speed beam steering device would be valuable. And that's really going to be the focus of Pierre's talk, and Pierre is going to give you much more detail on that. So thank you, everyone.

Thank you, Jon. That was good. Hopefully, you got it. It's -- not everything is easy to grasp, but by really looking at the webcast, I'm sure you will get everything. So next up is our dear CTO. I was told not to say dear CTO, our fantastic CTO. Pierre Craen, he has more than 20 years experience in the optomechanic system, actually, 12 of them in poLight. So it's starting to be inventory. He's from Belgium, but there is nothing wrong with that. And he is extremely experienced. He has been working in other companies like Varioptic, today Corning, which is also a liquid tuneable lens. And it found life easier in -- with TLens. He has been with Barco. He has been with Motorola, Motorola/Symbol, doing actually designing optical system for barcodes. And some of the customers we have today is knowing Pierre from these days he was designing barcode systems. So guess why we are in the barcode market. And also, some of the products Pierre designed is still in the market from -- on barcode side. So now what Pierre does, he do well. Pierre, backup.

Thanks a lot, Øyvind, for the nice introduction. So before starting, I would like to bounce back on Jon's presentation. And as you have seen, the world is really waiting for tunable optics to bring more applications. And I do -- I felt from the beginning of my career that after designing a few devices, optoelectronic devices, tunable optics was really something fantastic and so motivated to work on because I felt at that time, that was something which was super important for the future. And still, I do feel that there are very bright future in front of us. And I would like to thank all of you for -- because I'm not so often facing you, but I would like to thank you all of you for the support of poLight because, for me, it's really a fantastic opportunity to be part of that adventure. So thanks a lot again. And the future is ours, of course. So yes. So before going to the road map itself, I would like to go back to the competitive lens stack because that's a nice way to position ourself and to understand where we want to continue to push and develop and improve even more our future offering for the customer. So the competitive lens stack for us is basically based on 4 major companies. And the left side are more like old technology or at least easy-to-understand technology. The top left is the VCM, where you're moving the complete lens stack for making the focusing. So you can move the complete lens stack. And then there are magnets and cords to move. That's a relatively mature technology. It has been used on many, many products before, and there are a few companies which has managed to do very well for developing such technology for the mobile market and the camera module. So you can see that those technology from the picture are potentially very bulky also, and they're coming with limitation. And that's why I believe that many smart people came with new IDs and, in particular, the SMA technology, which is based on Shape Memory Alloy, which is a kind of bi-stable material that you can change shape quickly by applying a pressure or thermally activated. And Cambridge Mechatronics has been one of the company which has developed and used the technology for the mobile industry, and they have patented quite smart way to drive and to control and establish feedback loop on those solutions. So again, that is a technology which is moving the entire lens stack with respect to the VCM. So in a way, those technology on the market, the VCMs are definitely the incumbent technology that we're fighting and we need to displace one day. They are not tunable optics, but they are -- bring adaptability to the system. The 2 other companies that are clearly in our, I would say, area are tunable optics and the first one is Optotune. So Optotune has developed a liquid-lens technology, which is encapsulating liquids in a deformable, I would say, enclosure. And one of the window there is a membrane, which is deformed by pushing the liquids in by applying pressure on -- around the volume of liquid, so that the liquid is pushing the membrane and creating aspherical deformation. So very often, not always, but Optotune has developed that technology based on VCM. So in a way, that technology is also combining the benefits and the disadvantage of both. So it's VCMs plus liquid technology. Then we have Corning Varioptic. -- that, as I have mentioned, I've been working with a few people in the R&D team, by the way, are working with us. They have developed the technology, which is a liquid lens also, but slightly different. It's based on electrowetting technology. This is the technology which is on the right side of the slide, bottom side. And that technology is based on 2 liquids, which needs to be -- which needs to have the same density, the difference in the fraction, of course, to create that lensing effect, the focusing effect. But also one liquid is nonconductive, the other one is conductive. And by applying the voltage to the electrodes in contact with the conductive liquids, it can change the contact angle. So that's what we call wettability. So the contact angle of the liquids with the electrodes and by changing the voltage you can change the shape of the liquid interface between the 2. So obviously, the 2 liquids needs to be unmissable because you don't want to create [indiscernible] or emulsion after a few use of that. And that's, of course, technology, which took some time also to mature, but they are there, and they are moving with a few customers. So -- then to give you a kind of nice overview of how we position ourselves compared to those technology for what we believe are the key important parameter for the market that we are addressing. I will start from the bottom left with the gravity and posture. So Jon has been talking about that. Obviously, the world is in motion now. So things needs to be nonsensitive to motion, to posture. And we believe that we are outperforming with that respect, so much better than the VCM and the SMA, which are black gray color and much more better than the other tunable optics, Optotune and Corning because they are liquids. And liquids are also because of the structure they have developed are relatively sensitive to gravity for different reasons, but they are sensitive. So that's why we rated them a little bit with some less advantage than us and the VCMs and SMA. So the Field of View stability, a little bit related to the same thing. But on top of that, the fact that the TLens is so small has enabled us also to put the TLens very often, very close to the stop -- optical stop of the system, and that is giving you that nice feeling that when you do focusing, the image size doesn't change at all. And that is something that Optotune and Corning could potentially do. It's less easy for them, but definitely for VCM and SMA, we are -- they are -- they cannot do that at all. So it's moving the complete lens, the image size is changing and that is not a nice effect for the user, especially for video application. In terms of module size, XYZ, this is important. And you will see that we are developing new ideas around the existing product. And even before, we were adding some thickness to the camera module, for example, still, in terms of X and Y size, we are much, much better than the other technology. Corning, Optotune, as you have seen previously, they are bulky, they're building VCM, coils around the optical aperture, and that is making things extremely bulky. So we feel that in terms of compactness, we are -- we had also reliability, even though it has cost us a few years, that is still -- we feel much, much better than the others, especially when you look at the number of actuation that we can do. We have demonstrated billions of cycles of photo focus where VCMs are barely reaching 100,000. And that's where we feel that we are also ahead of them. In terms of speed, that's easy. We're changing speed of focus in a few milliseconds, all the others are in the range of 10, 15, 20, 30. And then obviously, the liquid technology are extremely sensitive to temperature. So Corning will be super slow at low temperature. Optotune will be super slow at high temperature. Many different reasons to explain that, but definitely a speed issue for them. And VCM, SMA, they can go fast, but then power consumption will start to be a problem for them. So of course, they can move fast, but then you need to accelerate and break super fast, and that is not always easy to do. And again, there, we are -- we feel outperforming and be better than the others. We're talking about a few milliwatts Optotune, Corning. Corning, potentially a few tens of milliwatt and Optotune like VCMs potentially even worse than VCM because they need to have even more stronger force to activate. So they are very -- not as good as us at least in terms of power consumption. Magnetism, again, nobody else than tunable optics can challenge us. So Corning is there, Optotune, depending of the actuator. If they use VCMs, obviously, they will be sensitive to magnetic interference with all the devices. So that's not an advantage for them, so for that. Then stability over temperature, as we -- as Jon mentioned earlier, we -- when we use our TLens on the fixed lens, very often, both are compensating each other. That's a nice effect. And that's creating a relatively stable device over temperature, where liquids are obviously extremely sensitive to temperature. And VCMs will suffer not about their technology itself, but they would suffer about the fact that the lens -- the fixed lens is sensitive to temperature. So they are a bit less stable than us. From the image quality point of view, we must admit that VCMs and SMA are better than ours because they don't bring on more optical component on top of the system. But still, we have some hope that we will get back to them. And even though we have rated poLight a little bit lower than the VCM. So you will see that there are potential ways to go back there. Obviously, Corning, Optotune, the technology is relatively difficult to secure good optical quality because we're talking about nanometer of quality of surface when you're deforming. And that's relatively difficult for them to secure that over the operating temperature by design and by technology, they are limited there. Then the last one, where we are behind the other tunable optics technology is the aperture size and focusing range. Obviously, so far, we are coming a little bit short, and that's why you have seen one application that people are stuck in TLens, so that's one way to get more optical power and focusing range. It's not always possible. And compared to VCMs and the other tunable optics, we are a little bit behind that. And this is really important to realize that, and that's where we will and we are putting effort to try to compensate and find solution to improve on that. So this being said, there are many other companies, which are working on tunable optics also, but most of them are basically working on the same technology. All of them are using liquid lens technology. The only one which is slightly different, which is still a liquid, which is a liquid crystal technology, its lens vector. They have tried to penetrate the mobile market a long time ago with no success because the technology was not good enough to create a nice image quality. And that has been, in a way, not a way to go to follow the trend of the mobile and the high-resolution camera for the mobile for the mobile market. So still nice technology, but coming with extremely bad performance for imaging application at least, and they have reinvented themselves for going to other technology. But in a way, nothing different than that. And I want to say also that Tristan, the other business VP in the U.S. is coming from lens vector. So we are quite well, I would say, equipped to understand the technology of the others and try to adapt our offer with respect to that. So then before going to the roadmap, just a quick status on IP. So this is evolving every quarter, I would say. We're owning 17 world granted patent families. So of course, it's much more patent than that. And you can see on the right side, the coverage of our IP on the globe. The size of the bubble is basically representing the number of patents that we have and we're trying to, of course, cover most of the market that we are addressing and a little bit more to try to make sure that in the future, you never know, we are well covered for emerging countries also. We have 9 pending application because we have tried to improve and continue to invent new solutions. So that's why every quarter potentially 1 of those 9 pending applications will become a granted application, and we have 3 registered trademarks. We believe, and I believe that poLight is very well protected by the key patent. The important patent are still valid for minimum 10 years, so we are good. In addition, of course, we are continuing to try to improve on that. And we have a strategy in the company to really secure the freedom to operate for poLight, but also for our customer. And of course, we need to -- we want to really avoid copycat of our technology or copy of our technology. So -- this strategy is based on 3 legs, even though it's not nice to walk on 3 legs, but still, we are continuing to invent new things, and we're patenting every time we have a key feature that we believe will be key for the future application or even for the current autofocus application, we're filing those application for grant of course. The other one is a trade secret. There are many, many, many things that we want to keep secret. And there are many, many things -- details, especially on the process that we keep secret, and we will not open to anybody because one thing that we need to keep in mind that filing for an IP patent is, of course, opening the know-how to others. We are protected, but still we are opening to the rest of the world. And then the third one is the defensive application that we call, so which is basically all the ID that we feel could potentially generate some smart ID, but still with low level of patentability. And then we do publication. We go for a conference, we do for participating to scientific papers, books and things like that to disclose those ideas so that we're creating the prior art so that people cannot start to patent it. And that's a way to secure the freedom to operate for us and for our customers. Then, the road map for the AF technology. As you know, the technology is based on the conceptually on a very simple approach where you put the polymer, soft polymer, soft optical material in between 2 pieces of optical component. One is flexible with activators and by applying voltage the piezo is contracting and bending the membrane, and that's creating the optical effect. So one of our focus for the past year and still ongoing today, and that's why we are getting more competence and experience in the team is to work around the existing product by we call design-in. So we're designing a lot of lens designs so that we can use our current product to generate a multiple of different solutions for the customers. So there are many, many designs that we have promoted a long time ago, sometimes with good success. And we continue to do that because we feel that it's a very nice way to optimize the solution. We're also proposing stack -- TLens stacked solution to increase the focusing range to compensate a little bit the lack of focusing activity. We are obviously also aware of the need to improve the pure optical performance of the device. The antireflective coating is one aspect of it, especially on the membrane side. So this is something that if we want to go for the high-end optical application, this is really something that we need to implement, and we are working on that. Then working on the curved back window. This is -- that has been always there, and that will become even more important for the add-in design because it's opening again for more flexibility, more degree of freedom to optimize the lens stack or the device in a better manner to -- or use lower number, reduce the small nose, the nose of the camera or optimize one performance of the camera. Another old ID, which become more and more real is to implement, for example, wavelength filtering in the TLens. That is something which is a little bit kind of revolution in the camera module world because that IR filter, which is sitting on the sensor, people has built their process with that to protect the sensor again, dust and everything. So removing that IR filter and moving it on the TLens is shaking a little bit the ecosystem. So it may take time to come, but it's definitely a way to make a more compact solution for some application. So obviously, the activator is key, and we're working with our partner to start to work with new materials, with new processes that will help us to improve the strength to bend more. But there are also potentially other type of actuators that we could use. Bulk piezo is one way to go. SMA potentially one day also. So we are not closing the door for those, and we will take the best actuator possible when needed to create the right product for the market. Then if we -- that's a little bit of -- one of my dream somehow, but if we -- today, the MEMS process that we're using is imposing to go for a relatively flat deformable membrane. And obviously, this is coming with some limitation. And we do feel that things are coming, and we have realized recently also that preshipped membrane could be at reach in the coming years. And that is, of course, requiring a lot of development and also from the actuator point of view. But there are signs to indicate that, that is becoming more and more possible and meaning that we're going to start to -- we will be able to create a lens, which is not like a window with no optical power, but a lens which could potentially replace the first lens of the lens stack which will basically remove one component. We're going to go straight on the lens stack and start to really provide the tunable lens with a lot of optical power and potentially some asphericity and all those degree of freedom that people need to go to take into account to make a high megapixel solution, high-resolution camera, okay? So activity on the membrane super important for us and obviously, the optical material, still on the road map, we need to continue to create more polymer new solution. We need to create more tunable optical material to optimize many different aspects and to adapt the offering to the market and the application that we want to go for response time, index of a fraction, maybe dispersion of the material could be important when we start to be more integrated in the lens stack. So in terms of roadmap, simplified roadmap here, we have the current product that we will continue to evolve by applying better coating potentially changing the back window with a IR filter, cut filter or a real back window or a plastic back window to be more integrated in the system. That's definitely part of the short-term activity and development that we're doing, the platinum, which will offer a bigger aperture. And still, we don't know what will be the biggest opportune that we can go for. We are reassessing now with the new material that our partner has developed and the process to see how big we could go. That will definitely be a product to address the bigger format sensor up to 0.5 inch and definitely give us more opportunity to penetrate the back cam, for example, for the mobile application, but I'm sure that industrial application will benefit a lot of using video aperture because there are a big sensor, there are big cameras everywhere. And today, we have some -- we went so good to address those type of market. Then smaller TLens for us is very natural to go much smaller. So that's something that we will also -- we have put on the road map. And as we say very often that we're going to be extremely opportunistic, I don't know which one will come first. We will stay very tuned to the market and the opportunity. So we will push the one that we feel and we believe is the best opportunity for poLight. Then the right side of the slide. This is basically illustrating a little bit what I was mentioning. So the next evolution of our product will be pre shape membrane with some actuator. And this is the top one single pre shape lens, top right, with -- combined with the fixed lens. So that will be a real lens, the tunable lens that potentially can start to be used in the lens stack and taking part of the lens stack really not like a window as the current TLens. And you will see the benefits of it in the next slide. And then, of course, the ultimate solution would be that both interface will be deformable and that will give us more focusing capability. And obviously, if we can make both pre shape, that would be a fantastic achievement. In terms of, I would say, impact on the camera module, and that's very mobile-oriented. But obviously, we can address that to -- for many other type of optical device. The concept is there. Today, we have a few products on the market with Add on. So basically, we take the TLens on top of the camera module as indicated on the right top side of the slide, and we have done a few POCs now after a few years of creating momentum in the market -- on the market and with working with partners, we have generated a super compact camera modules with the TLens in. And you see the TLens in blue on the left side, in between the lens stack. Obviously, to do such kind of things, the TLens needs to have some extremely tight optomechanical turns which not all technology can achieve really. The other tunable optics will have hard time to reach what needs to be done there for keeping the right optical quality. So by burying the TLens into the lens stack, we have been able to generate a very small nose camera, high-megapixel -- so it's a 64-megapixel frame. You will see 1 example of that camera. Obviously, you need to believe us because the TLens is inside, so you don't see anything except the 2 electrodes, which are coming from the middle of the stack. Then there are designs which has proven that if we can implement a lens instead of the back window which is flat today, it will even further improve the compactness of the camera, if we want to use that degree of freedom to optimize the thickness. So still, the TLens will be in between lens, but adding a curve back window in the TLens existing product will open for more opportunity and a higher performance solution. Then the next step, of course, here you see the third coming -- starting from the left is what I call the pre-shape membrane, which will take place, for example, replace the first lens. The first lens of the lens stack is the one where you have the most optical power. And that's where usually you want to make the focusing to make it very efficient. And that is potentially a way to affect less -- the image quality because we don't add the one component, we're just replacing one existing one. Of course, that component will have to be super good and super high quality, but this is -- that is possible. And then, of course, the next one could also be that we go for 2 preshaped and then we have a camera, which could be even more optimized. So that is the road map for the autofocus. And the impact on the potential evolution of the camera module here for the mobile. Of course -- sorry, all those camera modules could be benefits of putting the IR cut filter, which is in front of the sensor on the bottom here to reduce even further the -- and move the IR filter in the TLens. That is -- that can be used for whatever product. And of course, those concepts can be developed for any TLens that we're going to come with, platinum, silver, silver premium. Then I would say the natural move next is to start to do something else and focusing with our technology. We have a polymer, we have actuator, we have optical component. And if you start to actuate for example, the glass support with 2 actuators, you could start to use OIS. And that's, again, not new or at least you can do, not OIS, but beam steering. The concept is not new. We have done POCs in the past, and we have done the new POCs also recently, definitely possible. So that's what we are continuing to develop. You don't need to, I would say, combine it to focus with the tilting, which is represented on the left side, but still just by using the tilting and the optical wedge, tunable optical wedge, you can create some OIS, optical image stabilization. But you could also do some beam steering and also some -- improve some resolution, as Jon has mentioned previously, there are things that we can do. And then, last but not least, the dream of many, many optical engineer is to do an optical zoom with tunable optics. So no moving parts inside. Many, many people try to push that for the mobile, but no success so far. So we still believe that by making our technology evolving correctly, we could offer some solution for that. And the preshape and double preshape will probably be one of those important feature to enable those type of application. Of course, for that, we still need to improve piezo actuation. We need potentially to new -- to find also some lead-free piezo actuator in the future, and this is becoming more and more real, potentially not in a thin film PZT, but bulk piezo material with no lead are coming. So we are also investigating and scrutinizing those technologies, which are coming, different way of depositing those piezo material also key -- important for us to enable new architecture of products. And obviously, the optical material that we're going to use may have -- may need to be optimized in a very different manner. Stiffness, again, speed for OIS and other application will have to be tuned in a slightly different manner. So one of the product that we are working on today, this is -- and let me go back one step, is the wedge -- optical wedge, which is basically shifting the beam that we can use for improved resolution for our sensor solution, but also for display, as Jon has mentioned before. So the idea is to shift by half a pixel in all directions so that you can generate at the end of the day, a higher resolution with a low resolution display or low resolution sensor. This is, again, not very new. This is something that scientists and engineers has been developing for many years. But we believe here that we have a nice opportunity to provide super compact solution for those AR/VR application or other industrial applications. So that's something that we are working on actively. Then obviously, for AR/VR also, it seems that OIS and AF are sometimes very welcome to -- for the camera system or the sensor system because this is -- they don't like to call it a camera for image application, but for sensing, combining OIS and AutoFocus in one component and then make that one inside the camera module like adding solution would be a perfect solution in terms of compactness and functionality. So this is something that we have been working on. In the past, we have proven that it's -- it is possible to do, and we'll continue to work on the bricks, the technology bricks to make it real in the future. Then again, old, I would say, dream for optical engineers. That's a picture that I've taken from an article from 2007, which was -- which has been made by Philips because at that time, Philips was working on the liquid technology also. And obviously, again, many attempts with no success so far. But definitely, if we could bring system lens system and lens component with high optical power and some tunability, you could make a lot of nice solution with no moving parts. So you need -- very often, you need more than that. But by working on double preshipped lens, for example, tunable lens, that could be already 2 components in a way that will potentially enable those very nice designs for making zooms with no moving parts. So here we are. Thanks a lot.

Excellent, Pierre. Thank you. So if you don't need a break after that, you never need a break. So I suggest that we take a 10 minute break. That means 25. You in the audience here. We welcome to take a drink or some fruit or biscuit or whatever. For you guys sitting in the office or home, do the same and be sure to be back in 10 minutes. See you soon. [Break]

Okay. Welcome back after the short break, which we definitely needed. So next up is going through the operational setup. This is going to be done by Marianne Sandal, Chief Operating Officer. Marianne has been in poLight for 6 years now and has been chasing me for 20. We work together in our networks in Bergen for 5 years and [ Mandal ] for 18 years. Then I moved to Q-Free and was managing CEO there for nearly 8 years. And I needed someone to do clean up after me. So I brought Marianne to Q-Free. She was there for 10 years, I think. Then I had the same feeling when I went to poLight. I needed somebody to hold my ears. And so Marianne has now been in poLight for 6 years. Very strong operational background internationally and Bachelor in Mechanical Engineering and also some management school in addition. Marianne, the floor is yours. Enjoy the audience.

Thank you very much, Øyvind. It's a pleasure for me to give you a short introduction to the poLight operational setup. poLight, as you might know, is a fabulous company. Except of the polymer that we do in-house, the rest we use manufacturing partners. We have built a worldwide operation. Totally, 15 of our employees today are working in the operational area. In addition, we have our manufacturing partners. Here at headquarter, we do the manufacturing of the polymer. We also have a very advanced lab, and we'll be pleased to invite the one present here today to have a look after the presentations. We also do sample deliveries, small scale from here. Higher volume usually later in the evaluation phase we deliver from the [indiscernible]. We also have prepared some system delivery, small scale, from here, typical is the health and the medical customers. We have product data management, manufacturing technology, head of quality and the third line support based here. When we are building organization, it's important for us to be close to the customer and close to our manufacturing partners. In Tampa, Finland, we have Head of test management. Italy, Milano, we get the MEMS wafer supply. In the Philippines, we have our mass production assembly line, and we also have testing under establishment. Taiwan, we have head of supply chain management, product testing. We have a very experienced team of poLight employees doing testing. We do customer support, quality, and we also have a second source assembly. In China, we do both customer support, both pre and after sales and quality. The majority of our deliveries we will do through distributor. We are heavily involved with the OEM, with the camera module makers, before getting the order. But when the PO contract is ready to go, we prefer to use distributor to supply the material, also to have an advantage on the cash flow. We was ISO9001 certified since 2017. Manufacturing capacity. We split between what we call installed capacity and material. Installed capacity is about machine equipment and trained personnel. Today, we're targeting to have an installed capacity of about 1.5 million TLenses per month. When it comes to material, we follow the situation carefully. We prepare forecast, and we act accordingly. TLens and the supply chain. Pierre, you described the technology, looking at the left-hand corner. The TLens is constructed around the piezo element. You have the piezo-film, thin glass membrane. Then you have another high-quality glass, and you have the polymer as a sandwich in between. Around this technology, today, in mass production, we have, as you said, the TLens Silver and the TLens Silver Premium. The difference between the 2 is the aperture size. We -- and typical is the optical specification of the customer deciding which lens to go. We deliver what we call the bare TLens, and we deliver packaged TLens. The packaged TLens is to ease the integration for the camera module maker. The bare is more for the compact optimal design, typical, the add-in design. If you look below, you will see the main elements of our supply chain. It's the glass, the polymer, the MEMS wafers, assembly and test. The glass -- high-quality glass is handled by the manufacturing partner; however, on the specification of poLight. The polymer, again, we ship to manufacturing partner. The MEMS wafers are being shipped to the assembly partner and then assemble and test it. We then typically deliver to the camera module makers then and then deliver to the OEMs. The polymer. The polymer came from Russia in the late '90s. Together with SINTEF, it was developed into a stable silicon gel. Ignis Telecom -- Ignis Display together with SINTEF saw the tunable lens material opportunity in this. And in 2006, they file the basic patents. In 2008, Ignis changed name to poLight. The poLight TLens require a polymer that is super soft, with high optical power range, reliable, compatible with the high speed of the TLens. And we have been optimizing around these parameters during the last 10 years plus. Today, we do it here, and we ship to the manufacturing partners. We will do 100% testing of all critical parameters before we ship. Easy to scale. We are well prepared. 1 liter of polymer equals to about 1 million TLenses. So we are prepared. We keep buffer stock at the assembly partner, also very convenient as the shelf life time of the polymer is low. As Pierre said, we have all the competence around the polymer in-house, implying we can do fine-tuning to adapt to different customer needs. We can work on the viscosity, on the stiffness, on the response time, curing, et cetera. Also, the MEMS wafer have had some history, and I believe people working with the MEMS technology know the complexity of taking it into mass production in the [ larger hubs ]. poLight have worked with various hubs during the development phases. In 2013, we signed up with STMicro in Milano. And together, we worked on developing the optical MEMS actuator that is in mass production today. Core technology being piezo material, glass membrane, stress compensation and environmental protection. The setup we have today is well prepared and suited for high-volume operation. Today, we also have detailed plans in place together with ST how to do further ramp up. The tech environment at ST together with Pierre's team are continuously working on improvement and future-proofing of the technology. Meetings are taking place next week. The tech teams will meet in Agrate. Lead time of the MEMS wafers is the longest in our supply chain. In particular, during the last couple of years, the lead time of the MEMS wafer has been long, and we had to take actions. However, looking ahead, we foresee that the lead time will normalize. We also used quite some time to find the right assembly partner for poLight and the tunable lens. That is a very sensitive lady, as expressed by Pierre. In addition to precise pick and place suited for high volume, low cost, also optical quality has been an important factor when finding the right partner. The dispensing of the polymer and the glue also in a small quantity, high precision, high speed has also been important. We signed up with Theil, also called Tong Hsing, in 2013. We worked together with them in Taiwan at their headquarter in Taipei, setting up our line. Last year, we moved this line to the Philippines. The reason is that the site in the Philippines is better suited for high volume, low cost. The line we today have is a fully automated line. We also have taken the effort of qualifying a second source assembly partner. This one is in Taiwan. The reason, of course, being prepared for further ramp-up and volumes, but we also see that some of our customers demanding that we have dual source of some of our processes. The product test of TLens is very important for us. Today, the product test system do optical characterization and defect detection. The equipment we use is very complex equipment that we have designed ourselves together with the equipment partner, and then we consign to the assembly partners. We do 100% testing of each TLens, and all test data are transferred to the poLight database for carefully evaluation and analysis. We have full traceability of each individual part through the entire supply chain. That implies that each of the TLenses being supplied to the customer can be traced back to the full supply chain from the MEMS they prefer, the assembly path and the test. [Presentation]

During the last years, poLight have worked closely with several well-recognized customers demanding the utmost quality and reliability. The result of this is that the TLenses we are manufacturing today has the best quality ever, and our supply chain is well prepared for the various ramp-up scenarios. Going forward, for sure, we will continue to work on yield improvement and cost optimization, continuous improvement on the product and the manufacturing processes, future-proofing the technology and carefully evaluating the required capacity and material needed to supply to existing and new customers. Thank you.

Thank you, Marianne. Thank you, [ Alf ], for the nice video. So Q&A. Will my team please join me? So we potentially have some questions.

Just the one so far.

Just the one. Okay. And we can start maybe then with questions from the audience. I may let them answer or not, so that will be in my control. Any questions?

Ramping up, you're saying you are not producing for stock. Now -- but when you are making better money [indiscernible].

I would just repeat the question since the webcast participants can get the question clear. So the question was, you are today not producing for stock, but will that happen later when you have more cash? Marianne, do you want to answer that?

Yes, a question that's more for you, I guess.

But actually, we do produce some for stock. We do. But we try to minimize this, of course. And then there is -- and then also, there are different parts of the value chain. As Marianne talked about, wafers, we need to be prepared to have wafers in stock. But we would wait as long as possible before we make them into small pieces and assemble it into complete TLens because we want to minimize the capital we spend on stock. But wafers, as an example, is something we have to buffer. Just to kind of say is the year ago or plus, we were kind of forced due to the supply chain situation in the world to put a PO on our wafer supply vendor to say that whatever you need the next kind of 1.5 years, you need to order now. So that -- so because of the allocated capacity. Then we have to do it, and we did and locally. But then we just keep it in stock as wafer. We don't produce final TLenses before we have to. So that is the strategy. I think that as we get running with more kind of products, we would potentially have offer a buffer stock -- more buffer stock on final assembled TLenses. I'd like to minimize that. Any more questions? Yes?

I noticed on the film that the yield [ noted on the line ] it was 0. How to improve 0 [indiscernible].

The yield of that and the manufacturing is not 0 for sure, and we have come very, very far. Particularly, during the last year, we have come very close to our target. But no doubt, we need to work on the fine-tuning, continuing -- improving more. And of course, as I also said, continuing to reduce the cost of the TLens. But no doubt, we have come very far when it comes to the quality and the robustness of the TLens. So the yield is good.

I think on the video, it was actually rejects versus yield.

Yes.

[indiscernible]

Yes. That column was rejects.

Yes.

Yes. Okay. Any more questions? Yes, please.

Any other markets you have been contacted by? [ What's the use of ] TLens that we don't know about yet? Are there any -- you don't have to tell us, but are there any?

Yes. So the question is, are there any new markets which you can see coming to using TLens? I think that a relatively recent -- a recent example, I would say, relatively recent is the medical space where we had nothing not so many quarters ago, where we now have quite some significant activity ongoing. So that's kind of one example, and that's related to kind of endoscopes and more scientific equipment like the [ cable use ]. We -- I think the short answer to your question is for sure, and the medical space is a relatively recent example which we didn't see. You can say also automobile for car industry. We think that, that is a potential for us going forward. We are not using a lot of time and effort today on that market, but we can see it coming. The cars -- self-driving cars, also monitoring inside the car, the behavior of the driver, the behavior of the passenger, there are many, many type of application there. So yes. Then I would like to say that it's a relatively small team. And from my 20-plus experience of managing tech companies, one of the difficult things to do is to kind of make sure that these guys, not Marianne because she's very -- well, these guys is -- needs to be kind of also controlled and managed because they want to do everything, and that is the recipe of disaster. So we have to kind of concentrate on what we think is the near-term success factors. And that's why we cannot take all incoming calls and jump on that. That was a long answer, but the answer is yes. Any other questions?

I'd like to jump back to Pierre's slide about the competitive landscape and relative performance, where it seems to outperform the other technologies on reliability. Was the drop test fall under this part? So that I can understand of like TLenses [indiscernible] other technologies on the drop test?

Yes. So let me repeat that question. The slide of CTO Pierre was showing kind of relative benchmark of poLight towards other technologies. And on the reliability, poLight scored good. And the question was that does that include drop test? Pierre, do you feel...

Yes, it is including drop test. The other technology have also issues with drop test. So this is a tough -- evolving target, by the way, because the evolution of the films are always getting thinner, stiffer, more weight and everything. So yes, we are at that level now. So...

I just want to support Pierre, and that is I think reliability, and maybe in particular drop test, is something which will be hunting us from now to forever for the reason Pierre has mentioned. So -- because specs changes. Today, they're dropping at 1.5 meters. Tomorrow, maybe 2 meters. So -- and we need to continuously work on [ robustifying ] our solution to make able that -- to be able to follow all these kind of new demands. But as of today, as I said in my Q1 report, even though we didn't like the commercial progress during that quarter, the technical progress, in particular, related to exactly that has been extremely impressive.

Some of the new technologies that you are working on has not come about by a request from a specific application or a specific vertical like AR or like smartphone, like the pixel shifting and [indiscernible] your customers or...

So the question is that some of the new technologies and like the pixel enhancement solution, shifting pixels, whether that is an incoming demand or whether it's something we are technology looking for application. Was that the question? Yes, the answer to that is actually, yes, it is an incoming request, but we were not fully kind of surprised. But there is a clear customer request and demand for that kind of application.

From a specific vertical or a specific -- is it...

I would say in 2 verticals, both -- that's fundamental technology both for super resolution for smartphone-related application, but also for AR type relevant display. More questions?

Smartphone is probably planned for '23 maybe. But can you say something about the time line for the OEMs in the smartphone industry? When will there be a PO, for example? How many months before delivery that we'd probably see...

Yes. So the answer is that smartphone business for poLight, maybe 2023, which was kind of communicated in Q1 report. And then the question from [ Rica ] is when will there be then -- if that's the case, when will there be a PO for such a release on poLight. Is that the question? Yes. So first of all, we have relatively frequently POs from that market and -- but that are more related to clarification processes. When it comes to a real case, this is a demanding market because the OEMs, they do expect -- even if you're small, even if you're a new player, even if you're representing a new technology, they expect you to be ready based on them saying we expect to be releasing and we expect to be having this demand. So the PO -- and so that's just the expectation that market has, and then you can like it or dislike it, but that's the fact. So what we -- and that's why we needed kind of to take that decision to buy that material to be ready on, say, 12 weeks to ship to them. So they may be would likely only give us a 10 to 12 weeks kind of lead time. So that's how that industry works. It's super tough. But that's the mechanism there. Yes, [ Rica ]?

And everything technical is in order for camera modules.

Sorry. Can you repeat that, [ Rica ]?

Everything is in order in the technical manner for the manufacturers...

Yes. So the question is that from a technical perspective, if the camera module guys are ready with TLens solution. Is that the question, [ Rica ]? Yes, when it comes to -- as I said in the Q1 report, the progress we have had, I would say, the last year and the progress we had the last, say, couple of quarters has been extremely good. It's been dedicated a lot of the resources in the company in all parts of the value chain. So we see that our camera module suppliers are ready to take commitment. We see camera module suppliers pushing to get the first design win with this technology. So the readiness is there. Does that mean that it will be no hiccups in the first release? No, there will be hiccups, and they know that. But the readiness is quite mature. Yes?

Good enough is [indiscernible] good enough. The VCM is good enough. We have this PDAF. And taking account that the sensors are getting bigger, the PDAF is getting more efficient, is the [ meeting ] point with the PDAF [indiscernible] poLight?

So Jon, will you repeat that question?

Yes. Correct me if I'm wrong, I think you're asking about the impact of PDAF, which is phase detection autofocus, and increased sensor size. Is that correct?

Yes. [indiscernible]

Yes. I don't think they're necessarily separate. So very many of the cameras that we are working with just now, the camera modules that we develop, are already PDAF. And when we go downstairs, we'll show you some camera modules, the majority of which already are PDAF. So I don't think it's coming together in the future. I think it's something that already exists.

But there are no competition. I see in the cameras now, they autofocus with a small camera versus PDAF.

So PDAF is a sensor technology. It's something that happens in the image sensor, and that needs to be paired with a fast actuator. The ones that, historically, that you might be referring to are paired with fast VCMs, which have a closed loop in them. So they have a magnetic feedback system that's used to compensate for the postural dependencies [indiscernible] all the other horrible things that happen in VCMs. But it can equally well be paired with any other fast actuators, such as TLens. So I think it's something that enhances the benefits of the TLens rather than a competitive threat.

So we still have more time for questions. We are waiting to ask the question [indiscernible]. Okay. So Jon, there are also a few questions on the web. Can [ we put on your optical power ] and...

All right. I will do it. Yes. Okay. First question. Is Dr. Isaksen sure that a design win in the phone will happen no matter what the horizon? A lot of things have been said, mainstream solution, et cetera, yet the smartphone has been delayed time after time.

We are working every day, every night, every weekend, the big team, to try to convince that TLens will be part of the smartphone business. We wouldn't have energy to do that if we didn't believe. Then can I guarantee? Of course, not. I cannot guarantee. But if you look at the maturity, if you look at the performance we are able to do, if you look at the reference we are building, I can't see why not.

Next. Is poLight an important partner to STMicro?

Absolutely. STMicro, one of our key customer in the thin film technology is this [ spectacular product ]. Absolutely.

And final question just now online, on the slide about competitive landscape, Pierre talked a little bit about VCM and SMA being ahead of TLens terms of image quality. How significant is this difference in performance as of today? And does it apply to all applications?

Pierre Craen?

Yes. So I would say that it's more like a lab issue. And of course, many people are testing mobile phone and benchmarking in the labs and everything, which potentially they will see some difference. And still there, when you combine everything, the wobbling of the VCMs and when you take everything in real life, the difference in image quality is basically not visible. But obviously, if you add the window in front of a system, you are affecting the image quality because the window needs to be the right quality, the TLens needs to be the right quality. But at the end of the day, there is no real difference there. So then there is another dimension to that question, which is the fact that the tunable optics, all of them are coming with some field curvature which is degrading the image quality in the corner, and that is right for -- that is true for all. But again, comparing with other limitation from VCMs, where the tilting and the -- creating also defocusing on the edge of the image, that is they would sit side by side. And using our technology with the speed and using like all-in-focus technology, we're going to wipe down all those minor, I would say, quality issue on the image, and that will become like a fantastic image quality if people want to take that opportunity, if they feel they need to. So I don't think that we are behind too much of VCM. But on paper or in the lab benchmarking, they could see the difference, yes.

Okay. A follow-up question here. What's the biggest issue with having larger apertures for back camera? Will voltage levels increase?

Pierre?

This is one way to get more focusing range, but we are relatively high already. And then what we're going to -- what we're planning to do is to try to look for material which are stronger. Going to bigger aperture is not only an issue of actuation but is also an issue of optical quality. So very quickly, it doesn't go linearly with the size of the optics, but it's going with the square or even more. And that is a challenge to really secure the right optical quality. It's not only an issue of actuation, but it's also an issue of optical quality. And we need to continue to improve gradually our processes and supply chain to reach the right level of quality. So the little story behind that is that at the very early stage, we were working for [ bonds, Swiss bonds ], very small, and we had no issue at all with quality. With our current product, we had to improve a lot the supply chain to secure the performance on the pure optical quality of the component that we have been -- that we are using. And going one step beyond, we'll improve again the challenge to reach the right level. So that's optics. The big telescope, people are taking months and months to polish it, and that's very difficult for getting to the right quality. So bigger is always more difficult for everybody.

One more question from the audience?

Yes. The big glasses you [ grabbed ] a patent for, is that [indiscernible] are you doing anything with that one now?

So the question is that we have a patent from big glasses, spectacles you mean?

[indiscernible]?

So that one, we parked that a little bit on the side because big aperture, but we have been using the concept to develop POCs of bigger TLens. So that concept is under, I would say, development or trials so far.

Do you have any more surprises coming?

I would say...

[indiscernible]

Yes, yes, yes. And then again, they are, again, image quality, optical quality issues. And it's also, we feel that going into that direction is quite difficult because the way the human...

I guess he was referring if you have new kind of application surprises. But yes, I'm sure [indiscernible] knowing Pierre.

Okay. So we have another follow-up question from [ Oscar ]. Can we be sure that all parts of the logistics chain will keep up with the future ramp-up: smartphone, AR, VR, barcode? This will increase a lot towards 2025 if everything goes well. How will the production keep up? Mainstream solution will require quite a few TLens.

Yes. It's a very good question. And it's, of course, a great concern for Marianne, and that's why we have to take all the pain by being ahead of the real needs. We need to kind of take some bets basically with the material stream. But I think it's fair to say as a general statement, today, every company, I would expect, has a huge challenge with managing the supply chain. It is really, really difficult. My understanding, that will probably normalize. It will probably normalize, but there's nothing in the market today showing any signs of normalization. But that will happen, of course. So said that, we will not have a problem to [ run. We'll be aligned ]. I think there will be a lot of problems. But what we need to be trying to do is to understand the needs in the market in the different verticals as soon as possible and have the financial strict to take the commitment on the long lead items. That's the way we have to handle that.

No more questions from the online participants.

So how are we doing timing-wise? 15? 16? The demo starts in 15 minutes? Okay. Colleagues, thank you for your help. You can bring the computer to the CFO, and I will just do a concluding remark. Thank you. Yes, [ while you have ] that, next event is the second quarter 2022, 18th of August. So I expect to see and hear some of you then. So hopefully, this has been so far an event you -- which were delivered according to expectation. It's a lot of work behind it and also preparation work. Jon talked about business opportunities, product opportunities in the different verticals, which hopefully gave you more than you can understand from a quarterly presentation. Pierre was talking about so many things that I started to be sweating and felt the pressure to deliver on all these kind of fantastic new products. And as I said, we added to the slide yesterday evening, these are road map scenarios. And they are scenarios because we need to follow where the customer wants to go at all times, of course. But we need to be prepared also. If we start from scratch when all customers -- when customers start to talk to us about can you do this, can you do that, we can't start from scratch. We need to develop the technology bricks which prepare us to move fast when opportunity comes. And those bricks Pierre nicely explained today, and I know that's not easy to grasp everything. You need to have a PhD in optics to do that, but I'm sure that you will have the chance to ask more questions during the mingling phase. Marianne did a great sum up of where we are from the manufacturing perspective. [ Alf ] made a great video showing us how things are assembled and the process behind it. How could I say? After we started with poLight, it was not so many years because the product was kind of defined. Many, many of the millions you have been giving us and the time we have used has basically been dedicated to get it right in manufacturing. This is not an easy thing to do, and many people have been involved for many years to make this happen. We are not at 100% yield today. We probably never will be. But we have shown -- seen enough to understand that we will be at the high 90s plus for yield. So I think we have an exciting year ahead of us. Next of this program is that Lars, and also supported by Pierre and Jon, will show you some TLenses and products using TLenses. We will go -- we will start upstairs. You can bring some food with you or coffee or drinks, and then we will go down to the office area where we will do the product demonstration. You can see where we live. We can also, if some of you are interested, go down to the lab. I would like to introduce Lars before we do that. Come here, Lars. Come, come, come. This is Lars. Yes, yes. Lars, he's soon 20 years in poLight. 18 years to be exact. He is a specialist in polymer, a PhD and doctor degree in chemistry. Been working in -- is it hydro polymers? -- with SINTEF. And been, as I said, 18 years with poLight, which is impressive in itself. Lars is, for me, a little bit the father of today's polymer and yesterday's polymer and tomorrow's polymer, hopefully, and is really mastering that important part of poLight in a fantastic way. So Lars will be here for you to show you around. And with those concluding remarks, I would say thank you for your attending. Thank you for you attending in the webcast. See you next time. Thank you.