Sivers Semiconductors AB (publ) (SIVE) Earnings Call Transcript & Summary

Good morning, and welcome to this webinar. My name is Anders Storm, and I'm the CEO of Sivers IMA, and I will take you through this second quarter webcast. And today, we have a lot of new people coming into the company and interested in the company. So we had over 400 people, which is 4x more than normal. So I'm going to focus a bit also on talking more deeper about Sivers IMA. So the length of the presentation will probably be a bit longer, and the time for questions a bit shorter, unfortunately, since I have to -- I only have 1 hour. I have to move away to next meeting. But let's start the presentation and go through the situation. So to summarize the quarter, the sales was quite slow in April, May due to the coronavirus. In June, we had a quite strong uptake overall, concluding the overall quarter minus 10% year-on-year, which is quite good in this situation, I would say. If we look at some of our customers who have reported already, like Cambium, they had minus 11%. We had -- year-on-year, we had -- ADTRAN actually minus 21%. So there has been an effect on the overall market that we're working in, but we've done really well to keep up with that market and not have any effect in our factories and so forth in that sense. We have, of course, closed some very important deals during Q2. We have 2 Fortune 100 customers with contracts over SEK 30 million. And of course, the deal -- the CPE deal after the quarter, the SEK 480 million estimated deal. And we also have closed some more design wins during the quarter, including the CPE deal, plus 2 new ones. We're now totaling 19 design wins overall. And as I said today, we're going to do some extra background and deeper go into the company. If we look at the overall Q2, we had a turnover of SEK 21.4 million versus 21 point -- SEK 23.8 million, which is minus 10%. And that is, of course, an effect on the COVID on the sales numbers. If we look at the EBITDA, that was a bit lower, SEK 2.7 million, but there are some effects right now that actually, the company is -- going to explain more about those, but they are not sort of cash flow or any really costs in any way. So for example, the provisions that we're doing for social security cost, when the share price is going up, the stock options is also going up. And therefore, we have to do provisions, which is -- was SEK 3.2 million, and they are unfortunately getting in already on an EBITDA level. So if we look at that, we were actually in a sort of adjusted for it. It has a small improvement actually year-on-year on EBITDA level. And also, if we exclude that, we actually have capitalized R&D less. That means that all the development is not taken as sort of an income. We are more focused on delivering that. Therefore, we have an even better result. If we look at the overall operating income, it was minus SEK 7.9 million, including the 2 things I mentioned as well as we actually have a financial cost increase of minus SEK 4.2 million, which is connected to the convertible bond and the derivate that is connected to that. And that's sort of the same thing as with the social securities. This is something we need to bring up in the -- as a financial cost, but it's no effect on cash flow or anything else. So it is important to understand this. Therefore, we also have done a calculation on the next slide on how these effects can actually effect the results in a sort of a way that is -- needs to be aware of, but it has no real effect. So if we look at embedded derivate, which is sort of the Ampleon right to convert to shares, the market valuation in the income statement is affected mainly by the U.S./SEK FX rate and the share price, of course. Increasing the share price, increase the value, which increase the financial cost. But however, it's not a -- it's a technical account effect only. And the important thing is to understand that it's the valuation that is affected. There's nothing -- no effect to be paid out or any cash or anything. So if the share price go up above SEK 10 as it has done on even more between Q2 and Q3, that would be actually a negative effect on the financial cost by SEK 44 million. And again, that is not a real cost in any way, but it's good to understand that for the next report. The same thing with social security fees. This is nothing special for us. I mean I've seen Spotify had the same in their report actually. So the personnel cost is going up when the stock option is going up, but there's no effect on the cash flow. We're doing provisions for this per quarter. And as you saw, it's affected us by SEK 3.2 million. If that effect is now sort of going further on in Q3 with a higher share price that, for example, SEK 10 will have an effect of SEK 14 million instead on the social security fees. So it is something that will actually affect on the EBITDA line, but it's not a real effect per se. It's more of a financial accounting effects in that sense. So with that said, we can look at the first half year. If we look at sort of the COVID effect in general here, we have been able to keep the first half year, where March, April and may have been the month sort of with the COVID effect, and the total is minus 6%. And the numbers here, I see actually is wrong there under the EBITDA. It's minus 8% on the EBITDA overall and so forth. But the cash in bank was SEK 65 million. If we look at the segment reporting then, we see that Wireless have had a sort of a downturn. But as mentioned in the last quarterly report, I mean, we have had some end-of-life products from last year with the VCOs and radars that is -- so the comparison is not really fair in that sense that all the new products in 5G that is coming up and growing now was not there sort of last year in that sense. Photonics has been growing 7%. North America is the largest market, a lot of the effect on the Fortune 100 customers. Europe is 26% and Asia is 9%, which is very similar actually to last quarter as well. If we look at a significant event, again, as I mentioned, 2 Fortune 100 customers are going to go into that. We also had a press release about Photonics around the standardization organ around photonics devices. And there are some really large companies, and we're working within that group like Arista, Ayar Labs, imec, Intel, Lumentum, MACOM, Quintessent, Sumitomo and so forth. And that is fantastic for a sort of a small company to be part of this A-Team to set the next generation of silicon photonics in that sense. If we look at the Fortune 100 customers, the new deal in April with the new Fortune 100 was a SEK 7.5 million NRE project to build prototypes for sensing applications. This is, of course, a big step, getting a second really large company and supporting that was not just one chance that we got the first one. So the first one, going back to that, they had another order of SEK 21 million in NRE in June, which was including also more projects now. It's not just the first one. There's several projects ongoing, which is really good. And we have done some deliveries in Q2 on that order already. And we are still in the prototype phase and working really hard to convert that, of course, into the volume phase, but it's hard still to say since we're not controlling the customers' products and how they're going to launch them. It's still hard to share any time line on that, unfortunately. If we look at the significant events for Q2 -- of the Q2, of course, we have the 5G millimeterwave agreement on the CPEs for an estimated value of SEK 480 million, which I'm going to tell you more about and do a sort of deep dive soon. We have also done a directed share issue to close the loan of SEK 20 million we had for working capital. And that was a very small dilution, and it was a big opportunity for us to close that loan. That was supposed to be closed in end of August, so we did it before that instead of prolonging it and are now working with bigger banks to sought out our working capital in the future, which will support us very well rather than the short-term loan we had from this group. If we look at the CPE deal, so that's connected to sort of fixed wireless access as it called. The base station connects to the home and you get gigabit link to the home. It's a sort of -- that what is really new with this contract is that it's not just sort of a classic just design win and then a lot of work and then a supply agreement. They've gone directly from sort of from an RFQ process into a full sort of design win and supply agreement, including all their estimates and so forth for how much they're going to sell. We're going to work on this. And from early 2023, we will start rolling out volumes. What is also unusual about this is that our customer in this case has their own customer already signed up with this. So it is a commitment also on that side, which makes this a very interesting project. And we were, of course, extremely happy to be the #1 coming out from this RFQ. There was quite many companies bidding as far as we understand, and we came out as a winner. And this is, of course, one of the most important deals we have taken on in the 5G side, and our strength in the CPE side of the market has therefore been stronger. And to talk a bit about how strong that is currently, we can look at sort of the underlying demand, of course, on 5G and the need for more data traffic. And the data traffic is growing more and more, and it's still sort of an exponential growth. If you look at the Ericsson Mobility Report coming out in 2020, it is going to be sort of keep on growing, and that means that this is just the start of a bigger need for datacom and fixed wireless access as well. If we look at the more details on the fixed wireless access demand, Ericsson are including, of course, not just millimeterwave, but they include all the data. That's why there's such a large share number in 2020, but it goes up to almost 160 million. So it's about 100 million new connections or solutions for fixed wireless access coming up in the coming 5 years. There is also another report called SNS Research for fixed wireless access that came out in August 2017. They are confirming the numbers, but they are maybe a bit higher than Ericsson is saying now. So it's been a change sort of slightly over the time. But if we look at sort of -- and that report was mostly millimeterwave. So if you look at that and reduce it a bit more and look at that Ericsson numbers, we came to a conclusion that the overall number of units is like 30 million to 40 million, something until 2025. That will be the millimeterwave where the market we are resting. And the total TAM is then quite large. In the overall, if these estimates are correct, our sort of that one deal that we have made, we have other, of course, CPE deals also include with Cambium and other companies, but this specific deal is sort of maybe 4% of the total market over the time '23 to '25. So there is a lot of opportunity left to win and deals to make. So this is just sort of the start of the long run. And if you look at the company, it's not like where we are today on the on the quarterly results, that should be viewed the company, but looking at the company more long term and how that will affect income. If we look at the design wins then, how are they sort of the status of them. There's sort of 19. We added then 3 since the last report I made. And then, of course, just the large CPE deal, then -- and there's also new Japanese customer and a module company within Europe -- in Europe. So most of those other ones are smaller Tier 3 companies. But they are sort of working on building solutions that are quite interesting. If we look at the overall solutions here, we can see the dark gray or the sort of higher frequencies, the unlicensed 5G, which are now going sort of a bit better than the unlicensed -- on the license deal, which is, of course, part of the large CPE deal, and we will win more this there hopefully as well. And before, it was a bit 50-50. But since we are so strong now also in the 60 gigahertz spectrum, the unlicensed one and it's just us and another vendor Qualcomm basically in there. So it gives us an opportunity to win more deals there. The number of competitors in the sort of licensed spectrum is a bit higher. But as you can see, we won a big deal and we have the opportunity to win more. So how have these sort of deals gone so far? So if you look at some of them have now come into sort of -- or over time been sort of in prototypes and have ready hardware. So all of these are in different levels. To mention a few, if you look at Cambium Networks, for example, they are planning to be ready with their solution by second half this year. And if you look at the Eastern European point to multipoint also sort of a license deal we made, that is also coming to sort of prototypes and getting ready for volume and supply agreements. And so the next step is, of course, to bring this into volume, but also to get volume, you need to sign a supply agreement. And we have some of the supply agreements sort of signed already, about 5 of them. And a few of those are now in volume like Cambridge Communication Systems and so forth and Blu Wireless. But the other ones are not really there in the volume phase yet, but we are estimating at least 6% to 7% to be there, as we've said before, before the end of the year and then seeing the numbers growing in 2021. That's our estimate right now. But of course, we are not controlling our customers' launch, and that's sort of one of the drawback of being a component supplier a bit back in the value chain. However, we feel strongly that this is moving in the right direction. And of course, some of them have had sort of challenges when it comes to COVID as well, as you've seen from ADTRAN had 21% less sales and so forth. But there are many other things that's happening now, I think, second half, and we're seeing an improvement in the second half of it, and we'll come back on that, of course. I will talk a bit about these different projects. Fujikura, for example, have been around for quite some time. As a customer, they've launched now the technology. They just recently also got licenses to try the technology for backhaul in Japan. So they are making progress. But I think Fujikura, in a way, have also, in their market, have been sort of more hit by COVID-19 than someone -- some other companies. The Chinese Tier-2 vendor that doing track-to-train in fixed wireless access is making good progress. That are one of the companies we see that will go into volume, and we also have the Eastern European company that we already have a supply agreement with, but they are also closing in on that. So this is an interesting mix of companies, and we're really happy that we're building on this. But this is, of course, not the end. We are keeping on building. We're selling more evaluation kits. We're getting new requests. And as you've seen, even in the pandemic, we have won business, and we will keep on winning business in this area for sure. So I will now do a company recap and talk more about these things in general for everybody to hear about it, but it will be some repetition for many of you who have been with the company longer time. So to give you some flavor, I mean, the company has been around for quite some time. This is a turnaround case. It started about 5 years ago, and it's been possible to actually use a lot of sort of R&D investments and technology that was done previously into this company when 5G was sort of taken off. And then we actually acquired a company in Glasgow, and now the company has 99 employees. They are very high level of skill, 20 PhDs within the company. The main office is in Kista, and we also have an office in Gothenburg for a wireless part, which was a part of a transaction that was done in 2013 with a company called Trebax. So if you look at even further in the history, I mean, the company name is Sivers IMA, and that is because it's 2 different companies were put together in the '80s when Philips bought the company. And there was an acquisition in '75. And IMA is actually coming from companies called interactive microwave institute at KTH and ACEA, who became IMA. And then there was a private buyout in the end of '80s to early '90s and then it took some time before the new strategy was done in 2015/'16 to bring this company into the 5G parts, which have then been a very, very good journey. And we started developing RFICs in 2015, which is sort of on silicon germanium. We signed the first deals with Blu Wireless and other companies. And then we did the acquisition of CST Global and found sort of a really interesting company there to build forward on in 2017. So we have 2 strong legs for the future. We also entered into the First North market in 2017 in November. Partnerships with companies like Integrated Device Technology, Ampleon. We signed the first customer contract on 5G with CCS also in 2017. Then we kept on in 2018 adding some new institutional investors, for example, Swedbank Robur Ny Teknik came in very early. And that was, of course, a very good start. We also added AMF and Nordic Cross. And then we signed further partnerships within 5G with Fujikura and Ampleon. And Ampleon also invested in a convertible bond, and we also started getting new 5G design wins. And we were also -- the chip actually now the 60 gigahertz chip was selected as the best industry showcase by IEEE in a big fair symposium in the U.S. in 2018, which was sort of the real kick off and start of bringing in and getting respect in the market for our technology as well. Then we progressed even further in 2019 and also started adding U.S. Fortune 100 customers in Photonics, and the turnaround of the Photonics business has started to pay off in really interesting projects with 2 follow-up orders of SEK 30 million of Fortune 100 at that point. We got close to SEK 100 million in revenue. And we totaled about 12 design wins in the end of the year. And as you know, now, we're up to 19, so 7 more since the end of 2019. Now we're seeing the acceleration, I should say, 19 design wins. Fiber changed also named to Photonics, since we are now doing more and more sensing applications as well. We have first supply agreement in place for licensed 5G with Cambium Networks, for example. Ampleon launched together with us the latest beamformer IC, the second project with Ampleon. And we also extended the portfolio into silicon photonics well in collaboration in the Photonics business with imec, which is a European research R&D house as well. So it's happened a lot of things over the last 5 years. And we have had a strong growth last year. We grew 35%. I think COVID have unfortunately put sort of some pressure on the growth, as you can see, for this year, but anyway coming out of this in a good way. So I mean to sum up the company development over the last 4, 5 years and we started with SEK 18 million in 2016. We're now up to 2019 about SEK 100 million. We are now in a position where we're waiting for the second growth phase, so to speak, where we're getting into volume phases. And a lot of the products we were selling in 2016 didn't have much to do with what we're selling today. So it's also been a lot of work of transforming the company during this period into new products that are now in the phase of potential growth. And of course, the 2 business areas, Photonics and Wireless. In wireless, we provide RFICs, which is a silicon-based circuits for sending and receiving radio waves. We put them also on antennas, and we're selling also modules, we can sell both entities, so to speak, depending on if the customer wants to make their own antenna, we make the antenna. But it's more and more important that the integration is high there, of course, between them because of the 5G is requiring a lot of the beamforming, beam steering and other things that is complex. The areas we can use this technology today is fixed wireless access, which is the broadband to the home, 5G millimeterwave in general to mobile phones from base stations where you have the beamformer ICs. You can have it as a mobile backhaul, sending back data from the base station to the network, the Internet. Track-to-train applications, which is the Blu Wireless thing, for example, then -- and in the future, we're seeing even more things like vehicle to the x where you connect this and other type of transportation like buses and so forth. So why is this 5G so important then? If you look at the overall it's all about spectrum, actually, because if you look at the current spectrum that has been used and also being used for some of the sort of lower frequency 5G stuff that we call sub-6 gigahertz. The bandwidth of the channels are sort of 10x smaller. And also there are less number of channels available. So there is a spectrum crunch as it's called. With the 5G now, there is sort of many new frequencies in these millimeter where spectrum open up and in the unlicensed spectrum that we have been really successful there is just sort of 2 gigahertz or 2,160 megahertz wide channels. And there are sort of 6 of them. And we are the only one in the world who actually can support all 6 currently. And there's been a sort of investment on the license spectrum of several billion dollars in the U.S. to buy the spectrum to use it. So the overall spectrum available, as you can see, is much larger. It's 40x larger in this. And this is just starting, and it will go on for the coming 10 years. So this is quite important for the overall understanding of why is 5G millimeterwave so important in the future. Talking about the different customers. Cambium is one of the more well-known customers. I can recommend that you listen to their quarterly talks, but they came out just now with the report. They were minus 11% year-on-year on sales numbers. But they're also talking about the product we are part of the 28 gigahertz licensed solution that they see as a future important. They are listed in the U.S. They had a turnover about SEK 2.6 billion in 2019. And the headquarters in Chicago, and they are working on both base station and CPEs with our chipset that now is into the market, the TRX BF02. That's -- so the chip we're now launching and will be part of the other project that we're talking about, the SEK 480 million, they are actually a long-term contract. So Cambium will also go over to that chipset in the next generation. But that is -- this is called the BF03, that project. So that will be some connections to this as well. But it's very interesting to see this now that will start developing already the end of this year compared to the other product that's coming in 2023. We also have, within the licensed, we have what is CCS and ADTRAN. These are pictures of their solutions. This is actually rolled out and used today. This -- you can go down to Trafalgar Square and see these boxes on the right-hand side being used. And for example, and other places close to that, you have the CPEs as well that's been used. So this has been deployed mostly in the U.K., but also actually in Sweden by a company. So this is a very interesting and also ADTRAN coming into this, which is a sort of #3 player in the world when it comes to fiber, which we will use this as an extension portfolio of the fiber that they're using. So this is a very important customer to us and was one of the leads on the 60 gigahertz. Then we have Blu Wireless that are doing not only sort of silicon stuff as well when it comes to the modem, but they also provide full systems for transportation and track-to-train solutions. So they are using our solution there. They have started deploying this with a train company in the U.K., and they call the product SurfBlu. You can see it on the right-hand side. This is also very exciting. These are not so big volume as the fixed wireless access, but it's very high-margin compared to it, and it's better margins overall. Our overall margin, we're trying to be something between 40% to 60% margins -- gross margins. But in that case, it's better margins than that in the track-to-train. Here, you can see pictures from Trafalgar Square, and the company who's deploying this from CCS is called Ontix, which is an operator in the U.K. They have -- their CEO have actually said that they hope to see hundreds of thousands of these small cells to go out and build out around London, for example, and many cities need this type of technology. So smart cities and that kind of stuff that's coming up. So it's very interesting, and they're using this now for both fixed wireless access and mesh networks backhauling and so forth. We've also built a large ecosystem around ourselves and a lot around different modem vendors where we have integrated this with IDT, NXP and CoreProtect and also Blu Wireless, which is part of IDT as well. We also built partnership with semiconductor companies like NXP and Ampleon and Fujikura. And if you look at the modem partners, the Blu Wireless is one of them. The other one is IDT. They have a RapidWave modem that we've already done the integration, which is part of the CCS deployments and so forth. And also part of the track-to-train stuff that we're doing. We have a smaller company in Singapore that has prototypes. They have yet to get to sort of any large volumes, but we hope that they will get into that and sell to their customers. NXP, we signed a deal -- or we made an official contract with them and a partnership where they are working on integration between their modem in licensed 5G and work is still ongoing. It will probably take this year and so forth. But this is a key partnership, I would say, to also grow the market share within what I showed you in the fixed wireless access business and win more than the 3%, 4% we're talking about right now. Ampleon is an important partner when it comes to the base station stuff. They have a really big coverage within base stations. They are top 2, excluding NXP, when it comes to RF power in base stations. They had an investment in the convertible bond of USD 4 million in December 2017 and are now in -- before December have the right to convert it into shares as well. And we started 2 different projects. One was that they were part and invested in the first chip that is now in the Cambium solution. And the other chip now is just launched at the Mobile World Congress over here in this year, but it's still in prototype phase. And that chip was planned to be sort of ready for volume in 2021 early, and we are now out meeting customers together with Ampleon to address that market. If we look a bit on the Photonics business, and now it's technical, but it's actually called 3, 5 compound semiconductors, and those devices are like indium phosphide laser sources. So what we actually do is the laser itself that is connected to a module. We are participating in a lot of high-growth markets. I will tell you more about those. There are 14 PhDs in the -- of the 66 employees. It's a very U.K.-based supply chain, which has been really good now in the corona times. We have strong university links. And actually, a lot of the area around Scotland and Glasgow and so forth has been called Silicon Glen, actually, which is sort of a Silicon Valley of Photonics in a way, which has been very strong over the years. The areas we're working in here is 3 different: Optical communication, which is data centers; fiber-to-the-home and so forth; optical sensing and sensors and optical wireless. And the 2 newer areas is the two to the right here. And we are engaged, of course, now with the optical sensing part with 2 different Fortune 100 customers, and we're working on Fortune 100 customers and have for some while in the optical communication part as well. But we've yet to get to a final deal there, unfortunately, but we are in a strong position, I think, to also go forward there in the future. If we took at the optical communication, as I said, it's -- that was called PON. It's the passive optical network, which is fiber-to-the-home, cloud data centers. It's an important market, and you can have the fiber to backhaul 5G, quantum technologies in different ways where specifically, we have developed things that could be used for security solutions within communication, sort of encryption stuff, which is quite important. But we have not announced anything on that part so far. Optical sensing and sensors where you can actually have what's called LiDAR. It's sort of a radar part. Consumer biometrics, you can use a laser, of course, to do finger printing and so forth. You can also use it for metrology, where you can measure sort of different type of gases in the air and we used, which is a very interesting area, security as well, facial recognition, and augmented reality and so forth, you can use lasers to do this. So it's a very growth -- big growth area, and we now have 2 Fortune 100 customers, as I said, in these areas. Then it's something called optical wireless, which is, of course, a bit strange. It could be optical and wireless at the same time, but it's actually light coming in the air, which is sort of a competitor to WiFi in a way called LiFi, but it is more on a point-to-point solution and can be used as a sort of privately network and in higher secure environment and so forth where wireless might sort of get out of the environment, but this doesn't. It's an interesting area where we're working with some projects to see if we can get some work there as well. The Photonics in datacom, of course, looking at it, it is very important with the silicon photonics piece where you can sort of integrate the laser with the silicon. And there has been a big advancement over the last couple of years in how to do this. I get into a slide about that later on. But it's a very interesting market, and we are working really hard to be also part of that in the datacom market. If we look at silicon photonics, I mean, it's the connection between silicon and the CMOS technology and the lasers. Sensing is likely to be sort of the biggest market in this and adoption, ultimately also into smartphones and other things. Highest growth will probably be in the U.S. We have a significant ecosystem within Sivers for this and also for partners around the laser sources, of course. And here, you can see an example of how you actually sort of bring the silicon photonics laser over from the Photonics -- or from the silicon part. And it's connecting actually the whole thing here. So this is sort of a very big step in being able to connect these. So what's the unique selling point in this area? So it's end-to-end service design prototyping for high-volume manufacturing, of course, where strength in indium phosphide lasers, which we have been working with for a very long time when the fab was founded in Glasgow. We have key enabling silicon photonics technologies, working with partners in that end. We have an IP portfolio around sort of the recipes and so forth, how to do this within the factory. We have research partners like imec and others here that strengthen our ability to deliver things as well. And there are other partners there as well that I mention. I've also got a lot of questions about the current capacity. You can see the fab on the right-hand side and the office here in Glasgow. The current capacity with some increases of staff, when you'd look at just the sort of machinery and stuff, should probably be 2 to 3x the current sales. But of course, this is very dependent on the product mix and the orders we get. So there's a big difference between pricing actually with certain orders. It's also connected a lot to the order flow and how you can do that. And there is, of course, always when you increase sort of capacity in general, you also want to have duality and so forth to really ensure that you need to have a duality for the customers as well and no single point of failures, for example. So that will, of course, require some investment as well when volume is growing. And we have a very sort of -- if we have a very one-sided mix, then of course, we can do more, but that might not be realistic that we get that because we have customers in general, who need to do. So the general question I get about the Fortune 100, as I said before, if we're really going to ramp a Fortune 100, this is -- the current capacity will probably not be able to fulfill that. So we need to invest more. And as I said before, it's probably not a -- that's a happy problem to have when that happens or if it happens. Also, the NASDAQ main market is an ongoing thing. That has been sort of a bit slowed down in general by the COVID-19, but now we've had a decision in the Board that we should sort of restart this project in a sort of more stringent way. And the target is now set for first half 2021. We've done a lot of work, as you've seen in the report of IFRS, board committees, code of conduct things, working on that. But we are now sort of trying to speed this project and deliver on it. But of course, as always, business focus comes first. And it will always do. It's not up to us. If we get in, it's NASDAQ auditors that decides if it's going to happen. But now we have had put on the foot here and will start driving this at -- for a specific date. So more on this later, but this is, of course, great that we are now in a position to drive forward this. So summarizing everything. I mean a slow April, May due to COVID. June, very strong, overall, minus 10% in the quarter on net sales year-on-year. We're seeing a sort of a stronger uptake in June and forward. Important projects for the future is, of course, the Fortune 100 projects we closed amidst COVID situation, which is fantastic, SEK 30 million in orders. The large CPE deal has also been a very eye opener in general that what kind of market this is. Now totaling there for 19 design wins, including that deal, and the target of a main listing for first half 2021. So that was the full presentation, a bit longer today. So we will now start taking questions, and I will try to open up here and start taking them, and I only have 15 minutes. So I have -- probably have to be a bit selective today.

How is the Fortune 100 customer doing and so forth and potential for projects? I mean we have several projects we said with the first Fortune 100, and it's progressing really well. And as you've seen, we've got an order in June. That means that we are in a good position for the future, but we cannot give any sort of estimates on when we get to the next phase, unfortunately. Yes. Another question around that. When -- what is the product? When can we know the name and so forth? Unfortunately, we cannot go out with the name. It's a Fortune 100 customer, and it's a well-known name, I would say. How big is the capacity numbers? I think I answered that in the presentation. Have you heard anything from Ampleon due to the bonds? Yes. I mean they are well within the money now, and I think that they will, for sure, do something before it ends in December in that sense. But that should be a no-brainer and, of course, with the current earnings they have on that. Does NRE suppliers rendering money today? Yes. So I mean, we got an order, for example, even if it was small. The first one from CCS, SEK 3.5 million CCS/ADTRAN, but we hope to see, of course, an acceleration of that now when we're coming out of the COVID situation as well. Sivers has world-leading components in 2 enormous areas, Photonics and [ Wireless.] Who are the -- is the largest next contract? Yes, I cannot, of course, comment on the next contract. But I think both areas are doing really well. We have 2 strong legs. There are future markets that are going to be an underlying drive for need for that technology we're working with. So I think we're well positioned in that. And whatever contracted is, we signed the next step will be an interesting contract, of course. What is the status of 5G millimeter dual beamformer? Yes, we have it in prototyping. It's been in the lab now for testing. We have at quite good measurements on everything. We'll probably have to work more on it, of course, and we are expecting it to be sort of in mass production next year. Does the track-to-train in China with Blu Wireless effect due to U.S.? So track-to-train, China is not with Blu Wireless. It's with another customer. So I don't think that affects us with that customer either because this is not connected to Huawei. This is a Tier 2 company we're working with, with 1,000 employees, something like that. So as far as we can see that, that is no effect on that. It's more Huawei who just have a very big effect right now, and it's in a very bad situation, I would say. During your last presentation, you mentioned China was a new market. What's the status of China 5G? Yes. As I just mentioned, we are working over there with several customers. Our reseller matrix have sold more EDKs and the customer just talked about is making progress. So looks good. It's a very long question, [ Jørgen ]. I don't know if I can take that now. What revenue volumes do you need to breakeven EBITDA for respective? Yes. So we haven't gone out what that means, but I -- my guess is something like doubling the revenue where we are today, we will start breaking even in short term. But I mean, that's the breaking even it's not that sort of target here. We -- the target is something different. And the growth is more important that we win deals and win more deals over time, which is the thing that we are working on hardest right now. You grow employees by 5%, what recruitment do you need to go forward and monetize your current design? So grow employments in some important areas. And as you've seen, we're winning more business. We've done investments in sales as the guys who we have followed, we fit in 2 new salespeople, for example, in the wireless business that have been very effective. What we're seeing more investment in the future is verification, validation, supporting customers to get to the market and so forth. And also, of course, if we need to invest more in the larger build-out of fab, for example, CST. Will the slowdown revise year-on-year, Q2 be caught up during second half? Yes, that's what we're seeing. And of course, the slowdown, as I said before, is not fully sort of connected only to also compare year-on-year because in general, you see we had the end-of-life product also. So comparing that is not maybe a right way to do it. But we are hoping -- we had a sort of a good progress in June, and we hope to see further progress on the year-on-year coming in the year. There's very long questions. I don't know if I have time to take all of them when they're so extremely long. What do you do in an effective way, educate the market and millimeters is the best technology? I mean we are doing a lot of things, of course, but it's not to educate the market so much anymore. That was a couple of years ago. Everybody knows now that it is in a very effective technology. I mean you just look at companies in the U.S. buying licenses for $7 billion. So there is no education in that. However, there is an education on how we are doing that technology and so forth. And during COVID now we have, for example, run webinars and other things. And we are on the radar from most companies. So if there is an RFQ, we are invited in that sense. Is it fair to assume that the oldest design wins will lead to commercial agreements first? And are there some exceptions? No, it's fair to assume that. And of course, the longer time you have had on development, they should get more and more into volumes. But of course, there could be some exceptions if they don't succeed with their customers. But how will you finance R&D for the SEK 480 million contract internally? What are your estimated development costs? Yes. But we are not sort of -- if you look at the R&D in itself, a lot of the cost there is headcount and the people that works internally and they are already higher than working internally. So we don't need to invest more in that kind of things. But if you win more businesses and need to go into more type of chipset development, we probably need to add another team, but that's another positive story in that case, I would say. The met -- we haven't sort of gone into and shared anything on our estimated development costs. Since the Wireless business is also fabless. We don't need to sort of think so much about any investments into production, for example, which is a simpler thing to scale then compared to the Photonics business. Yes. That was a question that we already had. Same question about the chip again. How many F1 chipset -- chip products is ongoing right now? Yes, we haven't gone out to the exact numbers, but we have 2 Fortune 100, one of them are working on several chipsets, as I said. The Ampleon Tier 1 chip, yes, as I've told you, we are with now selling it. We have it in prototypes. We have customers that are testing it, and we expect to see effects on that during the year and next year. Please update about Fujikura and many design wins. Yes, I cannot share exactly how many design wins they have and what they're doing, but they have -- now they are ready product, and they're out selling it to customers and specifically focused a lot around the 60 gigahertz right now, which they have launched. And as I said before, Fujikura had been a bit more hit actually by the COVID in the general business. ATopTech solved their IP problem. I'm not sure if we talked about any IP problems there. That's nothing that I know about. So if you have anything, mail me to it because I'm not sure if they have an IP problem. How many Tier 1 evaluated the old and/or the new Ampleon chip? I cannot share that, unfortunately. Good question, but we're, of course, trying to get out to all vendors. So that's what I can say. Please update on the unhackable quantum solution for CST. Yes, I mean it's -- we don't have anything much new to say there yet. I mean this is research. And of course, it could be a very interesting area in itself in the future. But I don't have any sort of update on customers or anything like that currently, unfortunately. How many new supply agreements in 5G do you think is the rest of 2020? I don't want to guess on that. What we said before is that we hope to get 6 to 7 of those that we have already signed that will go and move into supply agreements. On [indiscernible]on chip product status? Yes. If you've seen, we -- that status is it's in the lab, and we've been actually showing it off a bit. And it's been a research project, and it's getting a positive understanding of the chip and the possibility to use that kind of technology for the future. So it's an interesting technology that we are keeping on building, and that's been a financed project from Smart Electronic Systems. Do you think being Swedish European manufacturer has been a positive thing, getting 5G orders? Yes and no. I mean it's if you're in the U.S., it's not always the best thing to be European. But in China, I think it's a good thing. In Europe, it's definitely a good thing to partner up because you're local and so forth. And but -- and it's more about technology to win these. The U.S. companies are very technology-focused. And if you have really good technology, they buy from anyway. So I hope that gives you an answer. What is your revenue CPE on average? We haven't really gone out on that, and it's hard also to say it because there's very different solutions. Sometimes it's a chip, sometimes it's a module or licensed or dual modules or whatever. So it's a bit of that. But we don't want to share it also for our competitors to know exactly what the pricing are. Let's see. Is it true that you are working with 400 companies? I don't want to comment that. If all your products goes the right way, how big market share Sivers gets? It's a good question, but we don't do any forecast, unfortunately. So I cannot sort of share that. But I mean you get some pointers today that in the CPE market, for example, we looked at -- with just that 1 deal, 3%, 4% of the market. So it's a way of seeing it at least. Are you considering opening up any office in the U.S.? If yes, would it be in the Bay Area? I mean of course, we're looking at it. We have some people, consultants over there right now working for us. And it's an opportunity and a possibility, of course, to grow the business into the U.S. So it's a maybe, yes. Is it possible to outsource photonics manufacturing? If that's what you mean -- I mean the customers that buys photonics from us, they are outsourcing their manufacturing for us. So yes. But in the sense of that we would outsource it to someone else, yes, maybe, but then we need to do and use our recipes that we have and our personnel and staff would be part of doing that and build up such an outsourcing. And just what do you prefer when celebrate your next deal, wine or beer? That was a good question. Maybe that's the last one. But we have a few more minutes. Of course, champagne is how you celebrate, isn't that? What profitability are you seeing in 5G? We haven't gone through sort of it on bottom line. But what we want to have in 5G in general is 40% to 60% gross margins. Do you see accelerating sales on the rest of 2020 and how large growth? I mean we don't do forecast in that sense, but we're seeing a positive development. And naturally, when customers are moving from design win and prototyping into volume, it should be a growth, of course. How are you looking buying more companies? I mean there is a possibility, of course, to find companies that fits and of course, with sort of higher market cap, it's open up possibilities. So we are constantly reviewing our strategy around mergers and acquisitions in that sense. So I cannot say more than that. But of course, there is always on the horizon to look at possibilities in that area. Have you received any interest in-licensing and acquiring some of all your technology IP? No. We are not sort of looking in-licensing deals and selling IP. That's not our business model. Our business model is to sell products. How do you look at possibility on an offer on the whole company? I mean we are currently working on getting to a profitable market. We have 2 strong business areas. We have strong customers, strong network around us. If that happens, that will happen. But right now, my focus is fully on building a profitable company moving in to the main list first half next year. Okay. We have, I think, one more minute. How do you look at -- oops, suddenly it disappeared. What you hope -- can you talk about the Q3 report? No, unfortunately not. How do you look at the possibility on an offer -- okay, that was the one I read already. Thank you for a fantastic presentation. Thank you for listening. We have had a lot of more people this time, better company the same type of question, congratulations to have Bill McLaughlin on the team, very good job. Thank you for that. Yes. I think we actually finished this as ending the presentation. Thank you so much for listening. We will, of course, as normally put this out without the Q&A part on the web afterwards. And I will now roll in for some meetings in town and also some interviews that will be we broadcasted later on. So thank you so much, everyone, for listening in, and it's really fun to see that so many new people are coming in and are interested in the company. Thank you.