Welcome to Nordic Semiconductor's fourth quarter presentation for 2017. It's a pleasure to see so many people in the room, and I'm welcoming everyone on the web. Today's presentation will be very similar to what we do. I do a business update, Pål will do the numbers, and then Thomas will go through the outlook for Nordic. If you look at our headline numbers, revenue was $64.4 million, and this is in Q4, which we expect to be a relatively slow quarter. Seasonality is usually are. As you see here, it was 2% down from Q3, which is the peak quarter for our industry. This is 22.3% up from last year's Q4. Bluetooth revenue at $44.1 million, close to 44% growth year-on-year, and again, from a peak quarter, down 3.9%.
Strong growth. Proprietary revenue was up 8.4 quarter-to-quarter. Proprietary revenue basically come a bit up and down, but generally for the year, it's been relatively slow, down for 2017, but not as much as someone could expect. We're pretty pleased with the stability of the proprietary revenue. Gross margin. We've been working on improving gross margin by sort of improving test, and we see results, and it was up 1.4 points from last year. Depending on the mix, it might be a little bit up and down quarter-on-quarter, but still we have the aim of our being around 50%. It was down 2 points from 0.2 from last quarter.
We've been investing heavily, our EBIT came in at $8 million, Pål will go through these point later on. All in all, we met our guidance for second half of 2017. We ended the revenue at $130 million. Our estimation was $120 million-$130 million. The growth for second half was 45.4% in Bluetooth. That was in the upper end, actually a little bit outside the guidance for the second half last year. Margins, 47.7%, just also in the upper end of what we estimated for second half 2017. All in all, a lot of numbers were in the upper end. Investment also.
If you take the whole summary, $130 million for the second half, 24% year-on-year growth, 22.7%, if you compare to second half 2016. Bluetooth, close to $90 million, 45.4% year-on-year. Proprietary, as you see, was up from Q3 to Q4, basically a little bit down. If you take year-on-year, it's around 10%. Gross margin, again, up, our EBIT, $5.8, which is up year-on-year, $6.9, up 22.6% half-on-half. Bluetooth dominated obviously revenue mix, as you see here. It was up 43.9%. It was total representing 69% of our revenue now. ASIC is sort of stable around the same, 2-3% of our revenue, and we won't see much delta in the ASIC coming forward.
We are not doing many new ASICs. If you look into each market, consumer electronics, 26.1, up 3% year-on-year, and flat quarter-on-quarter. Wearables was down, 5.5% year-on-year and 9.2 quarter-on-quarter. Still there is activity in wearables . We will, we still win design in wearables , but we see that there is a shift in the market to more advanced wearables . For Nordic, that's a very, very positive thing because we also see a shift in our product mix that our more advanced components get put into more of those products. Building and retail, tremendous growth year-on-year, close to 90%. Healthcare, if you look year-on-year, 80%. This wide spread of other products, that's basically most of them are within the non-consumer segment, are growing strong.
Non-consumer segment is an important segment. There's a couple of things that makes it important. Usually, it's longer lifetime, and it's more stable products. If you see here, if you go back to, I would say, one year ago only, it was around less than half of what non-consumer revenue totals for today. We keep on winning application that is more B2B, which is really where volume will be driven in the years to come. The important thing, if you looked at our number, was very low between Q3 and Q4, is because non-consumer has much less seasonality than consumer. It's a much more robust market, and we are growing now in the verticals we've been working hard on, but there is still new verticals to get into, which is exciting. Usually, we have these new products that we show you.
We have an enterprise lock with 52. We have a network enterprise IoT router with 52, we show. I said that there still is designs in wearable. Here you see a customer using 52, some gadget for wine using 52. We talked a lot about smart home. We still believe smart home is very important vertical for Nordic. The one you see here at the right is a smart air condition filter. This tells you, send a message to your smartphone and tell you to change your filter when it's need for it. Cool? We think it's very cool. What have we done through 2017 and Q4? We are strengthen of a sales organization. We need that to manage and fuel continued growth. We see that Bluetooth is strong, still going to grow very fast.
We also see Thread and low-power cellular IoT application, which we need to support going forward. These are 2 new markets that we're not very much present today. We opened new offices in China, both in Beijing and Shanghai. If you read analyst, they expect China to really boom on IoT products. If you look at overactivity in China, we support it. When we support, we need to do something. We are going to build this company to be a large company, with still a small, medium-sized semiconductor company. We are going to outperform our competitors, and to do that, we need people. That means that we also expand sales team in U.S. and Europe. We need more local sales and field application engineers to be able to give the best support that's possible for all customers that we see.
Actually, this is a January thing. We get confirmation that we give support. We have won two quality awards from large customers the last month. We got this award. I can't mention names yet because it's not been out, but we got two awards for quality, best quality supplier. Being a medium-sized, small supplier, you need to have better support and be superior. That's our aim. Obviously, if we're going to ship more components, we need to make more components. We're scaling our supply chain to meet 2018 demand. It's a mix of both volume growth and more complex products that take longer time to test. We need to scale up and expand our test capacity. We add testers, but also engineers, to ensure that we get parts quickly to the market.
Obviously, as we are getting into more tier-1 customers, we need to improve and meet the specification and requirements of these customers, both on quality, which we obviously do, and turnaround time, be faster. If something you guys should like as investor, is that we are fast to get to revenue, and that's what we're working on every day, to get faster to revenue. Nordic joins the Thread Group. We believe that Thread is going to be another very important protocol in the years to come for smart home. Remember, Nordic, we make radio platforms. We don't only do Bluetooth chips, we make radio platforms. All the effort we have put into our radio platforms enable us to get a Thread chip by adding on protocol. Now we are the only supplier that has combined Bluetooth and Thread chip in the market.
That's part of our expansion in short-range IoT, is to win smart home and building market vertical. Obviously, to be in a position to do that, you have to have product, but you also need to have influence into the organizations that decides the future of Thread. We decided to do the same as we did with Bluetooth SIG, get some people in there that can monitor and enhance and help Thread become a world standard, which it will become. This belong to Q1, but I couldn't have a presentation in February without talking about low-power cellular IoT solution. The nRF91 Series is cellular made easy, is cellular for everything.
We did a live demo when we released this product, showing that we're up running on Telia network in Norway, and also we got a call in through our Verizon network in the U.S. We are very operating on both those networks in this demo. To achieve this, we chose to work with a very leading SIP assembly company in the U.S. called Qorvo. Qorvo has some major customers and are a leading provider of such solution. It is more than a producer, it's a strategic partnership with Qorvo, and it's been successful, and we are pleased to work with them as we've done up till now. It's really good. If you sum up 2017, you can agree on the heading, Strong Growth in Bluetooth. We had 40% growth in Bluetooth revenue.
This obviously is a result of our strategy and investments we've done. We have diversified our customer base. You saw consumer versus non-consumer. We have achieved gross margin expansion. We have made a solid foundation for future growth. To do that, we need to invest. We invest to fuel accelerated growth. We should be present where there is a project to win. To do that, we need to have right people at the right locations. That's what we've done. We are unique position in this fast-growing market. We are very much present in low-power short range, and we're going to be present in the cellular IoT market. We invested in sales, R&D, quality, and supply chain.
These are the parts of the organization that's going to be able to drive these volumes that we expect to ship in the years to come through, and we have to do it now. We have kept EBITDA margin in line with 2016. All in all, we are proud of what we achieved in 2017. As you saw, we grew Bluetooth a little bit higher than expected, so we think we have overachieved on some parameters and are very proud of that. Now, I would like to hand over to Pål, that goes through the numbers.
Thank you, Svenn-Tore. I'm gonna run through the financials for Q4 now. I'll start off with the operating model for Q4, 2017. When we look at the numbers for Q4, it's really important to remember that compared to Q3, there is much more activity in Q4 versus Q3, mainly due to summer holidays, and normally we see more product launches, activities in Q4 versus Q3. The numbers here are direct from the report, so they're not adjusted OpEx numbers, cash OpEx. If you start looking at revenue, as Svenn-Tore said, we had a 22.3% growth compared to last year, driven by the 44% Bluetooth growth. 47.6% gross margins. I think we had a down in gross margins in 2016 going into 2017.
We've seen a very positive recovery related to the, the, the challenges we had on the introduction of the nRF52. Together with, with other cost improvements and yield improvements, we are seeing a good trend on gross margins. If we look at operating expenses, total OpEx came in at 41.3% of revenue this quarter, which is up from 37.1 a year ago. Due to, to strong revenue growth, the, the underlying number is $7 million up, and as Svenn-Tore said, this, this money is used to invest and to fuel future growth for the company. Spending is split between R&D short range and R&D cellular.
If you look at R&D, short range, which is the Bluetooth and the Thread business and proprietary business, we went from $15.6 million last year to $16.4 million. I said there's lots of activity in Q4. Yes, this Q4, we've working hardly on the high-end version and the nRF52840. We were also working on the nRF52810, which is a very cost-effective product for the market. If you look at the cellular R&D, it's more or less the same spending compared to revenue as last year. However, the underlying number is up from $5 million - $6 million this year.
It's obvious, this quarter, we've been working a lot with carriers on certification and customers to get out the lead, the samples to the lead customers. SG&A up from 12.6 last year to 15.6 this year. I think Svenn-Tore has mentioned all the activities we've had ongoing on SG&A, setting up offices in China, more people in the U.S., supply chain, et c. At the bottom, EBITDA margin of 6.2% compared to 9% last year. However, if you take the number without the cellular investment, where we have no revenue, it's a strong 16% even in the investment quarter.
I also want to show, since, since revenue and cost goes up and down every quarter, I'm also showing trailing average OpEx. I take trailing 12 months OpEx divided by 12 months revenue and compare them. As you see, it's pretty stable on R&D and a slight increase in other SG&A. It's very important to remember that semiconductor is sort of the industry with the highest spending. Overall, spending in the semicon industry is between 18%-20%. Nordic is trading on 23%, which is, of course, explained by the high investments in the cellular IoT business. On SG&A, average spending in the industry is from 12%-15%.
We're at 14, so more or less in the middle of the average number for the industry. Jump to gross margins. As I mentioned, we do have a recovery in gross margins compared to the down we had in, in the middle of 2016. Yields and costs projects are working well on the nRF52 and other products. We do see a 1.4% year-over-year growth. If you look at compared to last quarter, we have a all 0.2 percentage points decline. However, due to the product mix and customer mix, gross margins will vary from quarter to quarter, although we do see a positive trend. We are working hard on, as I said, improvements.
We do have maintain our 50% target on gross margins. We do have as a target to see the 50% in the quarter in during 2018, not for 2018 as a whole, but for a quarter in 2018. Jump to cash operating expenses. In cash operating expenses, I've adjusted for capitalization. Capitalization this quarter is $2.5 million, so it's higher than the average $1 million-$1.5 million. The reason it's higher in Q4 is that we've done some outside design of a chip, and this cost is currently, I first booked as internal development. That's why you have a difference in the number there.
Increase in OpEx from last year is around 40%. The main driver of this OpEx is the increase in headcount from 533 at the end of 2016 to passing 600 in Q4 2017. An employee in Nordic costs much more than just the employee cost, so it's all of the costs added, including software and tools they use in development of our products. As Svenn-Tore said, it's set up of new office location and employee bonuses in Q4 also impact the numbers. In Q3, it was a lot of focus on FX. However, if you look at Q4 isolated, there's very limited FX impact versus last year and last quarter. Increase from Q3 is 22%.
The main reason for this increase is, is the holiday pay in Q3 and also employee bonuses in Q4. As a total, OpEx increased 23% year-over-year. Cash flow in Q4 was very strong. Normally, cash flow in the last quarter of the year is strong due to we're building down inventory going into a slower seasonal Q1. However, this year, due to very strong focus on, on cash conversion, we, we exceeded our expectations on, on cash flow.
As you can see, the main driver of the positive cash flow is a $10 million reduction in net working capital, driven by inventory of $4 million, improved payment terms and cash collections in accounts receivable of $8 million, and at the same time, not increasing our short-term liabilities. Overall, a $10 million positive net working capital improvement. CapEx in Q4 was $2.5 million. Here, this is the external CapEx, not the intangible assets. $2.5 is average of the year, which came in at $10 million. Overall, for 2017, we had around a $10 million positive cash flow. We do work on having a tight cash management and optimize our cash-generating ability.
However, growing the business will require working capital, so in order to, to have funds available to, to fuel the growth of the company, we have increased our available financing with the bank, with $25 million, as a $5 million... a five-year, recurring credit facility. Including this new RCF, we do have a financial headroom of $94 million, which includes undrawn facilities of $57 million. Finally, I will go to the full year operating model. This is the same slide as I, as I showed before. Revenue growth, total for the year, 19%. Gross margins had a strong recovery from a slow start of Q2 and also, and 2017, I mean. If you look at the other KPIs, they are pretty similar from year to year.
That means that we're spending in line with our revenue increase of the company. As a total, EBITDA margin came in at 10% for 2017, just slightly down 1% from last year. However, as in for Q4, if we compare the numbers without the cellular business, we do have a healthy 18% EBITDA margin on the Bluetooth or the short-range business. Okay, Thomas, I'll hand over to you. We can go to the business outlook.
Thank you, Pål. Hello, everyone. In this section, I will cover three main topics. I'll talk about our guidance for first half of 2018. I'll say a few words around our market position and the outlook we have for the markets we are addressing. Then finally, I'll talk about some objectives that we have for 2018. Let's start with the short-term outlook, our guidance for first half of 2018. We do expect the growth momentum that we've seen in second half of 2017 to continue into first half of 2018. Based on the current visibility, we anticipate the revenue for the first half to be in the range of $123 million-$133 million, representing 21% growth at the midpoint.
For Q1 2018, we expect normal sequential seasonality. This is due to the fact that the Q4 - Q1 seasonality is mainly a logistical effect based on our vacation and the Chinese New Year, so it has a similar impact on consumer and non-consumer type of applications. We expect Bluetooth, obviously, to be the main growth driver for first half of 2018. This revenue guidance is based on a Bluetooth growth of 40%-50% year-on-year. Gross margins, we expect to be in the range of 47%-49%. This is underlying improvements, sequentially, driven from the improvements on cost structure. We will continue to have fluctuations quarter-to-quarter because of product and product and customer mix.
Switching gears a bit, talking about end product design certifications, this is then data from DNB Markets, where they count products that are being certified in the market, and they look at how many are using Nordic components and how many are using components from other suppliers. We do believe that this is a leading indicator of Nordic's market position in Bluetooth. In Q4, we came in at 123 end products using, being certified using Nordic chips. That is up 15% year-over-year, and it's down 16% sequentially, and that is consistent with something that looks like a seasonality for Q4.
We have a clear number one position with 47% of the total, and we are sort of keeping a, a, a strong hold there, even under a lot of competing solutions out there. This also means that for the full year, we have another record year with a total of 460 new products entering the market using our components, and that is up 22% from 2016. Next up is kit sales. In second half of 2017, we shipped 27,596 kits. Yes, that's close to 28,000 kits shipped from us to developers out there. This is all-time high for second half, up 57% year-on-year. Also for the full year, if we sum up 2017, we're up 29% compared to 2016.
We do believe that kit sales is one of the leading indicators of market growth, especially around diversification of the market. All of these kits are going to new type of applications, new type of customers, innovating and adding connectivity to their applications. We also believe that this type of kit sales is a leading indicator of our strong position that we also saw in, in the previous slide. People are buying these kits because Nordic have very, very attractive and competitive solutions that we offer to the customers out there. We remain confident on the midterm market outlook. Nordic is uniquely positioned in two of the fastest growing IoT connectivity categories out there, specifically Bluetooth Low Energy, which is the driving technology for low-power, short-range IoT.
We remain confident that this market is gonna hit around 1 billion units in total in 2020, representing a continued growth between 30%-45% on a yearly basis. This is a market where we have a clear number one leading position, and it's obvious that our objective is to keep and strengthen that position moving forward in this market. Low-power cellular IoT is the wireless category that is anticipated by third parties to grow the fastest over the next three years. We remain very confident that we're gonna see more than 100 million units sold in this market in 2020. As we've said, we entered this market in December by sampling the first lead customers.
We did the announcement, and we are ramping up our lead customer sampling program to build a position in this very attractive market. Our view on the proprietary market remains unchanged. It will go down on a midterm basis due to a careful transition in PC peripherals to Bluetooth Low Energy. We're looking at between 0% to -10%, single-digit decline over the next three years. One of the key things of all of this market is diversification. We're seeing strong underlying diversification of our existing business. We have, we have a, a go-to-market model and an organization that is capable and is very strong supporting this type of market diversity, and we are building products that are off-the-shelf products that's ideally fitted to address these type of markets.
As Svenn-Tore mentioned, we did a sneak peek of our cellular investment, something we started about three years ago. Up till three weeks ago, we revealed very, very little about actually what we are building. We've been confident all the way that we're building something that's very, very unique and different from the existing offering in the market. I just gotta say that we, we are very overwhelmed by the response we got from the market. We were confident that we had something good, but we are very positively surprised. The response from the market is exceeding our expectation. The market is truly recognizing that we built a highly differentiated and value-add solution due to our level of integration, the size of it, and the power consumption characteristics.
We're also getting a lot of recognition from the fact that this is probably the first truly easy-to-use cellular solution out there that can scale across, across these diversified markets, and we are getting extended industry press coverage on our announcement on, on our product. Of course, this means we are seeing a massive interest in our lead customer sampling program from an incredible diversity of applications and customers. Currently right now, we are exploring options on how to expand this lead customer sampling program that we have in place for 1st half of 2018. At the event, the 23rd, we also provided some of our business aspirations for cellular IoT. Just to be consistent, I'm repeating them here today.
Short term, basically this year in 2018, our objective is to secure design wins, secure design wins based on that lead customer sampling program and get early customers ready for production. We need to finalize, get everything done and ready, and then support a volume ramp towards the end of the year with these lead customers. Our midterm aspiration is to surpass break even on a running basis. That means that the cellular IoT gross profits is will be higher than the OpEx, specifically related to OpEx, on a running 12-month basis. Long term, we, our aspiration is that cellular IoT will be a significant contribution to Nordic total revenue and profitability. We're pretty excited about 2018, and we have some objectives I would like to share with you. The number one is really about expansion.
It's about expansion and continued growth in what we coin as low power, short-range IoT. The most important technology in short range, low, low power IoT is Bluetooth Low Energy. We have a strong position. Our objective is to strengthen that leading position. We're also expanding our offering, basically taking existing silicon that we built from Bluetooth, adding software and adding solutions around it, allowing us to expand into other technologies that are also relevant and represent growth opportunities in short range, low power IoT, specifically around 802.15.4 and Thread. We're gonna continue the expansion we started, and we are very confident that we're gonna see revenue contribution from our investments in those complementary technologies now in 2018. Our objective is that EBITDA margin, we will see expansion in 2018, driven by growth in short-range business alone.
That does not mean we're not potentially gonna see cellular revenue. It just means that the growth in short-range business will be enough to drive EBITDA margin expansion. Of course, this year we need to build, and our objective is to build this position in low-power cellular IoT. Partly, that is leveraging the existing customer base and the unique market reach that Nordic Semiconductor have. Our objective is to secure the first design wins and secure a potential production ramp with these customers, and then build a strong foundation to drive accelerated revenue growth and drive improved profitability on a midterm basis. Just to summarize the quarter, I mean, Q4 continued strong Bluetooth growth, +44% year-on-year, and this is partly thanks to robust contribution from the non-consumer markets that has less seasonality.
We have a solid Bluetooth-dominated backlog of $53.7 million, up 88% year-on-year, down 18% quarter-on-quarter. Outlook first half of 2018, we expect the growth momentum that we had in the second half of 2017 to continue into the first half of 2018. We're then guiding $123 million-$133 million, driven by a 40%-50% growth in Bluetooth. We expect sequential gross margin expansion coming from continued cost improvements. We expect our design win momentum on Bluetooth and short-range IoT in general, that strong momentum to continue laying the foundations for long-term sustainable growth. That's it today. Thanks.
Any questions? We start over at the left corner. Christopher?
I was just wondering, it seems like you have visibility on the EBITDA, EBITDA margin for the full year. Could you say anything about the first half as well?
I can comment that. No, on EBITDA margin, we have multiple things to play on, so we are able to control our cost and our investment level, obviously. We have ways to adapt it based on the drive we have on the top line. We're just saying that for the full year, this is gonna go up, we are not starting to guide on OpEx or EBITDA margin on a half basis.
Then on the OpEx related to Finland, is this kind of the new level that we should expect, or could it increase further or into the next year, or this year, sorry?
We have a tremendous market opportunity with long-range cellular, and we are adapting to this opportunity, so you will see some growth, but it won't be a sense excessive.
Thanks. Then on the kind of the different applications that you're seeing for the LTE or cellular business, you focused a lot on asset tracking to begin with. Are you seeing interest from other? Can you give some examples of other areas that you're seeing interest?
Yes, we see. We meet customers every day, which we basically will see, I call them the Internet of Things of B2B. It's sort of following in different processes. We see checking engines, checking turbines. There's a lot of applications coming into us.
Then lastly, on the Bluetooth growth, it was obviously very impressive, the outlook that you're giving for the first half. Is there anything in terms of high customer concentration or anything that could make us worried about this not continuing into the second half, or should we expect anything like that?
We're not guiding on second half yet. We keep on to guide on the next half. There is nothing. You know, if, if, if you look at that underlying growth that we are expecting, for the first half of 2018, there is no real change in the customer mix as such. It remains a diversified growth base.
Thank you.
I have a question from Axel on the web. I can do it first because it's related. Do you see any verticals that are important in the first half?
We don't comment specifically on the verticals driving the growth, no.
All of my questions has been answered.
Okay.
Andreas Bertheussen , Kepler Cheuvreux. Just a few questions. On, on the, the move to Thread, I was under impression that the Bluetooth five solution was quite competitive to Thread, but still you're seeking to move into more Thread protocol solutions. Could you just give some color on, on why you, you are increasing your focus on being more competitive on Thread?
Right. The way we view Thread is that Thread and some of the other 802.15.4 technologies do have some complementary things compared to Bluetooth. A lot of them offer more advanced meshing solution than is currently available on Bluetooth. Thread is also an important technology because it has heavy backing from the Google and Nest Labs ecosystem. There is a strong interest from various industry players to connect up to their ecosystem. We're looking at it as really a complementary technology to Bluetooth.
When we look, 2-3 years ahead into the smart home market, we do anticipate to see a good share on Bluetooth Low Energy, but also a good share on Thread, 15.4, and Zigbee technologies. This move to also include support for 15.4 and Thread is just a way for us to have a bigger position in that market opportunity.
Thanks. In terms of the growth in non-consumer-related customers, could you just give sort of indication of the lifetime of these products compared to consumer? Are we talking about a consumer product being, let's say, one year, and an industrial non-consumer product being two years, three years?
There is obviously a range. Let's take the extreme consumer products, right? They last for a quarter. It's like a giveaway thing that is, you know, manufactured and sold out. The other extreme is some of the non-consumer applications, you know, looking into medical and industrial automation, that we see has an expected lifetime of 10-15 years. Obviously, the non-consumer is more shifted towards the last extreme, and the consumer has a good spread on the, the, the first mentioned range.
Actually, we can see that we also do some short measurement internally, and we see the effect of this market change into those, those numbers.
Exactly, because, you're obviously guiding a very impressive, growth in the short range. I was curious to see, are you-- is the market growing faster, or are you increasing market share, or is it the stickiness that is providing probably a combination, but the, the main driver?
It's, I mean, we don't have no one, and neither do we, have a perfect visibility on the market. The way we judge things out there, it looks like we are growing faster than the market right now and taking market shares. We did it in second half of 2017, we believe we continue to do that going into first half of 2018.
I think I would like to add another comment, which I think is important that you guys are aware of. When a Nordic sales guy go out to a customer opportunity on Bluetooth Low Energy, or, other short-range sort of opportunity, the only thing we can sell is a short-range solution. When our competitors go out there, they have a huge catalog of products. I'm extremely proud of how eager our sales force are to win those opportunity, and you see those in the numbers from DNB chart . We are winning where we are exposed, and obviously, being a well-recognized player in the market now, we are invited to the most of these opportunities. It also means that tier-1 customers invite us. We feel we are in extremely good position, extreme strong sales force that knows the product. Important thing here is knowledge of the product.
Our sales guys know the product.
Thanks. Final question from me, how much can the product mix and the customer mix impact the gross margin from quarter to quarter? Obviously, there's fluctuations, and in extremes, it could be very large, but your best guess on the damage.
I don't want to give any number, but obviously, as we are broadening our customer base, as we are broadening it on non-consumer, we get a sort of solid base for the margin. Yes, there will come some larger customers on top with differentiation in pricing, but I think as long as we see the base customer is growing, it won't have so much impact, but not a percentage number.
I see. Just to clarify, you know, from quarter to quarter, if there's a lot of fluctuation, what to expect?
Yeah, we have said what you should expect. We are aiming for the 50% is still in there within this year, so we don't expect it to drag it down, at least.
Okay. Thanks.
Hi, Howard for Carnegie. Obviously, you guys are growing fast and also need to invest to sustain that growth, but could you give us some pointers on the mix between what's invested in Finland for this year and what's invested in Bluetooth?
Yeah, I will first have a comment. I mean, we are growing fast now because of all the investment we've done two, three years back. That's really, we have to do this investment two, three years ahead of showing revenue. What we're doing now of investment is going to impact how things looking in 2019, 2020, 2021. The split of investments, Finland versus Norway, I think a lot of the things we do in Finland now is also related to our R&D in Trondheim. We basically benefit and are more, even though there's two different products, we have synergy of each other. It's very difficult for us to categorize where we put the expenses.
All right, will you continue to show the Finland OpEx numbers going into the next-.
We will do that until revenue.
Right. How should we think about that number for the next few quarters through 2018?
I think, Svenn-Tore , you answered that question before, that we are investing, slightly more, but not over, not the same growth as we've seen, right? We're adding some people, but we're doing more, more tapeouts and then, customer certifications, et cetera. It'll be some increase, but not a large increase.
Fair enough. Thank you.
I have a question on email here. It says, your product range in Bluetooth co-covers now completed, how do you evaluate your position against competition? Who is from a product view closest to you? In no way do we view our Bluetooth offering as completed. We'll continue to expand our Bluetooth offering, both in terms of adding multiple more price points and doing value-add integration, and also improving the parts. We have next generation nRF53 Series series coming along to stay ahead of competition. We do believe we are ahead of competition, both in terms of performance, power efficiency, and obviously ease of use and completeness of the solution.
One of the most important things we have is that we have a unique position with an actual broad portfolio of products that's covering everything from simple to relatively, close up... relatively complex applications. I think that from, from an ease of use perspective, from a performance perspective, I think maybe it's probably TI that is, closest, but they, still have a relatively, narrow portfolio. From a breadth perspective, I think, SiLabs is probably the one which is, closest, but they're still relatively, new in this game, and we believe that they have still some homework to do in order to, match our complete solution offering.
I will add to that, if you look three years back, there was a lot of advice to us that we should go for the low cost, high volume market, and why don't we compete in the left corner then? We said, "No, we believe that the market is going the opposite way," and now we see results of this. We did a very smart decision in production management, and we see that most of opportunities we expose for today is in more advanced Bluetooth Low Energy.
Just one last one. On, on the R&D to sales for the short range business, I know you, you tried to give kind of a range for where semiconductors should be. Can you say anything about where you think you should be over time, kind of in a normalized world?
I mean, we're, we're probably still a little bit lower than sort of the benchmark, if you look at the size of Nordic. As we grow, I think that we will... SG&A, as percentage of revenue, will move towards, you know, the 10% target, which is average for very, very large semiconductor companies.
R&D?
R&D-wise, today we're at 23, and as we grow, as we get revenue contribution from Finland, that obviously will, will go down as a percentage. I think with the growth profile and, and our continued ambition to, to grow faster than the market, we, we, we're gonna be, in, in the higher, end of the typical industry range, for our type of products, which is gonna mean, you know, 18, and a, and a little bit extra, maybe on mid to long term.
Yeah, on the short range business in itself, can you comment on that?
On the split between short range and cellular?
Yeah, what should be the short range R&D to sales?
If you at it on a long-term perspective, when we have significant re-revenue contribution, short range R&D probably needs to be 18%-19% of the short range revenue. There is an element of synergies, so that in total, it'll be, it'll be within the target.
Thank you.
Okay, no more question. Thanks a lot for you to come here and to listen to us, and have a great day. Don't forget to celebrate Olympics today.