Good morning, everybody, and welcome to poLight second quarter presentation. Agenda. As normal, key events, a recap on what poLight is all about. Market review, financial review, outlook, and in the end, Q&A. Financial review will be presented by my CFO, Alf Henning Bekkevik, which is here with me today. Regarding Q&A, this presentation is only webcasted. If you have questions, you can add those into the interface on the web. Please leave your name and contact details in case we do not have time to answer all questions. Key events in a quarter. Yes, as you know, first assignment for web camera application. First assignment for a machine vision product, which is very much in a way, type barcode market. Good progress on most on the customer cases, we feel.
As you know and we have already announced, after Q2, we had a cancellation of a smartphone project due to portfolio changes. The same OEM, which canceled that particular phone, is still considering using TLens. Other OEMs have started evaluation. I will come back to that. Also, after the quarter, we received a follow-up purchase order for TLens worth approximately NOK 1.450, related to that barcode project we have been mentioning several times. As you may have seen today, also obviously post Q2, we received a relatively sizable PO, probably the biggest ever actually, for a medical case. I will come back to that. poLight at a glance. What we can maybe say, which is new here, is that we have expanded the team. Now we also have presence in U.S.A., in Bay Area. A Senior VP responsible for North America.
A background from the industry and been with a camera module manufacturer called Ofilm for several years. We also have a representative and employees, senior business development guy in Southampton in U.K., and also Taiwan, we have been increasing the presence, and also in Shenzhen. The organization is step by step being professionalized to handle the opportunity pipeline we see. poLight developed a unique lens, a tunable lens, which can be used in many different applications, coming back to that. Founded since 2005, it's been a long run to get where we are today. We have built a very, I would say, good IP platform, 15 worldwide patents, 11 pending, and three registered trademarks. We are now around 30 employees. As I said, Horten headquarter, office in Finland and China, and a representation in Finland, U.K., U.S.A., Taiwan, Korea, and Japan.
Uniqueness of our technology can be summarized on the bottom right side. Instant focus, extremely fast speed, can realize very compact solutions, have a constant field of view, no pumping, and have very low power consumption, which is key technical attributes among other important things. We are on our way. We have now actually five customer wins where we are shipping products. We have the web camera from MAXHUB. We have XUN Max Pro smartwatch for kids . We have the Xiaomi smartwatch for kids. Both those watches are still in market. We are inside Honeywell EX30 barcode scanner. Also we are now in a machine vision direct marking reading relevant to barcode unnamed company so far.
We are building step by step a customer base and are proving through these assignments, these customer wins, that we have a technology which is suitable for many different applications, and more will come. I would say we have three focus areas. The smartphone is definitely a high-focus area and will remain so, and it's quite a demanding market area to address. That's the area where the volumes are today, and volumes for poLight and our manufacturing partner are key. We will continue to explore smartphone. We will not give up that market. We have had some up and downs, but we definitely see a very attractive pipeline, and we have no reason to not address that market with full force. You can also say smartphone/wearables/accessories.
There could be other, and that's a picture of a smartwatch phone there on the right, which is also obviously a key area where we already have references. Another important area for us are the barcode, more the industrial market. Barcode probably represent the main focus, but there are also other application which we are working on and which is a part of our POC table, as you will see later. Augmented reality, definitely important for us. We have already several activities ongoing. We think, and others think, that AR will be probably the next big thing. It's not going to happen next year, but say in some years ahead. It's believed that augmented reality will be kind of overtaking the smartphone volumes, and still to be seen, but that's kind of the prediction.
We are using quite some effort to position poLight in that area, at an early stage, as opposed to the smartphone market, which has kind of been using auto-focus technology for many, many years based on a VCM solution. Here we are really in the early stage and can take our position without having to compete with an incumbent solution. Super important area, and I will come back to it. There are other markets areas, and medical, again, an example this morning. We just got actually the PO flying in just before we started this presentation, so I haven't included it in this presentation. Medical area is definitely interesting for us. Still, I would say at early stage, but we see clear opportunities, and the sign of that was given to you this morning.
Other application, like automobile, machine vision, accessories, is also definitely a part of our scope. I will say the three leftmost are today where we use most energy, and then we have some other cases which is kind of grouped in the other, which also are starting to mature and potentially can become an important segment. Okay. We had a follow-up order for EX30, where you see the picture of EX30 on the bottom left. This is Honeywell latest scan engine. That scan engine, they sell to other OEMs. It's kind of a heart, it's the engine inside a barcode reader. I just kind of picked some examples of who is using today EX30, and I'm sure there are more, and more to come. I've just listed, and you see a picture of those OEMs and the names.
They, so basically buying then this EX30 from Honeywell and installing and using it in these system solution delivered by these various OEMs. We have actually, so far, as of today, received a little bit less than NOK 5 million in orders to date. Also, which is important in itself, but also it's early beginning. This is typically a product which have a long lifetime. As in a mobile phone, 6-12 months. This have years horizon for this product. Also, we expect the volumes to gradually increase. Not only that, it's a super important reference for us, to build appetite in other potential customers, which we are today. I expect more good news flow to come in this area. As I said, it's still a market in an early stage.
The people we talk to are specifically mentioning power consumption being with TLens, speed, compactness, and low gravity sensitivity as key reasons for using TLens. As I mentioned before, there are two use cases. It's we being used in the world-facing camera on the glass for different applications, sensing, imaging, video. Also, for laser-based displays, we can also be a part of tuning the laser, so that when the user are getting displayed a message on the glass, that message will always appear to be in focus for the user because the TLens will tune the laser depending on where you, as a user of the glasses, are focusing. You can say, maybe in the extreme, for a AR glass, there could be two world-facing cameras, potentially three, I don't know.
There will be one laser system for one glass, and maybe also two laser projected displays need to be tuned. Everything between, say, three and potentially five of TLens is possible in a system like this. The use cases we are today involved in is, I would say, professional use cases, meaning relatively low volume. We also engage with companies who's targeting more the consumer-based market. That market will mature later. Some of the cases we are working on, I would say the professional use case could evolve into a consumer case, but we also, as I said, enrolled in pure consumer cases, starting as a consumer case. Those we expect will be released later. We are today involved in three concrete product projects and three proof of concepts. In addition to that, there are companies planning to start POCs. Quite a significant activity at poLight.
As I said many times, we will take a position in this market segment. We have an extremely good basis for doing that, and it could potentially be the most important consumer segment for poLight in some years ahead. There is a potential for, I would say, three design wins related to professional use case, within, very optimistically, end of the year. More realistically, maybe beginning of next year. Relatively near future. Okay. Extremely interesting area. Smartphone. Yes, it was a disappointment for us, this cancellation. It is, as I mentioned before, a portfolio strategic reason, meaning that they have decided not to release that particular phone. That was negative for us, and it's negative for our shareholders. I'm sorry for that. I just want to remind us what we always have said in this market. It's a really, really tough market.
It's a tough market for newcomers and new technology to come in, and it takes a lot of convincing and testing. In addition to that, which we have done quite well, you are so much, of course, dependent on strategic product decision at the OEM. That's what I said last quarter, is that it looks extremely promising, but it's not a done deal. That's basically the case, and specifically for these smartphone cases, they are difficult to be 100% sure. As I said before, you really don't know that you're in that phone before it's released to the market. It can change. Often they have also dual tracks. That's how this market works.
Please keep that in mind when we're talking about all the opportunities, that there are obviously risk, and our visibility is limited when it comes to strategic decision inside OEMs. Same OEM who canceled that project, as I said, still have a good dialogue with us. They're still continuing doing tests and improvements. In addition to that, we have other OEMs and other camera module players who are also starting their own activity based on similar camera, but also based on their own kind of design. It's still a promising area for us, and we are using a lot of resources to support these planning POCs. The way we see it today, there should be a potential for several candidates for phone project for poLight in the second half of 2022. This phone, which was meant to be released, was a release for first quarter 2022.
That first half 2022 is gone for us. There is possibility in the second half and maybe towards the end of second half, the way we see it today. This, we just need to see and support and work. As I said, there are also continuous improvements and requests on improvements, which we also need to answer to. We are continuing our preparation for manufacturing. We cannot afford not to do that. If we don't do that, we will for sure not have an opportunity. We need to be ready. They need to see us ready. They need to see us producing. They need to see capacity in place before they dare to continue.
Now we have a little bit more time, which, in many ways is, you can say, good, but the other side, I think having a pressure internally is also a very good tool to make sure that things are happening. We are trying not to take that pressure down and pushing our own people and our suppliers to be ready and produce with good quality. I would say there are a significant investment being made by several players in the ecosystem to evaluate, prepare themselves for using a TLens- based camera. For an OEM to do a proper proof of concept, design their own camera, add-in design, building prototypes, we are talking of significant money to make that happen. Of course, that is a sign of clear interest.
That's why we dare to say that there are still candidates, even though we had that setback. No reason not to focus on this area, definitely. We feel that this add-in solution will be potentially a widely used solution for the selfie camera. Not only that, we have also seen sign of interest to when they start to get used to using this technology, that it will evolve to the back of the camera, meaning as in AR case, there is a potential for several uses and several TLenses in one smartphone. Okay. We are sorry for the cancellation. Nothing we can do with it, nothing to do with TLens, but no reason to not have extreme focus in this segment. This is basically the same slide we used last quarter. MAXHUB, very nice web camera.
Web camera is, we are the autofocus solution. I've been talking to the MAXHUB people and the distributors, they are getting really good feedback on that camera. I'm using it myself in daily work and many others in poLight, of course, I also understand that many of the shareholders have starting to use MAXHUB camera. Please test it yourself. It's a really good camera for that price. We feel that the relationship we have to that product and that company is going well. We also feel that it's represent a fantastic reference. The pandemic has forced us to work more virtually, Teams and what have you, is something which we widely are using. This market, good web cameras will, I think, will only increase in interest.
We think there are many other players who could benefit for using TLens, and we are trying to explore those opportunities in a systematic manner. We are involved with a company, which some of you know very well, called Wooptix. It's a Spanish innovative company, which is doing many nice things. One of the things they're working on is volumetric video conferencing, so 3D video conferencing. They are now considering, and actually they are in the process of testing two TLens -based cameras to achieve 3D conferencing. Still, of course, on an early stage, but it's interesting to see how people regard TLens as fundamental for 3D volumetric video conferencing. I think there's web camera, 2D, 3D, I think potentially can be a very interesting segment for poLight. I think it will take time to develop, but I think it's definitely an interesting area.
When it comes to Wooptix, you have may seen that they have posted some videos using a TLens camera. They can do bokeh, they can do all-in focus, which we have done ourself, but more like, I would say, non-professional software. They have commercialized, and they can sell this kind of function, which then will depend on using a TLens -based camera. We have quite some cooperation with that company, and we'll continue to support them. Good progress in most of the customer cases. We have ongoing supply, five up from four. Projects, five down from six, and that is the smartphone project which disappeared. We have completed POC 32 as 27, so quite a few has been completed, and hopefully that makes ground for more projects to come.
We have today ongoing POCs 23, down from 25, obviously connected to what has been completed, and around 10 planning POCs, down from 11. These numbers are over estimate. It's not always crystal clear which phase the different kind of customers are. Obviously this is not exact science, but it's our kind of estimate. Maybe just a comment to this morning's press release. This is a medical area. It's not a design win. It is a product under development, a medical surgery, very compact product, extremely innovative, nice product. We are today designed in, but it's not a design win. There are still developments to be done, but the company want us to prepare for mass production, and that's why they placed this PO of NOK 2.3 million, which is actually, I think, the biggest PO in the company's history. Let's hope that will continue to grow.
In that sense, significant, and also significant as a clear evidence that medical surgical devices are using or testing TLens. So far, they have been tested this device, also with medical doctors, with very positive feedback so far. Again, things can happen, things can change, things can be stopped. Even though it's giving us clear an opportunity, which we are quite proud of. Okay, Alf Henning, would you take people through the financial review?
Sure.
Thank you.
Good morning to you. Deliveries of TLens and ASICs for commercial use and customer development projects and some revenue related to deliveries, related to our prototype of a potential new product, gave NOK 2.9 million in revenue in the quarter, compared with NOK 600,000 the same quarter last year. EBITDA loss of NOK 13.7 million in the quarter, compared with NOK 10.4 million the same quarter last year. The increased loss is due to increased R&D expenses in the quarter, also including some material used for manufacturing technology improvements.
On the balance sheet, the cash at the end of the quarter was NOK 55.6 million, compared with NOK 89.9 million at the end of the same quarter last year. According to current plan, the cash deposits will fund the group activities throughout this year. On the cash flow, we started the quarter with NOK 68.4 million in cash. We used NOK 12.6 million in operating activities, compared with NOK 8.3 million the same quarter last year. The increased spending is related to increased R&D activities. We used NOK 100,000 in investing activities and NOK 100,000 in financing activities and ended up with NOK 55.6 million in cash at the end of the quarter. Okay. Thank you.
Thank you, Alf Henning. Only the outlook statement left. I hope you're still with us. I just wanted to update this slide. This slide was given in the Q1 presentation, a similar one, stating operating milestones we are targeting and also financial ambitions. You all can understand, this is forward-looking, and the uncertainty in what we say here is definitely there, and it depends on many, many factors. Just again, I want to emphasize on that. Today, on the left side, we have 5five customer wins. We have several POCs in many areas. We have quite a handful and more to handle with a relatively lean organization, which I have to say also and give credit to, is doing a fantastic job to handle all these activities. Okay.
We target design win for AR, as I mentioned, in say, if we are very lucky, end of the year, maybe more realistic, first half year. We hope that we will have finally a confirmation on the medical side in that first half year. That will be two new design wins which will again exemplify and put TLens and poLight into super important market segments and adding to our reference list and growth platform. We target our first design win for smartphone. That design win will be related to autofocus for selfie camera and based on add-in. That's definitely the target we have. We will start revenuing a smartphone in end of the year 2022, beginning of 2023. 2023, 2024 will be a ramp-up phase. In 2024, we will also potentially have the basis to announce and introduce to the market a new product.
It could be OIS, it could be a bigger aperture TLens, it could be beam steering. We're having some, as you see from the report, some quite interesting activity on that. Having said that, our resources on the tech side is today, and also for quite a while, mainly focusing on existing POC, existing customers, and we have, I would say, more limited resources to do fundamental new product development. We are trying to do it step by step, and also we have some cases, or specifically one case, is also externally financed. That is progressing step by step. As I mentioned on the smartphone slide, we think that the design win for selfie camera is also a path to be included in the main camera. We think that selfie camera is a good start for poLight. We have a sweet spot there.
The advantage we can show there should place us in a good position. The camera engineers will be used to working with our technology, and hopefully invent and include our TLens into the main camera structure. Main camera, as you know, is not one camera anymore. It's two, three, four, five, wherever that will end, and there should be a space for a TLens application also on the back. We are saying that that's going to happen in the end of 2024, obviously that's some time ahead of us, still, clearly, target we have. When it comes to consumer and AR activity, we think that 2025 could be a year where you start to see releases for you and me AR glasses.
If we can build a position in the enterprise market AR, we should have a good platform to also be included in the consumer glasses, and that's where obviously the volumes will start to pick up from 10,000, 20,000, 100,000, to millions over time. That's the operating milestones. When it comes to 2025 and the revenue ambitions, we haven't changed that from Q1. We still are targeting $100 million in 2025, and also a 20%+ EBITDA. Revenue for non-smartphone will cover a substantial part of our total OPEX if the world develops and poLight develops as we anticipate. Okay. Last slide, outlook. Overall progress has been relatively good in the quarter. It's obviously a little bit colored by the after-the-quarter cancellation, and that has impacted the company and the shareholder negatively, which we don't like to do, of course.
There remains a high interest in TLens, also in the smartphone area, and the pipeline is really promising. As I said, there are significant efforts being made by several players in the ecosystem to evaluate and prepare themselves for using TLens in the smartphone market and other markets. There are several candidates for project in the second half. Promising, I would say extremely promising progress in AR and medical use cases. We shouldn't underestimate the importance of that fact. All that positive, I have to say, which I'm saying every quarter, there's still a lot of things to be done and improved in all parts of the value chain for poLight. We are a company doing a lot of things with a limited, lean, efficient organization. We are approaching many different markets, and all markets has its kind of challenges and demands and what have you.
When we go into the details in these markets, we clearly see things to be improved, things to be changed. That's the part of being a company like poLight and others, that you don't see the problems before you are in projects and exposed extremely intense dialogue with the customer. That's what we also face. It's not that everything is fantastic. It's also challenges inside the company. As I've said many times, that will always be the case. I've been managing tech companies for my whole life. It's always challenges. It's all about how does your organization cope with those challenges? How do you handle those challenges? That's where I feel that step by step, we are getting better and better. According to our current plans, the group's cash position will fund activities throughout 2021. Okay. Alf Henning, would you like to join me for the Q&A session?
Sure. Just a sec.
As I said, if you have questions, there may be questions we cannot answer due to time limitation or other reasons, please leave your name and contact details, we will get back to you if possible. Okay.
Okay. Ready?
Yes.
First one. In the first quarter presentation, it was mentioned that one OEM was discussing which model and when to put TLens in a smartphone. There are now several OEMs evaluating use of TLens in smartphone. Are there now more than one discussing with which model and when?
Yeah. I can understand the question, and it's a little bit difficult to answer too, because we are not a part of all the kind of OEM discussion, which is happening internally. Those are extremely sensitive product strategic decisions, and we don't have visibility in full of that. What I can say is that there is several OEMs who are now considering testing, starting testing, of a TLens-based camera. Of course, some of them are more mature than others. I'm sure some of them are already thinking of what will be the time slot for us to potentially use a TLens-based camera. Others are maybe in the stage where they still are only looking at a tech assessment without a clear plan. It's a mixed bag, but there are candidates, yes.
How will the global semiconductor shortage influence the company?
Good question. There's no doubt, and you probably see from the press, I saw today that Toyota will reduce 40% - 50% of car manufacturing due to shortage of chips. That is a challenging situation, and many companies have issues in how to get hold of capacity and components. We have obviously seen this coming for a while, and that's also what we have done. We have placed a purchase order for components capacity with our key suppliers so that we at least have what we think we need for 2022 and part of 2023.
That has been done for quite some time ago, and we have added to that and placed new POs also relatively recently. I think given that we get delivered on time, we should be okay, given that we understand the forecast correctly. It means that we have to place orders for capacity for components on our sub-supplier long before we have clear visibility/commitment from our customer. That's what this means.
Can you describe a little about the whole manufacturing process and the status of ramp-up capacity?
Yeah. Our product comprises a lens material, which is this polymer, which is basically the lens itself, which we then shape to change focus. That, I would say, has unlimited capacity and is done by ourself. Not a capacity issue. It comprises the eye muscles, which is shaping that lens. Those eye muscles are produced in a MEMS fab in Agrate, STMicroelectronics. Of course, there is, I would say, a significant capacity issue, but that's why we have placed orders long before we need them to make sure that we have what we need in 2022 and 2023, part of 2023. You have to basically plan a year ahead minimum, and that's what we have done. We need somebody to put together the product, the polymer, the membrane, the muscles, and that's done by the assembly partner.
That is, I would say, also a capacity constraint at the assembly partner at the moment. That's why we have built two. We are today doing, I would say, relatively low volume pilot production at both sites. We are also preparing these partners to ramp up, and we have placed significant POs for them to rehearse the machinery. There is many of these machines which are being used to assemble a TLens are relatively standard machines, which typically assembly partners has a lot of, in a way. It's not a big thing to get a new one. Of course, they need six to nine months, but that can be done. One thing which is limiting the capacity quickly is what we call the final test machine. The TLens, after being manufactured, is being tested for all kind of parameters.
That we call a final test machine. That final test machine is our property. It's our design. Today we work with two companies. The latest one you may seen from a press release is OptoFidelity, which is making test machines. Those test machines, we have now purchased new test machines to be installed. We have expanded the existing one with new functionality just to make sure that we are adding one million -plus in capacity per month in addition to what we have today. That needs to be taken care of, and that's an investment we have to take. That was a long answer, but hopefully gives some information.
Regarding the production of TLens, after the cancellation smartphone project, what is the status of producing TLens modules today?
We are basically continuing as planned. That we do because we believe that sooner or later there will be cases, and we would like to make sure that we remove all uncertainty, which the OEM may have because of first time use, because of small company, because of all these reasons. We want to continue to push to remove all uncertainty. No change.
In the press release, you said other OEMs are evaluating TLens. How can poLight handle a big PO as of now?
We think we understand how the ramp will happen. As I mentioned before, we don't think there will be an OEM taking us into a kind of multimillion project without first running a smaller project. I think that's how we see it today. If that's the scenario, we have planned for that scenario and are ready for that scenario.
Sunny Optical released their second half interim report 16th of August. In the report presentation and transcript, they mentioned both a Korean and a North American customer, and an intention to replace VCM with TLens. Could you elaborate on this as the potential vendor seems to be Samsung and Apple?
I can't really comment on Sunny's statements. I haven't seen it myself. What I can say, of course, is that there are definitely plans around the world to use TLens as I've illustrated. You can say that kind of statement is also some kind of evidence for that. I can't comment on Sunny's statement, that I need to divert you to Sunny themself. What I would like to say is that I don't think we should fool ourself and believe that any tunable lens will replace all VCM application. That will not be the case. Tunable lenses being TLens, being liquid lens, will coexist with VCM for many years, and maybe always.
Sunny Optical mentions TLens in a press release this week. There's another one related to this press release. They believe that the solution add-in can become mainstream within 2022, 2023. With this statement, do they have specific customers who are interested in and have come a long way in the process of this concept?
Yeah, I can understand that question. It's obviously an important question. Again, I just have to say that I cannot speculate on Sunny's statements and what does it mean. Just say that we also feel encouraged about the interest in our product. Also just wanted to chip in that there is tunable optics, I would say, in general, is getting increasing interest in the market. We are one of the tunable optics. There are a lot of different words used for tunable optics, liquid, and very often also TLens are referred to a liquid lens. We, as you know, we are polymer lens. TLens, some may, even though we have trademark, but TLens could also, for some heads, mean a tunable lens in general.
I just want to raise that awareness that tunable lens can be shortened to TLens and could mean more than a polymer lens from poLight. Yes, as I said, we are enthusiastic about it. They are referring to a mainstream. Yes, we say we think it could be widely used, but we think there will be competition. There will be other tunable lenses also in the market. You can say maybe particularly add-in design, we could potentially have an advantage for add-in, compared to liquid lenses. Remains to be seen. Yes. We are, of course, positive and enthusiastic about the market, but I cannot specifically comment to Sunny's press releases. Sorry.
As you see it today, will poLight need a share offering to grow in the near future to deliver, hopefully, a steep ramp-up of TLens?
Yeah. As we say that the current funding will take us through this year. In practice, we need new funding from next year. Obviously, share issue is one mechanism.
Might be a little concerned about the exercise of options and sale of shares by primary insiders. The signal effect it has. Would not those share, hopefully, be worth more in the future, they think?
Yeah. It's an understandable comment. What I can say that share option plans is being used and offered to employees in poLight. One of the reasons why we do that is that we also try to keep the fixed salary level down. That means share option is a part of the overall compensation of people. That's the right the board has given employees. I think it's also understandable that somebody, sometimes would like to use that right to maybe get some money they need there and then.
In my history, I think there's been from primary insiders, only one event in seven years. Those same primary insiders still have a lot of share option remaining. Yes, you're right. The share price has increased since then, so maybe they regret and be more careful next time. This is a part of the salary, and we need to respect that they sometimes exercise.
Can you please tell us more about the existing collaboration with Wooptix? What different projects are you working on?
I think I covered that in the presentation.
Yeah. Okay. Can you say anything about time for a new smartphone OEM to release an add-in concept with the same ops camera module as the one that was released?
The same camera module is also being considered by other OEMs and the OEMs which cancel. I don't think any project will happen before second half 2022.
Now it's a AR question. Are both camera for viewing outwards and the tuning of the retina glass for text in focus a possibility for TLens at the moment, or is tuning for retina glass function further down the road?
Yeah. I mentioned it briefly in the AR slide, and I would say that will not be the first design wins. It will be further down the road. Yes, it's a high relevance, and we are involved in the case on that topic, but we don't expect that to be the first in line.
Are there a lot of camera models on stock now after the cell phone cancellation?
We don't know the camera module because we are supplying the TLens, but there is being produced TLenses for that project, and that will probably go into a camera module when we ship. On a camera module side, I can't comment. On TLens, it's building inventory. Yes.
The TLens module for the project that was canceled, can it easily be adapted to other smartphones, also to other vendors that for the one that was canceled?
Yes. That is one option. I would also want to comment on kind of this continuous improvement processes, which is ongoing, which will then maybe do some modification on that camera module. Could be on the camera module, could be on the TLens, so it could be different things, but yes, we know that that camera module is being considered by other OEMs and the OEM who canceled. There are also activities using kind of similar concept but slightly different for different reasons.
There will most probably be need for additional funding. Investors like to know in advance, could you tell us anything about your plans?
I think we answered that.
Yeah. By now there is quite a number of TLenses in use for some time. How are they been running, and have there been any complaints or returns, and how is the durability quality?
We have had very little, Of course, things happens, and there are issues in manufacturing quality, but I wouldn't say that has been a significant problem so far. As I mentioned, related to the final test machine, we are doing extensive testing of lenses before they've been shipped out. That obviously removes some of the kind of problems on the road. I would say that so far so good.
How about competition? Do you see any new?
Not really. There are some in the early beginnings, which will take some relatively fundamental technology to be developed. Those which are in the market today on tunable optics are a few players, I would say. It's TLens, being poLight, which is a polymer base. Is a few liquid-based technologies also in the market. If I say there are three active we meet on daily basis on tunable optics, I think that's it. I know there are some early initiatives which may surface sooner or later.
How about the-
I think it's good with competition, by the way, because if you look at it from an OEM perspective, if an OEM can only see tunable lens from poLight, they would like to see more players being able to do a tunable lens so that they can kind of have dual sources and security. I think that competition is there is kind of also in that aspect important.
How about IPR? Are you aware of infringements, or close to from orders and on orders?
Yeah. We are monitoring with help from external specialists, the IP situation quite closely, doing quarterly reviews. So far we are not in any dispute or related to IP at all. We obviously are continuously monitoring the situation, but at the moment we don't see any big issue on that topic. That may come when kind of the use of TLens is starting to be big and in volume markets. So far we don't have any dispute ongoing, to put it that way.
How is production yield progressing? Increasing? Is it stable or fluctuating?
In these days, the yield will typically fluctuate. Until we have been producing volumes over some time, it will stabilize. Then there will be hiccups of course, which will take yield down. That stabilized level takes time to establish, and the target then is above 90% type yield, which we have proven possible in periods where we are producing a relatively steady flow. At the moment, it will kind of vary due to kind of early-stage ramp-up.
The hardware and software drivers have been around for some time now. Are they still up to date, or could and should they be updated?
We relatively recently made a revision of the driver of TLens, minimizing some noise and stuff like that. We have actually recently released from MP a modified driver. We haven't talked a lot about it, but that's a kind of continuous effort we do.
Have you, the board and the two lead VCM owners, considered a finance round to really lift the company's capacity to scope with more customers, projects, and future developments?
Yeah, I think we answered that.
Yeah, I think so too. How about organization and key competence? Are you able to get the competence needed? How do you judge the company culture, the staff, strong, committed? Are you experiencing any key staff quitting?
As I said, I think under the circumstances, we have been able to build a very committed and loyal staff organization. We have also lately been able to attract, I would say, key senior people. I mentioned we have a new business development team. We have a very senior guy, have been in the industry many years based in U.K., same in the U.S., in China. These are senior people, which have been around in different relevant companies for many years. I've been very happy with that. On the tech side, we have had some turnaround in our setup in Tampere. We still have key employees in Tampere, and we'll continue to build that group. Tampere has been an area which has been really difficult to recruit because there are so many big known names. The latest one was Microsoft Surface team who established an organization there.
In Tampere it has been more challenging to keep and to recruit. What we have been also focusing on, I would say, lately, because what we want is to have competence close to the customer, and since we have very few customer in Horten, and Norway in general, we tend to look at where could we place that competence. Asia is definitely key area for us to have competence, not only on the business development side, but definitely also on the technical side.
We have increased quite a bit in Asia, the team. Overall, I feel that we are working quite well. We went through a restructuring, taking us down from some 34 to some 22. Now we are picking up again. We are around 30. We will continue to increase, and we try to find the resources we need and find them in places where we think there are a customer base. That's the strategy.
In regard to high volume orders. Smartphone, et c. How long before the expected launch of the smartphone with TLens do you expect to receive the PO? Also, what is the expected production capacity per month for TLens after the planned upgrades and testing equipment is up and running?
The thing is that an OEM, in smartphone, typically expect you to be ready, and you may get the PO a few months ahead of them needing material. Maybe that could be long in some cases, but we have to take a lot of the burden and the risk to establish a capacity and material. That's what we do. When it comes to capacity as of today, that is a dynamic situation. We are today increasing capacity. As I mentioned, to illustrate it with the final test, we today have a final test capacity of, say, 700,000-800,000 per month.
We are now adding a new machine, which will adding one million capacity. Obviously then you're close to, say, two million capacity per month in testing. Why we do that is, of course, that's what we see we need to have minimum when we start ramping and more need to come. That is at least the first step.
Are you webcasting with TLens MAXHUB webcam? If not, please do it next time.
I will take that with Hegnar Media, whether they can use a webcam from MAXHUB. I don't know the answer to that. They are sitting here and smiling, and maybe they will try.
Will you try to sell TLens to laptop OEM?
Yeah, that has been an area we have been looking at. We think that the camera of a laptop, the challenge with that application is that a laptop screen is really relatively thin. To having a big thick camera needs then something to stick out or needs a very special folded type structure. Yes, this is a market we have been exploring. There has not today been a big willingness to invest a lot in that camera. I was in a meeting with one of the big players about laptop cameras, and he said to me, "This is nothing for high-end, and we don't need AF." By the way, he said, "Why is that?" Then he turned his computer, and he had blocked with a Post-it note the camera on the screen. He said that they're very limited use.
This is two, three years ago. I think this will step-by-step change. I think the use of that camera will increase. I think the quality will be asked to improve. Maybe a better a web camera which you have adding on top of your screen is the first step, and maybe that could have auto focus on TLens, as you see it from MAXHUB. Maybe sooner or later also that will evolve inside the laptop if there is some smart design. There is a thickness challenge there, so it needs to be a very smart folded design. Today it has been reluctant to invest a lot of money to do that. That may change.
There was a second question. Do you have any connection there?
Yeah, definitely, we have connection with camera module companies being major suppliers in laptop cameras, yes.
Any interest from PC OEM using TLens in web? That's another one, the same question. TLens must be an obvious choice with autofocus, high zoom, low energy consumption.
Yeah, I think we answered to that.
Yes. There is another one. That's the last.
That's also the last, I feel.
Can you explain how the upcoming AR cases are maturing for potential design win in 2021, 2022, and are these use cases for medical AR or more like industrial working use?
Yeah, I think that on the optimistic side, I think those AR cases can happen, design win perspective, meaning we get commitment in the end of this year. That is an optimistic view. We know that from time to time there are delays and there are shifting time plan. In a way maybe more realistic is kind of first half 2022. Today we know that there are design win plans for us in the end of the year. As I said, don't be surprised if that is shifting to the first half of 2022. They are three in numbers, meaning individual three, and they are all on the professional use case. Everything from, as you say here, industrial to more medical, and other cases. Covering all those kind of, I would say, enterprise market or sorry, professional use case.
Was the smartphone canceled due to low volume ready for sales? Is this the reason for you now starting to produce volume even without the PO?
No. By the way, we have always been producing TLens and material without PO. If we don't do that, we can't get the business.
There's another one with a webcam using for this presentation.
No. Sorry, not yet.
Great picture.
Yes.
Okay. Could you say anything regarding automotive and the ST Micro project called Petro, wherein I understand one or multiple TLens are used? Any progress in this regard?
Oh, interesting. That's new for me. What I can say is I can't comment specifically on that. We need to check that. Of course, ST knows very well TLens. They're producing half of it. When it comes to automobile, I think, as I said, and as we show in the left corner picture of the Q&A slide, that we have a picture of interior of a car. We think that there could be opportunities for poLight in that sector. Today that's not a main focus area, but it may come.
So...
Now that we've seen them.
That was the last one.
Okay. Okay, that was quite a bit. Thank you everybody for joining this webcast. Also thank you for making this Q&A session a dynamic and informative event. That really makes a difference. Next event is Q3. That will be held on 29th of October 2021. Hope you will be there and follow us. Thanks for remaining support from shareholders. That really makes the difference and the motivation high for us fighting every day to create value. Have a nice day. Thank you.
Thank you.