Good morning, everybody, and welcome to poLight's first quarter presentation 2021. My name is Øyvind Isaksen. I'm the CEO in poLight, and together with me today is Alf-Henning Bekkevik, CFO. When you ask questions, which will be in the end, through the web interface, please leave your contact details so that we can come back to you if there is no time to answer your question. Okay, agenda of today, as before, key events, introduction to poLight, operation and market review, financial review, outlook, and Q&A in the end. Key events for the quarter. We've received an important follow-up order from Honeywell, related to the EX30 scan engine. Generally, very good progress in the customer cases, both in the consumer segment but also in the professional markets. Specifically, I would like to highlight that the positive development we have reported lately related to smartphone continues.
I will come back to that. After Q1 and after Easter, we received a very important and interesting design-in, related to web camera for MAXHUB. Briefly about poLight. We have developed and now producing a very unique optical lens, which in many ways replicate the function of the human eye. This can be used for different products. We started already in 2005, so it's been a long journey, but finally, we are starting to see proof of a successful commercialization. We have a strong IP platform. We have 14 worldwide patent families, which is an increase by one during the quarter, 10 pending, and three registered trademarks. Employees increasing these days. Now we are 28, including what we call long-term consultants. In addition, we have some more shorter-term consultants, which is not counted. Headquartered in beautiful Horten, in Norway.
Offices in Finland, China, France, and representation in Taiwan, Korea, and Japan. Shortly, what are the key attributes of our product? It's an extremely speed, instant focus we can achieve. It's very compact, can realize very complex system solution. There is a constant field of view, which is a big advantage for many applications, and very low power consumption. As mentioned, poLight's product and technology platform is well-suited for different applications. Definitely smartphone and wearable are key markets, as of today. It's a large addressable market. Just taking the smartphone market, which is, say, give and take, one and a half billion phones per year. There is one front camera, maybe two. There are three on average back cameras, which is making NOK several billion market per year. poLight can maybe address, definitely the front camera, and also potentially one of the back cameras, having different roles, different cameras.
Maybe say NOK 3 billion per year. These are obviously estimates, so it's a big market to pick. The good thing is that camera functionality is really emphasized as one of the key features with a phone. In addition to that market, and also including wearable, we are addressing the barcode, more the industrial, barcode side. Barcode reading and direct marking is being used in manufacturing. It's a huge potential here. You can also see it's evolving from 1D barcode to 2D barcode, meaning that you have to go from laser-based to imaging system. You want to read something close. You want to read something barcode on the far distance. This means that you need a very robust and quick autofocus solution. This is a market we already are in through EX30 Honeywell, and we're working with others.
Augmented reality, the next big thing everybody believes. We are already, as I will come back to, involved in that segment. Other opportunities, I can talk about medical. We talk about machine vision. We can talk about web camera. Many things are coming into us as an opportunity. We are exploring them step by step. Okay. Very important is when a customer do repeat orders. That means that the customer is happy, we are happy. The customers of the customer is happy. Having a follow-up order from EX30 is very important for us. This is a scan engine, which you can see on the bottom right, where we are in the camera to the right on that scan engine.
This scan engine, Honeywell sells to all OEMs who would like to build a system like a barcode, like the person holding in the hand, as an example. This is a scan engine business of Honeywell. EX30 is the latest release of this scan engine, which they sell to other OEMs. No doubt, EX30 design win and shipping and reference has added a lot of more interest, and there are several new POCs and projects in that area and, I would say, relevant areas. We will continue to work hard on that market. It's going to sooner or later form a very, very robust basis for the company. One good thing about this market, which I mentioned before, is that these typical products last for many, many years compared to a phone lasting, I want to say, for 6-12 months.
An update on the AR side. TLens is considered for next-generation glasses by several OEMs, as I stated before. Again, AR market is still at an early stage with low volumes. It is believed that when form, factor, price is right, this will be a consumer device. We are having key advantages for this kind of application, power consumption being clearly one of them, speed and compactness, and also no gravity sensitivity. These are key attributes of poLight, and it's a very good fit for AR application. What's also nice about this case is that as opposed to smartphone, where we are competing with incumbent technology being there for 10-15 years, we are now in a early stage of an industry for which we can take a position already at reference design.
We are involved in cases both for professional use cases, also in potentially consumer use cases. There are two projects already defined, meaning real product projects, and there are three POCs and some also under planning. Those project we are involved in have so far, of course, not without challenges, but so far it shows promising results and even we can see a possibility of design win end of this year or beginning of next half year. This is related to the professional use case. Maybe this is the long-term, the most important consumer market for poLight and TLens. Today that's not the case because it's more professional use case, but long-term, definitely this has a high potential. Smartphone. Yes, first add-in project, which we have talked about in several quarterly presentation, has now moved from proof of concept to a real project. We have received a design-in confirmation.
That is not a design win, but it is a design-in, meaning they are planning to use poLight and TLens. We start shipping TLens for phone prototype phase, which also tells a lot. Testing on component and system levels continues. It will continue still for some time, and related improvement activities is happening. We can't not see today any showstopper from the technical TLens perspective, but obviously other things may stop it. You never know. It's so promising, we feel that ramp-up is definitely under planning, already planning material and starting assemblies. This we have to do to be prepared when the opportunity is materializing. The current phone release plan is implying that we need to start shipping from latest Q4 this year, and that's why we are very busy and planning as good as we can.
This is related to a very well-recognized camera module supplier and definitely a very well-recognized OEM. They are heavily engaged. In sum, very good progress, but not a done deal. We are very hopeful and plan according to that. In addition to that case, which we have talked a lot about, this design concept has definitely triggered a lot of interest in the area of front-facing cameras. You can see that tunable optics, such as TLens, is getting more and more attention from the news. We have now seen new initiatives involving other camera module suppliers and other OEMs. I would say it's a small, maybe handful today of other initiatives, which is basically triggered by this design concept, which can realize, as you can see from the right figure, a very compact solution for selfie camera with autofocus.
It's basically do not take more space in the screen than a fixed-focus camera, and that is really interesting for many OEMs. You can add autofocus with no penalty in the screen size. This is why not only we but many have speculating is that this concept can potentially be the mainstream selfie camera solution. I'm not saying that we will be there alone, but this concept has really promising future. I also want to mention that this new add-in design for us and for TLens is also highly relevant for smartwatches and AR. Today the main focus is smartphone. We received a design win on the webcam. It came for many as a surprise. Of course, we have been working on that for some time. It's called MAXHUB.
You can see the webpage on the right where they present the new camera and the new autofocus solution. You can see the statement from MAXHUB in the press release. By adopting TLens technology, it ensures a smoother meeting experience by instant autofocus. We do see several other opportunities for applying the TLens in the future. Nothing is better when a customer is willing to express such a promising statement. We are very proud of being part of this fantastic web camera, which already have received a lot of good feedback. The COVID-19 situation has definitely changed the way we work and the way we communicate. Web camera is a key element in that aspect. We do expect this is a fantastic showcase for getting into other potential cases in the webcamera area.
Just want to mention that longer term, there is companies working on what they call volumetric video conferencing by basically 3D video conferencing based on dual camera and light field imaging. Definitely, we are in some projects, I would say POCs, demonstrating TLens unique attributes regarding speed and constant field of view, which are making this actually possible. That's for future, but we also have to have something for the future. I would say continuing good progress during the quarter, illustrated by this table, showing you planning POCs, ongoing POCs, completed POCs, projects. Project means that then it is a decision that we will use your TLens in a product. POC is more a technology assessment. Ongoing supply is obviously where we have already signed contract and we are shipping. You can see is that we have ongoing supply.
We now have four as opposed to three in the last quarter. There is now six projects, four for last quarter. There are 27 completed POC as opposed to 25. There are 25 ongoing POCs, still a lot, one less than last quarter. There is 11 now planning POC, and that compared to eight last quarter. Very good activity, very good pipeline maturing month by month. Alf-Henning, would you help me to go through the financial review?
Sure. Thank you, Øyvind, good morning to you. Deliveries of TLens and ASICs for commercial use and services and samples for customer development projects gave NOK 1.5 million in revenue in the quarter, compared with NOK 500,000 in the same quarter last year. The EBITDA loss in the quarter was NOK 20 million approximately versus NOK 16.1 million the same quarter last year. The increased EBITDA loss is mainly due to Social Security accrued when it comes to the share option plan. That is an effect of that the share price of poLight share have increased in the period. This is offset by reduced operating expenses of NOK 2.2 million. On the balance sheet, cash position of NOK 68.4 million at the end of the quarter, compared with NOK 50.9 million the same quarter last year.
As an effect of the accrued Social Security on the share option plan, the current liability have rised from NOK 12.9 million in the beginning of the quarter, compared with NOK 23 million at the end of the quarter. According to current plan, the cash deposits will fund group activities throughout 2021. The cash flow. We started the quarter with NOK 77.2 million in cash deposits. We used NOK 11.2 million in operating activities, compared with NOK 22.2 million in first quarter last year. The reduced cash used is due to a decrease in working capital and of course, the mentioned reduced operating expenses. We also used NOK 200,000 in investing activities. We received cash from financing activities, whereof NOK 2.3 million in exercised share options. At the end of the quarter, we had NOK 68.4 million in cash deposits. Okay, thank you.
Thank you, Alf-Henning. Remaining is outlook and Q&A. As we hopefully have managed to illustrate, the progress is continuing, we feel. Smartphone projects progressing, not only one, but other initiatives triggered by the very novel add-in design, barcode follow-up orders, other customer opportunities maturing in several segments, including barcode, and design win for web camera application after the quarter. Many good things are happening for poLight. Definitely, it is important to say that there is still much to be done. We still have to pick up a lot of revenue over time, but we are building step-by-step the fundament, which we believe will be a strong fundament for poLight and future-proofing the company. It is also many challenges which we need to address in not only the customer-related activity, but the fact that this is a new company. We are doing things for the first time.
Today, we are living in a market where supply chain is really challenging to manage due to shortage of capacity and components. There is not lacking challenges, but I feel that we have an organization which are handling those challenges in a very professional and dedicated way. We do intend to improve progress on important long-term initiatives, which is about building a bigger and more global organization, which is about having more competence in certain areas. We are step-by-step building up, and we have, during this quarter, employed three new employees. One in Finland and two in Taiwan, and more will come in this quarter. The progress we feel gives definitely a confidence, as I mentioned, that it will be a good story. poLight will be a very good company. Of course, there will be ups and downs.
Of course, there will be challenges. What we have seen now is that we are building a fundament which we strongly believe in and which will become a very interesting and profitable company. Alf-Henning already mentioned cash position, and that will fund us throughout 2021. I just wanted to show one more slide, which I've been challenged to be more specific on what, when, and by many. We try to illustrate the milestones we kind of defined on ourselves. These are obviously risk factors related to these milestones. There are uncertainties related to these milestones. Hopefully, this is something which should give you a little bit better insight of our plan and also for us a motivating roadmap we would like to execute on. Today, four design wins, several projects and POCs ongoing in different areas.
We are targeting, as you can understand, our first design win for smartphone autofocus selfie camera towards the end of this year, an extremely important milestone for the company. We have managed to go into wearables, we have managed to go into industrial application, we have managed to go into accessory application. Now the big volume market today is definitely smartphone, and it's extremely important that we get into that. That will mean a lot for cost optimization of the product and organization. That we target to happen this year, end of this year. We also target to have a design win for AR. It could happen at end of this year. It could happen first half next year. As you understand, exact dates and months and quarters are incredibly difficult for us to be precise on. You have to look at this as an indication.
We also target the first design win in medical in 2022, maybe end of the year. That's related to a disposable endoscope, very interesting market. We are working on some new concepts being optical image stabilization, for AR as an example, super important. Also for telephoto folded camera, extremely important. We have an extremely nice concept, which we are working on. Also big aperture TLens we are working on. As you know, we have a, as you call it, the MOU project, which is addressing that topic, but we also do internal activity. Beam steering is another area which we, together with other partners, are working on. There will be new products coming out based on our IP. That will, we feel, be a good basis for also being included in the back camera structure. We have said that together, that will be 2024.
Can it be 2023? Can it be based on existing product? Difficult to say, but we have put it as a target. In 2024, based on the launch of new functionality. We are also feeling that there will be an AR consumer product, which will be different, which will be significantly different in volume. We, through the design-in in the enterprise market AR, we do expect that consumer-based AR will happen around that 2025, a little bit before, a little after, I don't know. That will be a extremely important milestone for the company to achieve that. There are other kind of milestones. There are repeat orders in other segments. There are probably also coming new segments. I would say that this is the most visible things and the most, I would say, important milestone we can envisage as we see it today.
Having said, definitely uncertainty related to that, but that's what we look at every night before we go to bed. Every morning we eat breakfast. Financial ambitions, as uncertain, but nice to have a target. Smartphone revenue will start this year, hopefully. We will ramp up throughout the year and into 2023. If we are first design win, first shipment of the first phone is successful, listening to the interest around us regarding this, that can be a steep ramp, which in itself can be very challenging. A nice challenge, though, to have. EBITDA break even at 2023. Maybe even if we are good, we can even be profitable. We have an ambition of NOK 100 million, say. We could say a different number, but NOK 100 million is a nice number, in 2025, with an EBITDA in around 20%+.
As I mentioned before, industrial application expecting to be covering a significant part of the operating cost of the company. I hope that gave a little bit flavor of what we are achieving and working hard to manage and achieve. I will invite Alf-Henning to join me for the Q&A. As I mentioned, if you ask questions on the web, please leave your contact details. It's not given that we are able to answer all live, but we will try to get back to you.
Okay. Are you ready?
I'm ready, Alf.
Good. The first one. Does TLens have similar issues with regards to noise induced affecting radio frequencies or other sensitive components in like for instance, mobile or AR?
Okay. A little bit uncertain similar issues, what that's referring to. What I can say is that TLens, compared to say VCM, TLens do not have any coils, do not have any magnets. In that respect, and this is also something we are emphasizing a lot, that we are not making that kind of noise in the area of the phone, which is a very sensitive area. There are antennas, there are microphones, and that area we are actually very silent technology, I would say. Compared to others, I would say significantly less of an issue for TLens than others.
Can you say something about how many OEMs that have shown interest in and are considering the add-in concept?
Yeah. As I mentioned during the presentation, if you take OEM/camera module vendors, I would say it's a small handful which has added to that interest list recently.
How many of your projects are related to smartphones?
How we define project is a project where we already have a project doing something for a particular phone, in this case. So far, that's one project, which I showed you on the table. There's one project on the consumer. The other one was the webcam, which is moved to shipment. That is actually one smartphone project. That means better or more POCs, of course.
Regarding TLens and add-in design, have you or the OEMs found new advantages or disadvantages in test models compared to using a normal VCM?
I would say not new. There are plus and minus of VCM and TLens. I think when now we see a lot of interest in our technology, it's obviously because in sum, they at the moment feel that the sum of attributes we can give the end user is better than VCM for that function. I think it's very important that we are on our toes because there are other tunable technology. There are VCM, and there are many VCM players, and they will definitely do everything they can to kind of get back also into that part of the phone. I think we just need to work very hard to show performance and to show advantages. One of the advantages which we have, which is not necessarily very easy to achieve with older technologies, is that you take a selfie as an example.
Due to our speed, due to our field of view is constant, we take a burst of images. We can combine those images very quickly because of constant field of view, and you have everything in focus, as we have shown you. That is not easy to achieve if not having a similar technology to TLens. We need to innovate user experiences, user application, which then will put a priority on continuing using TLens for that application.
What are your personal thoughts about the term mainstream that you have mentioned that the add-in has the opportunity to become in the smartphone market?
Yeah. What I mean is that, and not only me, but what we have been discussing with the ecosystem, is that this shows promising result at the moment. We are moving towards a real project, and if we are successful, if we are good, if we deliver a quality, if we can continue innovation, continue improvement, which is important in this dynamic industry, I think we can be a very, I would say, preferred solution. It's not given, but there is an opportunity there, and we intend to grab that opportunity. That's why we say mainstream, because today it seems to be a preferred option at the moment. As I said, but we cannot relax. We need to continue to push, to continue to innovate, and we need to be able to supply.
Still many boxes to be ticked, but we see an opportunity, which is extremely motivating. Not only us, but also people, the customer we're talking to.
Add-in at the moment, do you work with TLens under or on the top of the phone screen?
On the top. I guess you mean through the screen. Today, the normal configuration on a selfie camera is that there is a hole in the screen, which is not a display. That's where the normal implementation today, and that's what we are enrolled in the project we are talking about and the projects we are talking about. We can also fit an under the screen implementation. I think that the most challenge there is probably the quality. Because if everything is a screen and we're going to have a camera shooting through that screen, optical quality is not trivial to achieve. In a way, that's not a TLens problem, but it's more like a optical quality through the screen problem. We are today under the screen. Sorry, through the screen, but can also be under the screen design.
Is poLight the only player with tunable lenses that fits a selfie camera?
Well, okay. Today we are not aware of many other opportunities, but of course there are other tunable technologies. There are the liquid lenses and the various type of liquid lenses, which I'm sure also are being considered. This ecosystem do not like companies to have a single source situation. They will definitely strive towards having alternatives. Definitely. That includes VCM. I think that we feel that TLens is probably one of the easiest technology to integrate in such a scheme. That we feel. That's a subjective statement, but still that's how we see the world today. We have a good chance.
Has Android facilitated the use of TLens and similar lenses, for example, all in focus? Or does OEM or poLight need to develop a custom camera app?
When it comes to achieving the autofocus function, the Android, basically our customer is using the standard Android contrast-based focusing technology. It can be done smarter and faster, but that's what's used, and that works well. When it comes to all in focus or bokeh or stuff like that will be a third-party software which the OEM needs to implement to achieve.
It seems that several OEMs use the term TLens technology when using TLens. Is this something poLight has decided?
No. poLight's trademark is, as you know, capital T, capital L, E-N-S. That's how we write it, with capital T and capital L. Even internally, we are cheating sometimes, but that's our trademark, and we are not telling anybody to write it differently.
Does your partner J2C plan to extend their market for iris scanner with TLens towards the mobile segment? Would that be possible to implement in an under the screen solution?
J2C is a Korean company which we have been supplying components to. An innovative company doing interesting things. What they plan to do, I should be careful kind of answering to that. I think it's better that you approach J2C with that question. On a more, I would say, generally speaking, I think that, why shouldn't they? I don't know what they're doing, but of course, they could do. Please address that to J2C.
How are the opportunities for more products from Honeywell in 2021?
In 2021, this is a very slow-moving industry. They took years to finally decide and release the EX30. The way we understand it, Honeywell is supportive and would like to continue to evolve a new solution based on also TLens. I'm sure they're also considering other technologies. They definitely have stated that they would like to continue the cooperation using TLens for other products. That's not going to happen in 2021. EX30 going to live for five plus, minus years.
With the design win in the web camera brand MAXHUB, do you expect to see more design wins in this segment for the future? Why did MAXHUB decide to choose TLens?
Why? I think I read the statement from the vice president from MAXHUB in my presentation. That's obviously speed, smoothness, and no field of view pumping. That's why. Yeah, I think definitely it was an important design-in because of the reference it represents. Now people can buy this camera so soon, I hope. It's used together with Teams, compatible with Teams. It will be used in different kind of settings. Of course, we will use that case for whatever it's worth to demonstrate the advantage of using TLens. Yes, hopefully, this will be a stepping stone towards more of such application. There is today nothing concrete in the pipeline, which I also mentioned in the last time we talked about it. Okay.
How is the new partnership with Brighterwave received by potential customers? Is there any interest around this now, and what kind of opportunities have poLight in this partnership?
Brighterwave is a small Finnish innovative team, which we have been working with for a long time. We are having a good cooperation. We have sent some patent application, we have some joint presentation, and they have a very good laser competence. I think I can see several application coming out of that cooperation. It could be laser tuning in AO, it could be LiDAR, it could be many things. Still, I would say it is an early stage. It is advanced R&D stage, and it's too early to talk about customers concrete. I think we need to come back to that. It's an interesting technology, and in combination, can realize many interesting concepts.
Can you tell us more about production capacity at this moment?
Yeah. At this moment, we are obviously using all our efforts to plan for the ramp-up for the coming, hopefully, smartphone project. Luckily, and I'll say luckily, we have been foresighted, and we have built quite some inventory on the wafer level. We also have started to prepare a second source on the assembly side. That's our main focus, be able to supply to that smartphone case, starting shipping end of this year. We have also placed additional POs on STMicroelectronics to secure that and to secure us into 2022. What we have said before, and stepping back, our supply chain is producing the lens material, which we do in headquarter Horten. One liter polymer can serve 1 million lenses, give and take. No capacity limitation at all. We go to ST to buy the eye muscles, the membrane which we bend.
That is definitely a different ballgame, and certainly at the moment. What we said historically is that we have already installed a capacity of around, say, 1.8 million to 1 million lenses, membranes per month. That, of course, is given that you have supplied material into the fab. We are now starting more on a regular basis to fill that fab so that they are already running. Today, the lead time can be really, really high. In a normal situation, maybe, say, three, four months, but today it's much longer. Luckily, we have planned for material, and we are good shape for the coming projects. Assembly-wise, we are now building up a second source. We have two sources. We have also said that with one source, we can do, say, between 500,000 and 800,000 per month.
Doubling that is obviously needed to ramp up at the level we are planning.
New production partners have been mentioned. Can you tell us more about this?
It is a production partner which before was using the fab in Taiwan, which is now moving or have moved their manufacturing to the Philippines, same company. It's a re-qualification there. We have also worked for a couple of years now with a new manufacturing partner in Taiwan. We have one in Philippines and one in Taiwan, and we intend to keep both busy.
Xiaomi Mi Mix Fold were released with liquid lens from NextLens. The reviews were not impressed by the image quality. We know about all the good properties with TLens. How is the TLens when comparing image quality with the best VCM cameras?
Regarding the Xiaomi review, I haven't seen that, but that will be interesting, of course, if somebody can send me that link showing that review. On that phone, that is a liquid lens, and in a way by design that is causing some potential issues on image quality. That's physics. There are also some of the liquid technology do not enable AR coating. AR coating is a coating you add to the lens to optimize the optical performance. For some of the liquid technology, that's not easy/possible to do. For TLens, it is and already included. You can add coating on a TLens to make it even better. That's on that side. On the VCM side, it's a long answer. What I can say that VCM has been optimized for 10, 15, 20 years.
It's a good technology, no doubt about it, but it lacks compactness, it lacks speed, it lacks constant field of view. It lacks not being magnetic and what have you. What they do is, as you know, they move lens stack up and down to change focus, slow mechanical movements. What we do is that we bend a small membrane to change the focus. Quick, low power consumption, no magnetic noise, et cetera. That bending will imply that there will be what you call a field curvature effect, which you will see in the corner of the image in a lab if you take an image very close to the phone. That's in a way a disadvantage of any tunable optics by design. That's you can say is a negative thing compared to VCM, but I would say more positive things as I've been mentioning.
I think that back to the field curvature, which you can maybe seen as a negative thing. The field curvature can be compensated using a TLens by taking a burst of images, combine all images, and everything will be in focus. Field curvature will go away. There are plus and minus, and maybe the biggest plus for VCM is the market position they have and the maturity they have. That's probably the biggest advantage of VCM. We're going to go there. Having said that, VCM will exist for many years and maybe forever, for always. There will be other technologies coming in and coexisting with VCM.
How does the MOU project stand now?
It's progressing not super fast. This is the project with a camera module supplier where we are testing a concept for a bigger aperture TLens, which I mentioned earlier in the presentation. It was around NOK 700,000 progress, Alf-Henning during the quarter. Yes, progressing, but still things to be done and it is not on the highest priority, because of natural reasons, but very interesting concept, which we will walk through.
We see some phones come with two selfie cameras. Do you know if there have been built any test phones with more than one TLens in front camera? If so, do you know how that testing went?
No. As far as we know, obviously we don't know everything, but as far as we know, there's not been built or planned dual front camera. You saw dual camera more often before than now, to be honest. As I mentioned, volumetric video conferencing having two cameras, stereo camera, and with TLenses will be a very interesting application which may trigger that trend again. Let's see. It's not happening tomorrow, but it is showing some interest. The world is 3D, and I think more and more will become 3D. TLens is a fantastic application for such compact 3D solutions due to its speed and constant field of view.
Okay. We saw that MAXHUB referred to TLens saying TLens focus. Can you confirm or not if OnePlus is talking about poLight's TLens when they talk about new TLens technology for lightning fast focus in their new models?
What I can say that MAXHUB did write TLens wrongly in the first release. They have updated the webpage, so now they write TLens as we recommend it with an R, even in the back. Related to OnePlus, I can only relate you to talking to OnePlus because we cannot comment on OnePlus press releases.
Is there any movement regarding the competitors in the market? Are there any new competitors, or have some of the existing competitors strengthened their place in the market? Are poLight still as strong as earlier?
I feel if you refer to this quarter, I would say that poLight's position has been strengthened significantly. New design wins, repeat orders, progress on the smartphone, design-in commitment, shipping to prototype phone. I can only say that I feel, or we feel, that our position has strengthened during the quarter. Obviously, you can't only review competition over a quarter, there is competition, and there will be competition. I think we will manage quite well in that competition. The biggest competition we have today is VCM.
What do you think about a share split?
Yeah. We have done that historically, we have no plans for that. The liquidity and the retail activity in the share is relatively good. Currently there is no plan for doing that, because that could be a motivation, of course. As we see today, there is not an urgent need to do that. No current plans on that.
Can you make an assumption of a high-volume case? How much time does poLight need to provide the OEM finished lenses?
It's very difficult to give one answer, because it depends very much what we have ramped up to inventory. I would say in a normal situation, in a normal world, which we do not have today, there will be maybe, say, a couple of months of maybe three months of lead time, That's not the case today. That's why we have taken commitment long time ago on material to achieve what we are doing now, hopefully, with the upcoming smartphone project.
Have you been contemplating additional financing to be able to cope with more projects, et cetera, and aim for building an even larger company and faster?
As we mentioned several times, and is that the board and management are constantly, continuously evaluating a need for financing. We are keeping a very close eye on the cash we have. Being a solid, well-financed company is also very important for our customer. What I can say is that this is something which is constantly consider.
Many opportunities for your TLens, as a small company, you obviously have limited resources. Have you declined project leads from partners due to limited capacity? Please elaborate on how you prioritize.
Yeah. We have been invited into some relatively long-term things which we feel will take our focus too much. That happens. Doesn't happen often, I have to say, but yes, we have cases there. The priority is simple. The priority is getting a design win in smartphone. That is the priority, and that we will achieve and work extremely hard to achieve. Then we obviously have defined other areas, industrial like barcode, medical like endoscope, AR/VR. All of those are getting also a fair share of the activity. I would say smartphone, and this add-in type concept has took a lot of our resources in the last, I would say, year. We are also obviously making sure that our customer and project in industrial, medical, AR is being treated in a good way and hopefully will lead to design wins in not long future.
How do you judge NextLens as a competitor or even someone to cooperate with?
NextLens is an organization which is taking Optotune technology maybe into smartphone. I'm not fully aware of the strategy there, but, yeah, I think NextLens or Optotune will coexist. They have done a very good job in the industrial area, and they are cooperating also with partners in the smartphone area. I think those technology will coexist. Sometimes we are better fit, and sometimes they are better fit.
Is there a difference in the OEM swiftness on decision-making? Are some moving faster than others?
Yeah, a good question. Yeah, typically, big organization, more processes, more box to tick off. Smaller can move faster. Yes, there is a big difference. Big organization, qualify technology, write report, put the technology into the available technology closet. When somebody, product management, needs something, they go into that closet and look at what kind of technology has R&D qualified. They use that technology, maybe. Whereas, in a way, other small companies will find, okay, TLens, yeah, that could be very good for our web camera. They start, in a way, not a generic POC, but they just more start directly on the project. They move faster. Yes, there is a difference.
No. When do you have shipped a fair number of TLens? Can you say something about yield quality levels, returns, et cetera?
What I can say is that we have clear evidence that we will have yields above 90, high 90s. That's what we see. That kind of yield will be achievable when you, over time, ship volumes. It's not achievable when you turn on and off your fab. It's not possible when you have low volumes.
Can you comment on how, when, and on what level additional financing will be made?
No comments to that. I'm just saying that we continuously are evaluating when to do what.
Roadmap. Will it really take until 2025 for design-in for glasses?
No, I didn't say that. I said that I expect that consumer-driven AR glasses is for later. We are involved in a project with a well-recognized OEM, which is thinking about consumer as the base case. That is planned shipping relatively late. The first design win with AR glasses will be a professional use case, being doctors, being industrial applications, and that will come first, and then the consumer market. When form fit factor for the glasses, when cost is coming down, it's become a consumer market. That, is it 2025? Is it 2024? Is it 2026? I don't know, but it's later. That's why we say we are differentiating design win on AR for professional and AR for consumer. Where it is in time, I don't know, but we put it in 2025. Maybe it's 2024 or 2026.
There's a question about interference. Patents and other OEMs and smartphone vendors show concepts to decrease interference from this switching from piezo due to fast steering voltage switching.
Yeah. The TLens itself doesn't create noise. Of course, there is a driver of the TLens, which is an ASIC, which has to be designed properly to not make too much noise when it comes to EMI, ESD, and that design we have.
Larger tunable lenses may need high voltages and may be more affected by gravitation. Does poLight have any solution for these problems?
Yeah, we don't have gravitation effects at all. A liquid technology will definitely have, and that's one of the disadvantage. Clearly one of our, I would say, big advantage. The question about voltage, what was that?
It was more like-
Okay.
It needs more voltage if it's larger.
Yeah. We have a driver which can go up to around 50 volts, and that's what we need to have the optical power we need. That's a quite high voltage, but we haven't seen any issues with that in implementing that technology. Maybe I misunderstood the question then, please, if I did, send me a mail, and I will try to answer it better. We are getting close to stopping, Alf-Henning. Is there any more questions?
There are more questions. I guess there's only one.
Okay.
The last one. You state that barcode revenue will cover a substantial part of the total OpEx-
Yes.
in 2025.
Yes.
Does that indicate lower price in high volume sales, or does it indicate a huge upside in revenue when adding high volume markets?
Yeah. Barcode is a typical area. We typically ship low volumes but at a different pricing. That's what we call a kind of a high margin, low volume business, where I say the smartphone market will typically be high volume, lower margin. That's the combination we try to make in the company is to have some steady, long-term, good products shipping steadily over years, same product at low volumes, but relatively good margin. Then we have the consumer on top, which is kind of cream on the cake. Okay.
There was a last one, if that was coming.
We have to be quick.
just last minute. Earlier it was said that the smartphone release with TLens was expected early 2021. What has happened since it's delayed with almost one year?
That statement I can't recall, to be honest. At least the last quarters we have not talked about early 2021, but can be an old statement. Sorry for that. I can't recall that statement. Please send me a mail, and I will try to clarify it there. What we see today is that there is a very good opportunity to be a part of a smartphone release, which will be released in the beginning of 2022, and we need to start shipping in Q4 2021. Okay. Fantastic. I feel this presentation is over. Next event is annual general meeting on the 26th of May. Q2, August 20, 2021. Between now and then, we hope that we have a significant progress to report.
Thank you for participating, and particular thank you to all of you who are digging and digging and digging, and sending in questions and sending me SMSs and mails. I like it very much. I feel that it's very motivating to see so many people be so interested in the poLight and the technology, and I think that we owe you a lot for that interest. Thanks a lot. Enjoy the weekend when it comes. See you next time. Thank you.
Thank you.