Good morning, everybody, and welcome to poLight's third quarter presentation. The normal agenda, joining me today is CFO Alf Henning Bekkevik. Also, the board chair, Grethe Viksaas, is here for anybody who could mingle and discuss with her. Key events, introduction to poLight for those who are new, and I see a few ones. Operational and market review, financial review by CFO, outlook statement, and Q&A. There is normally a lot of questions during the Q&A, also today, I expect. For those who would like to give questions through the web portal, please leave your contact details in case we need to do offline reply.
Also, for those who would like to ask question from the audience, our chairman, sorry, board chair, will hand out the microphone, so that everybody can get the questions being asked from the audience. Key events in the quarter. I think we have to say that's a relatively soft quarter, although we have been super busy in supporting many customer projects and on different, I would say, improvement projects ongoing in the different parts of the organization. We did, though, receive quite an important and strategic order related to this Mini2P microscope, from a company who is actually planning to develop this system and manufacture the system, selling to the different labs around the world.
And then also, always good with repeat order, so we had a follow-on order from a machine vision code scanner customer from China. So for those who are new to poLight, poLight is having a unique tunable lens. A lens, optical lens, which can be tuned by putting a voltage on it. And tunable lenses are more and more talked about, and will be key, key technology in many market segments, we believe. It's been a long, long journey. 2005, we started, that was the invention. It was a part of Ignis, this polymer, and from that, some very clever guys and ladies invented this. Polymer was a fantastic basis for replicating the function of the human eye. Strong IP. We are a small team, 40 employees, give and take.
Very much distributed throughout the world. As you can see from the top right, we are placed where we find talents and where we have customer and partners. Of the 40, only around 15 is actually in headquarters in Horten. We were listed in 2018, so that has been also a few years, but ups and downs on the Oslo Stock Exchange. If we're gonna say four things about our technology, it's super fast, probably the fastest on the market. So meaning that you can change focus really, really fast, so that basically the human eye doesn't notice the change. It can make very, very compact solutions, which is important for many application.
Also, this annoying field of view change, this what you call breathing or pumping when you change focus, is something we don't have, because we don't move any lenses, we just deflect or bend. And then more and more important in many, many market segments, basically a state of the art when it comes to low power consumption. So I like to compare this to the function of the human eye. And I think it's also important to stress that what we have is a technology platform, which can realize different type of products. The products which is already in market is the tunable lens, but there are other products development which, which can realize other function based on the same technology platform. So again, back to your, the human eye.
The human eye has a lens, as you know, and there are eye muscles surrounding the lens. The brain give a message to the eye muscles to squeeze the lens. Then you change the shape of the lens, hence you're changing the optical power and where you are focusing. That's basically your human eye, and we do the same. The thing is that the lens in our case is a polymer, a gel. It is the eye muscles is a membrane, which you can see on the top left corner. That membrane can bend. The center of the membrane is transparent, so that's where the lights go through. And when you put voltage on that membrane, it starts to deflect. Polymer being just below that membrane, is then being shaped by this deflection.
Hence, you are changing focus from infinity to close, and anything in between, depending on the voltage. So simple. And when I first joined this company, I was amazed that it was possible to innovate such a, such a component, and I have to give all credits to those researcher who made that happen. And when they saw this and got this idea, they saw that this is a super good technology for small compact cameras. You can see on the top right, it's a very small component. It's compared to a tip of a pen. You can see that membrane, you can see the yellowish surrounding the hole. The hole is transparent, the lights go through. The yellowish color is the piezo material, which is bending, making the membrane bend when you put voltage on. So really, really w e have different version of this TLens, and from a manufacturing perspective, we are fabless.
The only thing we do is producing the polymer. It's very scalable. One liter polymer is 1 million lenses. It takes very little space, so we can handle that ourself with a few people, and we do. The good thing about that, then we don't need to share any recipes with anybody else. This is the start of the company, this is the heart of the company, and we have a lot of high competence people who have been developing this over the years. This is a component we have full control of, and we can tune for different characteristics.
So that, then we have the lens, and then we need the eye muscles, and that's what is done at ST MEMS fab in Milano, Agrate Brianza. So they are producing a wafer. Out of the fab is coming a big eight-inch wafer, which you will see a picture on this side. That wafer comprises more than 2,000 eye muscles, and these are basically what you see on top here. Those are the singulated dies on that wafer. Super difficult development phase. I would say that the innovation part of the company was, I wouldn't say easy, but it was relatively quickly innovated and prototyping was built.
The last five to 10 years has been all about being able to manufacture it with a high reliability and quality, and that has been super, super challenging. Many is asking me: What about IP? What about protection? I would say, to do what we do, you need much more than IP. You need a long, long, and a lot of investment to make it happen. So it's a protection in itself. So that has been a big investment for the company. So basically, then we have the MEMS, sorry, lens, we have the MEMS. We ship these components to our assembly partner now in the Philippines. Now everything is happening in the Philippines, both assembly and testing.
And then we are producing. You're kind of dicing the wafer, so that you have singulated dice. You dispense polymer on the back of the die, and you do a pick and place with back window, which is closing the system. That's basically the steps. All, I would say, standard assembly, pick and place activities. We have been working with our assembly partner for more than 10 years. We moved from Taipei to Philippines, but it's the same company. We then sell TLens, either a bare TLens without any close or packaging, or we sell it, as you see on the bottom here, with a package surrounding the die.
The reason for that is that sometimes it's easier for the customer to integrate that packaged TLens because it's less sensitive. It's a little bit sensitive lately, this component, and needs to be handled with great care, and that's why we have those two options. The driver ASIC, which is doing basically the voltage from 0 V to 50 V, is a purpose-made driver by ourselves, which we sell as a product also needed when you buy a TLens. So when we sell, we sell a TLens and a driver. And then we are doing all what we can to convince as many OEMs, product owners, that this technology is great, and then these are, I would say, a lot of the sales and marketing effort we do is directed to these product owners.
But of course, also different camera module players is important to massage and support and train. So we also are doing, of course, a lot of activity towards those. But in a way, it's very often the OEMs, the product owner, who is, I would say, dictating the camera module player what to do. Okay. And this component we have is very well-suited for small compact camera solutions. And there is a roadmap how we can take this to kind of bigger camera sensors, and there is also a roadmap how we can take it to even smaller sensors, for endoscope, as an example. And this is things we are investigating more and more, and are building a stronger team to do accelerate those tasks. Yes.
We are focusing on the three left TLens windows: consumer, industrial, and augmented reality, or AR, or MR, or whatever you will call it. Those are the three key areas. And also I think it's important to say that very much the same product goes into the different market segments. I would also fair to say that we are more and more seeing other application areas, and I think the two most interesting ones at the moment is automotive and healthcare. But we are rushing it carefully because there are so many activities related to these market segments that we need also to be careful not to spread too thin.
I've been CEO in tech companies for 25+ years , and the recipe for disaster is not having focus. So we need to be careful not to be too too spread also in doing this. It helps, of course, that we basically we don't have kind of very specific products for these different market segments. It's basically the same platform we are selling to these different markets. So today then, after years of investing, and thanks to investors and shareholders and those listening to us today for the support, which has been very long-lasting for many of you, and hopefully one day we will give you the the the the the the should I say return you are expecting. It's been a really really a long journey for many of us.
But in 2000, late 2000 was it, we started to see that we finally, after a lot of qualification process, finally we started to get design wins. And you know them all, most of you. The latest one is Meizu 20 Infinity phone, a super good phone. I know that some, many of you have that. It started with the smartwatches for kids, and we are still exploring that market. And also we have a webcam, which I know many of you are using. So that is the consumer side. When it comes to machine vision and barcode reading, we have quite some good and important references. You can see Honeywell, SuperLead, Hikrobot, Teledyne, and then there's one unnamed one, also Chinese, which are all very happy with TLens.
We can see as an example now that SuperLead is now actually using our technology for not only one product, but basically for four product. This is a little bit difficult for us to actually monitor, because in a way, we could be more vocal about that. But sometimes it just happens, and without us knowing. Just last week in Shenzhen, there was a machine vision show, and suddenly we saw one of our existing customer showing a new product with TLens, which we didn't know about. So this will, I think, be more and more normal, that we- things are happening without us knowing.
In the beginning, you know, they need a lot of support, but now they are skilled themselves to do it, and it's difficult for us to follow everything in detail, even though I know that you hate me for not making noise enough about about what's happening, but sometimes it's really difficult to. Sometimes you find out faster than me, to be honest. So that's this is starting to be a very, very important reference platform. I remember when in the beginning, when we were out selling without any design wins, super difficult to convince customer when you don't have any references. Okay. So let's move into that. That was a little bit the intro, and let's go into operational market review, focusing on the market. So I will say consumer for us is still quite challenging.
You can see that there was one question which I got yesterday, which is in a way true, because you can see that some of the camera module suppliers in China do report a little bit better situation. It's very much related to the fact is that, yes, in a way, that's true. We haven't really seen so much of it, but it's true because you have seen Huawei coming back. That is hopefully triggering some new dynamics that people need to kind of step up on the innovation side. But what you also see is very related to the back cam.
Back cam, and as you know, we are not still in that space, we are in the front cam, but you can see that the specification of the back cam is starting to be tougher and tougher, meaning that the value of the back cam and the camera module supplier are in uppricing that back cam, meaning that they see better revenue and better profitability. But still, I would say the volume is still very low compared to what it was from a smartphone device. But there is a back cam or the came ra is something which they are emphasizing on and they're investing on, but it's very much related to the back cam as of today.
So the focus of the quarter was smartphone and I would say augmented reality cases, which I believe is where the innovation is happening and will happen for many years. I think the innovation in the smartphone is very, very low. It's same shit, new wrapping with some new megapixels in the back cam or what have you, but the innovation side on the smartphone, I think, is flattening out, definitely. And I think the innovation will happen here... and that's why we focus a lot on augmented reality, MR cases. We also do webcams, laptop, smart homes, wearables, definitely.
But as I said, the cost focus is, is kind of, I would say, currently, I would say damping the, the, the cases we can explore on the smartphone, as long as we are not addressing the back cam, which we are starting to do. We have four design wins. There are 37 completed PoC, so there is, there is progress. There is ongoing PoC three, and there's planning PoC nine. Let me see what's happening here. There's no doubt that having a smartphone, on the market is helping us a lot in the communication, worldwide. So demonstrating this, this, Meizu 20 Infinity is, is, is, I would say, giving a lot of interest and a lot of, from a performance perspective, a lot of positive feedback.
I mean, the speed, the smoothness, the very small hole in the screen, it's quite unique, and they brag about it. Also, if you look at the Meizu 20 Infinity, statement from Meizu's own webpage, they say that among other highlights, among other highlights, "Its selfie camera is equipped with a hybrid lens, TLens, latest innovation of the company poLight, which aims to revolutionize the autofocus in our mobile devices." So they are really... We were participating in the release event in Shanghai, and they, you spent a lot of time talking about that Meizu 20 Infinity phone and poLight. So that was a great experience.
I think the cost is today a challenge we have, and it's not so much about TLens. Of course, that's also a we try to sell that as cost as possible. But it's also about the add-in design, which we talked about a lot, has a relatively few players who can do it, and they know how to price it. So that's a little bit the problem is the system-level cost, or should I say price, which is making a VCM-based camera module or even a fixed-focus camera module in a selfie camera, being very, very competitive compared to a TLens module. That is status today, but we don't think that will be the status forever.
So, key action to secure further development in smartphone is, of course, focusing on maturing and cost-optimizing TLens-based camera module solution. But we need to look at the camera module solution, not only the component. So we need to address both component, of course, and system level. Component cost is very linked to volume, and that we learn as we go. System-level aspects is, of course, in control of the camera module supplier, which we try to support as good as we can. So we are actively developing the capability and relationship with more camera module suppliers, and of course, existing, so that we can get that cost-competitive into that design also.
Then we step by step, we will address higher value applications in the smartphone area, and then we have to look at the face, the main camera, the back-facing camera, the camera on the back, which we are working on. We are doing reference designs for telephoto, wide field of view. We have our own lens designer in the team now in Tampere. So we're doing a lot of work there, and we are in dialogue with key players regarding this.
But I think also it's important to say that the sensor format in the back camera is huge, and we need to also have an evolution with the TLens to make a TLens, which is a better fit and having a bigger aperture size, which is in our roadmap and which we will do. So another key action, of course, is to communicate the Meizu 20 Infinity phone. Finally, we have that, and that's key. As you can see from the pictures on the right here, which is taken by the Meizu 20 Infinity phone, it's super good. You can see focus both close and infinity at the same time using a prototype Almalence software.
So this is creating also a lot of interest still, and we do this much better than any other actuator technology like VCM. So all these action we are talking about here is important, and they're also key for other market areas and specifically for the AR, MR space. Yeah. So here we can see an overview. I don't need to go through the details, but here you can see, based on the icons there, you can see what type of application we are addressing, and this also includes TWedge. AR, MR, I should say. Yeah, you know the drill. Key selling points, ultra compact size, very lo w power consumption. You can imagine a glass, like an all-day wear glass, how important it is to have low power consumption because there's not a kind of a big space for battery, as an example.
Fast focusing speed, key. Constant field of view, key. Think about, think about a, a, see-through camera in VR... if that field of view change is there, which is very annoying, you will be basically seasick. So, having a TLens, which is having all the attributes, but in addition to that, having a constant field of view is super important for the user to not g et basically sick by using VR glasses. No gravity head, no gravity impact. You are moving your head, you better not have any effect on the imaging quality there.
And these small units will during use change temperature, and that's what we call design with TLens is by design; it's compensating for temperature drift, so that if not having a TLens or a AF, a fixed focus camera will drift out of focus. Yeah, I think here is a super important market for us. And I feel that it continues to develop very positive. The last couple of weeks, we have been engaged with big customers having a high attention on TLens, and they are communicating in a way which make us very very motivated and encouraged that TLens will be a super important component in this market. And we're talking about significant players. So we are already shipping to Magic Leap.
If you have $3,000 or $4,000, go and buy. It's super impressive glasses for enterprise AR. And then we also have a design win with LLVision, which are shipping already, and those are relatively... Magic Leap is the biggest one and the most known one. The LLVision is also super nice, nice application, but they're shipping in smaller volumes. That's a little bit the cases we see are relatively small volumes. In addition to the design wins, we have five design-ins. Two of them may be launched end of this year, but there is a risk for further delays. Nothing to do with TLens, nothing we can control. There is definitely one of the design wins is delayed. That's that we know for sure.
The consumer cases we have one of the design wins is consumer-related is progressing extremely well. I was myself visiting the customer, and they showed us an extremely convincing prototype demo for an all-day wear application, where they use TLens to, I would say, improve the display. And I will go so far and say that without the TLens, the thing wouldn't work. Super, super interesting case. Then, in addition to TLens, as I mentioned, we have a technology platform where you TLens is doing two glass membranes, polymer in between, and bending like this, deflecting. That's TLens. TWedge is doing tilting, creating beam steering, which is used for making a low-resolution MicroLED, as an example, display to a much higher resolution.
MicroLED display is known to be trade-off between, trade-off between brightness and resolution. If you get too high resolution, you lose brightness. So instead of doing that, you're using a T-- you could use TWedge as a Wobulator to enhance the resolution by, by beam steering. Super interesting. We had a roadshow a couple of weeks ago in, in the U.S., showing, our technical sample, workable technical samples. Super important feedback from key players. Key players. So then one day we will be in TLens and we will be TWedge, so we'll be in two products in those type of glasses. Think about that. Huge strategic positioning.
I've said it before, I say it again, a TLens, TWedge, sorry, is still a product where we have only, I would say, a de-risk prototyping program ongoing. We've spent some NOK millions, but we are still to kind of make the business case and convince the board that this is a good thing to do, and that I hope to take that decision within this year. And then after that, we will of course report on progress on that development, and when and if launch to market as a commercial product, we will also, of course, start to report that as a separate line. Two design wins, five design-ins. Completed PoC, 13, ongoing PoC, 11, and planning PoC, increasing still, 14.
And here you can see the mix between the greenish is more the enterprise, whereas the yellowish is consumer. So you can see a quite good mix between all those different stages of process. And it does include TWedge also. Industrial. SuperLead follow-on order worth NOK 1.15 million, and you can see the picture here. This is the latest one they use. It's a sister company, in my understanding. So step by step, they are using it more and more. Now in four products, I mentioned already. Currently, five companies shipping with our solution. We know that a few of them are also thinking of expanding even more, the use of TLens.
And then there are new customer, which is in the process of qualification of the technology. Five design wins, one design in, so that's new. So meaning there's 1 customer who has now decided to use TLens, and is in the qualification phase, and have decided to release that in, we expect, first half next year. 12, 30 completed PoC, 12 ongoing PoC, and 7 planning PoC. And here you can see, again, the split. Actually, there is a little of a reclassification on the design wins because we experienced that many of those we have is actually machine vision cases, and that one is typically the classic barcode reading from Honeywell. The rest is basically machine vision.
Machine vision means typically a place where you have in a manufacturing line, you are having cameras to monitor the plant, the manufacturing assembly, and whereas the barcode reading is typically, say, supply chain related, warehouse related. We hope that one day that we will be brought into product which is closer to point of sales, where the volume is higher. Because there are barcode reading cases which represent millions, actually. So I think step by step, we hopefully can get into that part. So the eye is the machine vision cases.
The handheld barcode scanner is the traditional barcode QR scanning, and you can see there are also other application, which is not related to barcode scanning or machine vision, different type of application, which is only represented by these two dots. Last market, healthcare. Yeah, Xenocor, many of you are following that company very closely. Our understanding is that they do experience some unexpected delay. They were— They did human trials. As far as we know, they have went back to the lab to look at some redesign for reason we don't know. But we are in contact with them, and they are still very keen and using TLens, but there are some delays. We don't know more than that.
So I guess some of you have very close contact with Xenocor right now, so you need to find out more, but that's the situation. But still, an important case for us. Our cooperation with Kavli is extremely interesting and has actually, to be honest, given us more than I dared to expect. And it's giving us a lot of... It has significant revenue also. We see more and more universities, or I should say, labs using us. We also, as you know, from the release, have a company now who is starting to use and develop this system for cell, commercial cell.
It all started with Kavli, who I met Moser and his team in Trondheim, and they are all super, super enthusiastic about the TLens and what that does for them. You can see here, this is us visiting the team in Trondheim. You remember this, the sketch. They're using four TLenses stacked on top of a, you can say, mounting fixture here. They're using a glass, kind of transparent, section hole in the mouse head, and they are imaging through that glass and to study the reaction on the brain, activity in the brain, by imaging that using TLens. And this is what he say. He's saying that, "This is the key, guys.
TLens has been instrumental to achieve the performance of the Mini2P system. The speed and the temperature stability of TLens is much better than any other tunable lens we have tested, implying we can achieve result we've never been able to do before. This is very important for our research to understand the mechanism and information coding in the brain. We have seen a lot of interest in our work from many other research groups around the world. TLens will continue to be important for our future solution," Dr. Weijian Zong says. This is super, super interesting cases for us, and we see more and more activity around it.
Not only in that area, but these guys are publishing in very well-known and recognized journals, and of course, this is helping us a lot also when it comes to other healthcare application. One design win, two design ins. On that, 17 PoCs, there is several endoscope cases, but also several type Kavli cases. There is one which I'm getting a lot of questions related to that. There is one which is maybe particularly interesting. It's a big player in the endoscope world, 85% market share guy, and that program is progressing very well.
All good so far. There is a long process, but we expect that there will be important milestone in being a design-in discussions in the first half next year, potentially, if things goes as the plan. Automotive, not so much new in the quarter. Only I would say confirming that this is a really tough market, but also, it's a market will clearly state there is a need. There is a need for auto focus in automotive. And why is it that the case? Well, the sensor format, the resolution is increasing, and hence there is a need for AF, basically by design. And this is happening inside the car and outside the car. So, we have started some testing to characterize TLens for this kind of use case.
Still early to say whether we need to change or not change anything, but there are definitely very tough, tough demands. What the market is telling us is that they don't believe a conventional, mechanical, moving components can survive in such application area, and that's why TLens is one of the candidates they are considering. Early days, significant potential if we are successful, but don't expect some quarter by quarter big news flow in this area because it will take time. But we also need to have goodies for the next 10 years to come, and not only in the short term. Pipeline. Yeah, as you can see, 12 design wins, eight design-ins, 85 completed PoCs, 46 ongoing PoCs, and 41 planning PoC distributed among these verticals. Even the trigger me to make this graph.
You can see here planning PoC, ongoing PoC, and completed PoC, how that has developed over the years since 2020 Q1. Quite an impressive activity, and let me see. We can feel it on the body. Alf Henning, would you help me with the financial review?
Sure. Thanks. And good morning to you guys. Deliveries of TLenses and ASICs gave NOK 3.1 million in revenue in the quarter, compared with NOK 5.3 million the same quarter last year. The EBITDA loss was NOK 20.5 million in the quarter, and NOK 11.3 million in the third quarter of last year. The main reason for the increased or decreased EBITDA is we have a little bit more heads. As Alf told, we are strengthening the team, so approximately three more heads. But also there are some expenses related to the share options that are higher this quarter compared with last year. And I should also mention that we have some projects, so the external expenses from quarter to quarter varies a little bit.
That also explains that it's a little bit higher this quarter than last year then. On the balance sheet, we had approximately NOK 132.8 million at the end of the quarter, compare with NOK 84 million at the end of last year. Inventory at approximately NOK 70 million this quarter. That is an increase from NOK 46 million at the end of last year. So the inventory has increased by NOK 3.3 million in the quarter, which is mainly wafers from STMicroelectronics. On the cash flow, we started the quarter with NOK 153 million in cash and used NOK 20 million during the operations, compared with last year, with NOK 19.6 million, so approximately the same spending as last year. And that is, the share option expense that I mentioned doesn't have a cash effect, most of it.
There's a little bit portion related to security, social security, that has a cash effect when the share options are exercised. So at the end of the quarter, we had NOK 133 million in cash. Thank you.
Thanks, Alf Henning. So the heads, Alf Henning, talks about is coming also with the full body. So we, we have them all in. Outlook. Yeah, consumer market remains challenging for us, and we don't see any very, very clear sign of improvement. I could, of course, be a little bit more optimistic saying that, "Yeah, but things are happening." Yes, they are happening, but so far, I cannot say that it's extremely visible for us. But we continue pushing, and we believe on changes. We will continue focusing on, as the key action I mentioned to, to strengthen our position in smartphone will, will be a very important activity, and that has a direct, I would say, relevance also for other markets like AR/VR. AR, VR, MR, key market for poLight. I'm super optimistic about this.
There is a good match between the market need and the properties we can offer, and also for TWedge at a later stage. As I said, automotive healthcare market being explored could become very important.
in their smartphones.
I think it's a fair point. I think there's a synergy between that. As when you start to work with a customer using it for certain areas, they are more - we need to adapt to big sensors.
How can TLens in back camera improve user experience?
Same way as we do in, in any camera. Smo othness, speed, auto focus, touch to refocus. I think same, same characteristic which in the any, any other camera.
Can you elaborate more in what poLight can contribute to within the automotive industry?
Yeah, I think we mentioned that already in this. I feel that all the key market segments we are selecting to focus on, I think tunable optics will be key. And I think it's a matter of time before we start to see that.
Do you expect motor players to be able to manufacture TLens modules at a lower price anytime soon?
Yeah, I think competition will, will take care of that, and also maturity of the assembly processes will take care of that. So I think over time, they, they will, but of course, they also camera module suppliers, they also try to maximize the, the pricing, of course. They are, they are not a high-margin business, so they really try also to maximize the, the profit. So when they come with something new and great, they want to sell it as expensive as possible. True, I mentioned it briefly in my presentation, I think see-through is quite an interesting case.
I think all the good things about compactness, speed, power consumption are super important, but this, this constant field of view, if you have in a see-through camera, if you're, if you're starting to see something pumping and being not stable, you will be really, really uncomfortable in using it. And I think that fact that we are having no constant field of view change is a key attribute for, for see-through camera.
Xvisio has three AR glasses on the web page that uses three 13-megapixel autofocus cameras, the SeerLens One, SeerLens One Pro, and SeerLens One ST. Are all these three using TLens?
No, only one of them.
Using Teledyne 2MP Mini2P with TLens. Are there any income from this project worth mentioning yet?
Teledyne is very active promoting. I think also they know, I think it was mentioned here in one of the quarter presentation, they also used it for the 1.5 mega unit. There is a very, it's a very niche application, so it's very low volume. I would say it's, for us, has been insignificant, from a revenue perspective. So that's why we haven't been bragging so much about it. But they are definitely, we're seeing them around the world in different shows, kind of doing marketing and selling this, this solution. So I think Teledyne is a big company, and hopefully that will pick up one day.
Among camera module makers, we've spotted TLens w ith Sunny Optical, OFILM, Teledyne, Sharp, Kantatsu, Sanchen, Union Optech, Q Technology, Jinzhou. Have you implemented any recent improvements in the TLens product family lately, such as anti-reflecting coating, optical quality, focus-
Done, which is improving optical quality. So meaning light coming in is being less reflected and all go in. So that is an ongoing, I would say, research activity we have together with partners. When it comes to the aperture size, this is a little bit back to what we're saying. So we need a little bit different structure, but still same concept: two glass membranes, some kind of actuation, and polymer. And we are talking with customers which are asking about this and the roadmap, and they also being explained and giving a time schedule for when they can expect to see those products. So this is a matter of time, and money, by the way. So this is optical polymer is something which we do.
Take an example now, for different application areas may need some different recipe for the polymer, so this is something we constantly potentially do some changes to. Yeah.
Okay.
Mm-hmm.
Could you specify the verticals for the revenues of NOK 4.1 million in the first quarter and NOK 3.4 million in the second quarter, which were not linked to publicly announced orders in those quarters? Are these revenues related to previously announced design wins, PO, DI, or ongoing projects?
There is not a one-to-one. Say we announce an order in a quarter, it is definitely not a one-to-one that that will be revenue that quarter. So we can't connect in this way. But what I can say, that there is more and more of these kind of smaller things coming in, and individually, they are not kind of significant, but in some, like, say, of that NOK 4.1 million, a big part of that is actually related to healthcare, through a three, four, five customer. But every, each of them not so super big, meaning not a press release, but in some. So we luckily started to get these kind of smaller things. Second quarter, if I remember correctly, that was related to a pre-production fee we negotiated with the smartphone project, which was canceled.
But remember, order intake and revenue doesn't necessarily happen in the same quarter.
At CES in January, are there any projects involving this camera model with Sharp or other OEMs?
Sharp is doing a lot, and the other big ones we are highly, highly, I would say, related to and, talking to, without being specific.
The AR consumer market is how-
I've been saying before. But yes, they, they seem to be coming, and we are very well positioned. I think, we think, TLens is a key component. TWedge is a key component for those markets. And, and, when it comes to capacity, I'm just back from a few— we are really drilling into all the details, amazing details to drill into, both headquarters at ST, at, at Tong Hsing in Philippines, and, and this is one of the key question there are. So far, we have been managing to convince them that we are ready when you are ready.
You have an ongoing pro-
With key partners to receive potentially NRE for a purpose-made device. So the answer to that is yes.
You mentioned Meizu, too, significant interest in TWedge and its potential related to AR glasses. How is the progress for this?
Actually, our entrance into Magic Leap 2 was exactly that problem. "Oh, shit, we have a problem. Do you have a solution?" "Yes, we have." A little bit a risky partner because of size, of course, and capacity. And but so far we have been able to massage that quite well, but that, that is a topic which we need to be aware of. Mm-hmm.
poLight has two active VR, AR display solution projects, laser beam scanning and Wobulation. Which solution do you expect to reach the market first, and which one could potentially offer more long-term value for poLight?
I think they will coexist. I think, LBS will be, a solution for, for more simple, messaging-type device for all-day wear glasses. I think, MicroLED LCOS displays will be more like the high-end, being a big, high-resolution screen using TWedge, hopefully. So I think there are two, two different application. I think they will coexist. From a timing perspective, I think they will be relatively the same, same time, 2026, 2027, we don't know, but, around there.
Is the growing inventory of wafers valued at cost or sale price? Can you estimate the inventory value in completed TLenses?
It is historically a handful of value of fixed TLenses.
Is there currently any other tunable optics solutions with a similar level of compactness for the adding solution as poLight TLens?
I don't think so.
Is the newly released patent related to a larger aperture size from Sunny Optical connected to TLens Platinum? And does it represent progress in the development of TLens for back cameras? How is the progress for TLens back cameras in general?
I think, this general comment about patents, I think there are many patents, but they are very often patent application, and, and, many, many of them we don't think will never be granted because they are going into an area where it's very populated with other, IP, from among others like us. But then also some of the patents are also very much, you can see, triggered by positioning themself, freedom to operate. That particular patent, I think, yes, it seems to be very related to TLens. Whether it's for back cam or not, I'm not sure, but I don't expect in the next short term. On our roadmap, we do have a TLens without actuation for a thermalization. And as I said, it's quite an interesting application.
One of the very expensive part with poLight TLens is the actuation. It's what's happening on the MEMS fab. So if you could kind of have a basically a glass membrane and a polymer mounted in a camera and actually the thermal effect of a TLens is having the opposite thermal effect on the rest of the camera, and hence is by design compensating. It's a super super attractive thing, and we have customer who's trying that out. We haven't started any projects for-
Prioritize selling TLens modules over VCM modules. What is poLight doing to enhance TLens priority among camera module customers?
It's actually extremely good question, because some of the camera module suppliers, they do have VCM solution, they themselves dictate, you know, use TLens, and then they don't have a choice.
Among compactness, low power consumption-
The market segments, I think is the quick answer. Sorry.
poLight sent out a message that there was a very good reception for the Meizu 20 Infinity. Can you tell us a little about this?
Yeah, I think I mentioned it already. Super good performance feedback, small size, small hole in the screen, speed, smooth focus, all these good things, all in focus, touch and refocus. I think we mentioned that. I think it's super good performance feedback, but there is a cost issue.
The Meizu 20 Infinity was the first project with a number of lenses that which were to be delivered in an incredibly short time, and which had the potential to stress the organization production testing. Can you say something about how the yield has been on this batch of lenses?
I don't want to use exact numbers, but what I can say, we can see from start of that project to we shipped out this 100 plus in three weeks, significant improvement on yield we've seen, as expected.
Do you still work with-
And by the way, that yield work is continuing... as we speak, we have bi-weekly top management meeting where we are drilling into the details on the yield work, and super important activity in the company. That's one of the improvement projects I'm talking about.
Do you still work with smartphone customers, both in China and other parts of the world? Or can you say which parts of the world?
I think we are exposed to worldwide cases.
Can you say something about whether there are more camera module makers that have been ready or are ready in designs?
Yeah, there are, as you know, the Sunny, then the Sharp-Kantatsu, Foxconn. Those are, I would say, the most advanced, and then we expect more to come.
Can you say something about how things are going with the large tier one customer in medical? Lenses for PoCs have been delivered, how is the way forward towards a possible launch design win here?
Yeah, I mentioned that in the presentation. It's a super positive progress, and we hope that the second half... Sorry, first half next year, that we'll be seeing some kind of progress, which is moving from PoC to more- The volumes being extremely high can be, going back to laparoscope and disposable laparoscopes, of course, volume could be very significant. But, the other important thing here is the price point. Whereas the price point in a consumer market is low, price point in this market can be 10, 20 times more.
It is very impressive to see that the Kavli project provides a very solid revenue contribution, far beyond what I have expected. How do you envision projects with a similar design going forward? Will there be more similar cases?
Yeah, it's a good question because, for me also, it has been surprising to see, to see what this has given us. Also from revenue perspective, I've always been saying that I don't expect anything more. But now there are, I think there are two or three commercial companies which is starting to sell to worldwide labs. And what I learned also when I visited Kavli is that, you know, there are many, many of these labs, I don't know, hundreds, and they-- these are not only having one setup, they have many setups. And, the mouse is destroying the system. So, it's not gonna everlasting. It's last maybe for a year, and then they have to change. So, you know, you never know, huh? Can be more, much more than important than we ever envisaged.
Can you say something about the VR customers you work with? Are there only small players, or do you also work with big players in VR?
We work with many of them, small and big.
I am very curious about minor mirroring or something else.
You know-
Mirroring.
... you have some, intricate, complex questions, but, and I understand why, but this is a customer. I think we announced this customer in March 2022. I think it was a value of NOK 3.5 million, quite, quite a big. And they are planning using TLens. It's a display solution. It's a big player. More I can't say.
What does the interest in TWedge look like now? Is it the case that you are approaching a decision to start designing a new project?
I think we have handled that one, Alf Henning.
If there is a lot of activity, with TWedge and projects there, would you consider separating TWedge as a separate category in the project table so that we can follow this development more specifically there?
Yeah, I think that's a fair comment. To be decided when, and there is, as I said in the presentation, still a broad decision to be taken there. And if it's positive, we will start reporting that when it's launched in a separate kind of line, yes.
Very many customers seem to have come a long way with designing scanners with TLens. How does this vertical look in terms of possible design wins going forward?
I think it's interesting to see that those starting to use it seem-
TLens appear exclusive and expensive, or do they get feedback from customers that it is quality, and they could imagine, and that more people consider TLens because these big customers have products?
Yeah, I think it's, again, a fair point. Those references are key. Getting into those names are very difficult, and I think it's only serving us good.
Can you say something about how the work with various web cameras, with laptop cameras is going?
I think it's quite slow. They are very cost-conscious also, but we are having some activities, and we are positioning ourselves there. But I would say no big progress during the quarter, but we are hammering on that area also, as I mentioned.
The cost difference-
I think we need to put five minutes more maybe, and then we need to.
Yeah, we-
We need to open for the audience.
For the-
I think it's not working, is it? It is? Okay, good.
It's working.
Yes, it is working.
Okay.
Yes, sorry.
You have said before that you spend most of your energy on the mobile phone market and mobile phone customers, but due to now you're saying that the development in the mobile market is not so—they're not-
In a way, we have to steer the resources and the energy where you kind of feel the biggest and the most important opportunity at the moment. And at the moment, the innovation, as I said, is happening in the AR/VR space. But I would say that we also are very active. We are spending a lot of time on the market on convincing both camera module guys and smartphone guys to move with us. Even though, you know, it's kind of difficult, we—you can never stop hammering the door, you can—very high.
I'm glad to hear.
About NDAs with different companies, can you say something about what they can demand of secrecy from poLight, and what your obligation-
I would say any, any news and information which we believe has an impact on share price, we need to disclose. Sometimes you need-
In your presentation. Can you say something about the outlook here?
Yes. Yes, I agree with you. It's kind of droning. Yes, but we are exploring smartphone-related application, I would say. I am amazed, to be honest, and if you go back to the quarterly presentation when we talked about smartwatches or out fishing, only thing you need is this with a camera. I can't understand why it's not moving. I think it's a matter of time, but we are exploring that market still. Okay, I'm exhausted. And I'm happy for so many questions. I like that dynamic. I think it's so much better presentation. I think you contribute a lot to that. So thank you all. Thank you for those following us on the webcast, which I'm sure is a few hundred. Thanks for filling up the audience also today.
We're gonna work hard to create values for you and us, and next time we're gonna meet is Q4 2023, and it's related to the Q4 2023, and it's 27th of February. So we have Pinnekjøtt, lutefisk before that, and see you next time. Thank you all.