Sivers Semiconductors AB (publ) (STO:SIVE)
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Earnings Call: Q2 2021

Aug 19, 2021

Speaker 1

Good morning and welcome to the 2nd quarter webcast for Sivir Semiconductors. My name is Anders Storm. I'm the Group CEO and I'm going to take you through the Q2 report and in the information around that. So if we look at a short summary, the Q2 came in at $27,000,000 which is 25% year on year growth with wireless driving the growth with 118%. We have total this year added 5 design wins for the wireless business when we are now up to 26 in total.

Fortune 100 customers so far this year have put orders in for 20 €5,000,000 and photonics reached also a very significant milestone on its silicon photonics formed the indium phosphide 100 platform together with the IMEC and ASMR, which we are really hopeful for in the future. 8 devices also came out with seeing very positive upside on their estimates for the future orders they're going to put in for 2021 to 2024. And we also were able to get an uplisting to the NASDAQ MASTAC main market and we're now on the midcapalyst since June, which has increased the number of institutional investors in the company. And also we've been able to hire a lot of new personnel during this time, about 20 new people. It's 20% up for for 2021 and we keep on growing this year to secure the future growth of the company.

So if you look at the numbers, they came in 25% higher for the revenue, as said before. We had a bit lower EBITDA, but that is very connected to the cost of moving list, SEK 8,000,000 of those was connected to that as well as hiring more people into the company, which is a very important piece of the building this growth in the future. And of course, the operating income is directly affected by the same numbers. And the group cash and equivalent are still very strong. Our current financial assets is up at 143,000,000.

So we feel very confident that we can keep on and invest in growth. If we look at the segments, we came in with almost €10,000,000 for wireless. The growth is 118%. So this is sort of a start in the way getting out of the pandemic and we're now seeing the sort of first small part much of growth that we foresee in the future. Of course, we have much bigger hopes going forward when it comes to the wireless business and what's going to happen there.

Also photonics came in at SEK70 1,000,000 just above last year, have had a bit more challenge still with the pandemic. And that is sort of same as last year. We are still on sort of North America is the largest market with 70% Europe, 18% and Asia, about 13%. So still North America is a very important market and will be that for the future as well. We're seeing also a lot of the design wins now moving in the North American market.

And I will tell you all about the different design wins later on. So if you look at this, what have we done this year and we talked about this, it's very exciting time in the company's and of course, going up into the real main list, that's a huge step for a company. And that has been very driving and we worked really, really hard on that. And it's really a quality stamp now that we are there and that is really important for the future growth there for the company and the baby to build and get access to capital and so forth. We also added a lot of new resources.

This is really exciting, of course, for the company. More than 20 heads, we foresee even more in the future. We're so opening the office. We have not yet been able to close that due to the COVID. But as soon as we see the chance here, I think we'll be able to start and finish those processes.

Customer sales funnel looks really exciting. As I said before, we added 5 new design wins for the first half year. The Indian Fospelli 100 silicon photonics platform is now sort of out there. And we expect second half this year that we're going to see sort of the first design wins on that. And it's really interesting to have that platform now in place together with our partners.

Yes, and 5 gs design wins is also moving into orders. Of course, 180%. I mean, it's not much, but in Q2, but we foresee see a more interesting second half in that sense. Fortune 100 customers that we have been working on getting into the Mylet negotiation, they are ongoing. We have so far got $25,000,000 in orders and the dialogue continues.

They're really happy with the technology and we're making good progress there. We just need to see that we're now getting into the finalization of that and can get to the volume production in the future. So if we look at the significant events, of course, we added a North American design win for the 60 gigahertz unlicensed. And we have not been able to share the name and so forth yet, but I will tell you more about that. Also as I mentioned, the 8 devices shows a critical milestone and are now moving into volumes for the second half of the year.

Also NASDAQ, we started the trading, of course, 10th June. And as I mentioned, the photonics, IMEC, SM, Marmec passed major integration milestone and that's really going to be important for our silicon photonics going forward. We also signed an agreement in Japan with Shoshin for the Japanese market and they have really interesting parts where they can address interesting customers in the future. Also a second design win this quarter with ThinTech in Taiwan and that's really going to be interesting to open up the market over in Taiwan and their interesting products. We also closed the 2nd photonics deal with our Fortune 100 customer in June.

So that is progressing really well. So looking at the Fortune 100, we have so far close to $40,000,000 last quarter. We have $25,000,000 total this year. Positive new orders and negotiations is ongoing, as I mentioned. The photonics investments is going up.

And we have invested now into the fab about SEK 30,000,000 this year, which is sort of pre investments before we get to the sort of larger investments if and when this goes into volume production for this Motion 100 customer. But those investments is very important to secure reliability or production and all of that. So we're making really good progress in that and building out and adding headcounts. The 2 new design wins, Simtek in Taiwan, they have a focus on different types of applications. The other one is a U.

S. System vendor focus on fixed wireless and also point to point links. And all of these design wins is together with Renaissance, IDT, the really large San Jose company previously and now Japanese company owned. They're a very important partner and they are in most of the design wins together with us. So that's been really successful working together with them.

And both of these design wins has been on the unlicensed band where we're now making more and more progress in general. Also other significant events after that in Q2, we had these Series C shares and I think people might have misunderstood this completely. It's not sort of a direct share issue in that sense, this is something that has been known for a very long mine. This has been part of our incentive program since all the way back when I started. And now those incentive programs are getting into the possibility to both repurchase shares for those people who have them, but also the company.

As I mentioned now in many quarterly reports, we will cover the social fees for these in the sense of these shares. So that's why we now have sort of done this with the shares as well as purchased them back. So the company now has these shares and as soon as the people will start buying shares within the company and the ownership will go over to the employees and so forth. These shares would go out to the market. But this is well known and has been known for many years and as well as reported in several annual reports and so forth.

So this is no news in that sense. This is just something we need to report and make clear to everyone that we have done. When we come to design wins, we're now up to 26 design wins. Today, I'm going to focus on sort of the volume orders and where our partners are here in this. So if we look at for the second half, what kind of customers are now getting into volume?

So one of them is Cambium Networks. They have a ready product. And if you listen to the CEO, he's really on Cambium. He's really interested in and really psyched about the future for this product. They're really happy they see good volumes coming in.

Cambium Networks is is sort of they had a turnover of $100,000,000 last quarter. They're based in Chicago. They're selling all over the world. And their CEO will actually be on our Capital Markets Day, the 23rd September. So this is one of the products now going into production and we're really looking forward to see this.

This is a really nice product that will be used for fixed wireless access and other services. The other products going into production. The second one is Fujikura. They have actually 2 different products. 1 is the CPE And one is the sort of automotive transportation products that they are doing.

Fujikura is a 60,000 people company in Japan, and they are working hard with a lot of different vendors to get this out on the Q2. And we are seeing sort of the first orders coming in, in those kind of things as well. So that is very interesting now that they're moving into this. And also we talked about track to train transportation before and they are now moving in the right direction. And of course, When the site is opening up, this product is now ready.

It's passed all the testing and we are now hoping for the next step in this where they're going to build, for example, from Glasgow to London. And when more people are on the trains, this is hopefully going to happen now in the second half of this year. So this is really important project. And even if the volume is not going to be great here. That's actually really good margins in this market.

So we're looking forward to see this. And you can see more of this technology on their homepage. And I think it's a fantastic technology. There is no other technology like this out in the market, I would say, that can provide gigabit speeds to the trains and we're really proud to be part of this project. Another one is, of course, Madfran, who is using the CCS technology and they are now selling into this in connections to RDOF stuff.

And hopefully, a lot of the more art of situations will now lead into they also will use this fixed wireless technology on top of their fiber. They have a lot of sort of Tier 1 customers in the fiber networks today. And they call this their fiber extension portfolio. And that is really interesting to see how they can connect fiber and these gigabit solutions for wireless access. Antron is a quite large company.

They have a turnover of about $500,000,000 a year. They're 1500 employees and they're based in La Bama in the U. S. So they are sort of a Tier 2 size a vendor here that is out and selling and marketing this. The other company that is connected to them is also out selling their fixed wireless access and mesh solutions is CCS.

This is really a ready product now. Been it's being deployed in London and other places and other places in the U. K. And CCS are winning business. And right there, I just So they are hiring more people, which is a good sign that they are now making progress after the pandemic as well.

Another product is Air 1 Wave Tunnel. This is a multi award winning startup in the U. S. They have built this product you can see on the right. We're using our technology.

This is sort of a cutting edge 60 gigahertz radio replacing sort of cabling in houses and so forth. And it's really good to see that they now have a physical product rather than just trials. And this is a small company, but they have a really interesting technology that I mean, I wouldn't be surprised if they are quartered by the really big guys actually in the future here. Another one is the Tycon Networks Fixed Wireless Access. This is a product we've seen now getting out in the U.

S. It's sort of up and ready for orders, pre orders, I would say. We hope to see more of these in the future. This is a sort of a fixed wireless 60 gigahertz product covering all the bands. Then we have the 8 devices as you've seen.

They have now also a ready sort of unit and they're going to several new customers that can build out this in the second half of twenty twenty one. And as you've seen, they are expecting more orders in the future than they were expecting before. So This is really good. And now we're seeing this 7 to 8 different customers I talked about last time getting into volume for the second half. I mean, we had some volumes now and it was just 118% revenue growth.

But I hope we can see that these customers now getting into volumes and then we can see a different type of growth in the future. If we look at Photonics, the Fortune 100 customers, as I said before, we are working with them. We work now for 3 years with the first one and they have actually invested over almost close to EUR 100,000,000 now into this. That is something you do definitely if who want to do something interesting in the future. So we're very happy that they are keep on buying on the and they've invested $25,000,000 this year.

And we hope to see more from them in this year as well. And they are moving closer and closer then to volume production, of course. The other customer, the Fortune 100 that was over a year ago now that they did the first, they are still evaluating their solutions. We have no new information to share there right now, but I hope to come back as soon as we have more information on that. And of course, NASDAQ Main Market, we shouldn't dwell on this, but it was a big thing for the company and it's been really for us to make this move to support our future growth and also the quality stamp that the bigger institutional investors wants to see because it's actually a rather big difference in the way they are checking the companies from auditors and everything to be able to be on this market versus First North.

Also I'm getting still these questions about shortage of semiconductors. And there is a shortage, but not for us. We have to look at the different types of technologies here. Sivers are using global foundries and IHP and silicon germanium, while people who are using TCMC in Taiwan, they're CMOS and that's different type of technology. So there is no direct impact for us in this.

So even if people are constantly talking about this everywhere. As you could see sort of wireless grew 180%. And this is there is no effect right now from our side on that. If we look at the shareholders currently. We have now about 21% of institutional shareholders.

There is some new funds coming up on this list. The Lloyds, for example, has now made it into 2 of their funds onto the top ten. There is a couple of other sort of index funds now bought another 1,000,000 shares during sort of end of Q2 into Q3. So we are constantly increasing the number of institutional investors now going into the main list. And I think we'll see more of interest from that side of talking to a lot of them and having meetings.

So It's interesting to see this and especially looking for the future, we have a sort of the growth in front of us and that you need institutional investment support as well. So adding up the quarter, NASDAQ listing done. That's a real quality stamp. We're really happy with. We can do that on time, following the time plan and we got the big thumbs up from the auditors and the stock and the NASDAQ.

We're now totaling 26 design wins, which is very positive, I would say. 5 gs design wins is very important and we have netted 5 this year. The growth has started in wireless. So we're seeing now a positive move for the year and we are very hopeful for Q3 and Q4 now going forward. The Fortune 100 progressing really well.

It has been €25,000,000 in this year so far and we have very good talks and they are appreciating the technology we have delivered so far. Also, we have a good amount of cash and bonds in the company, dollars 143,000,000 which will secure our growth going forward with hiring a lot of people. We got good interest. It's been good to go into the main market. People are really seeing the company as very positive.

We keep on growing, probably around 130 employees in the end of the year and we will establish us in the U. S. And I also want to make some noise about our Capital Markets Day on the 23rd September. As I said before, the main guys from Sievers will be there, but we also have Cambium, we have another one, interesting customer from Photonics possibly coming. So let's sign up for that and there will be more information about that in the coming weeks.

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