Good morning. My name is Yoni, and I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductor's first quarter 2022 earnings conference call and webcast. All participant lines have been placed in a listen-only mode. Opening remarks by Valens Semiconductor management will be followed by a question and answer session. I will now turn the call over to Dafna Golden, Vice President of Investor Relations for Valens Semiconductor. Please go ahead.
Thank you, and welcome everyone to Valens Semiconductor's first quarter 2022 earnings call. With me today are Gideon Ben-Zvi, Chief Executive Officer, and Dror Heldenberg, Chief Financial Officer. Earlier today, we issued a press release that is available on the investor relations section of our website under investors.valens.com. As a reminder, today's earnings call may include forward-looking statements and projections which do not guarantee future events or performance. These statements are subject to the safe harbor language in today's press release. Please refer to our annual report on Form 20-F filed with the SEC on March 2, 2022 for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy.
We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of the business, and you can find reconciliations of these metrics within our earnings release. We will be in Boston, New York, Tel Aviv, San Francisco, and London later this month and in June for investor conferences and meetings. If you're interested in meeting with us, please email me at investors@valens.com. With that, I will now turn the call over to Gideon.
Thanks, Dafna, and thank you everyone for joining our call today. Q1 was a record quarter for Valens Semiconductor and a very strong start to 2022. Revenue and profitability exceeded our guidance with sales driven by continued solid demand for our core audio/video solutions as well as exceptionally strong demand for our emerging automotive products. We reported the company's highest-ever quarterly revenues of $21.6 million, 62% higher from Q1 2021. I am proud to say that we continue to successfully meet customer demand even in today's challenging supply chain environment, and we'll continue to do so, taking proactive measures, working closely with our customers and suppliers. As a result of the better-than-anticipated start to the year and our outlook for the rest of 2022, we are raising our full year guidance.
Most of this revenue increase is attributed to audio/video, while also essentially doubling the automotive revenue from the full year 2021. Dror will elaborate on our guidance in his parts. Valens is well positioned to benefit from significant growth trends in both the automotive and audio/video markets. Starting with audio/video. The demand for our audio/video solutions continued to build across all geographic regions and is expanding into new applications within multiple verticals, corporate, education, government, industrial, and medical. Companies recognize the potential of our cost-effective, high-performance, and easy-to-install audio/video solutions that can be used in conference rooms, boardrooms, and training facilities in both hybrid and remote settings. We see a growing number of customers rolling out their next generation products that embed our newest member of the audio/video products, the VS3000. As a reminder, the VS3000 transfers uncompressed signals to deliver the most crisp picture possible in HDMI.
It is versatile, supports full 4K HDMI video and can transfer audio/video, 1 gigabit Internet, and USB format all over a simple off-the-shelf single cable. Last quarter, I discussed the role we believe Valens technology will play in what's called the next normal for hybrid environments such as work, education, medical, and others. In education, we are seeing more schools and universities upgrading their classroom infrastructure to enable more advanced in-classroom and remote learning. This trend is supported by the fact that the US federal government recognizes the important role technology will play in keeping schools operating most effectively and enabling students' ongoing studies, even under the scenario that would have previously put schooling on hold.
US Congress has allocated to date a budget of approximately $190 billion in Elementary and Secondary School Emergency Relief, ESSER, funding for kindergarten through twelfth grade, K-12 schools, which includes funds for educational technology, including hardware, software, and connectivity that enables remote and hybrid learning. We believe the use of advanced technology will expand to education systems worldwide, which is an opportunity for Valens to further enhance its business in the large education market segment. By implementing our solution, we enable schools to stay open even in extreme scenarios such as severe weather and pandemic outbreaks. To that point, last month we announced that we joined the Logitech Collaboration Program to develop a solution using our technology and products in Logitech's USB peripherals suite of products for hybrid setups. Another interesting use case in education is university in Japan.
It was looking to build a modern classroom where students could easily see professor on video screen from anywhere in the large classroom. University also required true 4K video quality as well as remote control of the in-class camera. Our audio video solution met all these requirements, while extending HDMI, USB control and power between PC and camera sources, projectors, and displays over a single off-the-shelf, low-cost category cable. We also continue to see demand for our audio video connectivity solutions from leading equipment vendors in the industrial and medical equipment markets. The medical equipment space is undergoing significant transformation due to remote and hybrid health care, robotic surgery, and deep artificial intelligence, AI diagnostics. These applications require uncompressed high-resolution video connectivity that is medical grade and patient isolated to ensure patient safety.
For example, a U.S.-based center for special surgery required real-time, uncompressed audio video connectivity in surgery rooms. They recently completed updating the center's video signal transport infrastructure using Valens audio video solution. Using the VS3000, simple cabling was all that was needed to enable control and signal distribution, easy installation, and increased flexibility. Now, this medical center can retrieve videos from any of the surgical rooms in real time, as well as imaging such as X-ray on multiple displays. I am also encouraged to see that our VA7000 that was originally developed as a high-speed camera connectivity solution for automotive, is also gaining traction in the medical industry. It perfectly fits medical equipment targeted for use in critical procedures that require long reach, reliable, uncompressed, high-resolution video. Recently, several prospective customers in medical imaging has begun evaluating the VA7000.
While the sales cycle in medical is typically long, we are off to a very encouraging start and expect the medical market to become a meaningful business for Valens. We are proud of the role our technology will play in improving patient care. Turning to automotive. In the first quarter of 2022, we increased the number of OEMs, tier ones, and tier twos looking to integrate our newest VA7000 chipset into the platform from the 25 reported previously to more than 30 to date. In fact, since December 2021, we have doubled the number of OEMs that are evaluating our MIPI A-PHY standard compliance VA7000 chips. To date, we have eight OEMs evaluating this solution. Furthermore, we have also been receiving positive feedback on our engineering sample from prospective customers and partners who have already started to evaluate the VA7000 samples.
This is clear testament to the positive momentum and traction we see for the adoption of the A-PHY standard in the markets. We expect the next step will be OEMs requiring MIPI A-PHY standard compliance, high-speed connectivity technology as part of their RFIs and RFQs. We believe we will begin to see these requests towards the beginning of 2023, resulting in new design wins by mid-year 2023, which will translate into mass production starting in 2025. In parallel, the larger A-PHY ecosystem also continues to grow. Earlier this week, we announced an important partnership with OmniVision, a leading tier two supplier for in-vehicle camera sensors on a MIPI A-PHY compliant sensor solution for advanced driver assistance system applications, ADAS. OmniVision will embed our VA7000 A-PHY compliance chipset in their automotive reference design system camera modules. The initial camera module will also include an image sensor from OmniVision.
As we speak, we are demonstrating this A-PHY reference design at OmniVision's booth at the AutoSens Detroit exhibition. Also at AutoSens, we are leading a session on turning sensor fusion into reality for ADAS. It is clear that the fusion of data from various types of sensors, radars, lidars, and cameras, and the integration of data in the compute unit will play an essential role in reliable ADAS systems and autonomous driving. These concepts of sensor fusion will require a reliable, high-bandwidth video connectivity solution that can aggregate the data from the various sensors to the compute units. We believe that our A-PHY compliance solution will play a vital role in the realization of these important trends. We are also advancing with our joint project with Stoneridge and continue to expect ramping revenue from this project in 2023 and beyond.
As a reminder, Stoneridge is incorporating our VA6000 chipset into a connectivity solution to enhance vision and safety systems in tractor-trailers to address critical safety issues in the trucking industry. The trucking industry term is quite expensive. With more than 2 million new heavy trucks sold each year globally, in addition to a significant aftermarket opportunity. With our automotive product portfolio currently comprised of the non-symmetric VA7000 chipset and the symmetric VA6000 chipset families, Valens is one-stop shop for the in-vehicle wired high-speed connectivity required by OEMs. Why is this important? For today's infotainment and telematics, data flows in cars mostly over symmetric links. In parallel, to enable tomorrow's automotive applications such as ADAS and autonomous vehicles, manufacturers require video connectivity over non-symmetric links.
The automotive market is looking to deploy standard-based products for high-speed video connectivity for ADAS and autonomous vehicle applications rather than today's legacy solutions, which are proprietary and require dependency on specific vendors. Also, our end-to-end symmetric and non-symmetric offerings, and primarily the MIPI A-PHY standard compliance chipset, the VA7000 provide huge advantage to automotive OEMs looking for comprehensive sets of solutions addressing their high bandwidth connectivity needs. I now turn it over to Dror Heldenberg, our CFO, to review our Q1 2022 financial results and provide our financial outlook.
Thank you, Gideon. I'll start with our first quarter 2022 results and then provide our outlook for the second quarter and updated full year 2022 guidance. Beginning with our first quarter 2022 results. We topped our revenue guidance, achieving record total revenues of $21.6 million, an increase of 61.8% from the first quarter of 2021. Q1 2022 gross profit grew to a record of $15.4 million from $9.5 million in Q1 2021, an increase of 62%. First quarter 2022 gross margin was 71.4%, similar to last year, 71.3%. non-GAAP gross margin increased to 72.1%, up from 71.8% in Q1 2021.
The better than anticipated gross margins were driven by a favorable product mix in audio video, as well as the increase in automotive gross margins from prior quarters as this business begins to scale. In addition, in Q1, we enjoyed the benefits from sales based on today's higher ASP, while a portion of the cost of goods was still based on previous slower pricing. Operating expenses in Q1 2022 were $22.6 million, up from $15.7 million in Q1 last year. The $6.9 million increase was mainly due to an additional $3.7 million in research and development expenses, representing 54% of the total year-over-year increase in OpEx. This demonstrates our continued investment in expanding our product offerings to address the business opportunities ahead of us.
Sales and marketing expenses increased $1.1 million due to higher levels of promotion of our new audio video and automotive products. G&A expenses were up by $2.1 million, primarily due to public company expenses such as costs related to D&O insurance and professional services. We also exceeded our adjusted EBITDA guidance, with our first quarter 2022 adjusted EBITDA loss coming in at $4.1 million compared to the loss of $4.3 million in the first quarter of 2021.
Our Q1 2022 adjusted EBITDA was $6.1 million better than the midpoint of our guidance of a $10.2 million loss due to our higher than expected revenues and gross margins, as well as the fact that most of the better than internally projected operating expenses were related to certain R&D expenses that were deferred from Q1 into subsequent quarters in 2022. Loss per share for Q1 2022 was $0.05, 91.6% lower than Q1 2021, which was $0.93 per share. Q1 2022 is calculated as a net loss of $5.1 million, which includes an income of $2.6 million related to fair value of our future shares divided by 97.2 million shares.
Q1 2021 is calculated as a loss of $10.1 million divided by 10.8 million shares. The non-GAAP loss per share for Q1 2022 was $0.02 based on the net loss excluding $3.1 million of stock-based compensation and depreciation expenses divided by the 97.2 million shares. The higher number of shares outstanding is the result of the conversion of our preferred shares into ordinary shares. The shares issued as part of the transactions related to our listing and options exercised into shares during the period. Turning to the balance sheet.
We ended Q1 2022 with a strong balance sheet with cash equivalents, and short-term deposits of $166 million and no debt. We stated in the past, we intend to use our strong balance sheet to fund the development and commercialization of Valens' next generation products. As a reminder, for new products, the time from design initiation and manufacturing until we generate revenue can be lengthy. Typically, within three years in the audio/video market and up to five years in the automotive space. Inventory increased by $3 million from the end of 2021, driven by two main factors. First, the anticipated increase in the number of chipsets we intend to sell this year.
Second, the constrained supply chain environment resulted in higher cost raw materials and services from our supply chain, as well as the need to place longer term purchase orders and accrue more inventory to serve our customers' needs on a timely basis. Considering our strong backlog, we believe the $12.5 million in inventory will be consumed during 2022. Now, I would like to provide our guidance. For the second quarter of 2022, we expect revenues in the range of $21.6-$22 million. We expect gross margins to be in the range of 66.3%-67.3% and adjusted EBITDA to be a loss in the range of $9.8-$8.8 million. For modeling purposes, please note that as of today, we have 97.2 million outstanding shares.
As Gideon said earlier, we are raising our guidance for the full year 2022. We now expect revenues to range between $86.5 million and $88 million, up from $83 million-$85 million provided in March. Further increase in demand in audio/video and the continued expansion of our automotive revenues, which we expect to essentially double from 2021, drove our higher 2022 projections. We expect gross margins to be in the range of 66%-67.3%. This new gross margin range is up from the previously guided range of 65.5%-67.2%. We are also improving our projected adjusted EBITDA loss to be between $37.2 million and $35.5 million, up from a range of $38.4 million-$37.8 million.
We will continue to invest in enhancing our current product offering and developing and commercializing Valens' next generation products. In summary, Q1 was a strong start to the year, positioning us for a better than anticipated 2022. As we look further out, we are seeing growing demand and adoption of our next generation connectivity solutions in multiple industries. Together with our robust balance sheet, this should fund our business through breakeven and beyond. I'll now turn the call back to Gideon for his closing remarks before opening the call for Q&A.
Thank you, Dror. Our continued success demonstrates once again why we believe Valens is well positioned to create value for our stakeholders. First, Valens operates in two large and fast-growing addressable markets, automotive and audio/video. Second, Valens enjoys a first mover advantage for its wired high-speed connectivity solutions over simple and low-cost infrastructure by setting industry standards. We first did it in the audio/video market, having established our leadership position in audio/video, and we are now replicating this success in the automotive market. Third, our business model offers compelling financial metrics. As a fabless semiconductors company, we are driving environmentally responsible growth. I would also like to take this opportunity to thank our incredible and talented team of employees around the world for their exceptional dedication and execution. They made this very impressive start of 2022 possible, and I am confident that they will drive Valens' continued success.
Operator, I would now like to open the call for questions.
Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Please ask your question in a loud and clear voice. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Atif Malik of Citi. Please go ahead.
Hi. Thank you for taking my questions and good job in raising the full year guidance. I have two questions for Dror. Dror, that $2-3 million increase incrementally for the annual guidance, can you break that out between audio/video and auto?
Sure. Thank you very much, Atif, for the question. Indeed, we raised the guidance for the full year. I would say that the major contribution for this increase is mainly come from the audio/video space. While we still see that we're going to double the automotive revenue compared to 2021. If you remember, last year in 2021, we did $8 million automotive. We assume that we are going to double it this year. The main change in the guidance for the revenue for this year supposed to come from the audio/video business.
Great. Then you commented that the gross margins on the auto side are benefiting from higher ASPs. I just want to understand what is the assumption you're making on the pricing for the full year as we continue to hear foundries raising pricing even into next year. How are you thinking about ASPs in the full year guidance?
It's a question that involves both the price adjustment or the price increase that we see from our supply chain vendors and the price adjustment that we made shortly after to our customers. You know, let's start with the supply chain of price adjustment or price increase. I would say that unlike what we have seen last year in 2021 and primarily in the first quarter of 2021, today we see more kind of an ad hoc price increases from our supply chain vendors. It's not at the same order of magnitude that we have seen last year.
If you remember, starting from this year, January first this year, we implemented the price adjustment, the price increase to our customer to compensate on what we've seen with respect to our supply chain. Part of this price increase also referred to the automotive customers. I must admit that in the current circumstances, we don't believe that the price will go down in the foreseeable future. It doesn't seem like that. I believe that we reach to some kind of a status quo that I believe that will be with us at least through the end of 2022.
Yes. One last one for Gideon. Gideon, some of your auto peers have talked about an inflection in second half in autos for ADAS, whether they're NVIDIA or Qualcomm. Understand you guys have an incubation time for your chips. How are you looking at the auto market? Do you also see some type of inflection happening in second half into next year?
Well, can you please elaborate the question? I'm not sure I did understand the question.
Yeah. I'm just trying to understand the trajectory of your auto sales. Are you seeing second half meaningfully higher for auto sales over first half into next year?
Actually, yes. Let me explain it. First, thanks for the questions. I think it's very important to elaborate here. We see the balanced solution for this market is something that it doesn't matter whether it's NVIDIA or others, that they will need to transfer data from sensors to the ECU. Whatever the ecosystem you mentioned would win, the one who wins, we believe that most of them would need us to complete the solution. Now, there is in our market, as you know, the times are not fast. It's, and in automotive it's lower than the audio/video. The time it takes between the design win to when you see the big numbers, the ramp up is longer.
If you're looking whether in the second half of 2023, we will see a ramp up from those numbers, then the answer from the MIPI A-PHY is no. If you're looking for whether we are going to continue with the ramp up with the existing, we think the answer is yes. I hope I answered you.
Got it. Thank you.
Maybe just to add to what Gideon said, if we take 2022 as the reference year. You know, I just mentioned that we do believe that we're going to double the revenues from automotive in 2022 compared to 2021. In this year, by the way, 2022, still, most or I would say all of the revenues that we anticipate will come mainly from the business that we have with Mercedes-Benz. We continue to see the deployment of our chipsets in more and more models within this OEM. As we mentioned in the past, we also have the project that we run together with the trucking company called Stoneridge.
We mentioned that we anticipate the production ramp up at the beginning of next year. I can say that everything is progressing according to the plan. It's on track to be in mass production. Currently, these are the two main projects that contribute to our 2022 automotive revenues.
Thanks, Dror.
The next question is from Rick Schafer of Oppenheimer. Please go ahead.
Oh, thank you, and I'll add my congratulations. Maybe my first question, if I could, Gideon, congratulations on the OmniVision partnership that you highlighted on the call. I believe you only began sampling there last quarter in Q1, but I could be wrong. Was that a longer standing relationship or is this an indication of how fast future A-PHY design wins could happen?
Well, I think the answer is both. We know those companies for a while, but the time it takes once they see the chip and once they see that it's working, then it was really, really fast. I would say the convincing stage looks shorter and shorter. People, when they see the concrete of how these chips solve the real problem for EMC and solve their future problem of how to deliver data from their sensors to the computer, the convincing time looks shrinking from a customer to customer. As you know, that's not the first one who committed to us on the MIPI A-PHY, but definitely OmniVision was very encouraging, and we're very happy about it.
Well, thank you. Thanks for that color. Maybe for Dror, I believe you came into this year with $78 million or so in backlog. I'm curious if you could kind of update us on where backlog is now, maybe give a sense of how that splits between AV and auto, and how much of that, I don't know if you see how much you can share, but how much of that would be shippable, let's say this year?
I would say that we continue to see strong bookings and backlogs that are better than our internal projections. I would say that our backlog remains robust, contributing to our increased forecast for this year, 2022. This is part of the reason that we raised the guidance today. We see the progress in the bookings and the backlog in both audio video and automotive. It's very encouraging, and it's very positive trend. I would just say that we are already starting to see backlog that is scheduled for shipping in 2023 that further increase our confidence in our revenue growth trends. We feel very confident with respect to 2022, and we start to see more and more activities for the first half of 2023.
Oh, thanks, Dror. Maybe if I could sneak one more in. You know, I'll revisit the gross margin question, as it pertains, specifically to auto. I know you talked about that's improving the scale. I know you also mentioned that you think prices are pretty stable here, pretty firm. Does this change your long-term target for auto, for gross margin, you know, for that segment over time? Thanks.
I would say that, in a way, it changed a bit the revenue projection that we see. Part of it is reflected in the guidance that we provided today, and we are now trying to understand and analyzing what will be the long-term impact of this increase in prices. With respect to gross margin, you know, I think that what we see today in automotive, and we see some improvement in the automotive gross margin as well, it's also part of the fact that we see ramp up in the volume, and we see that the business is scale. That's one of the outcome of this increase in volume, is the improvement of gross margin in semiconductor business.
Having said that, if you remember the basics of our business, you know, you remember that we are dealing with audio video and automotive. Both of them are growing very fast, but still we anticipate that automotive business will grow faster than the audio video. Given the fact that our gross margins in audio video are higher than the automotive, I would say that the weighted average gross margin that we anticipate going forward is expected to decline a bit, as automotive will contribute more to our top line. Having said that, I think that overall, the steady state gross margin of the company will still be above the number that we traditionally convey to you, which will be north of 60%.
Thanks.
The next question is from Suji Desilva of Roth Capital. Please go ahead.
Hi, Gideon. Hi, Dror. Congratulations on the progress here. The revenue question for any impact from the supply chain in terms of under shipping your demand in the first quarter or second quarter guide, or is that not an issue?
Thanks for the question, Suji, great to talk again. I would say that, despite the very challenging supply chain environment, we still manage to fulfill, on a timely basis, all our customer demand, and we're very proud about it. We have not seen any negative impact of the current circumstances in the semi business on our business. We do not, by the way, see any negative impact on our second quarter. To be honest, we believe that we'll also be able to fulfill the guidance, the revenue guidance that we provided to you today. I think that we navigate successfully with our vendors. We managed our inventory levels in the right way.
Having said that, it comes with some issues that we've mentioned in the past. Today, we see longer or extended lead times from our supply chain vendors. We obviously had to extend our lead time to customers, and right now we don't see any improvement in this space. We talked about the price adjustments or the price increases that we received from our vendors that we pass on to our customers. More than this, you know, you see that we had to increase our inventory level. We just reported that we increased the inventory by $3 million compared to the end of last year.
Part of it is obviously the fact that we intend to sell more this year, but part of it is because our vendors or suppliers are telling us that they don't see any recovery in the lead time. Therefore, they recommend that we will place longer purchase order and will commit to capacity. Again, it's part of the penalty that we pay today.
May I add here a sentence? Thank you, Dror. I would like to add here a sentence. This also created a kind of an opportunity, because in order to be on time, in order that our customers would not suffer from what happens in the world, we had to tighten the relationship in the sense of discipline, of giving the forecast and giving the orders. At the end of the day, we see, you know, you have to see some benefits even in things, and actually we did. I think this also created some, I would say, increase in the intimacy between the companies, the supplier, us as a supplier and them as a customer.
Well, that sounds like really good execution through a tough environment. On the AV business, can you talk about what the content opportunities for you in a system pre- and post-COVID? I'd imagine the hybrid systems that are coming out post-COVID have many more peripherals attached, displays, mics, so forth. Maybe you can give us some order of magnitude of how much the content per system has increased in the designs that are coming out post-COVID.
Yeah. Well, as I said, I guess in one of the previous. First, I think it's a great question, and thank you for the question. I want to actually give you the opportunity to elaborate a little bit. The COVID created new phenomena that some of them will not expire after the COVID. I believe, for instance, that working from home would not expire. The hybrid education is just increasing after the COVID. The phenomena of what's called a huddle room that creates for us great opportunity for USB extension and other extension. All of them are post-COVID phenomena that create also some new products, and some of those products require new chips from us that were not in our plan.
Actually, we did give some information in the past about future development of future products. We see, especially in extension. Actually, all of them require extension. Another thing which happened after post-COVID is that we see more and more opportunity for automotive chips to find the way to the audio video world. Some of the extensions that will be needed, the automotive solution are very suitable to give solution for audio video world. Yes, post-COVID has effects of something that started in the COVID that would not expire, and something which gave, you know, a new thinking, and things I believe will never change back. I hope I answered you.
Yes, that was great.
Yeah, thank you.
The last question, if I can fit it in. I presume trucking is included in auto, correct me if I'm wrong. I'm curious what the timing of that revenue is, if it's already contributing. More importantly, as you do the asymmetric application, which is very abundantly clear how valuable you are in terms of the backup camera, does the symmetric product get swept in there because the customer wants a single platform across the two? Thanks.
Maybe I'll take it. With respect to the revenue, maybe to give you the how we build our revenue today. As of today, the product that we sell to the market is the VA six thousand. This is the symmetric solution. Right now, this is the product that we sell into Mercedes-Benz. We talked about the numbers, and this, by the way, the same product that will operate will be deployed as part of the overall solution, the system that will be deployed in the trucks with Stoneridge for the connectivity of the rear camera to a display in the dashboard.
I believe that this product will be the main contributor or the driver of our automotive business, at least in the next two to three years. Thereafter, we assume that the VA7000, which provides the asymmetric solution, this is the solution for the sensor to ECU connectivity. Only then we'll start to see significant ramp-up of revenue coming from this product.
Okay. Thanks, Dror. Thanks, Gideon.
The next question is from Brian Dobson of Chardan. Please go ahead.
Hi. Thanks so much for taking my question. You know, maybe we could just touch on your partnership with Sumitomo. I guess could you elaborate on some of the opportunities that that relationship should afford you moving forward?
First of all, thank you for the question, Brian. Sumitomo, it's another good example of the way that or the momentum that we see for A-PHY in the market. You know, this new standard of A-PHY, we see that more and more players from different disciplines are joining this journey. Sumitomo Electric being the leader, the world leader provider of cables and in-vehicle harness.
Also realize that they need to be part of this ecosystem. This is the basis for the collaboration between Sumitomo and Valens. We announced it in the previous quarter. By the way, Sumitomo is one name that we mentioned in the past. OmniVision joined this party this week. Also want to mention other companies like Mobileye, Gentex, Sony, all of them are good evidence to the very strong momentum that we see for A-PHY in the market.
Great. Excellent. Just following up on the trucking market, as it pertains to retrofitting existing trucks, do you think you can give us a picture of how large that market opportunity is?
Yeah. Well, the market opportunity is. Thanks for the question. Actually, truck is very important, and we see as a real opportunity for us, and I will elaborate in a second why it's a big opportunity, but I will answer first the question. There are 20 million trucks that are in the world and more than 2 million new trucks every year. One of the phenomena of truck, unlike a car, that when someone has a truck, he keeps improving it even when it's old, because it's safety thing and because of other reasons. Actually, unlike other markets where people would put money in their car only in the first one or two years, in trucks it's different.
The second thing is that we are touching here a safety thing which costs money from a point of view of insurance and the kind of cost of accident in a truck, which is very expensive. We're speaking about a market of more than 2 million new trucks a year, plus aftermarket of over 20 million moving trucks at the moment.
Great. Thank you very much.
If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we poll for more questions. There are no further questions at this time. Mr. Ben-Zvi, would you like to make your concluding statement?
Yes. Thank you very much for all the questions and for all your attention to Valens. We hope to hear from you again in the next quarter, and we hope to keep surprising you with good news all the time. All the best for all. Thank you.
Thank you. This concludes the Valens Semiconductor first quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.