Polight ASA

OSE:PLT

Earnings Call Transcript

[Øyvind Isaksen, Chief Executive Officer]

Good morning, everybody, and welcome to poLight's third quarter presentation. My name is Øyvind Isaksen. I'm the CEO in poLight. Together with me today is also Alf Henning Bekkevik, CFO.Today's agenda: key events, introduction to poLight, operation and market review, financial review with the CFO, some few outlook statements and Q&A. When you ask question through the web interface, please leave your contact details in case we have to give you the answers after the presentation.Okay. Key events. TLens finally confirmed, included in a barcode scan engine, which has been already released to market. That's a major, major milestone for the company. In addition to that, we have established a project with a key player in the smartphone segment to make a prototype of a new version of the TLens, coming back to the details there. In addition to that, I would say that we have generally good progress on customer cases. Also important to mention is that end-user sales of smartwatches is still lower than in a normal situation. Positively, VAT finally registered again from July 2020.For those being new to poLight, just a kind of a quick summary. poLight has developed, over many years, a very unique lens for use in different application, mobile, barcode, augmented reality and other markets. We have been around since 2005 and built a state-of-the-art expertise in optics, polymer, MEMS technology. And we are, today, around 13 worldwide patent families, pending 10 and also 3 registered trademarks.We have increased the headcount slightly during the quarter. We are now 24 employees, plus some consultants. We are headquartered in Horten outside Oslo, but we also have offices in Finland, China, France, and representation in Taiwan and Korea.The poLight technology can be characterized by a few kind of key attributes. First of all, it's extremely fast, so you can realize instant focus. It's very, very compact, so you have small real estate. It's a constant field of view, so that you don't see it as pumping in your image, which you see with conventional technology. And also the power consumption is really, really low compared to other technologies.As mentioned, the poLight product is well suited for different type of application. The company is focusing on, I would say, 3 sectors. You have the consumer, industrial, and also, we are more and more exploring cases in medical. We also believe in the future that automotive could be an interesting area for our technology.On the consumer side, we have the main focus on 3 areas. It's wearable being watches, glasses and, of course, smartphone area. As 5G Internet of Things is developing, we expect other products, units to be connected to Internet, who also needs to have a smart compact camera. So we foresee other areas of interest in the consumer side.On the industrial side, the main activity is related to barcode reading. We will come back to those applications later. But we also see machine vision being an interesting area, and many will claim that barcode reading and machine vision is 2 areas which are converging. So -- and also, I will mention drones, which both has kind of an industrial application, as well as consumer application. And the same actually for augmented reality, which also have, in many use cases, more a professional use case more than a consumer use case. On the medical side, we are enrolled in a few cases, for which like endoscopes for which our compact lens has potentially high value. But still, I would say that's an area of -- in early stage.Okay. Let's go to the market review. So as mentioned in the key events, finally, commercial breakthrough in the barcode area. As we have mentioned many times, we do foresee that barcode will be an extremely important part of the industrial activity in poLight and also that it will be an area which we think, over time, will build a very strong fundament for the company.The design win or the product we are now included in is a scan engine. And just to explain the scan engine expression. If you look at the right, you see the picture of a handle barcode reader. And I have circled around what you can classify as the scan engine, which is basically the camera unit inside that barcode reader. And that comprises cameras and [ lightning ], pointer and things like that. And that scan engine is a component in itself, which typically people or a company who's developing a scan engine, they are using the scan engine themselves in barcode products, but they're also selling the scan engine as a standalone product to other OEMs who make their own barcode readers. So scan engine is basically a very important component in those type of barcode reader.This particular scan engine, which we are now a part of, is meant for warehouse and distribution center operation. Obviously, then you can understand, important to read barcode very fast, close in front of you and also at a distance, so -- and that needs to happen extremely fast. And that's one of the main reason why we are preferred, is due to the speed and reliability.The customer we have there, which is an unnamed customer, so far, is -- what we can say is a very well recognized international player. The product is a relatively low-volume product, which, over the years, will probably increase. It's expected to increase, but it is a low-volume product definitely in the beginning. But also, it's not going to be like a smartphone project. It's going to be significantly less than that but, of course, at a price point which is also significantly higher than we have in typically consumer products. As an example, accumulated number of units we have delivered so far is 14,000, which includes the development and test phase. From what we have learned, the customer has been given good feedback from their customers, meaning they are selling the scanners into other OEMS, as I mentioned, and that -- those feedback has been really positive as far as we have been informed.Okay. And then just as a comment in the end of this area is that we are also, of course, exploring other barcode cases with other customers. And actually, one of the PoCs has, during the quarter, moved from PoC, Proof-of-Concept, to project. I will comment back to that.Augmented reality. We have mentioned this before and are restating TLens is considered for next-generation glasses by several players, several OEMs. And also here, we have -- during the quarter, have progress on several of the cases. And one case, in particular, has moved from Proof-of-Concept to project, meaning project, meaning then they're starting a project for a particular new product within AR.AR market is still at the early stage with low volumes. Many times I've been asked why is TLens offering attractive related to AR. And it's basically very much related to our key characteristics, which I mentioned in the beginning. It's a power consumption. Of course, power consumption in a wearable device is extremely important, even much more important than in the smartphone. So power consumption, so we have maybe 50 to 100 less power consumption than a combination of technology, and that's very, very significant in the total power consumption in a -- on a system level for wearable. So that's definitely one of the big advantages.Then, of course, speed. It's always an advantage. People are moving ahead, and you want to -- that -- this to focus to follow very quickly. Compactness, definitely, it's the -- one of the, I would say, main effort in this AR space is to make the glasses look like a normal glasses, and they want everything to be super compact. So our compactness and low footprint, small footprint is definitely an advantage.And also moving your head is also impacting the lenses to be used. And when we have no gravity impact, it's a big advantage for our technology. And then you have field of view, which doesn't change. And then other kind of categories. But those, I would say, is the main, main reason why we are considered. And not -- I would say, not only considered. We feel that we are very well positioned for an early market entrants in this area.As I mentioned before, in the smartphone area, we have been fighting. After we kind of qualified the technology a couple of years ago, it is and has been [ identified ] between kind of conventional technology where the engineers are very used to use like the VCM and more new technology. And that -- it takes a lot to displace an incumbent technology. In the AR space, there is, in a way, not establish an incumbent technology. So we are, in a way, competing in the early days, meaning it should be easier for us to make headways in this area.As I mentioned, one of the Proof-of-Concept has moved to project. It's, of course, difficult to be very precise and to understand when it goes on PoC to project. And even we, as poLight, not necessarily see -- have all the visibility. So -- but the way we feel and judge the situation is that one of the PoCs is definitely on its way to a real project. And that real project could potentially lead to a next-generation AR glass product towards end of next year. Of course, that's still some -- that's still kind of 12, 16 months or whatever ahead, so that time scheduled can change. But the current plan is like this. And there are other projects, which is also in that pipeline but probably a little bit later than end of 2021.We feel that AR glasses is probably one of the most important long-term consumer markets poLight can be positioned for. There is a strong belief that AR glasses will be the next big thing after the smartphone. It will change the way we work. It will change the way we interface the smartphone. So it is -- everybody -- big tech companies believe that this will happen. I think it's also fair to say that the beginning will be slow. The beginning will be low volume. And also, maybe the beginning will be very much related to more, I will say, professional use instead of more commercial use. But as compactness, costs, functionality, ease of use is improving, this will convert into a consumer product. And that's where we're going to be positioned and in the early days.I haven't mentioned it today, but let me do that. There are -- in a way, there are 2 applications for TLens in AR glass. It's -- one application is for the cameras pointing towards the world. The glass -- the illustration we have on the top right is showing 2 cameras. Maybe somebody will have 3. They also have a camera in the middle. So that's one application.Then you have also the -- some of the AR glasses and maybe the majority, over time, will be laser-based display. So in the bottom right, you see an illustration of the display technology. And then, it's basically a laser system projecting a laser into the glass-coated or something, reflected into eye, and that projection of the laser into that glass has to be tuned whether you are focusing close or far. So that whenever a message is coming on your glasses, information is coming on your glasses, that message and laser is tuned depending on where your eyes are focusing, so that you always will see display in focus. That's another application for TLens.Smartphone. It has been really good to see that after, I would say, some quarters with some, I would say, resistance to take our technology into use for -- main reason has been that the focus has been, on the smartphone side, on having a big screen. And that everything on that screen, which is disturbing that screen, either as a hole or whatever it is, is not wanted. So they want to minimize the impact on the screen, and hence, having a big, nice, better camera on the front of the camera on the screen side has been less wanted. They have been focusing and prioritizing the screen. What we have seen now is that this add-in project, which we are conducting with one of the major camera module suppliers in Asia, and is giving us opportunities to enter this selfie camera again.If you look at the bottom side of this slide, on the right side, I'm trying to illustrate what does it mean. A normal implementation of TLens on a camera module is that the TLens is the first lens. And you can see illustration that the TLens is somewhat bigger than the top lens from the fixed focus camera. So when you -- if you have TLens on top, it means that you know selfie camera becomes bigger than the top lens. So what we are doing now is that we are taking our TLens inside so the first lens become the fixed focus lens, the top lens, which is a smaller lens, meaning that the nose of the camera become as small as it possibly can get. Meaning that the hole in the screen or whether -- however you -- or how you implement it is less than if you had the TLens on top of the camera. You see the difference.And obviously, this is not a walk in the park to implement because you can imagine the tolerances in -- when you go inside the lens stack, has to be -- it's much stricter. In this case, we have a team with a very, obviously, advanced camera module supplier. We have an OEM, which is pushing a lot to have a prototype phone for demonstration in early next year. And that team, together with us, have made tremendous good progress in this area. It is technically challenging, but with the quality of players which are now included in this project and the commitment we are seeing, there is, I will say, a good chance that this can be a successful program.In addition to the OEM, which is included in this project, there are more OEMs, which have indicated the interest for this solution. I think I will actually dare to say that if this will become a success, I will classify it, for us, as a game changer. We all know that compactness, what has been step -- stopping us from getting into the selfie camera has been dimension, no size. Now we are able to -- hopefully, to reduce that no size because we're removing our lens inside, so the top lens is the smallest lens in the stack. And that is enabling new way of designing the phone.Extremely interesting project. It's not done. They are challenging to be sold, but I think it's fair to say that the progress we have seen this quarter is really, really good. And the commitment for the people we work with and the companies work with have been very, very high.Yes. I also want to say that when a market can see a selfie camera without a focus, which will not ruin the ID of the screen, everybody believes that auto focus for selfie camera is going to be the mainstream.Okay. Then another important news during the quarter is that we did manage to establish a project with a key player in the smartphone, another key player in the smartphone area, so these are different customers, to make a prototype of a new version of TLens. That is an NRE financed program. It's about the prototype, so it's not the final product. It's the beginning. It's the first phase of a development project. And we have started the design work. We have weekly project meetings with the customer. And this will lead to new possibilities for the TLens product family. It will add to the product family. And the biggest kind of new things in this product is that the aperture size, the hole of the TLens, is bigger, meaning we can fit bigger image sensors. We can fit other application, not only smartphone. This particular project is definitely about smartphone, and it's also about high-end smartphone solution for folded cameras. You have folded cameras, telephoto combined with wide field of view camera. And this is then a part of that high-end camera solution on the back. So many, many interesting aspects with this project but also having application outside the smartphone area.If we summarize the status [ leaving ] the quarter. First of all, I would like to emphasize, maybe the most important thing is that 2 Proof-of-Concept projects are moving towards real product projects. As I said, it's a subject -- is an evaluation, is an assessment done by us. It's difficult sometimes to be very precise, but far as we can understand it. Those PoCs are on its way to real projects.One of them is in the consumer. You can see the project column in the consumer is increasing from 0 last quarter, in brackets, to 1 [ leave ] in the quarter. And then also, you can see a new project on industrial. Even though it was also 1 last quarter, but that 1 has become an ongoing supply. So now you have an ongoing supply. Industrial, we have one. And then we have a new industrial project, adding to that project column for industrial. So we have 2 ongoing projects on its way to be a product project. And when it comes to ongoing supply, meaning products were already in, this has increased from 2 last quarter to 3. 2, consumer, the 2 smartwatches; and 1 industrial, which is related to the barcode we just talked about.So then you can see the ongoing PoC. It's, in sum, 20, down from 26. But then, completed PoC has increased significantly. Just on a side note, you may find that there is no -- some not very logical in this table. And the reason is that we have cleaned up some of the way we classified things. So you can't compare this to last quarter's table one to one. But it gives you actually a fair assessment of the activity.So many projects, many ongoing PoCs, many completed PoCs. When a PoC is completed -- and it may take time before it moves to a completed PoC to a real project. And this -- in some cases, actually goes directly from PoC to projects. So this is very different from case to case. But at least, this gives an overview of the extensive activity the company is having at the moment.Okay. Alf Henning Bekkevik will now walk you through the financial review. Alf Henning?

[Alf Henning Bekkevik, Chief Financial Officer]

Thank you, Øyvind, and good morning to you. Delivery of TLens, ASICs and services gave NOK 600,000 in revenue in the quarter compared with NOK 400,000 in the same quarter last year. The EBITDA loss was NOK 2.7 million in the quarter compared with NOK 11.7 million the same quarter last year. The decrease in loss is mainly explained by the VAT receivables of NOK 8.2 million, as a result of being VAT registered again. This also explains the positive administrative expenses of NOK 4 million in the quarter. But also, reduced salary expenses of NOK 1.9 million due to reduced headcount explains the decreased loss, offset by bonus payment of NOK 1.4 million in the quarter related to design wins achieved in the quarter.On the balance sheet. The cash position was NOK 79.4 million at the end of third quarter this year compared with NOK 79.9 million last year. The current cash position could potentially fund the company into 2022.On the cash flow. We started the quarter with NOK 89.9 million in cash at the start of the quarter. We used NOK 10.3 million in operating activities. We used NOK 10.9 million the same quarter last year. We used NOK 100,000 in investing activities, NOK 400,000 in financing activities, ending up with 79 -- NOK 79.4 million at the end of the quarter. Thank you.

[Øyvind Isaksen, Chief Executive Officer]

Thank you, Alf Henning, for walking through the key figures. So one slide left before Q&A session, and that's kind of summing up and some outlook statements.Since the last quarterly report, what has happened? The company have established its first commercial reference in the barcode market. The -- we have established a project, a customer project in the smartphone segment. We have achieved, we feel, significant project -- progress in several PoCs, e.g., as an example, the add-in for the smartphone.In the opportunity pipeline going forward already including our new consumer cases, including smartphone, including AR, and definitely also exploring follow-up cases on the smartwatch, in addition to several other additional professional use cases, I would say, e.g., industrial, but also others. Also good to see is that the potential new products and solution we are exploring and doing alone and together with a customer will add to the opportunity pipeline for the company, not in a short term, but longer term. All this, we feel, points definitely in the direction that we're going to make good progress also coming quarters. Financially, a good situation. The cash we have today will fund us into 2022.Okay. Then we will move into the Q&A session. Alf Henning, you will join me. And we have received some questions upfront this webcast, so we will walk through them. And then there is definitely the opportunity for you to log questions in the interface on the webcast.So let's start with Alf Henning to go through the questions, which has been submitted last night, and try to answer them as good as we can. And then we will take the next questions coming in to the webcast after that.

[Alf Henning Bekkevik, Chief Financial Officer]

Good. So we'll start then. Regarding the new bigger TLens MoU, will this be able to compete on optical power compared with the VCM and liquid actuators in the same size?

[Øyvind Isaksen, Chief Executive Officer]

This particular project is very much focusing on high-end, back-end solution, telephoto application. And for this, we will say this solution is driven by that solution available today is not good enough. So in a way, this project is to make a solution which is significantly better what we have today. So short answer, definitely yes.

[Alf Henning Bekkevik, Chief Financial Officer]

Our new TLens is being developed with a larger aperture. Will TLens Silver still be relevant in the smartphone markets?

[Øyvind Isaksen, Chief Executive Officer]

Yes, definitely. This new program, new product is -- and lets remind us, it's a prototype project. It's -- there's no firm decision to take it from prototype to final product, but obviously, that's the target. So -- but yes, TLens technology platform, TLens, like the Silver, like the Silver Premium, like the Platinum are still, I will say, the main focus for the company. And all the projects which we are doing today on the PoC level and project level, e.g., the add-in, is based on the normal TLens Silver. In that case, premium; in other cases, others.

[Alf Henning Bekkevik, Chief Financial Officer]

Also regarding the bigger TLens, the MoU, will this require more power? Is it as fast as TLens Silver?

[Øyvind Isaksen, Chief Executive Officer]

Yes, good question. From a power consumption perspective, the TLens, the standard TLens is extremely low-power consumption. We are talking about a couple of milliwatts. Whereas a standard say, VCM, we are talking 250 so -- milliwatts, so it's a huge difference.For this application, for TLens with a big aperture, we will most likely have a different activation technology, meaning that the power consumption will increase, and also, most likely, the speed will decrease. However, that's a trade-off which the customers are willing to make to get a better solution for this telephoto application as opposed to what we have today.

[Alf Henning Bekkevik, Chief Financial Officer]

What is the expected sale next year in the following: barcode, smartwatch and the new TLens, the MoU?

[Øyvind Isaksen, Chief Executive Officer]

Yes. I can understand the question very well, but we don't give guidance on revenue and margin. So -- but what I can say is that when it comes to the new product, I think it will be unrealistic to have any expectation for commercial sales next year.

[Alf Henning Bekkevik, Chief Financial Officer]

For the bigger TLens, will the image quality be as good as TLens, I guess, in Silver then?

[Øyvind Isaksen, Chief Executive Officer]

Yes, definitely, the target.

[Alf Henning Bekkevik, Chief Financial Officer]

Does the bigger TLens open new segments and use cases? Does it, for instance, open up to possibility to be implemented in compact cameras?

[Øyvind Isaksen, Chief Executive Officer]

Yes. Compact camera, if that means DLSR (sic) [ DSLR ], no. That will be a different ball game, different aperture size. But if new segments, definitely, yes. We can also see bigger aperture TLens is also something which is wanted in other application areas, also industrial as an example. So yes, we think it can add to the opportunity pipeline also outside smartphone.

[Alf Henning Bekkevik, Chief Financial Officer]

Regarding the bigger TLens, may this camera alone be the single camera on back on the phone?

[Øyvind Isaksen, Chief Executive Officer]

The project at the moment is a project which will typically be a part of a camera system comprising 2 to 3 cameras, not as a standalone camera, which you see is more and more normal in all smartphones that there are 2 and 3 cameras. So -- and this will -- this new TLens will be part of one of the camera.

[Alf Henning Bekkevik, Chief Financial Officer]

Will the price on a new bigger TLens have the same price as TLens Silver?

[Øyvind Isaksen, Chief Executive Officer]

That's premature. What I can say though is that the value of the camera system on the back is put higher than the value of the selfie camera. So in that context, there could potentially room for better sales price. But it's a little bit premature to say.

[Alf Henning Bekkevik, Chief Financial Officer]

Will you have to build a new production line dedicated for this bigger TLens? If so, will the vendor help out funding this?

[Øyvind Isaksen, Chief Executive Officer]

Yes. It's also a little bit premature to say, but I'm sure that compared to what we have today, it definitely would need an adoption. The basic principles are, in many ways, the same. The actuation will be different. But on the assembly side, it is, in a way, basically a little bit similar, but there will be need for changes, adoption. And where that's going to happen, together with who and who's going to finance it, I think that's a little bit too early to say.

[Alf Henning Bekkevik, Chief Financial Officer]

What is the price of doubling or tenfolding the production capacity of lenses?

[Øyvind Isaksen, Chief Executive Officer]

I assume that's a general question related to the ongoing manufacturing activity we have. I think what I would like to say there is that we are working with strong partners. And as an example, at the MEMS fab in STMicro, STMicro has a huge infrastructure in place. We are using the infrastructure that are built up in Agrate outside Milano. And that infrastructure is in place for us to be used. So in a way -- and they are using, I will say, broadly speaking, I would say, a standard processes and machines. And over, in a way, role will be to kind of input material into that line.So -- and if there's any special equipment which is needed only for us, yes, then there is typically an investment discussion. But very often, that investment discussion can lead to then our supplier taking the investment, given that we are committing to a certain volume. So I wouldn't say that this is a -- this is more a topic about how much material are we willing to start in the fab.Similar on the assembly side, the processes and the machines we are using are, again, standard machines, which they have many of, these bigger players. And again, it's a matter of how much we are placing into the [ PoC ] -- we are placing into the system to get priority. There's one, I will say -- so one thing to add to that is that the every TLens being produced, every single TLens today being produced are 100% tested on all kind of optical parameters. That machine is a very special purpose made machine, which is basically owned by us, and it's placed on the consignment by the assembly partner. That machine would need to be, obviously, duplicated and more. But it's -- I will say, from a money perspective, in the bigger picture, it's a relatively eligible investment.

[Alf Henning Bekkevik, Chief Financial Officer]

Why did the barcode vendor go for TLens instead of liquid lenses?

[Øyvind Isaksen, Chief Executive Officer]

Yes. You will see different barcode vendors, they're using different technologies. Liquid lenses is definitely one very common use technology. In this particular case, we think that speed was important parameter. But also, we feel reliability is important.

[Alf Henning Bekkevik, Chief Financial Officer]

After all the positive news the last year, did any new opportunities related to existing TLens products present itself?

[Øyvind Isaksen, Chief Executive Officer]

Yes, references and success stories always is -- in a way, it's the best sales tool you have. And it has been -- and if you look at the -- what's happened now -- take the add-in project. The add-in project would most likely not been there if the people didn't see the maturity coming in our technology. So -- and we are involved in other industrial cases. We are involved in some medical cases. So definitely, I feel there's no doubt that our design wins in the beginning of the year has been really helpful in convincing companies to take a bet on the TLens products.

[Alf Henning Bekkevik, Chief Financial Officer]

Regarding AR, can you tell us in depth how and why TLens is so suitable?

[Øyvind Isaksen, Chief Executive Officer]

I think we answered that during the presentation.

[Alf Henning Bekkevik, Chief Financial Officer]

Why -- what changed the view on TLens from a smartphone vendor perspective? It seems very certain we will see TLens in a smartphone within a year.

[Øyvind Isaksen, Chief Executive Officer]

I hope you're right. What changed, I think, many things. But that -- the smartphone player we are working with now in that particular project, when -- they understood that TLens can be integrated inside the lens stack instead of adding to the top of the lens stack. That kind of finding or -- after, obviously, we've been communicating this for quite a while. That -- when they assess that in detail and saw it was really possible, I think that was the main trigger changing their attitude and starting heavily, I will say, investment on making this -- realizing this add-in design.As we speak, they are now building mold and cameras and PCBs to be tested in this design. So that was -- the ability to go inside the lens stack was a big trigger for the smartphone case we are talking about.

[Alf Henning Bekkevik, Chief Financial Officer]

5G is in the market. Is this good news for poLight and it's TLens? And if so, why?

[Øyvind Isaksen, Chief Executive Officer]

Yes. It's difficult to say, but 5G could be interesting for poLight. Many believe that 5G, which gives better capacity, significantly better capacity between handset and base station, will make people be more willing to communicate through videos, instead of messages and pictures, so sending, distributing videos.And that -- also, what we see is that high frame rate sensor is starting to be available. Maybe there, someday, will be a special camera which will be used for exactly that, taking high frame rate video. And that high frame rate video, which you want to share with your friends, is obviously having a potentially need for a very fast actuator. And if we can prove an add-in design fitting a relatively good big sensor format, I think that this is a potentially interesting use case for TLens. It remains to be seen, but definitely, that could be interesting.In addition to that, I think 5G will also probably, over time, in a way, facilitate other type of products to be connected. Those products will most likely -- some of them have cameras, small compact cameras. And I think, as such, there will be new product opportunity for TLens, which is kind of coming on back of the 5G.

[Alf Henning Bekkevik, Chief Financial Officer]

Many patents from various smartphone OEMs stretched from around 2017 until 2019. Did you notice any more interest from these now after TLens came to market for smartwatches?

[Øyvind Isaksen, Chief Executive Officer]

Yes. We are seeing -- we see and we follow and follow this quite carefully. There is a lot of patents flying around where our customers always trying to protect themselves, obviously protecting their solution. I think the best thing we can say about this patent is that it definitely documents the interest in TLens.

[Alf Henning Bekkevik, Chief Financial Officer]

Can you explain the difference in consumption and performance in video recording with TLens versus VCM?

[Øyvind Isaksen, Chief Executive Officer]

Yes. I think there are 2 things I would like to emphasize on there, is the power consumption. As I mentioned, our power consumption in TLens is a few milliwatt, definitely less than 5. And a normal VCM is as high as 250 milliwatts, so it's a big, big difference.And if you take video recording, that power consumption is -- difference is very, very significant. Then you can say, "Yes, but is that so important? There is so good battery technology in the smartphone." Yes, maybe, maybe. But also one aspect when it comes to power consumption is that if your camera, if your actuator is using a lot of power, is also dissipate heat. That heat is very close to the image sensor. Heating the image sensor creates noise. That noise will be transferred into bad picture quality. So this is, we think, very important.Another thing is -- and there can be other from a performance perspective. That's also linked to the performance. But in addition to that, field of view changes. Conventional technology, changing the lens stack up and down, is giving you this, what we call this pumping effect. That pumping effect has to be somehow compensated for by image processing. That, you don't have in the TLens at all.

[Alf Henning Bekkevik, Chief Financial Officer]

Eye tracking is getting more common in future devices such as AR, automotive, et cetera. What is the main benefit in using TLens in this use case versus other solutions?

[Øyvind Isaksen, Chief Executive Officer]

We haven't really been exposed so much to eye tracking so far. There has been some dialogue. I think if eye tracking and TLens will be an application, I think one of the major advantages is, again, a little bit back to the key characteristic of the TLens, speed. Of course, speed is important when you're going to track an eye. And also field of view aspects. So then I think add-in design could potentially open eye tracking application for us in a stronger way. So let's see.

[Alf Henning Bekkevik, Chief Financial Officer]

Regarding the poLight's technology platform, it is said that the platform may suit different use cases. Can you tell us more about what you mean by poLight's technology platform?

[Øyvind Isaksen, Chief Executive Officer]

Yes. The poLight's technology platform, then I would focus on what's the technology platform, which is the basis for today's TLens. And that's basically a polymer, which is the lens, sandwiched between 2 glass membrane, for which the glass membrane can be changed, deflected, shaping, hence, the polymer, changing the optical power. That's basically our technology platform, which has -- we have the strong IP protection on.

[Alf Henning Bekkevik, Chief Financial Officer]

Okay. Regarding production, are yield, stability and quality level satisfactory? Or are there any need and room for improvements?

[Øyvind Isaksen, Chief Executive Officer]

Definitely room for improvements. And it's like all type of manufacturing. And particularly, in what we are doing is that you need to, over time, have volumes to be able to improve the yield. Without having volumes, you cannot work on yield. So yield improvements is coming through having volumes. And so that will be a continuously ongoing process to improve.What we have said is that when we have -- being producing volumes and/or higher volumes on and off, we have seen that the capability -- we have seen that potential is definitely there to have a very, very attractive yield number, both on the wafer level but also on the assembly level.

[Alf Henning Bekkevik, Chief Financial Officer]

Maybe a question for Viking Venture. But I note that they are selling off significant part of their shares. Are you -- are they going to diverse completely? And if so, will the other 2 large owners take stronger lead position?

[Øyvind Isaksen, Chief Executive Officer]

Yes. I -- Viking Venture has been selling their shares. That's we have also seen. Just want to say that Viking Venture has been a long-term investor for 10-plus years in poLight. The fund is quite old, and it's kind of closing, that they are selling some shares after so many years. I guess it's not a surprise. But what their plan is and how they think and strategy ahead, that, we really don't know.What other shareholders will do is also difficult to predict. So this is something being listed, having a good liquidity in the share. This is something which you never, in a way, control. Our duty as a company, as management, is to make sure that the company is being seen as attractive as possible and seeing that shareholders are wanting to stay and new shareholders wanting to come. So that's what we have to focus on.

[Alf Henning Bekkevik, Chief Financial Officer]

Finansavisen calls TLens a tool for scanning barcodes. This is a very slim description, as the TLens uses are widely spread and can be used in a bunch of technologies, right?

[Øyvind Isaksen, Chief Executive Officer]

Yes, definitely. TLens, as we say, and if you look at this Q&A slide, this is showing some of the applications where we are focusing on using TLens. TLens has many, many different application areas, being consumer, being industrial, being barcode, being endoscope. So relating TLens to a barcode device is significantly limiting the opportunity pipeline for TLens. And even Finansavisen knows that we are already established in the consumer market on the smartwatches. So yes, that was a little bit limiting description.

[Alf Henning Bekkevik, Chief Financial Officer]

Can you say anything about potential volume of the new barcode project?

[Øyvind Isaksen, Chief Executive Officer]

No. The only thing we say is that it is a low-volume product. So far, we have delivered 14,000 at a significantly higher price than the consumer markets. So it's only -- I can say, it's a low volume. I don't want to be more precise than that because also for us, it's an uncertainty. We don't really know. And even the customer is uncertain. But what I can say is that it's not going to be millions. It's going to be more like [ 10 ] up to [ 100 ] or something like that. But it's going to be a product which will be last for -- actually, smartphone, it will also say 6 to 12 months. This is a product which will last for maybe 5 to 10 years. So it's a different market, different dynamic.

[Alf Henning Bekkevik, Chief Financial Officer]

Given both the number of patents referencing TLens in both smartphone camera models and AR glasses and a number of completed PoCs and projects, can you speak a bit about TLens ability and the hurdles that needs to be overcome to deliver high volumes in near future in the case of a design win within these high-volume segments?

[Øyvind Isaksen, Chief Executive Officer]

Yes. I think I will focus my answer to the smartphone area because, of course, if you are getting into a smartphone and the bigger guys are taking TLens into their flagship models, that is definitely something which will, I will say, add to our supply chain stress.Having said that, I feel that we have been planning for this for many years. So -- and we have supply partners which are extremely keen to ramp up. And we have a relatively detailed plans what it take to ramp up.But it will be -- the other question, it will be very much important that we are able to handle the yield that we are -- that of course, if we're going to produce a high-volume at a low yield, that's very costly. So that yield control will be super important. All the assessment we have been doing so far is that, that is possible, and that is to be -- that can be managed. But we need to see the volumes coming.So in a way, volumes will give us, in a way, stress the supply chain, but that's the only way. That's the only way to get there, is to stress the supply chain to improve the yield. And that will, sooner or later, lead to a very stable and high-yield manufacturing.

[Alf Henning Bekkevik, Chief Financial Officer]

That was actually the last question.

[Øyvind Isaksen, Chief Executive Officer]

Okay. Okay. Thanks a lot for asking all these questions. If you feel that there are things I didn't answer in a way you understood or I forgot to answer some part of your question, please contact us, and we will try the best to clarify, the other questions you may have or the unclarity.So then Alf Henning, we can just conclude this presentation. Next event is fourth quarter 2020, which is to be held after Christmas, after New Year, 19th February 2021. Thanks a lot for participating in this webcast. Have a great Friday. Have a great nice weekend when it comes, and take care. Thanks.

[Alf Henning Bekkevik, Chief Financial Officer]

Thank you.