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Ladies and gentlemen, welcome to the ams First Quarter 2019 Results Conference Call. I'm Miruna, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Alexander Everke, CEO; Mr. Michael Wachsler-Markowitsch, CFO; and Mr. Moritz Gmeiner, Head of Investor Relations. Please go ahead, gentlemen.
Good morning, ladies and gentlemen. This is Moritz Gmeiner. I'm very happy to welcome you to this morning's conference call on our first quarter 2019 results. As usual, Alex will lead you through the key developments in our business and Michael will give you an overview of our financial performance. Alex?
Thank you, Moritz. Good morning, ladies and gentlemen. I'm very happy to welcome you to our first quarter 2019 conference call this morning. I will now discuss our business, starting with some key financial figures. Michael will later take you through the financials in detail. Our first quarter revenues came in at $390 million at the top end of our expectations despite a sequential decrease of 20%. Our adjusted EBIT for the first quarter was $24 million and 6% of revenues, so above our expectations. As you can see, our business performed very well in the first quarter of 2019. Driven largely by our consumer business as the biggest contributor, we recorded these positive results despite a generally more subdued end-market environment and in addition, to typical strong seasonality in the consumer market. As a leader in optical sensing, our portfolio spans high performance solutions for 3D sensing, including VCSEL-based illumination; high quality display management, including behind OLED, TrueColor and microscale proximity sensing; bio- and spectral sensing; and other optical applications. We are a leader -- a leading provider for 3D sensing technology, shipping in high volume to consumer OEMs. Our extensive 3D portfolio and system know-how, including 3D hard and software, covers all 3 approaches: structured light, time-of-flight and active stereo vision. We support both front-facing and world-facing 3D systems with a current focus on 3D illumination. As previously indicated, the market is moving along a multiyear adoption timeline for front-facing as well as world-facing 3D sensing. The adoption of front-facing 3D is expanding at a good pace, while world-facing 3D sensing, as anticipated, is seeing instances of early adoption. As a result, we are experiencing the expected positive momentum for wider adoption of 3D sensing this year. In line with our previous comments, expected Android smartphone launches that include ams 3D technology started in the first quarter. The previously mentioned illumination solution for world-facing 3D sensing system at a major Android OEM has started volume shipments in the quarter. As anticipated, we expect additional 3D sensing-enabled Android devices with 3D -- with ams 3D illumination to be launched over the course of 2019. There's a range of ams 3D solutions across Android devices, which have already been launched or are expected to be launched this year. This shipping and expected solutions includes several front-facing 3D illumination solutions, including iToF; the first world-facing illumination solution mentioned before; and the first use of active stereo vision. The successes I just mentioned are expanding our customer base of 3D sensing that includes the world's leading smartphone OEMs. At the same time, the wins underline our position as a leading provider of 3D sensing across technologies. Our advanced high power VCSEL portfolio is a core driver of our market success in 3D sensing because our VCSEL technology offers advantages for 3D illumination in all 3 technologies. Moreover and in contrast to VCSEL-focused vendors, we are able to offer OEMs full solutions for 3D illumination, which can incorporate VCSEL, VCSEL arrays, VCSEL drivers, optics, model design and/or manufacturing. As these solutions offer high differentiations and fully optimized design for performance, our capabilities create a meaningful competitive advantage. We therefore see ongoing customer traction in 3D sensing, where our portfolio supports dot and pattern projection, different types of flood illumination and time-of-flight proximity sensing. Based on this portfolio, we are establishing a strong market position in 3D sensing illumination.We recently launched an industry-leading long distance 1D time-of-flight solution, which provides accurate distance measurements up to around 2.5 meters. Interest from other -- from consumer OEMs is already significant for applications such as laser detect autofocus for smartphone backside cameras. In addition, we are seeing increasing interest from other markets such as IoT. I also expect a [ good ] solution can support very interesting use cases in areas such as consumer robotics. In display management, I'm excited about our innovative solutions for proximity and light sensing behind OLED displays. Shortly after launch, this technology has already become a resounding market success. We allow OEMs to place light and proximity sensing invisibly behind the OLED display. We thus have to maximize screen-to-body ratio and enable bezel-less phone designs. Several major smartphone platforms that were launched at different Asian OEMs in the first quarter already use our behind-OLED sensors and shipment volumes are expanding. Removing bezel-placed elements from the front side has become a trend in smartphones. Customer traction for behind OLED continues to be strong and expect adoption to broaden from this into next year. At the same time, we are shipping significant volumes of customized TrueColor sensing for advanced display management. Another new area showing good momentum in customer adoption is flicker detection for smartphone cameras. We have started high volume shipment of these sensing solutions to Asian OEMs this year. Positioned next to world-facing picture cameras, the sensor detects flicker from artificial lighting, which then can -- which can then be eliminated from the picture. With this technology, we enable even higher picture quality in all lighting conditions. We continue focused development efforts for new optical sensing technologies and the increasing customer traction for our highly differentiated biosensing solutions. Here we offer fast, high-quality measurement of blood pressure, which is a very valuable health indicator, and which we complement by heart rate and a range of additional personal health parameters. Our solution provides a comprehensive set of personal health data and is able to support next generation wearables and other mobile devices. As a result, we are pursuing several OEM engagement in this area for the coming years. We also pursue regulatory certification for medical grade blood pressure measurement in the United States and expect to complete it this year. Beside this positive development in multiple areas, I also want to comment on the less favorable developments. In the customer project for consumer spectral sensing solution, we have unfortunately encountered difficulties at an advanced stage. These are related to matching a highly complex emerging technology to evolving use cases [ envisioned ] by the customer and the volume implementation in a mobile application. Efforts to take these customers and technical requirements into the [ column ] have resulted in unplanned [indiscernible]. As a consequence, we and the customer have moved beyond the desired time window for implementing the [ car ] project. We would have expected a revenue contribution from this project for this year, but given the very strong [ requirements ] we obtained over the last few quarters, we do not expect a negative impact from this on the total revenue for this year. We continue to pursue the mass market readiness and implementation of spectral sensing for consumer use cases, given its application potential and attractive capabilities. In this context, we continue discussions with OEMs and are currently discussing another consumer spectral sensing opportunity at an earlier stage. Next to our optical sensing business, audio sensing showed a good performance in the first quarter. We have presented our latest innovation in active noise cancellation, which enables high quality noise canceling for smaller size wireless earbuds. This is difficult to achieve due to the relatively open nature of these earbuds and their significant space and power constraints. I'm happy to share that we're already seeing strong OEM interest and volume opportunities for this solution. Let me now look at the other nonconsumer areas of ams. Our automotive, industrial and medical business performed in line with expectations in the quarter. In automotive, we are seeing a less favorable market environment as demand trends continue to be mixed across world regions. However, given our focus on safety, driver systems, autonomous driving, position sensing and chassis control, we cover a range of applications, Tier 1 suppliers, OEMs and market segments. Significant R&D investment for the reported major 3D LIDAR program continue this year, supporting advanced solid-state LIDAR architectures. Here we provide a high power VCSEL illumination system for large scale deployments. Our VCSEL illumination capability for LIDAR applications are attracting strong interest from a number of major automotive players. As a result, we are actively pursuing several LIDAR engagements in different geographies. We also note increased traction for our VCSEL technology for alternative LIDAR architectures such as macro-mechanical spinning solutions and MEMS micro-mirrors for these architectures all of which we can help solve systematic challenges, giving them technology advantages. New optical 2D and 3D sensing applications inside the vehicle are gaining momentum in the market. We are engaged in multiple design activities in this field, which we believe can offer leverage opportunities for our portfolio. In addition, we see potential to include global shutter image sensors in upcoming automotive optical sensing. I'm also glad to point out, the attractive growth market for automotive projecting lighting. In this new area, we are expanding our market position in safety and comfort applications such as light carpets outside the vehicle. Here we offer advanced illumination models, which leverage our VCSEL optics and manufacturing expertise. Our industrial business showed an attractive performance in the quarter, reflecting a limited impact on the less variable demand situation in industrial markets. As a leader in industrial sensing, we serve a wide range of applications in industrial and factory automation, HABA, industrial imaging and related areas. This extensive portfolio and application base is providing supportive to our business in the current environment. We hold a leading position in high performance global shutter solutions for industrial imaging. This is an expanding market and offers attractive growth opportunities for us going forward. Our medical business recorded another solid quarter focused on medical imaging for computed tomography and digital X-ray as well as micro camera endoscopy. Our market penetration in Asia is expanding further as we added another program win at the medical imaging OEM in Asia. We are the leader in micro cameras for our next generation medical endoscopy, and we see continued growth in the market for disposable endoscopes. Implementing last year's strategic decision to deemphasize our environmental sensing activities, we recently announced the creation of a joint venture with Wise Road Capital for our environmental flow and pressure sensing. We will transfer IP, sensor products, relevant customers and employees to the joint venture and expect the transaction to conclude in early fall.Looking at our operations, we have implemented a range of cost improvement measures in our Singapore operations since the beginning of this year. We have started to recognize positive effects from these efforts and see ongoing benefits from better cost efficiency in our Singapore manufacturing. This includes lower staffing levels together with overall improvement in the utilization. Regarding our VCSEL needs, the attractive volumes we anticipate for this year will be fully supported by our outsourced supply chain as expected. Our internal VCSEL production line for new differentiated designs is on track for completion and its planned ramp for around year-end. We combine scalable outsourced internal VCSEL capacity, which puts us into a very nice position for expected volume growth in the future. Our capital expenditures are developing fully in line with expectations, and we are on course for significantly lower CapEx, which we expect for full year 2019 compared to 2018. Let me now come to the outlook for our business. For the second quarter 2019, we expect a positive development of our business, as the consumer market environment appears to have stabilized and the smartphone demand is expected to show lower seasonal impacts. In addition, we have started to ramp design wins of the recent months and quarters, which drive broadening engagement across our Android customer base. Our other end markets generally reflects a less favorable macroeconomic environment and a higher level of cautiousness, but we expect them to continue their positive contribution. Based on available information, we expect second quarter revenues of $390 million to $430 million, which translates into a sequential growth at the midpoint and a very strong year-on-year increase of 62%. The adjusted operating margin for the second quarter is anticipated to increase strongly to around 10%, benefiting from further improvements we expect in our manufacturing operations. Let me now hand over to Michael to take a look at our financial result.
Thank you, Alex. Good morning, ladies and gentlemen. As usual, it's my pleasure to give you an overview of our IFRS and adjusted numbers for the first quarter 2019. Let me start with our P&L and top line development. As Alex already mentioned, our first quarter group revenues were $390.2 million just above the top end of our previous guidance. We are happy about this performance, which we achieved despite a more subdued market environment and characteristic first quarter consumer seasonality. Q1 revenues decreased 7% compared to the last year and 20% sequentially from the fourth quarter 2018. Our adjusted gross margin, excluding acquisition-related and share-based compensation costs, was 32% compared to 36% in Q1 last year. This gross margin development reflects certain product mix effects and relative revenue contributions, given the more difficult environment across a number of end markets. Our IFRS reported gross margin was 29% compared to 33% in Q1 last year. Our R&D spending was $79 million in the first quarter of 2019, in line with our plans for a significant increase from $56.8 million in Q1 last year. In relative terms, we spent 20% of revenues on R&D in the quarter. Our continued strong R&D spending supports a range of platform development and large product opportunities, including our automotive LIDAR and consumer optical sensing activities. While there are always quarter-to-quarter movements in R&D spending, we expect lower levels of spending relative to revenues going forward as we want to get back to a level of below 15% of revenues for R&D. Further down in our P&L, SG&A costs were $44.3 million compared to $40.4 million in the first quarter last year. In relative terms, we spent 11% of revenues on SG&A in the quarter. Here we're also expecting improvement relative to revenues going forward. As you know, for our SG&A spending, we work towards a level of well below 10% of revenues on a full year basis. Our other operating income of $4.1 million for the quarter compared to $3.7 million in Q1 last year, resulted for the most part from R&D support grants from Austrian and European R&D programs, which are tied to dedicated R&D spending for these programs. Given these developments, our adjusted operating result or EBIT, excluding acquisition-related and share-based compensation costs for the first quarter, was $23.5 million or 6% of revenues, which was nicely above our previous guidance. It's a decrease though from $71.4 million or 17% of revenues in Q1 last year. The IFRS reported result from operations or EBIT for the first quarter was negative $4.5 million or minus 1% of revenues, down from positive $43 million in the same period 2018. Our financial results came in at negative $2.8 million compared to positive $29.7 million in Q1 '18, which was heavily impacted by a positive accounting effect from last year's revised earnout structure in conjunction with the Heptagon acquisition.The financial result also reflects noncash valuation adjustments for foreign currency balance sheet items and interest expenses. Consequently, adjusted net results for the quarter came in at minus $9.5 million compared to plus $92.3 million in the same period in 2018. Last year's result was very positively impacted by accounting adjustments due to valuation effects of the issued U.S. dollar convertible bond. Adjusted basic and diluted earnings per share were minus CHF 0.12 and minus CHF 0.12, compared to CHF 1.20 and CHF 1.12 in Q1 2018; or minus USD 0.12 and minus $0.12 compared to USD 1.15 and $1.08, respectively, for the first quarter '18. Our total backlog on March 31, 2019 stood at $288.4 million compared to $331.4 million we showed at the end of last year and $319.6 million on March 31, 2018. In this context, intra quarter business has come to play a more meaningful role for our total business, especially in the consumer side. Now I would like to give you some additional figures from the balance sheet and the cash flow statement to complete the picture. Our cash and cash equivalents stood at comfortable $647 million at the end of the quarter, compared to $710 million at the end of the fourth quarter last year. This change mainly results from the planned repayment of certain debt facilities and the acquisition of treasury shares. Our trade receivables stood at $126 million, down from $137 million at the end of the fourth quarter. Our DSO ratio was favorable 35 days, down from 44 days in the last quarter and significantly down from 55 days in Q1 last year. I'm very happy about this positive development where, as previously anticipated, we are seeing a solid decrease in our DSO. Inventories were also lower at $325 million compared to $352 million at the end of the fourth quarter, while the finished goods portion of our inventory remained at around 25% of total inventory. On the liability side, with the current debt position at $250 million while our long-term debt stood at $1,801 million at the end of March. Our net debt position was [ $1,404 ] million at the end of Q1. Our long term debt was generally taken on to bolster liquidity, support a major CapEx cycle, which has now been completed, and to create flexibility. Apart from the 2 issued convertible bonds, the debt mainly consists of promissory notes and unsecured bank loans of a long-term nature. As announced, we have initiated a buyback program for a portion of our outstanding convertible bonds in March. As of now, we have successfully repurchased $19 million in nominal values at market prices, predominantly of the U.S. dollar 2022 maturity bond. Based on this, we continue to be open for further repurchase of our convertible bonds. In case we should have funds remaining from the total amount earmarked for the convertible bond buyback, we plan to use this for other forms of debt reduction this year.Our operating cash flow in the first quarter showed a very healthy increase to $96.1 million, which was well above expectations, up from $52 million from the same quarter last year. This positive development was mainly driven by working capital management and changes in inventories, as well as higher depreciation from CapEx spending and mandatory IFRS rule changes. We expect to continue to see strong cash flow generation over the course of 2019, providing a good, positive free cash flow for us this year. Against this anticipated backdrop and based on current expectations, I expect a strong improvement of our net debt-to-EBITDA ratio by year-end 2019 to a level I can feel highly comfortable with. Our CapEx in the first quarter was $88 million, 45% lower than last year's spending in Q1 of $161 million. As mentioned before, we expect full year CapEx for 2019 to be significantly lower than in 2018, but the spending is somewhat front-loaded this year. With this in mind, I expect a quarter-to-quarter decrease in CapEx for the remainder of the year. And with that, I would like to thank you for your attention and would like to open the floor for questions.
[Operator Instructions]The first question from the phone comes from Andrew Gardiner of Barclays.
I just had a couple on the second quarter outlook, if I could. Firstly, on the top line, you're clearly a bit more optimistic than we had anticipated and I think [indiscernible] anticipating earlier in the year, talking about sales up sequentially now, bucking normal seasonality. And you've highlighted that some of that is due to sort of the stabilization, sort of improvement in the core of the business as well as the new customer ramp. Could you give us a sense as to sort of magnitude of those, how much is stronger business in sort of the existing sort of core consumer business versus the new Android ramps? Then I have another one on the margin front afterwards.
Yes, Andrew. Alex here. Thank you for the question.Yes. As mentioned in the call, it's a combination of we see a more stabilized consumer demand and smartphone demand. But there is a strong, meaningful implication of all the design wins we indicated last quarters to you and which are materializing in revenue in the first quarter and then certainly increasingly in the second quarter and to the rest of the year. So we feel very comfortable with our penetration in the Android market with our [ light ] solutions.
Okay. I mean -- and it sort of feels like tens of millions, multiple tens of millions a quarter from those Android brands. Is that a reasonable starting point?
It's a meaningful contribution.
Okay. And then perhaps one for Michael just on the margin guidance for Q2, you highlighted the step-up there from 6% in the first quarter to 10%. Sort of what you're describing around OpEx trends on an absolute basis. Is more of that sequential growth driven by gross margins?
Yes. Andrew, it's Michael. Yes. Clearly, we have our OpEx well under control, I can say. And clearly, we expect further improvement in our operations.
The next question from the phone comes from Sébastien Sztabowicz with Kepler Cheuvreux.
You mentioned in the prepared remarks that your [ SG&A ] rate has improved in Singapore in Q1. Could you please provide a little bit more color on the pace of improvement from, let's say, Q4 to Q1? Or tell us a little bit where it was [indiscernible] the first quarter in Singapore? And also, looking at the competitive landscape in the VCSEL market because we had a couple of [indiscernible] Involving governmental fix. Have you seen any change in the market dynamics in the VCSEL market whether a few weeks or months?
Yes. This is Michael. I'm happy to take your first question. Yes. Clearly, we saw productivity improvement, mainly in our Singapore operations.Some [ postpone ] measurements, obviously, were taken. We had strong yields, so overall, very solid performance, I can say, yes, we'll take it from there and we'll improve it further.
Yes. To the question related to VCSEL, yes, we certainly see changes in the market, but clearly to our favor when you look at the wins we drew in the Android space, when you look at wins we announced in the automotive space. It's across all market segments. We are winning with all this business, which is a proof point of investing in the right technology.
The next question from the phone comes from Robert Sanders with Deutsche Bank.
My first question was just to get an update on how you're thinking about your content in the [ upcoming ] product cycle, your largest customer in smartphone. I remember last year 12 months ago, you weren't able to prebuild Singapore owing to the [ sec ] release not happening until July. So is that less of an issue in Q2? So are you able to start loading up your facility earlier? And I have a follow-up.
Yes, Rob. Alex here. Thank you for the question. So as you know, we cannot comment on specific customers. That's not possible. But what I can see is that we feel very comfortable with a view of a strong second half of this year [ for all customers ].
Got it. And obviously coming -- following on, on VCSEL. How do you think about your design win share in VCSEL at the moment, both in smartphone and [ wins ] automotive? And could you just talk a bit about the key attributes that you think are driving that success whether it's small footprint, [ lowest power ] or something else?
Yes. Yes. Absolutely. So I can tell you, we are very excited about the design win rate we have in the Android space. We announced a few wins there. We are even more impressed about the automotive business, which is a new business for VCSEL for us. And the reason is, exactly as we said, why we're winning is in the Android space not only because of technology what we have, the high power, high efficiency, but also the knowledge of the system architecture of all these devices of all the solutions which a VCSEL-only vendor cannot have. That's why this is a strength we have with the complete value chain from the optics, from the packaging, from VCSEL wafer-level optics, we have the complete solution. That's why we are very successful in Android space. And then in automotive, on top of that, this high power capability we have with the acquisition of Princeton in U.S. helped us tremendously for long range LIDAR business. And now of course, the automotive experience and automotive quantification of our manufacturing sites brings us to a very, very strong supplier for automotive customers. So we are very delighted with this.
We will take our next question, which comes from the line of Sandeep Deshpande of JPMorgan.
I was just wondering whether -- you've talked about various wins. I mean, do you have any -- have you got any roadmap from your customers in terms of the ramp-up of those wins in Android in particular? And would you say that given that you're seeing a big improvement into the second quarter with this sequential improvement from the Android camp continues into the third and the fourth quarter of the year based on the pipeline that you see at the moment? And I have one follow-up.
Yes. Thanks for the question. Yes. Absolutely, we have a roadmap from our customers. We work with our customer base together to create those roadmaps. We have visibility on them. Of course, when we run the project together, there is an exchange of information. And we do see increasing business and more design wins in the course of the year and in the course of quarter-to-quarter. So we are very positive about it. And we are consequently executing our strategy to expand our 3D sensing and flight solutions in all mobile phone OEMs.
I mean, one question which comes up on the 3D sensing is that you have a bunch of design wins in the Android [ side ], but not all the phones will be successful. I mean, when you're talking about this ramping in the second quarter, are these on the back of new phones or those phones that you already seeing having been successful?
I think you gave the answer to the question because we cannot anticipate every phone will be successful, but this is a matter of -- a discussion with our customer base. We -- our strategy is to be as broad as possible, that if one platform is less successful, someone has to pick up the market share. And as long as we have similar market shares across the customer base, well one platform will lose a bit and the other wins. And we...
The next question from the phone comes from David O'Connor with Exane BNP Paribas.
One or two from my side. Maybe firstly, Alex, the world-facing 3D sensing system win that you talked about in the release. Can you just talk a bit about this win and the primary application? [indiscernible] for camera assists or is this to actually capture images in 3D. That's my first question. And also related to that maybe, how should we think about the content of these 3D sensing wins relative to, for instance, what you ship today in structured light for instance just to give us -- to make sure we have the baseline there correct. And then lastly, one last question, on the unstructured light, how should we think about the ASPs if we go into the back half of this year? Can we expect [ we may see a reset ] or more classic ASP erosion?
David, thanks for the question. For world-facing, one application is certainly, as you mentioned, is camera assistant. But there might be more in the future, but it's certainly one of the leading ones. About the contents, it depends a little bit on the project, but it can be very similar content-wise. And the third one, on pricing, we cannot comment on that specifically.
The next question from the phone comes from David Mulholland with UBS.
Just following on a little bit from the last question, but it's something you've been investing in quite a lot for the last year. It's been on the software side and helping to make sure the ecosystem is there to really help make use of 3D sensing. So I wonder if you can just give an update on how you feel about the ecosystem readiness, I guess, particularly in the Android camp at this stage for really being able to use 3D sensing and deploy applications. And then secondly, I know you're kind of trying not to comment too much on this, but it will be really helpful if you just give us some steer on how you feel about the kind of half-on-half increase this year given all of the commentary you're giving on ramps versus what's going on at your largest customer. Some color there would be really helpful. And then just finally one clarification for Michael. I think on the last call, you had pointed to a run rate of somewhere around [ $380 ] million or at least that was my impression for R&D this year. Is that now running a little higher? And so my question on a CapEx basis, obviously, coming down each quarter the rest of the year, but if you can just help us understand what you think that might be for the full year. Really helpful just to keep us on the right line.
David, thank you for the question. I will take the first 2. Your question about software, I can tell you it's increasingly more important and this was also helpful for multiple design wins we did in Asia. And this is a combination of our own software activities, our initiation of several sensing software company and also with partnerships. We have multiple partnerships in the industry. For example, the partnership we have with Face++ and Qualcomm to drive the Android business further. Also the software is increasingly important, but I can tell you not only for the Android. It's [ kept ] even more important for the nonconsumer business, and automotive is a key area for us for future growth. And there the software capabilities for new technology, which are totally new for the automotive industry is extremely important and very, very helpful. On your question -- on the second half, as I mentioned in the call, we see a very strong increase in the second half compared to the first half of this year. We feel very comfortable there and that's why we're seeing this very, very positively.
On a similar order of magnitude to last year? Or...
We see it very, very positively.
Yes. David, Michael. I'll take your R&D and CapEx question. As I mentioned in -- obviously, there is some lumpiness in our R&D numbers based on where we are in a project -- the project phase. But clearly, we see that obviously with the revenue increase quarter-to-quarter, a relative lower R&D spending. In absolute terms, as I mentioned it earlier, roughly $280 million, maybe $300 million is what we expect for the year. And in CapEx, I also mentioned it, we had a -- well, we have kind of a front-loaded year this year, which is the outcome of what we have invested in the last 2 years, so there is kind of a lagging cash out for it. But clearly, with this in mind, we expect a quarter-to-quarter increasing CapEx for the remainder of the year into that range that we indicated before.
The next question from the phone comes from Janardan Menon with Liberum.
Just going back to the Android for the moment that you're seeing in the second half. Can you give us a feel for in terms of [ just another model ]? And I completely understand number of models do not equate to the volume because of different models having different volumes. But is it like you have around 5 models launching in the first half and that can rise to, say, 10 models in the second half? Is that the sort of magnitude of acceleration within the Android case that you are seeing for the [indiscernible]? And then just going back to your point about spectral sensing sort of being pushed out right now. I'm just wondering in terms of new revenue opportunities outside of your existing area you have biosensing, automotive and still, the spectral sensing. Can you give us the time scale for when you would see the first revenues now in each of these? Is that all 3 of them, is it a 2020 time scale or will it be into 2021?
Thanks for the question. So on the Androids topic, as we indicated, we have several OEMs and several models design wins, and you can expect that in the second half, you will see additional models contributing to our growth in the second half. So that's very important particularly for development we are seeing there. On the spectral sensing, we mentioned the one design win, which didn't work out because of complexity, but we see -- we have discussions with multiple other OEMs. We will see opportunities. I would say this is more a topic of 2021 for revenue. The biosensor I would consider as a topic on '20, '21 as well. And automotive, of course is more a topic of '21 and '22. What's important is that we generate new revenue growth engine for the company for the years to come. And this segment is certainly one of them.
The next question from the phone comes from Jürgen Wagner with MainFirst Bank.
I have a follow-up on R&D versus the number for the full year. What would be a number post your exit of the environmental business? And would that be enough to meet the 15% of revenue you mentioned at the beginning?And you discussed the spectral sensing delay. And also on the half mentioned is power system ramp in the second half is still -- is that still on track and what magnitude is it looking at for the second half?
Yes. The 15% of revenue is a target. And obviously, as I said, there's some lumpiness in the business and depending on revenue, obviously, it's a target for the full year. That's how we want to end up with. And on the power question. Yes. Power business we indicated is on track and it's ramping, and it's continue to ramp into the second half.
And maybe a question, you postponed the listing in Hong Kong. At what point would you reconsider that option?
Thanks for the question. This is Moritz. I think we will look at that as we go through the second half of the year from today's point of view.
The next question from the phone comes from Achal Sultania with Crédit Suisse.
Just trying to understand the wins that you're having in the Android camp. I guess we have seen a number of phones, which have come up -- which have been launched, which have the front-end dock solution. So can you help us understand what exactly are you winning in these Android projects? Is it the VCSEL? Is it the [ full imaging ] solution? Is it the ToF solution integrated along with that?Just trying to understand what exactly are you winning and how that thing evolves going into the second half. Did it change in terms of your content wins? Does it go up as we go into second half?
Thanks for the question. Yes. The majority of the wins is the illumination system within the ToF solution. This is where we're focused on and this certainly includes the VCSEL. That's why it's so crucial for us to have the VCSEL capabilities. And as I mentioned before, we expect more models to be launched within this year with our solutions inside. And certainly, interesting to look at those phones.
Alex, just a clarification. So just your -- being most of the illumination works, so clearly ToF sensor is coming from other suppliers. So are you indifferent to who the ToF supplier is? Like your solutions can actually work or integrate well with any of the ToF solutions out there in the market?
Yes, that's right. That's correct.
Okay. And maybe a follow-up on the cost side. Just for Michael, can you help in this? Obviously, the headcount in your Singapore fab are actually gone down significantly, I think, in the last 6 months. You already mentioned that cost has been ticking down. Can you help us understand the magnitude of cost [ reduction ] that has happened, either in terms of like whether your fixed cost has come down or the amount -- or the number of employees that have actually come down over the last 6 months, 12 months? Any color on that would be helpful.
Yes. Unfortunately, we cannot break it out, but I guess you see it in our margin trends. And with the guidance for the second quarter, this is somehow a hint to that.
So can you expect -- maybe can you expect the headcount to come down further or are you feeling that you are already at a reasonable level going forward? You've already done enough on that side.
Yes. Unfortunately, we cannot comment. But you can imagine that with -- as Alex indicated with that significantly stronger second half of the year over first half, obviously, there was also an increase in production volume.
Thank you very much, everybody. This concludes our question-and-answer session for today. We thank you very much for joining us this morning, and we look forward to speaking to you again with our second quarter results end of July. Thank you very much, and have a good day.
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