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In this blog post I want to share some thoughts on the journey from product idea to revenue, to make it easier to understand the life cycle for a hardware component supplier in general and for Sivers IMA in particular. I will also touch upon how one of many 5G revenue streams can develop according to available research.     As we have shared in many quarterly calls and via press releases Sivers IMA is now entering the revenue phase for our unlicensed 5G product portfolio (see picture 1 below) and will as planned be in that phase for our licensed 5G products in early 2020. It is not always easy to understand how fast or slow a full product development and commercialization cycle is for a hardware company. It is also very different if you sell products to used in consumer electronics (e.g. mobile phones), wireless infrastructure or cars (automotive). Sivers IMA wireless business is today focused on wireless infrastructure hardware within 5G, which will be the main focus of this blog post. Many years ago, when I was working for Sony Ericsson (SEMC), we were developing smartphone products, our design cycle was from approximately one up to three years from first idea to commercial market launch. Of course, some of the components, like the application processor had a longer development cycle. And to be included in the phone it had to be ready at least in some shape or form earlier to be selected for being designed into the phone (i.e. what is called a “design win” in this case for the application processor provider). The development cycle time is significantly affected if you are reusing a “product platform” or if it is a completely new product. At SEMC new platforms was called a “Mother” and other new product based on the same platform was called a Daughter. Developing a Mother compared to a Daughter resulted in quite different development cycle times. The same type of platform concept is used in the automotive industry, which is known for quite long development cycles. Even if automotive companies nowadays have adopted the platform thinking and thereby reduced their cycle time over the last 20 years. However, a new automotive product is seldom less than three year from start to finish, often closer to four years or more. Picture 1: Sivers IMAs “Mother” product. Which is entering the revenue phase for our unlicensed 5G products. The IEEE award winning unlicensed 5G chip – TRX BF/01 57-71 GHz RFIC, is mounted on Sivers IMA BFM 06010 RF antenna module, making it a complete RF unit/Module To make it more specific, I will explain the overall development cycle at Sivers IMA. We make RF chips and antennas for the wireless infrastructure market and the four main steps in our product development cycle are listed below: Prototype development phase (8-14 months): Product specification, system partitioning, design, layout and fabrication of the prototype chip (or break-outs to test different blocks before you make a full chip). The time is of course dependent on the complexity of the chip and the foundry used for fabrication of chips etc. Test and verification and pre- qualification phase (3-5 months): Customer testing of prototypes to find issues and bugs and qualification of products. Final product development phase (6-10 months): Redesign and fixing issues and bugs, fabrication of the “final chip”. Re-test and verification phase and final qualification phase (3-4 months): Final verification and final product qualification. Total cycle: Approximately 2-3 years for a “Mother” product including RFIC development Our customers development and the commercial cycle In early stages our product development cycle runs in parallel with our customers’ development and commercial cycle, which for a component company is connected with the product development cycle of the system vendor and its cycles. The main steps in the cycle for our customers are similar to what I described above for Sivers IMA, even though they can often remove development time, since they base their products on “standard electronics” and often do not have to deal with the longer lead times related to silicon wafer manufacturing. In most cases, the development cycle time for our customers is a 9 to 18-month cycle including market approval and customer trials and maturity of the products. The customers’ development cycle starts in parallel with our development, i.e. often during customer sampling of prototypes in step 2. During this phase Sivers IMA start getting design wins for a new product. As you have seen in a number of press release from us, to date we have nine design wins that has has been announced. A design win means that a customer has signed a contract and has decided to develop a product based on our 5G technology. To reference one example, below to the right you can see a picture of a ready product by CCS, the 60 GHz Metnet Node, which is using the Sivers IMA BFM 06010 RF antenna module with the TRX BF/01 57-71 GHz RFIC. This product is now commercially launched and has started to be deploy, in for example the UK. The second product, the CPE below to the left is a “Daughter” to the Metnet Node and will be commercially launched this quarter (Q2 2019). This shows the full cycle from unlicensed 5G chip product idea to our customers finalized product that has now been launched and are deployed in the market.                                                                                                   CCS CPE home unit                                                                     CCS MetNet Node   The effect of the commercial cycle Sivers IMA “BFM 06010” RF antenna module with the “TRX BF/01” 57-71 GHz RFIC is already used in customer products and Sivers IMAs “Daughter” product the licensed 5G chip – TRX BF/02 24-29.5 GHz RFIC is now in prototype phase and will be ready for product launch late 2019/early 2020. Our customers, the system suppliers (the second step in the value chain) are often ranked based on size, e.g. Tier 1 or Tier 2 etc.  For example, Huawei, Ericsson and Nokia are typical Tier 1 system vendors, while CCS for example can be ranked as a Tier 2 including their partner ADTRAN. The same is valid for the mobile operators that are customers to the system vendors, they are also ranked by size in Tier 1 to Tier 3. For example, two of the biggest Tier 1 mobile operators are Verizon and AT&T. The bigger they are they more units are expected to be sold and delivered. Evaluating anticipated revenue in an emerging market like 5G requires the use of external reports and resources. To focus on one example, I like to share data for the FWA (Fixed Wireless Access) market. It is the first mmWave 5G vertical that is expected to grow into a larger market. Other verticals such as transportation (trains) and medical are expected to add revenue as well the coming years, but are not part of the below estimates. For this blog post I use the SNS Research report “5G for FWA (Fixed Wireless Access): 2017 – 2030” (www.snstelecom.com/5gfwa). This report estimates approximately two million RF units to be shipped in 2019 and a total of 225 million units until 2028 (with 60 million units per year in the year of 2028). The 5G market is something that will grow over a very long time and there will be big investments, for example just recently is was announced in Japan that the 4 operators will spend USD 14 billion in 5G infrastructure from 2020 to 2025 and there is a 28 GHz band available which offers 400 MHz wide channel for mmWave 5G. If we apply a unit price per RF of USD 15-70 (depending on how complex the RF units that are used), the Total Addressable Market (TAM) for RF units should have a value between USD 3,3 billion and USD 15,7 billion. for this time period. For simplification and to count on the lower side, let’s assume a TAM of USD 4 billion. In total the Tier 1 system vendors will jointly typically reach a market share of 60-75 percent in a vertical like FWA, the rest of the market will be addressed by Tier 2 and 3 companies. Let’s assume that over time there will be approx: 50 vendors in total for this specific market segment. Then you can divide the total market in three parts, 60 percent to Tier 1, 30 percent to Tier 2 and 10 percent to Tier 3. This simplified estimate gives this table: Estimate of RF vendors revenue per system vendor for mmWave 5G RF units for FWA (2020-2028): Tier 1: TAM USD 2.4 billion with 5 Tier 1 this is ~ USD 500 million per vendor Tier 2: TAM USD 1.2 billion with 15 Tier 2 ~ USD 80 million per vendor Tier 3: TAM USD 0.4 billion with 30 Tier 3 ~ USD 30 million per vendor This gives a possible view of the overall expectations and a possible value for each design win from 2020-2028 for a “hypothetical” standardized Tier 1, 2 or 3 customer.  Summary In summary, new products within the wireless infrastructure sector will start generating volume product revenue for a hardware company like Sivers IMA, after three to four years. Sivers IMA’s wireless unlicensed 5G product portfolio has been through 3.5 years of development, and are entering the volume phase for FWA. This is just one example in other verticals like medical or transportation design wins can have quicker or slower cycle . For cars within the automotive industry you need to add maybe even two to three years on top of this, to get to the same phase as with FWA for infrastructure. Hence the number of design wins with the right customers are one of the most decisive factor for the total outcome, that is directly connected to the success of the customers’ products in the market. From the above product development cycle times, as well as this simplified commercial market revenue model, it is possible to make assumptions how and when a component supplier will achieve commercialization and volume revenue. These numbers are of course somewhat simplified and estimates based on the 5G scenario by SNS Research that you have to evaluate for yourself and believe in or not. Even though this is an example and in someways is hypothetical, I hope it offers in insight into the total time to market for a hardware company from product idea to market commercialization and finally revenue and I hope it will help you as an investor or analyst to understand this journey from product idea to revenue.   Anders Storm CEO Sivers IMA  

5G is here – Mobile World Congress 2019 This year Mobile World Congress (MWC) was a big: YES, to that 5G now is here for real both on the device side with multiple handset vendors launching 5G phones as well as the system vendors, the Nokia CEO confirmed this on stage as well as the Cisco CEO stating “5G hype is rooted in reality”. We can also establish that this year’s show confirms that our licensed and unlicensed 5G now is here to change our lives. There were plenty of positive news confirming that our technology is ready at the right time, which I will tell you more about in this blog.   Blu Wireless/Sivers 60 GHz node (in red circle) with beam steering was demonstrated in our booth, where a basestation connected to 3 stations running a throughput of 3 Gbps We had more than 35 meetings booked in our stand in Hall 5. This year we shared it with Blu Wireless and Fujikura and we all had a steady stream of visitors. Sometimes it was even hard to move around in the 72 Sqm big booth. We showed a total of 4 joint live demonstrations of Sivers IMA 5G technology with the common denominator that they all use Sivers IMA’s RF technology. Before the show we had several press releases around 5G with Blu and Fujikura, the most followed up on was the fantastic news that we had tested Live with Blu Wireless and could show more than 700 meters with 1 Gbps speeds, using very cost-effective patch antennas with a small form factor of 4×5 cm and with only 1,6 millimeter thickness. The RFIC and antenna is consuming only approximately 5 Watt DC power. With Blu Wireless work around transport and connected cars showing that they can connect mobile stations with gigabit speeds at +250 km/h and also offer long distances, this truly shows that our technology is ready for the mass-market.  Unlicensed 5G (60 GHz WiGig/802.11ad) Not counting our own on PRs, there were 3 main announcements around at MWC that will have a positive effect on Sivers IMA’s future: Blu Wireless contract with FirstGroup in UK Cambridge Communication system (CCS) and Adtran partnership CCS launch of their first 60 GHz Customer home unit (CPE) that will be used with the Self organizing (SON) MetNet Node, having Sivers IMA RF inside  FirstGroup contract in UK FirstGroup is a multi-national transport group, based in Aberdeen, Scotland. The company operates transport services in the United Kingdom, Ireland, Canada and the United States. It is listed on the London Stock Exchange having £6.4 billion in revenue and around 100,000 employees. The plan is to connect First Rail trains with gigabit speeds by installing 60 GHz base station along the train tracks. This might just be the first possible customer and the transport sector can be a quite interesting area for this technology providing gigabit speeds. There are today 16.000 km of rail way track only in the UK and to fully cover the full area a small cell would be needed every 1 km. How much of the total tracks that will be covered is however too early to say, but it has a great potential to revolutionize the transport industry offering true gigabit connectivity around the world. CCS and Adtran partnership Adtran is a US based company with a turnover of about SEK 6 billion and their partnership with CCS is of course very exciting for us being a supplier to CCS. Via Adtran, CCS will get a great partner that can increase volumes and market reach especially into the US. From Adtran press release “ADTRAN is working with a number of Tier 1 carriers and regional service providers in the U.S. and EMEA to design, deploy and manage access and backhaul networks utilizing mmWave/mesh/SON technologies.”. Tier 1 carriers being the biggest mobile operators in the world increase the overall opportunity we see via CCS. CCS launched a Customer home unit (CPE) at MWC Being part of CCS 360-degree MetNet Node is of course already in itself very exciting (see below picture to the right). Now when CCS launch this home unit (CPE) for Fixed Wireless Access (FWA), it is even more exciting (see picture to the left) since CPE:s has even larger market potential. With the Blu Wireless software supporting up to 120 CPE units per MetNet node, this is of course an opportunity to see increased sales volumes for CCS when this CPE is available in the market around Q2 this year.                 CCS CPE home unit                           CCS MetNet Node  Licensed 5G (28GHz 5G-NR) We had two 5G NR demos in our booth. One showing our new 5G chip and antenna we use for internal test and validation. In this demo we were showing a 1.2 gigabit link over a 400 MHz channel at 28 GHz using one RFIC. Fujikura also demonstrated their 5G-NR LCP low loss patch antenna using 2 Sivers IMA RFIC tiled together on each antenna. This RF solution can be used in for example a home unit CPEs or small cell (see picture below). This solution is state of the art an offers low loss and better output power (i.e. longer distance) than any other CPE solution currently in the market. All these products are still in prototype stage, but as we have discussed before, the market is to take off from 2020 and by then we aim to have products ready for volume production. The interest for these products was maybe even bigger than we seen for unlicensed 5G at this year’s MWC, which is of course connected to that the overall market at MWC is more telecom oriented (than datacom), thereby the focus on licensed spectrum.  Fujikura 5G antenna with two tiled Sivers IMA 5G chips MWC overall all MWC is a crazy big event with over 109.000 people attending this year and with a great number of launches covering all parts of the telecom industry. There were many new handsets launched by several companies. The biggest interest was around new 5G phones including foldable phones from Samsung and Huawei. The foldable phones were of course the center of attention with the biggest surprise being the price which will end up above SEK 20.000. This will of course not help volumes too much and it is going to be interesting to follow if they will become a success. 5G phones using 28 GHz mmWave was also launched, which is a big thing. There has been a big debate if a line of sight (LOS) technology, such as mmWave, will be possible to use in a phone or not. With the Qualcomm snapdragon 855 supporting it, it was still good to see that it is now available in handsets. Our take on it, is that from the start we should probably see these phones as very quick “Wireless modems” to be used as the MiFi pucks once was. It makes a lot of sense to connect your laptop via your phone as a 5G mmWave modem and get gigabit speeds with short range indoor using the 28 GHz spectrum. Another topic was of course the China/US trade war and what effect that will have on the roll out of 5G. We believe that operators that are not fully vested today in Huawei infrastructure will of course think 1 or 2 times extra before they invest in new network gear from China, at the same time EU operators that have a single source from Huawei, will have little choice but keep on building their networks as long as they are not banned. Hence we do not believe that EU will make a full ban in Europe, since that would be a disaster for some operators. Talking to non US component suppliers they see a positive development in China as long as there is no ban on overall US components to China and there is a possibility to increase market share in China. If an overall component ban would happen again to any of the Chinese system vendors, then of course it is not possible to operate, and it would not be good for component vendors outside US either.   Other hot topics were AI and connected cars, but I think we will have to come back to that in a later post. However, it was nice to see Blu Wireless units on top of a McLaren (see below picture).  Blu Wireless Units with Sivers IMA’s RFIC technology on top of a McLaren  Conclusion This was probably the best MWC for Sivers IMA so far, unlicensed and licensed 5G is here to stay and it is about to take off. Our partner and customer network are growing and our strategy to work with and via partners is showing great possibilities. We hope to see a ketchup effect from this the coming years and long-term growth based on having great products to offer to the 5G market that will change how we are connected everywhere.   Anders Storm CEO Sivers IMA