Nordic Semiconductor ASA

OSE:NOD

Earnings Call Transcript 2021-Q4

[Svenn-Tore Larsen]

Welcome to Nordic Semiconductor Quarterly Presentation for Fourth Quarter 2021. It's been an eventful quarter and we are pleased to go through the presentation with you all. Our revenue grew to $171.2 million, and our margin were 58.9%. And the underlying gross margin, I will say, was 53%. Pal will go through our margin in details later on in the presentation. We did increase prices to distribution in December last year. Bluetooth revenue accounted for $136 million, a growth of 39% since last year. Gross -- cellular revenue ended at $5.9 million, very much capped by supply from our vendor. We have exiting Q4 record high backlog. The backlog more than tripled in '21. And we see that the backlog stretches into 2023. Timing of delivery is very much dependent on wafer supply, and the job at Nordic now is to focus on customer and ensure that we can keep customers going with the production. It's tough times, but we have an extreme close discussion with customers and we are able to ship to most of our customers. And you can see that over here. I mean, basically, if we went into the year, we had more revenue towards the top 10 than we have today. So balancing the revenue per customer has been a challenging and difficult exercise. Well, as I said, I think we've been able to balance it across the Tier 1s, the large ones and the broad market in a good way. Not everyone are happy with allocation. Obviously, if there was no supply challenges, this would have looked different. So all numbers we are showing today is basically not market-driven, it's allocation capped. So we grew across all verticals, obviously, and Consumer Electronics remains the largest segment for us. Healthcare is driven, as we have been spoken for many, many years, really strong and its new applications. And what we see is finally the disruption in several applications like asset tracking, smart home, smart light, and again, health care. New product that we saw in Q4, which are cool. We now start seeing again products with both cellular IoT and Bluetooth. We see gaming mice that are cutting the wire. Basically, the first, I will say, strategy Nordic had was to cut wire for keyboard and mice with the 24 family. Now we're seeing that latencies in Nordic Bluetooth is good and they can even start using Bluetooth or wireless keyboard, mice for gaming. We continue to have the certification market share above 40%. And if you look into 2021 as a whole, we had 42% market share. In Q4, we managed to achieve 44% market share isolated. So we continue a very, very good trend on designing -- winning designs. And we looked at our development kits as we do every half year. And now we have surpassed 100,000 kits out in the market. So more than 100,000 engineers have kits on a desk. What we see here now is that we've continued to sell kit to the new products we released. Nordic PM1100, which is our PMICs, are also selling strong. And we have seen strong sales of kit to these products. We participated at CES this year, and we demonstrated some cool demos. We did low-energy audio using the 5340. And we did new the science there with cellular IoT on location services. And we also showed the Matter protocol working with customers like Nest, LEEDARSON and Yale Smart door lock. So it was fun for us to show that these protocols now are working out in customer applications. And I think it was special excitement around the next evolution of wireless audio where we show the 5340. So it was a successful CES despite that there was maybe a little bit less customers than usual, but we had a steady feed to our booth and was, despite the conditions, we thought it was a value to participate. Going over to cellular IoT. I would say we have global coverage now. We -- this quarter, we certified with Vivo in Brazil. And I think we can say that there is a global coverage now for Nordic cellular IoT products. We said very early when we started it that we're going to use the same scalable business model as we are doing for Bluetooth Low Energy. We want to reach out to the broad market, and that's a basic difference from Nordic compared to our competitors. Any designer can basically use our design kit and be able to achieve a product through either support in our support portal or local support. So our slogan is making a cellular IoT easy, and we see that when we add up the numbers of customers that it's working. We are expanding our Nordic Partner Program. Edge Impulse is a company that make development tools for cellular IoT with machine learning. A1 Digital is a turnkey platform that basically develop all the power to the cellular IoT product. And you can basically use our platform and make the device connect to the cloud. Polte is a company that do IoT location services. And we see some of our customers using asset tracking solutions working with Polte. So we are expanding the ability to get a useful product out there with partnering up with leading companies in each segment. What we do is that we've been doing exactly the same as we did with Bluetooth Low Energy: we're focusing on growth verticals and we try to find which customers are leading in each of these verticals. So we see the signs in asset tracking, both industrial and consumer. We see sensors, metering, both consumer and industrial. We see the signs in smart home consumer applications, and we also start seeing appearing the signs in health care. And the final vertical I will talk about is modules. Nordic has a growing revenue in BLE on module partners. And now we see the same partners and even new ones using cellular IoT products from Nordic to create new modules. Pal will do the financials. Thank you.

[Pal Elstad, CFO & Executive VP of Finance]

Thank you, Svenn-Tore. I'll now jump and give a little bit more detail on the numbers for Q4 2021. Nordic Semiconductor continues the strong reported growth as achieved in the previous quarters both compared to last year and compared to last quarter. This growth comes despite the fact that we are still heavily impacted by the availability of wafers and the revenue, hence, does not reflect the full underlying demand across all end-user markets. If we have had higher supplies, we would have had, to a much larger extent, been able to take advantage of the strong demand. Nordic is, as we have communicated in the earnings update we gave earlier in January, impacted by the inflation that during the second half of 2021 has been observed in semiconductor market. As a result, Nordic has been passing on the price increases that we have and will get from our suppliers. Revenue came in just above the guided range for Q4. And for the full year, revenue ended at $611 million, representing an impressive growth of 51%. This is significantly higher than what we expected earlier in 2021 and comes as a result of strong management of supply chain, including us being able to pull in additional wafers, higher prices improved and favorable product mix. Nordic reported revenue of $171.2 million, as Svenn-Tore mentioned, which was an increase of 35% from last year, where we had $127 million, and it's 15% higher than last quarter. As I said, the revenue comes as an effect of the general product increase across all technologies made during Q4. It comes as an effect of higher volumes. And finally, it comes as a positive effect of the product mix. With product mix, we mean that we, during the quarter, have sold more for high-value products to our customers. We saw strong Bluetooth revenue in the quarter. However, proprietary continues showing impressive numbers driven by continued strong demand for PC accessory products to our high-quality customers. For the full year, proprietary is $84 million, representing a 10% growth. This is in contrast to the single-digit decline that we guided for a few years ago. Cellular at $5.9 million for the quarter and $17 million for the year. Just as for the overall revenue, individual markets show a strong growth compared to last year and relatively flat compared to last quarter. However, it's difficult to analyze markets as it is important to keep in mind that allocations based on wafer availability will impact revenue in the various markets. Also, the price effect that was mentioned earlier takes effect and is reflected in all markets. Consumer Electronics, which is by far our largest market with 36% of total, which is actually a slight reduction from 39% last quarter, the market shows a 14% growth from last year. Wearables is the market that, during the last quarters, has been hit most by the product allocation, which showed a revenue of $17.6 million. Building and Retail is the market showing the highest growth with a growth of 76% versus last year and 20% up from last quarter. This increase reflects continuing growth for both industrial and home automation applications. Healthcare revenue is strong with 63% growth to $17 million and up 40% versus last quarter. In Healthcare, we have stable base of drug delivery systems, mainly for diabetes, including new products being introduced during the last period. We are preparing changes in the market's reporting that will take effect from Q1 2022. Gross profit increased by 50% to just above $100 million in Q1 2021, up from $67 million a year ago, with the gross margin of 58.9% in the quarter compared to 52.7% the same quarter last year. We have seen a temporary inflation in gross margins as we have increased our prices and cost of goods sold on the sale in Q4 is based on materials purchased prior to the price increase from our suppliers. We will see the full effect of the wafer cost increase in Q1 2022, and therefore, we will see the gross margins more in the same range and normalized at 53% to 54% in the next quarter. Adjusting for the effects described above, the underlying gross margin was around 53% in Q4. This strong gross margin came despite significant cost increases that we have already seen in the market. We managed to get the strong gross margin as an effect of positive product mix and very strong operations during the quarter. I'll now go to the operating model. The numbers on this slide reflects reported numbers not adjusted for capitalization. First of all, the strong reported revenue in the quarter has resulted in improved KPIs, although the underlying absolute spending has increased. We're investing in line with what was communicated during the Capital Markets Day a few months ago. Although volume growth currently is being capped, we have seen margin expansion as a result of the higher revenue. Total reporting -- total reported R&D spending during the quarter was 23.3% (sic) [ 23.6% ], up 21.6% versus last year. And of course, the main driver there is that we've added around $4 million in spending related to the R&D acquisition we did a little bit more than a year ago. For cellular R&D, we are continuing to invest. And in this quarter, we've invested $12.5 million or 7.3% of total R&D spending. R&D spending -- no, SG&A spending at just below 11% or $18.5 million the quarter, up from $13 million a year ago. In total, EBITDA of 24.7% in the quarter, up from 21.1% a year ago. Most interesting is actually the full year EBITDA percent of 20.4% for the year, which is the first time since 2015 that we're actually able to hit plus 20% in EBITDA margins. As I mentioned, we are investing in continued growth. So total cash operating expenses amounted to $56.5 million in the quarter, which is an increase of about 38% year-over-year. $41 million of the cash operating expenses relates to payroll expenses, which was $30 million a year ago, also a 38% growth. The company continues to invest and add new employees to support higher activity level, strengthening our customer relations and continuing our technology innovation. The number of employees in R&D increased 24%, and we now count 926 engineers working in R&D. Other cash operating expenses, at $15 million in Q4, up from $11 million a year ago, with the increase reflecting more product introductions and generally high activity level including marketing and travels that has been very low during the earlier quarters in 2021. For the full year, cash operating expenses increased to $200 million from $141 million in 2020. CapEx was $6 million in Q4, up from $4 million a year ago. We are continuing to invest in additional test capacity so that we are able to quickly turn around wafers to finished products when we get them from our suppliers. CapEx intensity for Q4 was 3.5%, so more in line with the total for the year, which was 4%. For 2022, we expect CapEx intensity to continue to be at around 4%. My final slide. We do see a continuing strong cash position and cash-generating ability of the company. During Q4, we added $33 million to a cash balance, which ended at $279 million. Operating cash flow was $42.5 million in Q4. The strong operating cash flow comes in as a result of the EBITDA we reported only partly offset by increased working capital. So the absolute number of working capital increased by $11 million mainly as a result of higher accounts receivables. However, net working capital remains at record-low levels. Now it's down to 18%. This low ratio comes as a result of very low inventory, now approximately at half a quarter of revenue. So net working capital will increase when we have a more normalized situation. For the year as a total, we increased our cash balance by $37 million mainly driven by a strong operating cash flow of $96 million. Svenn-Tore, I'll hand over to you now for the final guidance.

[Svenn-Tore Larsen]

Thank you, Pal. So despite all the supply challenges, we expect a solid Q1. We are putting the guiding range from $170 million to $190 million in revenue, and that really reflect the wafer allocation for Q1. And it's a wide range, and the important thing is if we get our wafers in early in March so we can turn it into product. And we, as Pal said, expect the margins to be around 53% to 54%, which is the margin that is going to be, I would say, rest of 2022. One thing we know is that Q1 is going to be the quarter where we get less wafers for all of '22, so we expect higher supply in the remaining quarters of the year. And also, we hope to pull in more in Q1, but obviously it's not confirmed at the moment. But $170 million to $190 million is a range we are comfortable showing today. We've been building a solid platform for continued strong growth. I mean if you look at the capacity support plan we have today from our vendors, it really puts us on track to achieve the 2023 revenue target of $1 billion. So despite all the work we're doing on pulling in and accelerating test and production and it's going to give us results, we are confident on reaching a good revenue for '22 and be on very well target towards the $1 billion revenue in '23. We are working every day. As Pal said, we are doing more than any other semiconductor company in R&D investment. And we are determined to extending the lead on connectivity. We are going to deliver the features that IoT products require going forward. We are working on new cross-technology platforms. Basically, the effort we are spending today is gaining over short-range shortage products, over WiFi products and over cellular products so we can sort of leverage on all these 3 technologies on our new technology platform. It's exciting and it's working very well, and we are, I would say, on route to deliver these products which are going to be another disruptive product family. We do R&D innovation the same way as we've done previously. We have high customer involvement to ensure that the products and the specifications are aligned with what our customers need the next decades. These are multiyear project with large R&D teams and are spread multiple sites globally. And we are leveraging state-of-the-art development ecosystems, so we can do even better parts now than we did when we introduced previous family to the market. We are using leading process technology optimized for IoT. Obviously, through the year we have behind us and the year we have in front of us, we see having more suppliers will enable stable supply going forward. And our first short-range product will be ramping second half of '23. With our investment, obviously, the reason we do this is that we have high financial ambitions. When we reach the $1 billion target in 2023, we are aiming to more than double revenue in the period of '23 to '26 with all new exciting, leading products we're bringing to the market. We see there is going to be a continuous strong growth in short range, it's accelerated in cellular IoT and we see the early traction in WiFi. And we are going also to see that the adjacent products are going to contribute to revenue as we go further in this year. So basically, we open for questions.

[Stale Ytterdal, Senior Vice President of IR]

Yes, this is Stale from IR. We have a lot of questions for you, gentlemen, and we have split them up in topics. So we start with customers. We have a question from Oliver Kielland from SEB. Can you give some color on your customers' reaction to the recent price adjustment? Any pushback? There's no doubt that demand seems to be very strong.

[Svenn-Tore Larsen]

Yes. The last part, demand is very strong. Customers have gotten price increases from all of our competitors through all of '21, and we have basically not adjust any pricing before end of '21. So customers were sort of expecting this, and it's been more important for customers to get part than to basically argue with pricing. And obviously, they want to have a solid vendor that's going to be here and grow with them for years to come.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have a question from Robert Sanders, Deutsche Bank. Can you discuss new ramps in second half at your largest OEM and how that could affect your 2022 sales outlook especially when combined with higher pricing?

[Svenn-Tore Larsen]

Our largest OEM, we don't comment individual customers. And I'm not -- well, if it's general to our largest customers, we see that, basically, the answer would be the same as I did previous question. It's a fight to get parts. We try to allocate as fair as possible. And our customers are working closely with us and we are laser focused on next production batch for each of our customers and try to overcome the challenges.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have a question regarding guiding. And this is from Christoffer Bjørnsen, DNB. The bottom end of the revenue guidance for is implying negative growth in volumes sequently, which is hard to believe given the current pricing environment and what your peers are reporting. How do you explain this? Some people would worry it's because of the inventory buildup we have seen at some of your larger customers during Q4. Or is it just because you are not prioritized by your foundry partner?

[Svenn-Tore Larsen]

I would say we are prioritized by our foundry partner. What we need to account for is that we don't know exactly now if we are able to produce all wafers coming in, in March and turn it into revenue. If we are not able to turn it into revenue, it will come in Q2. And there is a time from when wafers arrive at our facilities until we can get them out as revenue. So that's why we have a wider range than we usually have because it's more important for me to ensure that the information we give the market is in line with what we achieve rather than taking a risk and be optimistic of arrival of parts. The second part of your question is do we see buildup at our big -- largest customers. The answer is clear no. What we do is that we are not -- today, we are shipping directly from our testers to customers' production facilities because there is no buffer on the product lines that we are supporting our customers on.

[Stale Ytterdal, Senior Vice President of IR]

Yes. Thank you. Then we go over to the wafer situation. It's from Petter Kongslie, Sparebank Markets. We have seen some peers reporting and several others that the wafer supply is improving. Have you received any new information on this?

[Svenn-Tore Larsen]

We are guiding only quarter-by-quarter, and apart from that, we are saying that we are on track when it comes to the capacity support plan to achieve the $1 billion goal in '23. Obviously, then we need to get more wafers, but we haven't seen any significant change on capacity support plan the latest quarter on the node that Nordic is using for our product lines.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have -- we go over to the gross margin, and I think this question goes to Pal. Petter Kongslie from Sparebank 1 Markets. What do you mean with the comment of full effect of wafer cost increase in Q1 2022?

[Pal Elstad, CFO & Executive VP of Finance]

So what I mean is that we increased pricing in Q4. Cost of goods sold is based on inventory produced at the earlier stage, so it will take time to turn around inventory so that the new cost of goods sold will be linked to the higher prices from our suppliers. Therefore, there's a lag in -- when cost of goods increases.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. We also have a question from Christoffer Bjørnsen, DNB, regarding gross margin. You comment in the report that available capacity has been allocated towards higher-margin areas, and as such, structurally lifting the gross margin. Furthermore, you guide for underlying gross margin to remain at the current level through Q1. Will you allocate back to lower margin segment in the rest of the year? Or is it fair to assume that the gross margin will stay above your long-term model at least for the remainder of the year?

[Pal Elstad, CFO & Executive VP of Finance]

Yes. The comments I made on the strong underlying gross margins in Q4 related to product mix, we believe, will continue for the rest of 2022. We don't foresee any major changes to that assumption.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. We also have a question from Adam Angelov, Bank of America. Can you discuss the traction story of gross margin throughout '22 from your guided Q1 levels? Your peers in the U.S. yesterday was talking down gross margin from the current guided level throughout 2022.

[Pal Elstad, CFO & Executive VP of Finance]

I think I just answered that.

[Svenn-Tore Larsen]

I think Pal just responded to that question, Stale. I think the important thing is that we, as a vendor, now see that need for more advanced feature and the design wins that we have done up till now has been more and more skewed towards high-value products, and high-value products as most people understand as higher margins.

[Pal Elstad, CFO & Executive VP of Finance]

But for the long-term gross margin target, I'd like to refer to what we said in the Capital Markets Day.

[Stale Ytterdal, Senior Vice President of IR]

Good. Thank you. We go over to the topic of OpEx. Petter Kongslie, Sparebank 1 Market. Cash OpEx for cellular was [ NOK 12.5 million ]. Is any of this capitalized R&D or is it all OpEx now?

[Pal Elstad, CFO & Executive VP of Finance]

For cellular, it's all OpEx as well.

[Stale Ytterdal, Senior Vice President of IR]

And we have on the same topic. Kristian Spetalen, Arctic. Could you comment anything on the cost development in 2022 versus 2021? Can you hire in the same space as before? Or should we expect organic OpEx growth to come down in absolute terms?

[Pal Elstad, CFO & Executive VP of Finance]

I think I'll refer to what we said again in the Capital Markets Day. We expect R&D to be at around -- or declining towards 20%, and SG&A also have a slight decline. Although with the revenue growth, of course, the absolute numbers will continue to increase. But of course, in today's market, it is challenged to hire and there is inflation also in the hiring market, so the absolute terms will increase. Svenn-Tore?

[Svenn-Tore Larsen]

That's correct.

[Stale Ytterdal, Senior Vice President of IR]

We have one more question from Kristian Spetalen, Arctic. You highlight higher performance pay. Was that primarily for Q4 given the sharp OpEx increase quarter-by-quarter? And should we look at this as a one-off or continue to expect this seasonality in years to come as well?

[Pal Elstad, CFO & Executive VP of Finance]

I think you have to look at it, firstly, for the total year. It was a slightly higher level in Q4. But year-over-year, for the total year, it's probably where we would be.

[Stale Ytterdal, Senior Vice President of IR]

Yes. And we got one more question from Kristian Spetalen, Arctic, on CapEx. Could you clarify, when you say 2022 CapEx in line with 2021, is it in relative terms or not -- and not absolute?

[Pal Elstad, CFO & Executive VP of Finance]

No. It's the percentage in the -- not absolute number, but the percentage of revenue.

[Stale Ytterdal, Senior Vice President of IR]

And we have a very nice question from Petter Kongslie, Sparebank 1 Markets. Regarding the reporting on the markets we have, why are you changing reporting? And how worried are you about the Consumer Electronics exposure?

[Svenn-Tore Larsen]

Not worried at all about Consumer exposure. Basically, what we see is that Consumer, I would say, vertical for us will continue to grow because we won some of the leading global vendors on consumer products. And I think his question is more related to existing consumer products, and we see strong demand from our existing customers that's driving consumer stronger than we've ever seen.

[Pal Elstad, CFO & Executive VP of Finance]

But with the new reporting, it will also be easier to see actually what the industrial and retail business represents in the total.

[Svenn-Tore Larsen]

Yes. I think it's important for us to show that we are also growing on the industrial leg of the industry.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have question on cellular. And we have 1 from Johannes Ries. Will cellular IoT accelerate during the year? Revenue contribution of cellular IoT included in your 2026 ambition, what is it?

[Svenn-Tore Larsen]

The important thing with cellular is that currently we are selling a module. This module is dependent on external suppliers' products, and we have had challenges getting the external component that we need to build this module. We hope and expect that, we're working close to our vendors, that we will get more of these external components because we are able to support our own model -- our own silicon on these modules, but we are restricted because of lack of external. But we expect to see a strong momentum in '22 on cellular IoT.

[Pal Elstad, CFO & Executive VP of Finance]

And in relation, of course, to the '26 target we discussed in the Capital Markets Day, cellular will be material part of the equation.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. And Johannes Ries also have a question regarding adjacent products. Adjacent products further -- do you have any plans of further products in this category in 2022? How important will this part of your offering get in the coming years?

[Svenn-Tore Larsen]

We're going to see meaningful revenue on PMICs through '22. And obviously, as we are progressing, this is going to be part of why we are changing our segment reporting to show that adjacency is adding on revenue for Nordic. It will be an important part.

[Stale Ytterdal, Senior Vice President of IR]

And then we have questions regarding backlog from Petter Kongslie, Sparebank 1 Markets. Can you provide us with how much demand increase was part of the order backlog? Any thoughts would be helpful.

[Pal Elstad, CFO & Executive VP of Finance]

So the order increase in order backlog is, of course, as we mentioned earlier, a mix of price and volume increase.

[Stale Ytterdal, Senior Vice President of IR]

And also in the same time, he's asking -- Petter Kongslie, Sparebank 1 Markets, is asking, have you increased the lead time from the 52 weeks seen in Q3 '21?

[Svenn-Tore Larsen]

I think it's very important that analysts understand that we are shipping through our distribution channels. We have close discussions with our distributors every day. Obviously, our aim is not to extend our backlog outside the 52-week window. But as we are getting some major customers now having long production planning due to, not on the Nordic situation, but all the suppliers have long lead times, we see that approximately 200 -- actually not approximately, $203 million is outside the 52-week window of this backlog.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have a question from Oliver Kielland from SEB. Given the supply-demand imbalance, double ordering seem to be an analyst concern on earning calls across the semiconductor industry. How widespread do you think that is across the industry? And how do you work with your customers to make sure your backlog is real demand only?

[Svenn-Tore Larsen]

I think that's a question that we've been sort of monitoring, obviously, since and beginning of this year. And what we see is that all the ODMs that are placing the order that already exists have a related price quotation to these orders and it matches the customer's demand. So what we see is more doubling of volume than double orders. And that's really -- the important thing for us now is to ensure that we are able to give sufficient supply to this additional high-volume orders so that we can get the new products into the market and sustainable until the supply challenges are eased.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then we have a question from Henriette Trondsen, Arctic. Can you comment on the level of price increase in the backlog? Expectation is that TSMC has increased prices by around 10% to 15%.

[Svenn-Tore Larsen]

No. We have not disclosed our exact price increase, and it varies from vertical to vertical. And we feel that it should basically not been disclosed what our customers get of price increase.

[Stale Ytterdal, Senior Vice President of IR]

And the last question here from Henriette Trondsen, Arctic.

[Svenn-Tore Larsen]

Well, I think I would like to do another comment because you believe that we have been increasing cost or prices more than the semi -- other suppliers have increased it. But basically, if you listen to what Pal said, it's mainly driven by product mix. More features is more costly. That's basically what have increased the margins more than price adjustments except from what happened in December, which Pal explained.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. And we have the last question from Henriette Trondsen, Arctic. In your backlog and Q1 guidance, can you comment on the split between Bluetooth Low Energy, proprietary and cellular?

[Pal Elstad, CFO & Executive VP of Finance]

I think it's -- the mix is like the revenue, Bluetooth or short-range is the vast majority of the backlog. We don't split out the backlog per technology.

[Stale Ytterdal, Senior Vice President of IR]

So we have one more question, the last one, before we can let you go, is from Øystein Lodgaard, ABG. When do you think that the current wafer situation is going to normalize? Could that happen in 2023? Or do you think we won't see a normalization until 2024?

[Svenn-Tore Larsen]

That's something that I'm not qualified to answer because I think more than Nordic see this exceptionally takeoff of IoT. I think what we do is to build new platforms on -- new products on alternative platforms, and we will add new products in our portfolio. So we will ease up the situation on existing platform by adding new products. When the situation is sorted out when it comes to generic supply shortage, I think it's best to ask is the leading suppliers of semiconductor to the market.

[Stale Ytterdal, Senior Vice President of IR]

Thank you. Then I think we are finished with the Q&A questions.

[Svenn-Tore Larsen]

Yes.

[Pal Elstad, CFO & Executive VP of Finance]

Thank you.