Investor Presentation • Nov 28, 2016
Investor Presentation
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Investor and analyst brief
Nordic Semiconductor ASA November 28 2016 Oslo, Norway
Low power LTE technology
The market opportunity
Our strategic investment
Fundamental concepts Shaping the future of IoT
Fundamental drivers Size and growth potential Product and market strategy Product development
Proprietary 2.4GHz
3 years
to reach first revenue
Bluetooth
to reach first revenue
Director of Strategy and IR
Chief Technology Officer
Head of Nordic Finland
15 year+ with Nordic Last 10 in Product Management Product and market strategy
Started in 2001 Responsible for R&D organization Ex chairman of Bluetooth SIG
20 years in cellular chipset development Nokia, Renesas, Broadcom
Today's agenda
Lower throughput
Higher throughput
| LTE-M | NB-IoT | ||
|---|---|---|---|
| Also known as | "LTE-MTC", "LTE Cat-M1" | "LTE Cat-M2", "LTE Cat-NB1" | |
| Max throughput | ~575kbps | $~50/60$ kbps | |
| Range | Up to $4X$ | Up to 7X | |
| Mobility | Yes | Limited | |
| Frequency deployment | LTE In-band | LTE In-band, guard band and GSM re-purposing |
|
| Deployment density | Up to 200,000 per cell | ||
| Module price | Sub \$10 | ||
| Module size | Suitable for wearables | ||
| Power consumption | Up to 10 year of battery lifetime |
Broader coverage
Lower cost
Rural areas Deep indoor Higher density deployments
Space constrained devices
Module cost Subscription cost
| Low power LTE (NB-IoT, LTE-M) |
Unlicensed LPWAN (SigFox, LoRA) |
|
|---|---|---|
| Open standard | Yes, 3GPP | No, proprietary |
| Frequency bands | Licensed | Unlicensed, sub 1-GHz ISM |
| Infrastructure | Existing LTE | New |
| Max throughput | Up to 375kbps | Up to 6kbps |
| Reliability and QoS | $(+++)$ | $(-)$ |
| Security | $(+++)$ | $(-)$ |
| Module cost | $(-)$ | $(+)$ |
| Power | $(-)$ | $(+)$ |
Complexity of integration Tele-regulatory approvals Standard compliance Carrier certification Regional variants
Source: IHS Technology Teardown Service, 2015
Chipset
Transceiver support for multi-band Cost and complexity impact
Module
RF-front-end support for multi-band Significant cost and complexity impact Typically 2 - 5 bands
1-3 bands Limited to a carrier and region Lower complexity and cost
$25+$ bands
Worldwide roaming Higher complexity and cost
Unique information / process for network identification Specialized secure microcontroller and memory
SIM card not practical for IoT application
eSIM is chip
Over-the-air provisioning
Remotely manage subscription
A GLOBAL INITIATIVE
Standardization body GSM, UMTS and LTE
Part of Release 13 Completed
$LTE-M$
Part of Release 13 Completed
NB-IoT
Ultra high throughput
Higher frequency (>26GHz)
Existing and fast growing market
Low power LTE a key driver
Complements Bluetooth market
Excludes phones, tablets and PCs
~ 400M connection in 2015 27% CAGR*
Continued growth $\rightarrow$ 2022 Diversification of the market Different type of applications A few overlaps
(*Source: Ericsson Mobility Report 2015)
No local
area network
Existing infrastructure
Ubiquitous connectivity Security and reliability Ease of use
Home
Industry
City
Healthcare
$\frac{\Delta}{\nabla}$
Transport
Buildings
Logistics
Utilities
Consumer
Agriculture & environment
28
Services built on top of connectivity Cloud, big data, machine learning Per "use" and/or recurring
Massive worldwide LTE coverage
Low power LTE status and projection
15 28 CAGR billion billion 2015-2021 Cellular IoT $0.4$ $1.5$ 27% $4.2$ $14.2$ 22% Non-cellular IoT PC/laptop/tablet 1.8 1% $1.7$ Mobile phones $7.1$ 8.6 3% Fixed phones $1.3$ 0% $1.4$ 2015 2021
GSMA
$(2015)$
Connections
$\rightarrow$ Unit shipments
Replacement
rate $(\%)$
Low power LTE share $(\%)$
Change in number of connections
Replacement of 2G/3G General replacement
VS. 2G/3G and LTE Cat 1+
Chipset price range
Module price range
$ASP \neq lowest price$
Volume distribution over the price range Distribution of customer size
Range of price points
Market / application depend
Market dependent
There will be a "value play"
Dataset and assumptions
Subscription cost / model
| Page Bill Date |
||
|---|---|---|
| WIRELESS BILL Account Number Customer |
$\partial$ to t July 3, 2013 |
|
| 123456789-0 JOHN DOE |
$\text{Tax}^{\text{o}/\text{o}}$ 4.00% |
|
| Tax/Charge | 4.25% | |
| State sales lax Local sales taxes |
0.19% 2.50% |
|
| MCTD sales tax itate excise tax (186e) Hence (186e) |
$0.30\%$ 1.49% |
Support for eSIM
Adoption in
Cost of ownership
Over the air provisioning
Shorter design cycles Drive early volume ramp
Ξ
Technology shift
Market shift
High throughput $\rightarrow$ power, size, coverage and cost
Specialized $\rightarrow$ broad diversified market
Nordic low power DNA Broad market model Cellular expertise in Finland
I TE-M and NB-IoT
Early US deployments
Broader range of applications
Incremental approach to a bigger market
Architected and optimized for I TF-M and NB-IoT
High level of integration
NB-IoT support enabled with firmware update
Power Size Performance Features Solution cost
Complete and easy to use solution
Lowering barriers of adoption
Leverage existing community & ecosystem
Strategic partnerships Hardware, software and tools
Enable innovation Drive market growth
Forum and Developer Zone 3'rd party tools and solutions
Regional tailored offerings Carrier certifications and partnerships
High volume and growth potential Strong competitive edge
New features and performance improvements,
Meeting focus customer requirements
Selected verticals Logistics, consumer, utilities
Strong interest Competitiveness of our solution Working with Nordic
Collaboration on requirements
Matching our early offering to their requirements
Second half
2017
2018
General sampling
Evaluation - development - certifications - production Production ramp linked to sampling schedule
Volume ramp with lead customers Dependent on sampling schedule and design-in time
Lead customers in volume production Volume ramp with general customers
Leading edge Radio's
Highly configurable digital platform architecture
Software is a key enabler for silicon sales
$\blacksquare$ $\cdots$
COPYRIGHT © 2005, MOUNTAIN GOAT SOFTWARE
Overall: enabling customers to concentrate on their contribution, not on Nordic's hardware or software
Tight collaboration with marketing, sales and customers to ensure we make the right products Highly educated and experienced staff
Large portfolio of in-house IP that are leveraged in new products, patent portfolio
Top of the line design tools
Collaboration with leading partners
TSMC, ARM, CEVA $\mathbf{r}$
Active participant in standards organizations to shape tomorrow's specifications
Bluetooth Sig, ETSI, 3GPP, NCF Forum, IEEE, Rezence, ++ $\mathbf{r}$
Focus and agility
Nordic Semiconductor's R&D Department have a customer focused approach committed to providing off-the-shelf solutions to thousands of customer but at the same time be able to develop targeted solution to key application segments and supporting key customers with their special needs. With our flexible IC and software architecture, robust solutions, willingness to support customers, whatever it takes attitude, we will provide the ultimate peace of mind for any engineer and company working with our products.
News 23.7.2014 14:27 | updated 23.7.2014 14:27
The wireless modem maker Broadcom is to shut down its connectivity chip operations with the loss of 600 jobs in Finland. Some 430 of them will go in Oulu. which is already reeling from the announcement last week that Microsoft will close a research facility there.
The fate of Oulu as an IT hub hangs in the balance after another company announced hundreds of job losses in the sector. Broadcom, a US wireless modem firm that runs a research hub in the city, is to cease operations in the connectivity chip field after failing to find a buyer for the unit.
The closure means 600 people in Finland will lose their jobs, with some 430 of those based in Oulu making 'baseband' chips for mobile devices.
The northern city has been hit hard by changes in the technology sector, with some 500 people informed just last week that their jobs at Microsoft's research and development centre will go when the centre shuts down
Ericsson, once the major manufacturer of modems, is planning to leave the business. The move will see 1,000 redundancies and 500 people moving to other Ericsson projects, such as small cells.
22 Sep 2014 at 13:36, Simon Rockman
$\mathbb{G}$
$\bullet$
G
$f_n$
In February 2009, Ericsson entered into a joint venture with ST-Microelectronics - itself a merger of SGS-Thomson and NXP - in a bid to take on Qualcomm. In mid-2013, ST-Ericsson was dissolved with the modem business moving to Ericsson. The closure of the joint venture led to the loss of 1,600 jobs.
We are always looking for the best engineers and offer a working environment where you will be integral to the development of ideas and decisions. It is an environment where you can make a difference and contribute to the success of the company.
We are now hiring more engineers for our R&D centers in Oslo & Trondheim. RF & ANALOG DESIGN ENGINEERS IC DESIGN ENGINEERS HW/SW VERIFICATION ENGINEERS MCU VERIFICATION ENGINEERS FW DEVELOPERS PROJECT & PROGRAM MANAGERS
Norwegian company that produces and sells Integrated Chips [ICs] with Bluetooth technology, ANT+ and custom made protocols. Our engineers are central in the development of
the Bluetooth Smart standard, which is now being adopted by all major tech companies worldwide.
NORDIC
$\triangleright$ www.nordicsemi.com/career $\blacksquare$ $\blacksquare$ $\blacksquare$
65 employees in place by start 7 January 2015, now 135 employees
Radio Systems personell with Nokia-Renesas-Broadcom background
Design from very first cellular systems up to highest category LTE modems
Power management, RF and Digital IC and SOC design personell with Nokia-Renesas-Broadcom and Nokia-ST Fricsson-Fricsson backround
• Multi-billion IC/SOC volume experience
Firmware and protocol SW personnel with Nokia-Renesas-Broadcom and Nokia-ST-Fricsson-Fricsson background
• Multi-billion cellular product volume experience
R&D Finland tightly integrated with teams in Norway
Licensed and acquired HW and SW building blocks to speed up development and reduce risk
Selective outsourcing of key elements to key partners
Special function test chips
Analog/RF
Debugging/verification, certification/ carrier interoperability
Early customer sampling
Mass-production chips
Fixing bugs and issues from prototype chips
Possibly add additional functionality as needed
Software development for Cellular IOT products
Collaboration with main infrastructure vendors in place
Carrier collaboration with selected carriers in place
Multiple succesfull tapeouts
Software development in good shape
• 1.5 million lines of code
Partnerships in place
Low power LTE technology
The market opportunity
Our strategic investment
Fundamental concepts Shaping the future of IoT
Fundamental drivers Size and growth potential Product and market strategy Product development
Investor and analyst brief
Nordic Semiconductor ASA November 28 2016 Oslo, Norway
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