Posted By Trevor on I dump From the Nanoco webc
Post# of 22456
Posted On: 10/12/2016 4:05:45 PM
Posted By Trevor on I dump
From the Nanoco webcast with some bolded highlights.Funny Edelman doesnt even acknowledge QMC as a competitor.Revenue was abit more than double QMC's this year..fantastic..not !
http://seekingalpha.com/amp/article/4011480-n...transcript
Revenues for the year, which David will talk more about were basically £0.5 million.
If we look at TVs by size, not surprisingly the dominant size is the 50 to 60-inch range, and that coincides with the high-end TVs that most people are buying today. If we look at the cut or the breakdown between – the predicted breakdown between cadmium and cadmium-free, cadmium-free absolutely dominates. It dominates today as in 2016 and will continue to dominate going forward. And we’re seeing that in all the western facing brands, whether you’re Samsung, or whether you’re Apple, whether you’re LG, these companies have all made statements declaring that they will not entertain cadmium, and they’re all very focused on cad-free.
Runcorn, which has always been and many of you who’ve been to Runcorn and many of you in the room who’ve been to Runcorn is just a small pilot plant. I’m through some process innovation that’s happened over the last six months. We’ve been able to significantly increase the yields of Runcorn by a factor of 10.
So all of a sudden, Runcorn capacity running in its current configuration on shift can produce somewhere around 500 kilos a year. With very modest investment, we can get that up a lot more. But Runcorn now is relevant, where before it was a test facility, where we were able to trial our material at larger scale and transfer that to the licensees.
A little update on RoHS. So, it’s a lengthy process. We learned a lot about Europe going through this process. But there’s – the European Commission has got an ongoing review of cadmium-based quantum dots for display in Europe. In 2015, European parliament voted overwhelmingly to not extend any exemptions. 3M has been aggressively pushing for an exemption.
European Commission asked for another study to be done, which was done by the Öko-Institut. They came out, I think, in early August. September/August, they came out in July suggesting that there should be an extension for three years and display lighting should not – there should be no extension for lighting. And that was the recommendation of the European Commission then takes out and goes around the member states, which they’re doing now, as well as consulting with interested folks like Nanoco.
Question-and-Answer Session
Q - Unidentified Analyst
Ken [indiscernible] from Stifel. A couple of questions on production and way you’re at. It looks like you’ve sold a couple of kilos of quantum dots last year and maybe had several kilos in start to judge by the figures. If you’ve been producing at 500 kilos a year, you can produce 100 by now this year, which I imagine you haven’t. But firstly is that about right, and where are we at in terms of Wah Hong and Merck in the quick start. How – what can you say about where we are now in terms of the amount of quantum dots you’ve sold today?
Michael Edelman
So we’ve – in terms of production, you’re right on production in terms of what we sold, we haven’t sold a huge amount . The majority of the material is going – is being converted into resin and being shipped to Taiwan for larger and larger coding trials and optimization of the coding lines at Wah Hong. So that has to happen.
Bear in mind, Ken, we signed these agreements just a few months ago. So, there has been a tremendous amount of progress at Wah Hong in getting that line up. Line number one, optimized, which can do up to 60 inches. They’ve now brought forward – I’m really pleased, they’ve brought forward by 12 months of large capital investment on a second coding line, which will take then to a web that would do 100-inch TVs, and that’s being installed now and should be operational in the New Year. So that’s where we are with Wah Hong.
Merck, again, just announced in August, they’ve taken their first kilos, which we shipped, which are currently haven’t made it to a customer, because they’re being held up in customs, which was taken time in one of the countries in Asia. And it’s taking its time to resolve, which has now been resolved. Once that gets released, it will go to various film coders who will then start trials.
Merck is the tech transfer. We’re very active in the tech transfer process up to the point, where we’re now at August/September, we’re two months in with Merck. And they’re starting to run initial trials on their pilot plants in Darmstadt, so that’s very, very fast.
Merck, you’ve got experience with quantum dots. They’ve been working – last year, they bought an Israeli quantum dot company. So they perhaps have an advantage over, where Dow started. Dow was starting from scratch. Merck knew what was going on, had experienced with Qlight out of Israel, which was all cadmium-based They then made the decision that there was no way that they were going to launch any cadmium containing product. We did the deal and they’re now active in technology.
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Unidentified Analyst
[indiscernible] from Peel Hunt. Mike, could you just comment about the supply chain? Now, you’ve got three key partners set up. Should we think not just sort of cool partners going forward? Would you add anymore in future? And would they be similar sorts of agreements in terms of royalties and product sales, or would it just be product sales and more of a sort of transactional basis?
Michael Edelman
I think where we have space to have, where you’ll see us out over the next 12 months is companies that look more like Wah Hong. We’re going to hang tight with core manufacturing with Dow and Merck for now. We think with Dow and Merck and Nanoco, there’s probably enough, what we’ll see where it gets up. But with film coding, there’s millions of square meters of film that needs to be coded that can be serviced from those three.
So we’re actively engaged now with one other film coder, which looks like Wah Hong. Merck and Dow are both engaged with a whole range of film coders. I mean, Dow is active with one who is producing their own number, who are producing samples today that they’re supplying into the market. And Merck has a group of coders they work with already who they’re trying to get our material to been held up by customs. Once that’s resolved, things will start to flow. So I think look for more from direct from Nanoco more like Wah Hong, a question how many more, but probably one more in the next 12 months.
Unidentified Analyst
And can you just go into a bit more depth on the relationship with Wah Hong? How it’s actually working in practice? Now you’re having people in their operations, how you’re discussing things with their customers in order to get perhaps sales moving along?
Michael Edelman
Yes. So relationship is very close, so and on multi-levels. So on the engineering, technical level, our teams are on their production lines every two weeks. We’ve been running since we’ve signed, we’ve been running large trials and we’re rotating people through Taiwan, so optimizing some of the coding trials, so we get films that runs on TVs, as you’ve seen outside.
On the commercial side, it’s also very close. So we are – our commercial teams spend time jointly at the brands, the OEMs, and then working down the supply chain with Wah Hong. So you have a TV brand like a Sony, who actually is – doesn’t make anything. And they then have all their suppliers, so you then work back. You have a TV assembler and works back into a panel maker then to the various components like film. So with Wah Hong, Nanoco and Wah Hong are in each together working each partner in the chain, as well as the brands.
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Unidentified Analyst
And just the expectation that you could replace existing cadmium quantum dots in that supply chain, or are you really waiting for new products to come out that would include to your quantum dots?
Michael Edelman
So they’re actually not a huge number of cadmium containing TVs out there. I mean, Hisense have one and TCL have one. Both of those companies are looking to move one away from the rail, because I don’t know if you’ve heard our competitor QD Vision has exited the rail business. So they’ve shutdown their rail operation in Taiwan totally outsold gone.
And so those companies are either going to get rails from – trying to get rails from local Chinese suppliers who are trying to make cadmium dots, cadmium is easier to make the cad-free. But they’re all, we’re actively engaged with all those guys and are actively trying to swap to a cad-free film.
Unidentified Analyst
Excellent.
Michael Edelman
But I just one more comment on that, the rail system that you see. The rail does not work with high dynamic range. So for the latest newest 4K technology with Dow’s and versus its HDR-enabled and you can use around, so it sort of kill them.
Unidentified Analyst
Thomas [indiscernible]
Michael Edelman
Hi, Tom.
Unidentified Analyst
How does the shift 24 hour shifts in one contract margins, because that was one issue you raised before as potential impediments to moving from just day shift?
Michael Edelman
I think, we talk about margins on the quantum dots themselves. I mean, quantum dots are seeding the high on the resin, we talk about 60% Runcorn. I think, have you been to Runcorn, Thomas? It’s a private, it’s a large lab, it’s a private lab. So it’s – if you’re building something from scratch, if you like what Dow has done, what Merck has done, you wouldn’t have as many people.
So, people are roughly 60% of our cost , as we scale beyond our currents – our current configuration, we need to evaluate. Do we put in larger vessels, which we can get the same amount. We get larger amounts out with smaller numbers of people, but we’re currently looking at that. So shifts on our current facility gives us – enables us to get into capacity very, very quickly, or as quickly as we can train people to do that. But we’re absolutely, we’re – if you’re setting up from scratch, you wouldn’t do it that way. Joe Mark?
Joe Mark
Joe Mark from SunTrust. You displayed the first lighting products at LuxLive last year, so that’s almost a year ago. Can you explain to us a little bit more detail where exactly sales are going, sort of flow, they’d stop taking off by now?
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Michael Edelman
Yes. So, LuxLive generated a lot of interest for the technology in a lot of different areas. So, museum lighting, general lighting, horticultural lighting, facemask suite of beauty lighting, and it’s one of the challenges we always have with quantum dot technology. It can be used in so many places. The challenge is always, how do you corral that into something meaningful that fits with our core capability and our ability to serve the market. And so, a lot of those we’ve parked and rather than chasing down lots of different raven homes and we chosen instead to focus on the horticultural lighting is going to be the main one with a bit of sight on the beauty therapy.
Joe Mark
So I have a commercial sale started then of that [Multiple Speakers] to quantum?
Michael Edelman
We’ve had some commercial, yes, some small.
Joe Mark
Sorry to interrupt, again, just scrolling up on that, there were $20,000 of sales in the UK, do I take it that’s small lighting?
Michael Edelman
Probably, yes.
Joe Mark
Yes. Okay, which follows on from James question.
Michael Edelman
Which is insignificant [Multiple Speakers]
Joe Mark
Better than nothing out to 20,000. And I’m sorry the second question before I hand over the mike was oh, yes, the quantum dot sets – the IHS data shows it’s being sold 5 odd million, however, loss this year. So who is that hurting from? I think 5 odd million of quantum or cadmium-free quantum dot, sorry quantum dot free, can be a free quantum dots, is that all coming from Hansol or RoHS?
Michael Edelman
Well, that’s the only other supplier of cad-free material is – meaningful supplier is Hansol.
Joe Mark
Yes.
Michael Edelman
That’s not supply, that’s projected.
Joe Mark
Right.
Michael Edelman
We know that Hansol don’t have that capacity.
Joe Mark
Yes.
Michael Edelman
So that’s a projection.
Joe Mark
Right. And then a definition of cadmium-free wouldn’t include Nanosys’ RoHS compliant cadmium line product?
Michael Edelman
No, Samsung is not going to use any cadmium.
Joe Mark
Okay. Thanks.
Michael Edelman
So cadmium light is still cadmium.
Unidentified Analyst
[indiscernible] of medicine. Just looking outside of display, could you just give an indication of how deep into the supply chain, deep into the technology you will go in those lower volume markets to get enough revenue from essentially low volume products?
Michael Edelman
So how much is the question? What investment we’re going to make in lighting or…
Unidentified Analyst
Well, I mean, just life sciences, because some of the other markets out of display are some lower volume markets. I’m interested in learning how your business model might differ in these lower market – low volume markets versus the licensing and the fewer quantum dot display?
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Michael Edelman
To be decided really. As we enter the lighting market, we’re actively talking to one of the leaders in the horticultural area there and trying to work out how to best work together, how to best commercialize technology for that market. So we’re not sure. Likewise with life sciences, we’re not sure what it’s going to look like, yes.
David Blain
It could be a very similar business model though to the display with royalties milestones and if we get into diagnostics that sort of thing, that’s going to be very similar.
Michael Edelman
I think life-science is probably very much so on the horticulture, we’re not sure. I agree with you. Michael?
Unidentified Analyst
[indiscernible] When do you think a TV set containing your dots will actually be on sale?
Michael Edelman
It’s a good question. I can’t give you a specific answer.
Unidentified Analyst
Is it likely to be this year I mean, you – the previous answer you gave about Hansol suggested you were looking for a big increase in sales in the latter part of this year. But Hansol doesn’t have that capacity. Will you – does that – is that relevant for you in your dots?
Michael Edelman
V ery relevant. We’re relevant for our partner Dow.
Unidentified Analyst
So, in effect, you are expecting to see your dots in sets for sale this year?
Michael Edelman
We’ll see.
Unidentified Analyst
There has been speculation that you might need more money if you’re continue – continuing your pace of R&D and to expand Runcorn, have you got any comment on that?
Michael Edelman
Sure. We don’t expect any more money. We believe – so we’ve expanded since last year, but employee numbers now are flat. We’ve spent a lot of time working with our employees and the contracts to get people to working flexible arrangement. We have – we’re able to move people around the organization.
So as we move or as we move to 24/7, we haven’t increased the number of people moving to 24/7 within the organization. So we don’t expect to see costs go up anymore. We also expect to see strong revenue starting to flow through our direct sales and materials out of Runcorn. So that combination of keeping costs under control, we’ve always been very good at managing our costs with the cash we have combined with the revenues coming and we think we’re in a very strong position.
Unidentified Analyst
Mike, you’ve talked about QD Vision shutting down their rail business and there’s also the spat between QD and Nanosys’. Could you just comment about the competitive market what’s going on with the other players and their progress in terms of developing the product?
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Michael Edelman
Sure. So if you look at the main other players, you’ve got QD Vision and Nanosys. And QD Vision has exited from basically the rail business, so which in the short-term means, they’ve exited from the TV business in its entirety that company has dramatically slimed themselves down from about 160 to 20 people. And they’re focused on new generations or new ways to employ quantum dots and other applications.
Nanosys is working with 3M still to promote – 3M working are promoting their cadmium-based film. They launched a – what can describe as a cadmium light film, which they’re trying to promote. We haven’t seen it in the marketplace yet. So we’ll see, whether it takes off at all. I think, I mentioned before that I don’t see any of the Western facing OEMs adopting it.
They’re working hard to try and move forward on cad-free, and we’ll see where they get to. And we’ve seen some Chinese players enter the market on – in cadmium-based materials, managing nanotech around for a while as a cadmium producer and trying to supply cadmium-based materials.
The lawsuit between Nanosys and QD Vision, it’s interesting, and it’s sucking a lot of cash from both of those companies. We estimate it’s up to $1 million a month that it’s sucking. QD Vision don’t have any cash. Nanosys have limited cash. It was a £13 lawsuit with 400 claims, and that’s a lot of claims now this is all public domain. The judge in California recently went back to Nanosys and told them 400 claims is not a viable lawsuit. They’re not willing to waste U.S. taxpayer money on that slim it down to 20, which they’re working on doing and we’ll see where it goes.
But it’s not – it doesn’t strike me as a very economic lawsuit. So we’re not quite sure what Nanosys’ intentions are. I mean, if you looked at damages that would be awarded in the U.S. Court if Nanosys’ won the suite basically the way you calculate it as you go back six years, you look at six years worth of revenue – historic revenue associated with the – what they’re trying is infringing, apply a royalty rate to that, and you come up with the damages then, which by our calculation, we can’t get any more than if they won much more than $1.5 million. So they must be trying do something else or they expected QD Vision to rollover very quickly, which they didn’t.
Unidentified Analyst
And with the competing technologies of OLED, do you see any movement in the price comparison that they’re able to achieve now?
Michael Edelman
We haven’t not in the last six months. We’re still – they’re trying, they’re still working to promote. But if you look at the TVs and certainly in the U.S., the big seller of TVs is the company called Best Buy. So if you go into their shops, you see the Samsung QD TVs front and center and the OLED TVs sort of along the side not being promoted. And I don’t know how I haven’t been in the shops here. I don’t know what it’s like in the UK, but certainly in the U.S. that’s what happening.
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Unidentified Analyst
[indiscernible] again. What is the main thrust of your R&D now?
Michael Edelman
Right. So, R&D, we’re in now a rapid product improvement cycle and that takes a number of firms . One is the dots themselves, so increased optical performance the dots, which is measured in the width of the peak, the brightness of the peak, and the stability of those dots in operating systems .
Other areas are in the transport system, the resin, and the – after the component itself. So how to improve cost – would improve performance reduce costs, which is a consistent theme with the display industry. We have to always look at how do we very systematically and aggressively keep ramping our performance up while we pull cost out of the systems. Note :my take is CAPEX AND OPEX ISSUES
I think, there’s a lot of focus on that. And then there’s some focus on and we are working – we’re in Manchester, which on the home of quantum dots with the home of graphene, got a relationship with Nigel, our CTO and one of the Nobel Prize winners are close and we’re working together and combining graphene and quantum dots and QD stuff and some interesting stuff that we don’t talk much about that’s way out that we’re doing and we’re filing on 3M.
Unidentified Analyst
And with the – you preferred cost, are there any specific bars you can get to which then open up other markets, such as smaller displays and so on?
Michael Edelman
Yes, we’re seeing now. The major interest that everyone is focused on is on the large high-end TVs. We’re seeing increasing interest and we’re working on programs on monitors. So a lot more work on monitors and some of the leading monitor producers in the world, where people using monitors for gaming and monitor color. Great, I think, okay, one more question, and then we’ll wrap up.
Unidentified Analyst
I’m Michael, NFACG. Just a quick question. Would you be able to give us any guide on the average selling price of the square meter film?
Michael Edelman
Of the average selling price of the square meter of film, yes. And if we look at the price in the market, I mean, what 3M has been setting the cadmium price at about $100 a square meter. And Samsung pay a lot less than that, but just give you a rough idea.
Unidentified Analyst
And the other thing, roughly, how many dots going to the square meter of film gram wise?
Michael Edelman
It depends between a half a gram and a gram.
Unidentified Analyst
Osram, the joint development agreement with Osram, is it being the new this year?
Michael Edelman
We’re not sure. We’re – we may strategically move away from that, because what Osram is trying to do and what we’re trying to do are very different . So Osram is – we’ve been working with Osram for a long time. And they haven’t moved forward with any of our ideas or technologies into a product. And they’ve been very, very focused only on getting high temperature dots, dots working directly on the chip like a faucet [ph]. And that’s a tough technical hurdle.
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The amount of money and revenue we’re getting from Osram was pretty small less than $200,000 a year, which doesn’t justify the spend in that. So we may take an active decision to pull away from that . As I said, we are focused, because they’re focused on general lighting, which is the most difficult or challenging market to enter from a price point of view and from a technology, if you’re trying to get the dots on a chip, whereas if we focus on areas that we know we can achieve today like the horticultural lighting that can use film. We – the margins are very, very large, and we can do it today.
Unidentified Analyst
Sure. One final thing, we’re hearing a lot of talk about the new Samsung TVs that talking about this QLED TVs. Is it something you’re working on?
Michael Edelman
We’ve had – we’ve worked on QLED is electroluminescent quantum dots. We’ve had a program on electroluminescence quantum dots for about eight years.
Unidentified Analyst
Okay. So you’re willing to. Okay.
Michael Edelman
Yes, there’s couple generations of TVs with quantum dots that are going to come. You have photoluminescence, which is what’s going on now with film. The next generation of dots, which will require a large quantity of dots is using dots as color filters is the next guys. And then colored filters then will move down potentially to electroluminescence, and it’s not going to be in three years as Samsung says, it will take a bit longer.
But color filters could be in a few years. And it’s one of Merck’s major interest in this area is the ability to use quantum dots’s new generations of the color filters in TVs called CCM, a Color Change Media type TVs. So it’s interesting. And for us, it’s very interesting, because the volumes and material required are much greater than what would be required to service the 20 million TVs predicted today.
So having mass production from Merck’s and Dows is very important. But there’s a good – there’s a very clear roadmap of the different technologies that are coming out. And I guess, what’s nice is, it makes it easy for us as Samsung’s talking about it, so it enables us to talk easily about.
Michael Edelman
Great. Thank you very much.
From the Nanoco webcast with some bolded highlights.Funny Edelman doesnt even acknowledge QMC as a competitor.Revenue was abit more than double QMC's this year..fantastic..not !
http://seekingalpha.com/amp/article/4011480-n...transcript
Revenues for the year, which David will talk more about were basically £0.5 million.
If we look at TVs by size, not surprisingly the dominant size is the 50 to 60-inch range, and that coincides with the high-end TVs that most people are buying today. If we look at the cut or the breakdown between – the predicted breakdown between cadmium and cadmium-free, cadmium-free absolutely dominates. It dominates today as in 2016 and will continue to dominate going forward. And we’re seeing that in all the western facing brands, whether you’re Samsung, or whether you’re Apple, whether you’re LG, these companies have all made statements declaring that they will not entertain cadmium, and they’re all very focused on cad-free.
Runcorn, which has always been and many of you who’ve been to Runcorn and many of you in the room who’ve been to Runcorn is just a small pilot plant. I’m through some process innovation that’s happened over the last six months. We’ve been able to significantly increase the yields of Runcorn by a factor of 10.
So all of a sudden, Runcorn capacity running in its current configuration on shift can produce somewhere around 500 kilos a year. With very modest investment, we can get that up a lot more. But Runcorn now is relevant, where before it was a test facility, where we were able to trial our material at larger scale and transfer that to the licensees.
A little update on RoHS. So, it’s a lengthy process. We learned a lot about Europe going through this process. But there’s – the European Commission has got an ongoing review of cadmium-based quantum dots for display in Europe. In 2015, European parliament voted overwhelmingly to not extend any exemptions. 3M has been aggressively pushing for an exemption.
European Commission asked for another study to be done, which was done by the Öko-Institut. They came out, I think, in early August. September/August, they came out in July suggesting that there should be an extension for three years and display lighting should not – there should be no extension for lighting. And that was the recommendation of the European Commission then takes out and goes around the member states, which they’re doing now, as well as consulting with interested folks like Nanoco.
Question-and-Answer Session
Q - Unidentified Analyst
Ken [indiscernible] from Stifel. A couple of questions on production and way you’re at. It looks like you’ve sold a couple of kilos of quantum dots last year and maybe had several kilos in start to judge by the figures. If you’ve been producing at 500 kilos a year, you can produce 100 by now this year, which I imagine you haven’t. But firstly is that about right, and where are we at in terms of Wah Hong and Merck in the quick start. How – what can you say about where we are now in terms of the amount of quantum dots you’ve sold today?
Michael Edelman
So we’ve – in terms of production, you’re right on production in terms of what we sold, we haven’t sold a huge amount . The majority of the material is going – is being converted into resin and being shipped to Taiwan for larger and larger coding trials and optimization of the coding lines at Wah Hong. So that has to happen.
Bear in mind, Ken, we signed these agreements just a few months ago. So, there has been a tremendous amount of progress at Wah Hong in getting that line up. Line number one, optimized, which can do up to 60 inches. They’ve now brought forward – I’m really pleased, they’ve brought forward by 12 months of large capital investment on a second coding line, which will take then to a web that would do 100-inch TVs, and that’s being installed now and should be operational in the New Year. So that’s where we are with Wah Hong.
Merck, again, just announced in August, they’ve taken their first kilos, which we shipped, which are currently haven’t made it to a customer, because they’re being held up in customs, which was taken time in one of the countries in Asia. And it’s taking its time to resolve, which has now been resolved. Once that gets released, it will go to various film coders who will then start trials.
Merck is the tech transfer. We’re very active in the tech transfer process up to the point, where we’re now at August/September, we’re two months in with Merck. And they’re starting to run initial trials on their pilot plants in Darmstadt, so that’s very, very fast.
Merck, you’ve got experience with quantum dots. They’ve been working – last year, they bought an Israeli quantum dot company. So they perhaps have an advantage over, where Dow started. Dow was starting from scratch. Merck knew what was going on, had experienced with Qlight out of Israel, which was all cadmium-based They then made the decision that there was no way that they were going to launch any cadmium containing product. We did the deal and they’re now active in technology.
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Unidentified Analyst
[indiscernible] from Peel Hunt. Mike, could you just comment about the supply chain? Now, you’ve got three key partners set up. Should we think not just sort of cool partners going forward? Would you add anymore in future? And would they be similar sorts of agreements in terms of royalties and product sales, or would it just be product sales and more of a sort of transactional basis?
Michael Edelman
I think where we have space to have, where you’ll see us out over the next 12 months is companies that look more like Wah Hong. We’re going to hang tight with core manufacturing with Dow and Merck for now. We think with Dow and Merck and Nanoco, there’s probably enough, what we’ll see where it gets up. But with film coding, there’s millions of square meters of film that needs to be coded that can be serviced from those three.
So we’re actively engaged now with one other film coder, which looks like Wah Hong. Merck and Dow are both engaged with a whole range of film coders. I mean, Dow is active with one who is producing their own number, who are producing samples today that they’re supplying into the market. And Merck has a group of coders they work with already who they’re trying to get our material to been held up by customs. Once that’s resolved, things will start to flow. So I think look for more from direct from Nanoco more like Wah Hong, a question how many more, but probably one more in the next 12 months.
Unidentified Analyst
And can you just go into a bit more depth on the relationship with Wah Hong? How it’s actually working in practice? Now you’re having people in their operations, how you’re discussing things with their customers in order to get perhaps sales moving along?
Michael Edelman
Yes. So relationship is very close, so and on multi-levels. So on the engineering, technical level, our teams are on their production lines every two weeks. We’ve been running since we’ve signed, we’ve been running large trials and we’re rotating people through Taiwan, so optimizing some of the coding trials, so we get films that runs on TVs, as you’ve seen outside.
On the commercial side, it’s also very close. So we are – our commercial teams spend time jointly at the brands, the OEMs, and then working down the supply chain with Wah Hong. So you have a TV brand like a Sony, who actually is – doesn’t make anything. And they then have all their suppliers, so you then work back. You have a TV assembler and works back into a panel maker then to the various components like film. So with Wah Hong, Nanoco and Wah Hong are in each together working each partner in the chain, as well as the brands.
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Unidentified Analyst
And just the expectation that you could replace existing cadmium quantum dots in that supply chain, or are you really waiting for new products to come out that would include to your quantum dots?
Michael Edelman
So they’re actually not a huge number of cadmium containing TVs out there. I mean, Hisense have one and TCL have one. Both of those companies are looking to move one away from the rail, because I don’t know if you’ve heard our competitor QD Vision has exited the rail business. So they’ve shutdown their rail operation in Taiwan totally outsold gone.
And so those companies are either going to get rails from – trying to get rails from local Chinese suppliers who are trying to make cadmium dots, cadmium is easier to make the cad-free. But they’re all, we’re actively engaged with all those guys and are actively trying to swap to a cad-free film.
Unidentified Analyst
Excellent.
Michael Edelman
But I just one more comment on that, the rail system that you see. The rail does not work with high dynamic range. So for the latest newest 4K technology with Dow’s and versus its HDR-enabled and you can use around, so it sort of kill them.
Unidentified Analyst
Thomas [indiscernible]
Michael Edelman
Hi, Tom.
Unidentified Analyst
How does the shift 24 hour shifts in one contract margins, because that was one issue you raised before as potential impediments to moving from just day shift?
Michael Edelman
I think, we talk about margins on the quantum dots themselves. I mean, quantum dots are seeding the high on the resin, we talk about 60% Runcorn. I think, have you been to Runcorn, Thomas? It’s a private, it’s a large lab, it’s a private lab. So it’s – if you’re building something from scratch, if you like what Dow has done, what Merck has done, you wouldn’t have as many people.
So, people are roughly 60% of our cost , as we scale beyond our currents – our current configuration, we need to evaluate. Do we put in larger vessels, which we can get the same amount. We get larger amounts out with smaller numbers of people, but we’re currently looking at that. So shifts on our current facility gives us – enables us to get into capacity very, very quickly, or as quickly as we can train people to do that. But we’re absolutely, we’re – if you’re setting up from scratch, you wouldn’t do it that way. Joe Mark?
Joe Mark
Joe Mark from SunTrust. You displayed the first lighting products at LuxLive last year, so that’s almost a year ago. Can you explain to us a little bit more detail where exactly sales are going, sort of flow, they’d stop taking off by now?
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Michael Edelman
Yes. So, LuxLive generated a lot of interest for the technology in a lot of different areas. So, museum lighting, general lighting, horticultural lighting, facemask suite of beauty lighting, and it’s one of the challenges we always have with quantum dot technology. It can be used in so many places. The challenge is always, how do you corral that into something meaningful that fits with our core capability and our ability to serve the market. And so, a lot of those we’ve parked and rather than chasing down lots of different raven homes and we chosen instead to focus on the horticultural lighting is going to be the main one with a bit of sight on the beauty therapy.
Joe Mark
So I have a commercial sale started then of that [Multiple Speakers] to quantum?
Michael Edelman
We’ve had some commercial, yes, some small.
Joe Mark
Sorry to interrupt, again, just scrolling up on that, there were $20,000 of sales in the UK, do I take it that’s small lighting?
Michael Edelman
Probably, yes.
Joe Mark
Yes. Okay, which follows on from James question.
Michael Edelman
Which is insignificant [Multiple Speakers]
Joe Mark
Better than nothing out to 20,000. And I’m sorry the second question before I hand over the mike was oh, yes, the quantum dot sets – the IHS data shows it’s being sold 5 odd million, however, loss this year. So who is that hurting from? I think 5 odd million of quantum or cadmium-free quantum dot, sorry quantum dot free, can be a free quantum dots, is that all coming from Hansol or RoHS?
Michael Edelman
Well, that’s the only other supplier of cad-free material is – meaningful supplier is Hansol.
Joe Mark
Yes.
Michael Edelman
That’s not supply, that’s projected.
Joe Mark
Right.
Michael Edelman
We know that Hansol don’t have that capacity.
Joe Mark
Yes.
Michael Edelman
So that’s a projection.
Joe Mark
Right. And then a definition of cadmium-free wouldn’t include Nanosys’ RoHS compliant cadmium line product?
Michael Edelman
No, Samsung is not going to use any cadmium.
Joe Mark
Okay. Thanks.
Michael Edelman
So cadmium light is still cadmium.
Unidentified Analyst
[indiscernible] of medicine. Just looking outside of display, could you just give an indication of how deep into the supply chain, deep into the technology you will go in those lower volume markets to get enough revenue from essentially low volume products?
Michael Edelman
So how much is the question? What investment we’re going to make in lighting or…
Unidentified Analyst
Well, I mean, just life sciences, because some of the other markets out of display are some lower volume markets. I’m interested in learning how your business model might differ in these lower market – low volume markets versus the licensing and the fewer quantum dot display?
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Michael Edelman
To be decided really. As we enter the lighting market, we’re actively talking to one of the leaders in the horticultural area there and trying to work out how to best work together, how to best commercialize technology for that market. So we’re not sure. Likewise with life sciences, we’re not sure what it’s going to look like, yes.
David Blain
It could be a very similar business model though to the display with royalties milestones and if we get into diagnostics that sort of thing, that’s going to be very similar.
Michael Edelman
I think life-science is probably very much so on the horticulture, we’re not sure. I agree with you. Michael?
Unidentified Analyst
[indiscernible] When do you think a TV set containing your dots will actually be on sale?
Michael Edelman
It’s a good question. I can’t give you a specific answer.
Unidentified Analyst
Is it likely to be this year I mean, you – the previous answer you gave about Hansol suggested you were looking for a big increase in sales in the latter part of this year. But Hansol doesn’t have that capacity. Will you – does that – is that relevant for you in your dots?
Michael Edelman
V ery relevant. We’re relevant for our partner Dow.
Unidentified Analyst
So, in effect, you are expecting to see your dots in sets for sale this year?
Michael Edelman
We’ll see.
Unidentified Analyst
There has been speculation that you might need more money if you’re continue – continuing your pace of R&D and to expand Runcorn, have you got any comment on that?
Michael Edelman
Sure. We don’t expect any more money. We believe – so we’ve expanded since last year, but employee numbers now are flat. We’ve spent a lot of time working with our employees and the contracts to get people to working flexible arrangement. We have – we’re able to move people around the organization.
So as we move or as we move to 24/7, we haven’t increased the number of people moving to 24/7 within the organization. So we don’t expect to see costs go up anymore. We also expect to see strong revenue starting to flow through our direct sales and materials out of Runcorn. So that combination of keeping costs under control, we’ve always been very good at managing our costs with the cash we have combined with the revenues coming and we think we’re in a very strong position.
Unidentified Analyst
Mike, you’ve talked about QD Vision shutting down their rail business and there’s also the spat between QD and Nanosys’. Could you just comment about the competitive market what’s going on with the other players and their progress in terms of developing the product?
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Michael Edelman
Sure. So if you look at the main other players, you’ve got QD Vision and Nanosys. And QD Vision has exited from basically the rail business, so which in the short-term means, they’ve exited from the TV business in its entirety that company has dramatically slimed themselves down from about 160 to 20 people. And they’re focused on new generations or new ways to employ quantum dots and other applications.
Nanosys is working with 3M still to promote – 3M working are promoting their cadmium-based film. They launched a – what can describe as a cadmium light film, which they’re trying to promote. We haven’t seen it in the marketplace yet. So we’ll see, whether it takes off at all. I think, I mentioned before that I don’t see any of the Western facing OEMs adopting it.
They’re working hard to try and move forward on cad-free, and we’ll see where they get to. And we’ve seen some Chinese players enter the market on – in cadmium-based materials, managing nanotech around for a while as a cadmium producer and trying to supply cadmium-based materials.
The lawsuit between Nanosys and QD Vision, it’s interesting, and it’s sucking a lot of cash from both of those companies. We estimate it’s up to $1 million a month that it’s sucking. QD Vision don’t have any cash. Nanosys have limited cash. It was a £13 lawsuit with 400 claims, and that’s a lot of claims now this is all public domain. The judge in California recently went back to Nanosys and told them 400 claims is not a viable lawsuit. They’re not willing to waste U.S. taxpayer money on that slim it down to 20, which they’re working on doing and we’ll see where it goes.
But it’s not – it doesn’t strike me as a very economic lawsuit. So we’re not quite sure what Nanosys’ intentions are. I mean, if you looked at damages that would be awarded in the U.S. Court if Nanosys’ won the suite basically the way you calculate it as you go back six years, you look at six years worth of revenue – historic revenue associated with the – what they’re trying is infringing, apply a royalty rate to that, and you come up with the damages then, which by our calculation, we can’t get any more than if they won much more than $1.5 million. So they must be trying do something else or they expected QD Vision to rollover very quickly, which they didn’t.
Unidentified Analyst
And with the competing technologies of OLED, do you see any movement in the price comparison that they’re able to achieve now?
Michael Edelman
We haven’t not in the last six months. We’re still – they’re trying, they’re still working to promote. But if you look at the TVs and certainly in the U.S., the big seller of TVs is the company called Best Buy. So if you go into their shops, you see the Samsung QD TVs front and center and the OLED TVs sort of along the side not being promoted. And I don’t know how I haven’t been in the shops here. I don’t know what it’s like in the UK, but certainly in the U.S. that’s what happening.
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Unidentified Analyst
[indiscernible] again. What is the main thrust of your R&D now?
Michael Edelman
Right. So, R&D, we’re in now a rapid product improvement cycle and that takes a number of firms . One is the dots themselves, so increased optical performance the dots, which is measured in the width of the peak, the brightness of the peak, and the stability of those dots in operating systems .
Other areas are in the transport system, the resin, and the – after the component itself. So how to improve cost – would improve performance reduce costs, which is a consistent theme with the display industry. We have to always look at how do we very systematically and aggressively keep ramping our performance up while we pull cost out of the systems. Note :my take is CAPEX AND OPEX ISSUES
I think, there’s a lot of focus on that. And then there’s some focus on and we are working – we’re in Manchester, which on the home of quantum dots with the home of graphene, got a relationship with Nigel, our CTO and one of the Nobel Prize winners are close and we’re working together and combining graphene and quantum dots and QD stuff and some interesting stuff that we don’t talk much about that’s way out that we’re doing and we’re filing on 3M.
Unidentified Analyst
And with the – you preferred cost, are there any specific bars you can get to which then open up other markets, such as smaller displays and so on?
Michael Edelman
Yes, we’re seeing now. The major interest that everyone is focused on is on the large high-end TVs. We’re seeing increasing interest and we’re working on programs on monitors. So a lot more work on monitors and some of the leading monitor producers in the world, where people using monitors for gaming and monitor color. Great, I think, okay, one more question, and then we’ll wrap up.
Unidentified Analyst
I’m Michael, NFACG. Just a quick question. Would you be able to give us any guide on the average selling price of the square meter film?
Michael Edelman
Of the average selling price of the square meter of film, yes. And if we look at the price in the market, I mean, what 3M has been setting the cadmium price at about $100 a square meter. And Samsung pay a lot less than that, but just give you a rough idea.
Unidentified Analyst
And the other thing, roughly, how many dots going to the square meter of film gram wise?
Michael Edelman
It depends between a half a gram and a gram.
Unidentified Analyst
Osram, the joint development agreement with Osram, is it being the new this year?
Michael Edelman
We’re not sure. We’re – we may strategically move away from that, because what Osram is trying to do and what we’re trying to do are very different . So Osram is – we’ve been working with Osram for a long time. And they haven’t moved forward with any of our ideas or technologies into a product. And they’ve been very, very focused only on getting high temperature dots, dots working directly on the chip like a faucet [ph]. And that’s a tough technical hurdle.
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The amount of money and revenue we’re getting from Osram was pretty small less than $200,000 a year, which doesn’t justify the spend in that. So we may take an active decision to pull away from that . As I said, we are focused, because they’re focused on general lighting, which is the most difficult or challenging market to enter from a price point of view and from a technology, if you’re trying to get the dots on a chip, whereas if we focus on areas that we know we can achieve today like the horticultural lighting that can use film. We – the margins are very, very large, and we can do it today.
Unidentified Analyst
Sure. One final thing, we’re hearing a lot of talk about the new Samsung TVs that talking about this QLED TVs. Is it something you’re working on?
Michael Edelman
We’ve had – we’ve worked on QLED is electroluminescent quantum dots. We’ve had a program on electroluminescence quantum dots for about eight years.
Unidentified Analyst
Okay. So you’re willing to. Okay.
Michael Edelman
Yes, there’s couple generations of TVs with quantum dots that are going to come. You have photoluminescence, which is what’s going on now with film. The next generation of dots, which will require a large quantity of dots is using dots as color filters is the next guys. And then colored filters then will move down potentially to electroluminescence, and it’s not going to be in three years as Samsung says, it will take a bit longer.
But color filters could be in a few years. And it’s one of Merck’s major interest in this area is the ability to use quantum dots’s new generations of the color filters in TVs called CCM, a Color Change Media type TVs. So it’s interesting. And for us, it’s very interesting, because the volumes and material required are much greater than what would be required to service the 20 million TVs predicted today.
So having mass production from Merck’s and Dows is very important. But there’s a good – there’s a very clear roadmap of the different technologies that are coming out. And I guess, what’s nice is, it makes it easy for us as Samsung’s talking about it, so it enables us to talk easily about.
Michael Edelman
Great. Thank you very much.
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