ParkerVision 2011Q1 Conference Call
May 24, 2011
Walter Schenker, with MAZ Partners
Greg Lewin, from TLF Capital
Robert Cohen, with Western International
Charles Bellows with White Pine Capital
Joe Graves, a private investor
Sayid: Good afternoon, and welcome to the ParkerVision, Incorporated first quarter 2011 conference call and webcast. Today's conference is being recorded, and all listeners are in a listen only mode. Following the presentation, we will open the conference call for questions and answers. The company has requested that questions and answers be limited to one question and one follow up per caller. And it is now time for opening remarks and introductions. I would like to turn the conference over to Ron Stabiner with the Wall Street Group. Please go ahead, sir.
Ron Stabiner: Thank you, Sayid. Good afternoon and thank you for joining us. Before we get started I would like to remind listeners that this conference call will contain forward looking statements which involve known and unknown risks and uncertainties about our business and the economy and other factors that may cause actual results to differ materially from our expected achievements and anticipated results. Included in these factors is the ability to maintain technological advantages in the marketplace, the ability to increase manufacturing capacity to meet demands, achieving timely market introduction, acceptance of product, maintaining our patent protection, and the availability of capital, among others. Given these uncertainties and other factors for our business, listeners are cautioned not to place undue reliance on any forward looking statement contained within this conference call.
Additional materials concerning these and other risk factors can be found in our filings with the Security and Exchange Commission.
On today's call, we will hear first from Cindy Poehlman, Chief Financial Officer of ParkerVision, who will provide a review of the company's first quarter results. And she will be followed by Jeffrey Parker, Chief Executive Officer of ParkerVision, who will provide an update on the business of the company. And with that, I will now turn the call over to Cindy. Please go ahead.
Cindy Poehlman: Thank you, Ron, and welcome to those of you joining us this afternoon for ParkerVision's 2011 first quarter conference call. On May 16th, we reported a net loss of $3.4 million, or six cents per share for the first quarter of 2011. This was a 15 percent reduction from our net loss in the first quarter of 2010 of $4 million, or 10 cents per share.
The reduction in our net loss was the result of a nearly $600,000 decrease in our operating expenses. Roughly half of that decrease was due to reduced share base compensation expense, as we've had certain equity awards from previous years that have become fully vested and new equity awards have been fairly limited.
The remaining reduction in the operating expense was primarily the result of certain cost containment measures. We did see an increase in outside design services related to our preparation for production; however, these increases were more than offset by decreases in other areas, in particular, our prototype fabrication costs.
We ended the first quarter with approximately $8.4 million in cash and short term investments. Cash used for both operations and investments in our patent portfolio totaled $2.4 million for the first quarter of 2011. This compares to our 2010 quarterly average of $2.8 million per quarter.
As a company, we're continually reviewing cash usage to insure that our cash is utilized in the most efficient way possible. That said, we do anticipate that our cash usage may fluctuate from quarter to quarter, particularly as we incur costs for production tooling once we begin volume production of our chipset.
And with that, I will now turn the call over to our CEO, Jeff Parker, for an update on current sales efforts and other business activities.
Jeff Parker: OK, thank you, Cindy, and thank you all for joining us today. So, in our last update to you a few weeks ago, I indicated that we had a number of scheduled activities that we believe would help accelerate the pace of moving our company forward to a successful commercialization of our product. While I don't have an OEM order to announce to you today, we remain confident that we will realize the commercial launch of our product in the very near future. Our number one priority continues to be securing our first order for our PVM 2510, which is our CDMA, 1xEVDO RF solution that's used with VIA Telecom's, seven series base-band processors in the high growth Asian markets. While the process is taking longer than we had expected, it is not a cause for undue concern.
As you recall, our tested and validated product was officially made available for orders only recently. As our solution gets fit into products, our customers have and will have their own various internal priorities that have nothing to do with ParkerVision or our advanced solution. And we are still readying ourselves for the production of initial orders that we believe are forthcoming.
Also, just as I remain fully committed to launching our CDMA product, we've been assured from top management at VIA Telecom that they share that goal as well, and as such are assisting us at the highest levels of their company. Both our firms benefit from the successful launch of this product.
ParkerVision benefits by enjoying a select group of mobile handset component vendors. And VIA benefits in having the technical superiority of the best overall CDMA power consumption in the industry, bar none, which is not an insignificant competitive benefit.
So, while our primary goal is securing our first order, close behind that is the development of additional customers and strategic partner relationships. Since the completion of our product and testing, we've received interest beyond our initial targeted customer, to which our organization has been responsive.
And from the resulting recent product demonstrations, which are complemented by our extensive test results, I can tell you that our sales calls are vastly more straightforward and productive than those made earlier during our product development cycle.
While our initial offering is designed for the Asian marketplace and its specific frequency bands, we are also able to show the development platform from which our product was created. And provide a crisp and easily understood roadmap to our next product, which is a CDMA product that supports frequency bands, expanding our offering in the handsets shipped in North America and other geographies around the world.
It is also now much easier to show that it's a highly predictable development path to products for additional mobile phone standards, such as 4G, LTE, which will enable us to engage in the pursuit of both near term product sales based on CDMA solutions as well as midterm strategic product development relationships based on the benefits we bring to 4G.
So, while we are maintaining our short term focus on securing the initial product order and the related production ramp, we are expanding the possible sales channels for this existing product. And we're also looking towards strategic relationships for future product funding, development and sales.
These short and midterm priorities are complementary. As you might imagine, the parties who are interested in our current product offering will almost certainly be interested in a relationship that allows them first access to future products, as well.
I remain confident that an important audience is quickly learning about the benefits of our D2P technology, particularly in the area of power savings and heat reduction. And that this will drive sales and strategic relationships forward.
One question that I hear from shareholders is that, since it's taken longer to get into shipping handsets, have we missed our window of opportunity for this technology and its first product? And the answer simply is not at all. From the OEMs that we speak with as recently as last week, the industry's interests and need for significant reductions of power consumption to 3G and 4G handsets continued to be on the rise.
The topic of battery life shortcomings is even found in recent industry reviews of the latest smartphones and their associated blogs. Excitement for our product offering continued to be very strong during the meetings we've had with potential customers and partners. In fact, we hear our own messaging repeated back to us as engineers review our solutions and tell us about the importance of reduced power consumption.
One reason for this is the growing use of wireless networks for higher speed Internet connectivity. As an example, did you know that a CDMA 3G data session can consume up to 10 times the battery capacity of the CDMA voice call from the identical location, largely as a result of the additional transmit power required?
With data usage rates growing exponentially, the impact of rapidly consuming the battery capacity while using a higher bandwidth wireless gets a lot of press and a lot of consumer complaints. And that is why we are so confident that the ParkerVision solution will absolutely find a meaningful place in this industry and soon.
No other RF solution reduces the battery consumption profile of today's phone as significantly as does the ParkerVision solution. So, while the barriers to entry for a market as valuable and large as the cell phone industry are, of course, time consuming to address. We are confident in our commercialization path, our solution, and the need for the advance that we bring to this application.
One more quick note and then I'll open up our call for questions. We have a steady cadence of patent issuances for our technologies, as well. While we don't hail each individual patent issuance on a real time basis, I think it's important to take stock of the portfolio we have built, as this is an important foundation for our company.
In the last 12 months, we have seen about 16 new patents issued, 14 US and two overseas, which represents an increase of about 10 percent in our currently issued portfolio. The average remaining life of our portfolio is about 14 years. And with approximately 70 additional patents pending, and more filings in process, you will continue to see our already significant IT portfolio expand.
So, I expected a number of questions, so perhaps we should go ahead and open up the call so that we can have an opportunity to address them, please.
Sayid: Thank you. Ladies and gentlemen if you have any question at this time, please press * then one on your touchtone telephone. If your questions have been answered and you wish to remove yourself from the queue, please press the # key. Again, if you have a question at this time, please press *, then one on your touch tone telephone. One moment while our participants queue up. Now, our first question comes from Walter Shenker from Mass Partners.
Walter Shenker: Hi, Jeffrey.
Jeffrey: Hi, Walter.
Walter: I will try, I will make one question, since I'm all [inaudible 11:36] .
Walter: Your development of your technology has been in partnership with a single power block manufacturer. They obviously do not do business with everybody in the cell phone industry, and in fact, may do much more business with some people than others. Given that tie in, to what extent do you actually have an opportunity to move away from them and their customers - really, their customers - in pursuing opportunities, and to what extent do they sort of have you, because of your development with them and therefore they can control or have a significant say in who you sell your technology to.
Jeffrey: Sure. Well, let me, and I'm assuming you're referring, when you say power, you mean VIA Telecom, the baseband company.
Walter: Yes, yes, I'm sorry, baseband, not power block band.
Jeffrey: No problem, that's what I thought. So, that's a good question. Look, without a doubt, our quickest path to revenue is through a VIA supported product, because that's the existing interface that we built into our chip. Although you can do other interfaces relatively quickly and, in fact, even between our chip and the baseband, the interface chip can be developed pretty quick that would allow us to attach to other basebands. But I will tell you, I think VIA is very well informed about the competitive advantage that this relationship brings to them. They have their own competitive pressures from their, other baseband companies who compete against them, who are significant and large. And we bring to them a technical superiority that, without us, they do not have, and which they are out promoting, actively.
So, yes, they have some influence in the sense that the customers who they take us to and who we are speaking to, are, in fact, the customers who use VIA Telecom basebands. But, three of the top five tier one handset companies use their basebands, which is well over 50 percent of the market. A number of tier twos, a number of ODMs, and I wouldn't be surprised if soon, four of the top five tier one handset companies use their baseband.
So, the other thing that VIA does is, as we expose our product to their OEMs, those OEMs do buy other baseband products for other cell phone standards. Or sometimes they buy other baseband products even for the same cell phone standard to not be fully dependant on one supplier. And we've had OEMs ask us, "Can you attach to other basebands?"
In fact, I've had that question in front of the CEO of VIA Telecom from one of his best customers. Before I could answer the question, he answered it for me. He said, "Yes, ParkerVision can attach to other basebands. We would fully expect that over the longer term that they will. But we would also expect that if we deliver on our commitment to them that they'll stay focused on our opportunity”. I think, Walter, that's the balance that we have right now in the relationship. I think they're motivated to help launch us; they've told me as much. They're doing activities to prove that.
Of course, nothing will prove it more than when we consummate and get an order delivery here. It will be a very happy day for all of us. They're active on that, I'm active on that, as well as other people in our company. So, yes, they do have an influence but I don't think it's an undue influence. I think it's a good balance right now.
Walter: OK. I'm going to sneak one in. To what extent do you have an issue ‑ the lifecycle of handsets, at least in this country, is somewhat limited.
Walter: There's always a new model coming out. To what extent is it a problem or an issue that the handset you originally designed into may, given the time lags, become ‑ not obsolete ‑ but an old set that doesn't have much demand anymore?
Jeff: That's a great question. Luckily for us, what we were designed into more than a phone model was a phone platform. So, VIA Telecom actually creates reference designs, which they put out to their handset OEMs. The OEMs may tweak those designs a little bit here and there for their own use, but we were designed into a specific platform with their latest baseband, which is the "7" series, which finds homes in both feature phones and smartphones. So, even as it's taken longer, that reference design is still quite fresh and relevant to their customers. In fact, the handset OEM that we work with has both feature phones and smart phones planned for use with our technology and our products. So, it's not just one particular phone model, but it's a series of models.
That's the key in the business: You try to design around a single design that doesn't have to be changed from a circuit board standpoint too much. You change the packaging, the display, maybe the software, but you try to keep the chips as close as you can to the same from model to model.
Walter: OK. Thank you.
Jeff: Thank you. Next question.
Sayid: Thank you. Our next question comes from Greg Lewin, from TLF Capital.
Greg Lewin: Hey Jeff, how are you?
Jeff: Hi Greg, good, thanks.
Greg: Jeff, I want to explore the VIA relationship a little bit more in a different context if I may. Often times we're reading in other areas of the circuitry of how there are these unique power‑saving solutions that people are coming up with, and we're reading about them all the time. I was wondering what contribution ‑ because you're just a piece in a larger mosaic here ‑ what degree does the power advantage that you provide, provide a solution when VIA is competing versus whomever else they compete with in industry for the overall power consumption of their offering, which you are just a component of, if that made sense?
Jeff: Sure. If you look at the average use of a 3G phone in terms of where it's located on the network, meaning you're not directly adjacent to a base station or you're not on the very edge of reception ‑ you're kind of somewhere in between, which is the way the networks are purposely laid out. If you're in that condition, which is the vast majority of the time, just the transmit function alone is greater than 50 percent and can be up to two‑thirds, even 70 percent, of the total power consumption.
Greg: Of the handset?
Jeff: Of the handset. I'll give you an example: A CDMA baseband processor ‑ which is the brain of the phone, so you might think, "Wow, that must be really power hungry." The baseband processor, which is largely a digital device, gets to take advantage of all these great shrinking transistor sizes and the smaller geometries of ever‑shrinking semiconductors. So, they've gotten the baseband processor power consumption, depending upon exactly what it's doing, 40 to maybe 65 milliamps of battery power; 40 to 65, remember that number. The transmit chain is going to be, on the average, more in the 250 to 400 milliamp region, so 5x to 10x the baseband.
Or, I'll give you another example. A smartphone display screen like you might see on your iPhone or a Samsung Galaxy or an HTC phone, it's pretty common to see those displays -it depends on the type of display, but on a round average number, it wouldn't be unreasonable to see that display consume between 85 and 125 milliamps. Again, that's against the context of a transmit chain that's a couple hundred to 400 milliamps.
So, the transmitter is, by far, the single biggest contributor to absorbing your battery. In fact, and I'm not going to tell you that these numbers I'm going to give you are accurate, but I've got an iPhone in my hand right this second, and I've got a little app on it that's called Battery Magic. The Battery Magic takes a look at how much battery is left in your phone and, if you were to use it for different apps, how much time do you have left?
Well, I've got 50% battery and, right now, it says I have 2.3 hours of talk time left for 3G. If I move over to a video ‑ meaning I'm watching a movie on my iPhone, I'm not talking on it ‑ that 2.3 hours, according to them, is five and a half hours. The screen on a movie is on 100% of the time.
People often think, "The screen display must be the single most power hungry thing on a phone." Well, it's not when you compare it to what it takes to make a phone call. Think about it. When you're on a phone call, whether it's voice or data, you've got to have enough energy to get that signal from wherever you are to a cell phone tower, which could be a mile away or through many walls of a building plus a mile away, so there's real power involved in getting that transmit signal to properly get back to the cell phone tower.
Greg: With that in context, would you then sort of describe how and whom VIA must compete with, and how this may change ‑ therefore, how they're incented to negotiate on your behalf as a part of their system?
Jeff: In the CDMA world, there's really only two companies that sell baseband processors. There's VIA Telecom and there's Qualcomm. There is nobody else I'm aware of. The marketplace certainly always prefers a situation where's there more than one choice of vendor. The marketplace tends to not like single‑vendor as the only choice. Now, you would like for your alternate vendor to have also technical reasons that you'd buy, not just because you want a second vendor but that they also have things that they bring to your product that enhance the efficacy and the enjoyment of the product that they sell, in this case, to consumers who use phones. So, in this situation, VIA has a technical superiority over their competition of talk time, battery life and power consumption from the combination of their baseband and our RF.
When I said in my comments earlier that they have the best CDMA power consumption bar none, I'll reiterate that. I have tested phones as recently as last week to see what's the latest and greatest out there. And I will reiterate, they have power consumption that is better than anybody else in the industry.
Greg: Thank you.
Jeff: Thank you.
Sayid: Thank you. Our next question comes from Robert Cohen of Western International.
Robert Cohen: Good afternoon, Jeff.
Robert: Hi. I think you've talked about this a little bit, but I'd like you to tell me who you're benchmarking against. Your technology, obviously, has been out there for quite some time now and, in the last three or four years of the evolution of your technology, have you made improvements to it from three, four years ago? And can you elaborate on who you're actually benchmarking against, as far as competitors or whatever it may be?
Jeff: No problem, sure. As I mentioned earlier, the only other competitor that they have... Well, I wouldn't say that. There's really two categories of competitors. There's VIA basebands that use traditional transmit power amplifier solutions, and then there's Qualcomm basebands that use traditional transmitter power amplifier solutions. We're the only transmitter solution that uses an advanced architecture, such as what we've developed. So, yes, as I mentioned just a couple of minutes ago, we benchmark and continue to stay abreast of how our performance is against what else is in the market. And we benchmark against phones with both baseband processors types in them and a variety of transmitter and power amplifier solutions. And in all the cases, we see that our savings... And the latest benchmarking, Bob, that we did was focused on what's known as the CDMA standard that's called EV‑DO Rev A.
EV‑DO Rev A is the latest and greatest, most bandwidth that CDMA network owners like Verizon and China Telecom have deployed. It gives you the fastest ‑ I don't remember how many megabits it is per second, but it's the fastest data link. So, if you were on the network, it would give you your quickest response.
In that mode, which is very power consumptive ‑ as I mentioned earlier, it can be 10‑times more power consumptive for the same location when you move from a voice call to this Rev A EV‑DO. And in that situation, we find that we are, over the vast majority of the dynamic operating range ‑ meaning when you're near a cell station or faraway from a cell station and every place in between, that transmitter has to change its power to accommodate all those locations. If you look at us over the entire dynamic range for the vast majority of that, we are 100 milliamps or greater power savings.
So, to put that in context, as I mentioned to Greg earlier, that's as much or more than an entire smartphone display consumes, which is a lot of power savings. Or, I think I mentioned earlier, you'll see the transmit consume anywhere from a couple hundred milliamps up to maybe 400 milliamps, or even 500 at the edge of the cell phone reception. So, you're talking about knocking that power consumption anywhere down between 20‑25 percent to half, depending upon where you are. That's a lot of power savings.
And one last comment I'll make because we're looking forward at even the next standards beyond, like LTE or even further enhancements of CDMA, and with our technology there are actually ways to further enhance our advantage, even beyond where we are. So, yes, over the last three, four years of development, our technology has held its own and continues to bring these kinds of savings we talked about when we first started developing.
Robert: I've just got one other question and I'd really like to see you answer this, I don't know if you're aware but there is a bear story out there. And there's been several comments made of why your technology just isn't what you claim it is. I guess they're hanging their head on the fact that it's been several years now and you've never gotten a contract and that really is the bottom line and I think if shareholders saw a contract that would be a very, very happy day. And I just would like you to comment somewhat on the bear story out there about not getting the contract and your technology just not being able to do what you claim it does.
Jeff: You know, Bob, I'm definitely not going to go into these nutty bearish stories. I think what I'm going to do is I'm going to let our technology and the orders we're going to get speak for themselves.
Robert: OK, thank you.
Jeff: Thank you. You bet.
Sayid: Thank you. Our next question comes from Charles Bellows, White Pine Capital.
Charles Bellows: Yeah, Jeff, I've got a little problem just with sort of logic running here, it doesn't fit my simple mind and that is you have said you've got great power savings. We know that you've got, from past calls, you've got a lower cost in the product going in, when you put all the pieces together. So there's a cost savings there. Why the delay in the contract? Are we having problems? Is this a legal issue? I don't see why somebody wouldn't want to push this up on a new platform, get it in, get it going and are you having a problem on the legal side?
Jeff: No, no we're not. It's a good question, my and my colleagues attitude right now around here is, "Lord grant us patience, but please hurry." Look, as I mentioned earlier, we have fulfilled everything under our agreement that we needed to fulfill and the process is moving forward and we do think an order is coming in the very near future and our partners do understand the sense of urgency and have communicated that to us. So all I'm really able to say today is, it's moving along, we believe it's going to happen in the near future and that's really about all I can comment on.
Charles: Well, let me ask it slightly differently, I'd been around long enough to know that when lawyers get involved in things, especially as they become more technical, often they can screw it up big time. And are you at a position where the basis of the deal is in place and therefore we're not going to hear, two months from now, everything was great except for the guys in the suits?
Jeff: Yeah, I can tell you that in this situation, we can't, the guys in the suits aren't part of the situation. There's no guys-in-the-suits problem here, OK?
Jeff: Yeah, not to worry about that.
Charles: OK, thank you.
Jeff: I've been in that situation. Yeah you bet.
Sayid: Thank you, ladies and gentlemen. Again, if you have a question at this time, please press * then one on your touchtone telephone. And our next question comes from Ira Nathan from Nathan Financial.
Ira Nathan: Yes, Jeff how are you?
Jeff: Hi Nathan, I'm well, how about yourself?
Ira: Good, thank you.
Ira: I don't know, I keep listening which I've been listening to these conference calls for several years and I have no doubt about the technology. My question seems to be - maybe what we're missing is the correct marketing people and/or a director who has experience in promoting new products and putting it across into the field. Have you ever thought of spending money to acquire the right people to produce the sales?
Jeff: Ira, if we had had our product approved and tested for a lengthy timeframe, I don't know how many days it's been now but it's only been, hasn't been long, I might be wondering about that. But our marketing and sales organization really is doing what needs to be done. And a lot of the new interest that's been generated since the test reports has been finished is a credit to some of the work that they've been doing as well as some of the word that's just getting out in the industry but they're being very responsive to that. So no, listen, I can appreciate from your perspective why you'd ask that question but that, in my opinion, is not the situation.
I think we're going through a not abnormal process to get this first order in the boat and it is moving forward. Look, it'll be a happy day for all of us, myself first and foremost, that we can get back to the conference call and I can tell you guys we've got the order and here's what it looks like and here's where it's going.
So I'll just ask you for a little more patience and hopefully we'll have another call sooner than later but as I've said, both Via Telecom and other people who are involved in this are highly committed in getting this thing in the boat and getting it going. There's a lot of good reason for that to occur.
Ira: OK, thank you.
Jeff: You bet, thank you.
Sayid: Thank you. Our next question comes from Peter Massaniso from Ponte Verde Partners.
Peter Massaniso: Hi Jeff, how are you?
Jeff: Hi Peter, fine, thank you.
Peter: I'm going to ask that last question a different way.
Peter: Do we have the wrong customer or potential customer? Someone who has trouble making a decision or perhaps has an ulterior motive?
Jeff: No, I don't think so. I just think that, look, there's no question that this, for us, is our sole focus. It's our highest and only priority. When you look at handset companies and they have many product lines and lots of things going on and they work with multiple carriers and multiple baseband vendors, while we may be a high priority, we're not their only priority. So I wouldn't come to a conclusion that because someone isn't moving as quickly as we'd like them to move, but is moving, then that makes them the wrong customer. I do believe that now that we have a finished product, as I said earlier with the test results though, that that will begin to broaden our... I don't believe it will, it has already started to broaden the interest in this product and things, I think, will start to move along with additional customers even more quickly.
One thing I will assure you, there is no single customer that's going to prevent this product from being adopted in the marketplace and in the near future and I believe that they understand that as well.
Peter: Thank you.
Jeff: Thank you.
Sayid: All right, our next question comes from Joe Graves, a private investor.
Jeff: Joe, you there?
Joe Graves: Yeah, you there?
Jeff: Oh, there you go, hi Joe.
Joe: Can you elaborate on the VIA situation with respect to their ability to sell CDMA in world markets? Maybe it's not your place to answer the question, but did they pay a license back to Qualcomm or are they able to sell CDMA chipsets on their own without paying the license back to Qualcomm?
Jeff: Well, I honestly don't know exactly what the legal relationship between VIA and Qualcomm is but my belief is that they have a license agreement with Qualcomm that's appropriate to allow them to sell their product in the geographies that they're currently selling which I know is, throughout Asia, North America. I believe they do some business in Latin America, I'm not that familiar with that geography, and I know they sell into Japan as well as in Europe. So they, I believe, have all the necessary licenses to do whatever they need to in the geographies that they're selling. I'm assuming if they didn't that they would probably be hearing from Qualcomm and probably long before now.
Joe: Then so walk me through the current competitive landscape with respect to the cost of a low end 3G baseband processor and a handset was like anywhere from $8 to $10 is that correct?
Jeff: Well, I'm not really at liberty to talk about what they basebands for but in the range of where you are, you're not way off one way or the other, I'll put it to you that way.
Joe: Yeah, an RF is, what $3? Is that fair?
Jeff: Well, if you're talking about a single band of Asian frequencies, yeah in the $3 range but then there's the bunch of supporting parts around that, it's not just $3. There's other things you've got to put around that to finish it off but it's OK. Let's say the chipset maybe around $3.
Joe: All right, as we walk down this path are you starting to see, are you getting a better sense of what the yield of manufacturing cost savings could be? And then probably the most important question would be, once you go into production, it sounds like then markets are pretty robust and that your ability to ramp could be called into question, can you talk about that a little bit?
Jeff: Yeah, let me see if I can think about two things you said, so in terms of production advantages, we'll know more verification as we actually get through the high volume production lines but what we see is, that gets OEM's excited about our solution, is they see only a few supporting components outside of our chip. So we eliminated a number of discreet components, those are gone, they like that. They see that the device is already calibrated, meaning today, they have to calibrate their transmitter on the production line and that's time consuming, oftentimes, mistakes are made which causes quality problems at the end of the production line. All of that is gone, that's already done for them, they like that a lot. They also seem to have a big appreciation for the lack of heat that our device generates because that can also create, not only problems in the product on the production line but after it gets shipped into the marketplace and challenge some of the reliability issues that they're trying to maintain.
So there's a number of things in the production line that they have an appreciation for and I think once they actually experience it in high volume production, it'll be more than an appreciation, I think it will be a demand and that'll keep growing our opportunity. In terms of production capacity issues, our semiconductor partners are IBM and TSMC, the fabs that we use have lots of capacity. I don't remember off the top of my head, but we're talking tens and tens and tens of thousands of wafers per month of the semiconductors that we use.
They way the world economy is today, the semiconductor capacity that we're using is not fully occupied so there's no constraints that I'm aware of. And really, for us it will be, as we get our first order and we start to ramp the production and we get additional orders, it'll be the methodical manufacturing ramp that you need to go through to make sure that you maintain quality and increase your yield and work closely with your vendors to make sure that the entire supply chain works as a well coordinated orchestra, so to speak.
So you can take advantage of those opportunities but I do believe, as frustrating as it's been waiting to get this first order done, I think our next issue that we'll be dealing with is as we start to ramp production, it'll be making sure that everything is well coordinated so we can take advantage of the kind of production ramp that I believe will be available to us as people actually get this product into their phones. And they see the extremely high‑quality signal that they get and the lower power consumption translates to demand from their customers.
Joe: That's great.
Jeff: Thank you, Joe.
Sayid: Thank you. I'm showing no further questions at this time, I will now return the conference back over to Mr. Parker for any closing remarks.
Jeff: Well, folks thanks for attending our call today and I look forward to having another one sooner than later to give you more information about our first order. And I have no question that this product is going to be adopted and it's going to be adopted in great quantity. I will just make one last comment that we miss Jim Whitten on our call today, but we will be toasting to him when we get our first order. Have a good evening, bye.
Sayid: This concludes our conference call for today. If you with to access archived audio broadcast replay of this call, you can do that by visiting the company's website at www.parkervision.com. Thank you.
Transcription by CastingWords