Q&A on future directions of Smoltek

On June 4, Smol­tek held a webin­ar on the company’s future. After the present­a­tion by Håkan Persson, CEO of Smol­tek, he answered ques­tions from the audi­ence and mod­er­at­or Albin Kjell­berg. Here are the ques­tions and answers, slightly edited for readability.

Albin Kjell­berg: How long will the money from the issue last?

If you look at it in isol­a­tion, the money should take us well into 2025.

We also have the bid­ding pro­cess under­way; if it is suc­cess­ful, the money will last longer. In addi­tion, we are involved in a num­ber of EU-related pro­jects; we have sub­mit­ted one applic­a­tion and will sub­mit sev­er­al. If we are suc­cess­ful, it will mean that we will receive addi­tion­al cap­it­al in the first half of next year.

Mikael Johans­son: What is meant by” disruptive”?

The tech­no­logy is totally dif­fer­ent. Nobody else is doing what we are doing. We can solve the prob­lem dif­fer­ently. Let’s com­pare it to sil­ic­on deep trench, where you etch into the mater­i­al. We do the oppos­ite and build on top of the mater­i­al to cre­ate more sur­face area on the sub­strate. This gives you bet­ter per­form­ance and a more robust engin­eer­ing solu­tion. And this is what makes Smol­tek unique. We are the only ones using car­bon nan­ofiber to build this solu­tion and solve mater­i­al tech­no­logy prob­lems. Nobody else is doing it.

That is why the play­ers are also inter­ested in what we are doing and are work­ing with us to make this tech­no­logy a reality.

Mikael Johans­son: If the tech­no­logy is so good, why are there no part­ners to co-fund it?

We have ongo­ing pro­cesses and dis­cus­sions with dif­fer­ent types of part­ners. We were very close to get­ting YAGEO on board. Now, giv­en their intern­al pri­or­it­ies, they had to make oth­er decisions. But this is the path we are work­ing on, and this is what we have to do.

As I have said for many years, this is not a quick fix. It is a con­tinu­ous devel­op­ment pro­cess, and soon­er or later, we will break through and involve our part­ners in this pro­cess. That’s what the whole bid­ding pro­cess is about: just accel­er­at­ing that development.

Albin Kjell­berg: Is it chal­len­ging to explain to the mar­ket and poten­tial part­ners what Smol­tek has and where the poten­tial lies?

Yes, it is. But it’s also an advant­age because it makes us unique and rel­ev­ant, and the mar­ket needs our expertise.

For example, YAGEO is a world lead­er in pass­ive com­pon­ents. Still, they do not have the expert­ise that we have to solve their future problems.

That is why we are rel­ev­ant. That is what we bring. At the same time, the sales pro­cess and the pro­jects we do take a long time. That is the nature of the busi­ness; what we are doing is not a quick fix, but we are cre­at­ing new ways to take the next step in two excit­ing busi­nesses: hydro­gen and semiconductors.

That’s what’s dis­rupt­ive. We’re doing things in a dif­fer­ent way to solve a prob­lem that the industry is strug­gling to solve today.

Bengt Nord­ström: Hur är det med konkurrensen ?

Of course, there are com­pet­ing solutions.

In semi­con­duct­ors, we have Sil­ic­on Deep Trenches, a col­lab­or­a­tion between TSMC and Apple. How­ever, it has many lim­it­a­tions, both in terms of pat­ents and pro­cess technology.

With hydro­gen, there are com­pet­ing tech­no­lo­gies that try to reduce the amount of iridi­um. But most of them work with the ink. That is not the solu­tion. The solu­tion is to work with the sub­strate. That’s where we can add value with our car­bon nan­ofiber technology.

Albin Kjell­berg: After semi­con­duct­ors and hydro­gen, what is the most likely application?

Some things are very sim­il­ar to what we do. Let’s take hydro­gen as an example. Fuel cells are very close. Fuel cells are really a mir­ror image of what we do for elec­tro­lyz­ers. So the part­ner in the auto­mot­ive industry that’s test­ing our mater­i­al has a dual interest here; they’re doing elec­tro­lyz­ers, but they’re also doing fuel cells.

How­ever, we are not stand­ing still; we are an incub­at­or, and we have a long list of oppor­tun­it­ies that we are mov­ing through the incub­at­or pro­cess to eval­u­ate. These include night vis­ion sensors, auto­mot­ive radar, and med­ic­al applications.

One example is an ongo­ing col­lab­or­a­tion with a dent­al tech­no­logy com­pany that man­u­fac­tures x‑ray equip­ment. Our tech­no­logy is vir­tu­ally the only way for them to imple­ment their tech­no­logy. It’s a smal­ler pro­ject that has flown under the radar, but we’re work­ing on it.

There are a lot of things that we can do. It is import­ant for us to have a struc­tured pro­cess for eval­u­at­ing oppor­tun­it­ies so that we see not only the tech­nic­al oppor­tun­ity but also its com­mer­cial rel­ev­ance. We should not throw tech­no­logy at pro­jects that we can­not mon­et­ize. That is why we are using an incub­at­or pro­cess to assess their rel­ev­ance to us and our shareholders.

Mikael Johans­son: What is Håkan’s inter­pret­a­tion that the mar­ket does not have con­fid­ence in Smol­tek at the moment?

Of course, it is a liab­il­ity for us. Every­body knows that we are a devel­op­ment com­pany; there­fore, there is no dir­ect rev­en­ue. We have to find part­ners to help us fin­ance devel­op­ment, indus­tri­al­iz­a­tion, and com­mer­cial­iz­a­tion. That’s what we’ve been pur­su­ing for quite some time. We’re very close to get­ting there, thanks to the tech­no­lo­gic­al advances that have put us in a much bet­ter pos­i­tion. And I think that is not reflec­ted in the market’s con­fid­ence in our stock. That’s why we’re going out in these bid­ding pro­cesses – to make that value vis­ible. It is cent­ral to us.

Albin Kjell­berg: What mater­i­al tech­no­logy is most sim­il­ar to Smoltek’s in com­mer­cial use today?

In the semi­con­duct­or industry, it is the sil­ic­on deep trench. In the hydro­gen industry, it is the iridi­um ink.

Jac­ob John­son: What is the rela­tion­ship with YAGEO? Could they be a poten­tial bidder?

YAGEO could be one of the bidders.

We have an ongo­ing rela­tion­ship with YAGEO. Our CTO, Far­z­an Ghavanini, and YAGEO’s CTO, Phil Less­ner, are in reg­u­lar con­tact and have monthly coordin­a­tion meet­ings. We also provide them with samples for test­ing and eval­u­ation. This is great for us: On the one hand, we keep them informed about where we are and how we are devel­op­ing tech­nic­ally. On the oth­er hand, it also saves a lot of time and money; they have entirely dif­fer­ent resources for test equip­ment and the activ­it­ies we bene­fit from.

I would say that the con­tin­ued cooper­a­tion is proof of what Bob says: It wasn’t a lack of con­fid­ence in the tech­no­logy and the pos­sib­il­it­ies of the tech­no­logy that caused YAGEO to walk away from the nego­ti­ations, but oth­er pri­or­it­ies that they have to take into account. But they are still fol­low­ing us, and I think there is a good chance they will return.

But since our con­tracts were ter­min­ated, YAGEO no longer has exclus­iv­ity. This allows us to approach oth­ers. We know exactly who they are, and they know exactly who we are; we have been in con­tact with them before and, in many cases, togeth­er with YAGEO. We are, of course, pick­ing up those threads.

And if we do what we need to do accord­ing to the plan that we are execut­ing, we will show that the tech­no­logy is evolving, and there­fore I see good pro­spects to have a very inter­est­ing dis­cus­sion at the end of the year. Not just with YAGEO, but with YAGEO and oth­ers, and then maybe we will have an auc­tion pro­cess on the tech­no­logy. That in itself is a value-cre­ation oppor­tun­ity for us in this pro­cess that we are going through.

Albin Kjell­berg: Can you elab­or­ate on the news that a world-lead­ing auto­mot­ive man­u­fac­turer has recently star­ted test­ing a cus­tom-made cell mater­i­al from Smoltek?

It is a company—I can­not name it now—that is inter­ested in both vehicle and elec­tro­lyz­er man­u­fac­tur­ing. They are inter­ested in our cell mater­i­al for elec­tro­lyz­ers and fuel cells; it is basic­ally the same tech­no­logy. They will be test­ing our mater­i­al for both purposes.

Albin Kjell­berg: Vad mer behöver komma på plats för att nå slut­må­let om 0,1 mil­li­gram per kvad­rat­cen­ti­meter cellmaterial?

We have already achieved this in the half-cell format. So, we have the anode side done. We have to assemble it into an entire cell and then do the same thou­sand-hour test that we did for 0.2 mil­li­grams per square cen­ti­meter. We are pre­par­ing for that right now.

Albin Kjell­berg: Were poten­tial part­ners dis­cour­aged by the break with YAGEO?

They have not been dis­cour­aged. We are in the pro­cess of dis­cuss­ing the bid­ding pro­cess, and every­one we are in con­tact with shows the same interest in the tech­no­logy because they know what it can do. The need is there; we get proof of that in every con­tact we have. The semi­con­duct­or and hydro­gen indus­tries have real prob­lems that need to be solved. Our part­ners have not lost con­fid­ence that we can help them.

We are in a situ­ation where the plan we were sup­posed to execute is not hap­pen­ing. That’s why we need to cla­ri­fy the value of what we’re actu­ally doing and raise addi­tion­al money to move forward.

Albin Kjell­berg: How has intern­al con­fid­ence in tech­no­logy been affected by recent events?

It has not changed at all; on the con­trary, we have made much tech­no­lo­gic­al pro­gress in the hydro­gen area and the semi­con­duct­or side, so the motiv­a­tion remains high.

But we feel, and I feel myself, the frus­tra­tion that what we are doing is not reflec­ted in the stock mar­ket. That’s one of the prob­lems of being a devel­op­ment com­pany; we have to make the value vis­ible. And that’s why we’re going into these pro­cesses now.

So, the motiv­a­tion is high. We know what is needed out there. We know what we can do, and that is what we are going to do. That’s extremely import­ant because if we stop execut­ing our plans, we stop cre­at­ing value, and we become irrel­ev­ant over time. That’s why we must raise money to keep doing what we do.

Oliv­er Winchester: What busi­ness areas could Smol­tek estab­lish after the bid­ding pro­cess is completed?

We have a long list of poten­tial applic­a­tions run­ning through the incub­at­or pro­cess. For example, there are fuel cells. Bat­ter­ies are also a hot area where we can con­trib­ute. On the semi­con­duct­or side, for example integ­rated cir­cuits, there is what we call IC-CNF-MIM, which will con­trib­ute to the kind of chip archi­tec­ture of the future. So, there are many things we can look at and are look­ing at.

But the focus right now is on nail­ing down the exist­ing busi­nesses and using them as a plat­form to gen­er­ate rev­en­ue, cre­ate prof­it­ab­il­ity, and fund what we do. That’s what enables new areas and innov­a­tion. That is the found­a­tion of this company—to cap­it­al­ize on the car­bon fiber tech­no­logy that we have.

missko1962: It sounds like hydro­gen has a faster route to mar­ket than semi; what is Håkan’s opinion?

It’s about how fast we can get to an indus­tri­al­ized product that we can man­u­fac­ture in volume. Hydro­gen is an industry that is explod­ing, while the semi­con­duct­or side is a more mature industry. But I would say the time hori­zon for both is about the same. We have the ambi­tion to start sales and also volume pro­duc­tion in 2025–2027.

Albin Kjell­berg: What are you most excited about for the rest of 2024?

It’s fas­cin­at­ing to go out into the mar­ket, make con­tacts, and be open and expli­cit about the fact that we’re look­ing for part­ners. We have worked with industry play­ers before, but it was not as clearly stated as it is now. And I think that also gives us a whole dif­fer­ent level of vis­ib­il­ity for our value. So I think that’s going to be very excit­ing. Of course, this aligns with the tech­no­lo­gic­al devel­op­ment we are pur­su­ing because it cre­ates the con­di­tions and res­ults neces­sary for this pro­cess to be successful.

So it’s a very excit­ing time, and I really hope that we can con­tin­ue on this path. That is what will cre­ate and max­im­ize share­hold­er value over the next 6–12 months.

Albin Kjell­berg: There is nev­er a dull moment being CEO of Smoltek?

No, it keeps you busy. But at the same time, it’s a hell of much fun.