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.