Constant Investor Interview

A long interview transcript by Alan Kohler with Fred Bart in AK's Constant Investor includes this interesting exchange. Clearly, Alan has done his homework, and at one point quotes from the AGM proceedings....

AK: 'And who are going to be the main customers for this? Is it computer manufacturers or speakers or everybody?
FB: I suppose the best way to explain it – I think at last we reported 50 – but we probably have close to 80 or 90 non-disclosure agreements now signed with the top 80 or 90 companies in the world. The largest consumer electronics companies in the world, so you can assume that it will be used in everything from a television to telephone to a laptop to an iPad to home entertainment.
Anything in the world where there is audio, it will be used.'

AK: Is that because they’re cheaper?
FB: 'Currently, just to give you an idea, we estimate the market to be the equivalent of 16 billion chips a year.'

AK: 'And who are going to be the main customers for this? Is it computer manufacturers or speakers or everybody?
FB: I suppose the best way to explain it – I think at last we reported 50 – but we probably have close to 80 or 90 non-disclosure agreements now signed with the top 80 or 90 companies in the world. The largest consumer electronics companies in the world, so you can assume that it will be used in everything from a television to telephone to a laptop to an iPad to home entertainment.
Anything in the world where there is audio, it will be used.'

AK: Is that because they’re cheaper?
FB: 'Currently, just to give you an idea, we estimate the market to be the equivalent of 16 billion chips a year.'

AK: How much will each chip cost?
FB: It depends on the customer, depends on our supply capability at the time. I don’t want to go into that. We’ll be able to make a significant margin on the price that we will sell the chip for.

AK: And what sort of market share do you---?
FB: The market share will continue, as soon as the chip is proven to be delivered in mass quantities, then I would imagine that we will engage a number of the MEMS manufacturers, not just the current ones that we’re dealing with, to manufacture it, and as capacity ramps up, we will get a bigger and bigger share.
........
AK: And would I be right in assuming your margin on these things is more than 50%?
FB: It depends on the volume, our margin should be quite substantial. We would anticipate to achieve, we’d like to achieve in excess of a dollar a chip.