Thin Film Electronics ASA (Thinfilm) announced a strategic update and corporate restructuring aligning the business with the current market adoption of NFC. The company plans to focus resources on developing and building market adoption of its brand protection and consumer engagement solutions.
 
Thinfilm took the following steps toward this goal. The company has:

• Paused development of printed dopant polysilicon (PDPS) technology;
• Realigned its sales organization and its go-to-market strategy;
• Sharpened its focus on complete product solutions, integrating hardware and software;
• Reduced its global footprint and shifted weight toward San Jose.

These actions are designed to yield nearly $20 million in annualized savings at the operating level and will result in an approximate 40% reduction in the workforce.
 
“I am very disappointed that we need to take these drastic steps, especially given the significant contributions of individual team members and I’d like to thank them for their commitment and wish them well for the future,” said CEO Kevin Barber.
 
The Q4 2018 update noted that previous management was too optimistic on the timing of demand for NFC solutions, the need for a PDPS solution and mistakenly pursued a sub-optimal go-to-market strategy.
 
While the new management team is confident in the viability of NFC technology in the long term, market adoption has been slower than anticipated in the previous business plan and has been hampered by delayed support from leading handset vendors. As a direct result, the sales performance was disappointing.
 
Progress on the roll-to-roll PDPS factory has been unsatisfactory, leading to significant delays to the scheduled completion. The Board of Directors and the new management team believes PDPS technology is not required during the early phase of market growth. It is, therefore, in the best interests of Thinfilm’s shareholders to pause development of the PDPS technology. It is not nor ever was a critical part of building initial market volume. However, in the event of very significant market growth, Thinfilm may reassess this decision.
 
Silicon-based NFC solutions are currently readily available and sufficiently cost-efficient to deliver competitive solutions to drive a profitable business model. In addition, management believes it can drive significantly improved cost-per-unit on silicon-based solutions to cater for large volumes.
 
As a result of pausing the printed electronics line, Thinfilm will discontinue the current Electronic Article Surveillance (EAS) business after exhausting existing inventory with its leading customer. All in all, EAS has been maintained as a tool to improve roll-to-roll factory learning, but, it has not positively contributed to Thinfilm profitability.
 
Thinfilm is disappointed to report that discussions with a potential strategic equity partner are not expected to result in investment at this time.
 
Thinfilm continues to engage in multiple discussions with strategic go-to-market partners where the company can integrate its NFC tags into specific components and leverage existing relationships to deploy brand protection and consumer engagement solutions.
 
The new management team is confident in the positive long-term outlook as communicated to shareholders in the Q4 2018 report. Customer case studies have demonstrated that Thinfilm’s product solution addresses customer pain points of authentication, anti-tampering and mobile marketing use cases, in particular in the wine & spirits, health & beauty and over-the-counter pharmaceutical verticals.
 
Thinfilm believes that it can take a leading position in the NFC market by delivering a comprehensive solution offering and, in turn, drive unit volumes into the billions.