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CEVA Inc (CEVA) Q4 2020 Earnings Call Transcript

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CEVA Inc (NASDAQ: CEVA)

Q4 2020 Earnings Call

Feb 16, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the CEVA, Inc. Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Richard Kingston, Vice President of Market Intelligence, Investor and Public Relations. Please go ahead.

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Richard Kingston -- Vice President of Market Intelligence, Investor and Public relations

Thank you, Cole. Good morning, everyone and welcome to CEVA's fourth quarter and full year 2020 earnings conference call. I'm joined today by Gideon Wertheizer, Chief Executive Officer; and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the fourth quarter and provide general qualitative data. Yaniv will then cover the financial results for the fourth quarter and also provide qualitative data for the first quarter and the full year 2021. I'll start with the forward-looking statements.

Please note that today's discussion contains forward-looking statements that involve risks and uncertainties, as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include guidance and qualitative data for the first quarter and full year 2021, optimism about 5G base station RAN deployment in China and relationship with ZTE and the opportunities presented thereby, optimism about the continued momentum in our connectivity, sensing and AI technologies, ramp-up from existing Wi-Fi 4 and 5 customers, optimism about our Bluetooth technologies will allow us to penetrate the high volume smartphone market, our belief for strong licensing revenue in 2021 and potential new licensing engagements and our belief that our royalty growth drivers will more than offset the decline in royalties from the 5G smartphone supplier switch.

For information on the factors that could cause a difference in our results, please refer to our filings with the Security and Exchange Commission. These include the scope and duration of the pandemic, the extent and length of the restrictions associated with the pandemic and the impact on customers, consumer demand and the global economy generally, the ability of CEVA's IPs for smarter connected devices to continue to be strong growth drivers for us, our success in penetrating new markets and maintaining our market position in existing markets, the ability of new products incorporating our technologies to achieve market acceptance, the speed and extent of the expansion of the 5G and IoT markets, our ability to execute more non-handset baseband license agreements, the effect of intense industry competition and consolidation, and global chip market trends. CEVA assumes no obligation to update any forward-looking statements or information which speak as of their respective dates.

And with that said, I would now like to hand the call over to Gideon.

Gideon Wertheizer -- Chief Executive Officer

Thank you, Richard. Good morning, everyone and thank you for joining us today. 2020 was an extraordinary year, with the COVID-19 pandemic accelerating the adoption of new technologies and usage models, while presenting uncertainties and enormous operational challenges worldwide. Notwithstanding the circumstances, CEVA had an exceptional year, with all-time high revenues in both licensing and royalties, and substantial market expansion in the 5G RAN, Wi-Fi 6 and automotive spaces. I will allude to these developments in more detail later on the call.

Fourth quarter was another excellent quarter with revenue and EPS significantly ahead of our expectations. Total revenue for the fourth quarter of 2020 came in at $28.1 million, our second highest revenue -- quarterly revenue on record. The licensing environment continued to be healthy, at $12.1 million for the quarter, with a good demand for our Wi-Fi, Bluetooth and audio DSP products. We signed a record-equaling 21 new agreements, of which 16 were for connectivity and five were for smart sensing. Seven of those agreements were with first-time customers. Target products for our technologies include 5G smartphones, TWS earbuds, cellular IoT for asset tracking, and a wide variety of other IoT devices.

Late in the quarter, we signed a comprehensive and sizable license agreement for our connectivity portfolio with a key OEM in the mobile space that is internalizing the developments of Wi-Fi and Bluetooth technologies and intends to deploy our connectivity portfolio across all of its 5G smartphones, TWS earbuds and other smartphone related products. This agreement along with others that we have in our pipeline reinforce our belief for a stronger and another record year in licensing revenue for 2021.

Royalty revenue came in at an all-time record high $16.1 million, up 19% year-over-year. Seasonal strength across our IoT markets and strong shipments of 4G smartphones were the key drivers for this exciting record. For the second quarter in succession, we reported all-time high royalty revenues from our Bluetooth, Wi-Fi and sensor fusion product lines. For the full year 2020, revenue came in at a record setting of $100.3 million, up 15% from 2019. This marks the first-time that CEVA has crossed the $100 million annual revenue threshold, a year ahead of our expectations.

Licensing and related revenue had a record year with $52.5 million, up 10% from last year. We continued to expand our customer base with a record of 55 license agreements signed, of which 17 were first-time customers. Annual royalty revenue came in all-time high $47.8 million, up 22% as compared to 2019. Royalty revenue from our base station and IoT product category grew 72% year-over-year to $22.3 million, as the momentum for our large and diverse customer base across multiple end markets continues. Royalty revenue from handsets declined slightly year-over-year, down 3% to $25.5 million. Units shipments of CEVA based products grew 27% year-over-year to more than 1.3 billion units, with a record 750 million units from our base station and IoT customers.

In perspective, 2020 was a landmark year for both CEVA and its industries. The global pandemic highlighted the impact connectivity has on our lives and acted as a catalyst for rapid change toward digital transformation. This presents a unique set of opportunities for CEVA differentiated technologies and operational agility, in particular in four key markets: 5G RAN, Wi-Fi, TWS earbuds and automotive.

Let me take the next few minutes to elaborate on these growth drivers and the anchors CEVA has already in place in these lucrative markets. 5G RAN. 5G offers data rates and ubiquitous connectivity. The fast rollout of 5G networks to-date is predominantly aimed at smartphone use cases. According to Ericsson's most recent Mobility Report, by the end of 2020, over $1 billion or 15% of the world's population live in a 5G coverage area. China in particular is very advanced with 70% of the global 5G connections according to the GSM Association. Beyond smartphones, 5G offers new growth opportunities in regards to URLLC and IoT applications. These applications will be at the center of next-generation technology deployments in industrial, robotics, AR and autonomous cars.

The digital transformation, and the new applications 5G enables, present sizable opportunities for CEVA's 5G RAN technologies beyond our existing incumbency in baseband. This specifically applies to the growing use of Active Antennas, a new antenna technology that combines arrays of antennas with DSP to process complex algorithms such as massive MIMO and beamforming for more precise steering of the antenna signal which gains a substantial boost in capacity and energy efficiencies. The emergence of O-RAN and vRAN which aims to transform the telecom industry from relying on proprietary platforms from a limited number of OEM to a disaggregate network with open interfaces and a multitude of merchant chips from incumbent and new suppliers. Rethink Research is expecting Open RAN to account for 58% of the overall RAN capex spending by 2026.

With our second-to-none competitive edge in DSP processors, we are able to empower our existing and upcoming customers to innovate and quickly expand their market reach to the remote radio units and address new opportunities in the RAN space like private networks, small cells, Fixed Wireless Access and O-RAN. We are encouraged by the progress ZTE has made in the 5G RAN space, growing its share in the global RAN market from 8% to 11% on a year-over-year basis, according to Dell'Oro, and we expect other customers of ours to go into production in 2021.

Wi-Fi, Wi-Fi is deployed in over 5 billion smartphones and more than 300 million hotspots today. Cisco estimates that more than 50% of the global mobile data traffic is offloaded to Wi-Fi, and this is set to grow to over 70%. AT&T noted that its network experienced 90% Wi-Fi data growth during the pandemic. The new Wi-Fi standards, Wi-Fi 6 and 6E, provide substantially higher data rates of up to 9.6 giga bit per second versus 1.3 giga bit per second in the prior generation, Wi-Fi 5. Wi-Fi 6 also presents sizable opportunities beyond smartphones and PCs, through the proliferation of connected IoT devices such as smart home appliances, smart TVs, smart speakers, connected cars and wearables.

Our RivieraWaves Wi-Fi 6 IP is at the forefront of the Wi-Fi 6 upgrade cycle and the only IP with successive record of accomplishment. We have signed to date more than 10 Wi-Fi 6 customers, and our existing Wi-Fi 4 and Wi-Fi 5 customer shipments grew more than six-fold in 2020, the start of a significant expected ramp up. In addition, as I noted earlier, Wi-Fi 6 along with our Bluetooth technologies bring us opportunities to penetrate the high volume market of smartphones as more OEMs are looking to internalize wireless connectivity technologies, as well as semis that look to take advantage of our leadership in the Wi-Fi 6 and Bluetooth domains.

TWS earbuds, The TWS earbuds market presents a lucrative opportunity for CEVA due to its size and roadmap. Per IDC, by 2020, the TWS segment reached 234 million sets and projected to reach to 400 million set by 2024, representing a CAGR of 14%. The pandemic has expedited the proliferation of TWS as more people have to work or study from home and require high quality earbuds to ensure a good experience. Additionally, large handset OEMs have recently decided to remove complimentary earbuds from new phone packages, paving the way for a large merchant market for TWS earbuds.

CEVA already has a strong presence in TWS earbuds space with our Rivierawaves Bluetooth IP. Overall, our Bluetooth technology has been adopted by more than 80 semis and OEMs to date and powered more than 520 million devices in 2020, up 44% year-over-year. Furthermore, the future TWS earbud designs will progressively seek to add more functionalities while dealing with the challenges of finite space and battery life.

Among those functionalities are noise cancellation for adverse environmental conditions, voice recognition, AI and sensors for activity and health tracking, of which relates to technologies that CEVA owns. In the coming weeks, we will officially announce the world's first comprehensive and open platform for TWS earbuds and hearables that we will license. We have already started to introduce this high value differentiated IP to lead customers and expect to conclude the first license agreement shortly.

Automotive, the automotive market represents 9% of the global semiconductor consumption or $41 billion in sales. Yet, selling into the space requires overcoming large entry barriers and it commonly takes between three to five years for semiconductor vendors using new technology to qualify a design at a Tier 1 or OEM before going into production. With that said, as soon as production starts, the product lifecycle in automotive is longer than most other markets, ensuring a stable source of revenue and profits and plays well with CEVA's R&D investment strategy.

In recent years, the automotive industry has undergone a massive technology transformation driven by adoption of ADAS and electrification. ADAS applications such as Lane Departure Warning, Emergency Breaking, Parking Assistance, Driving Monitoring Systems, require high performance DSPs to process sensory data captured by cameras, radars, Lidars and other sensors surrounding the vehicle.

Automotive electrification is gaining momentum as a result of increased emphasis of government to lower CO2 emission as threats of climate change produce more and harsher storms, wildfires and flooding. Battery management system plays a key roles in the electrical powertrain, in charge of keeping high efficiency and longer life of the battery cells. Powertrain vendors and OEMs have recently started to use DSPs along with AI to boost the performance of the battery systems for longer drive per charge in diverse environmental and use conditions.

Leading Tier 1 and OEMs are increasingly receptive to new DSP advancements, and the collaborative business model that CEVA proposes in the areas of ADAS and powertrain. Our latest SensPro2 DSP architecture, the world's foremost DSP for sensor processing, provides a unified architecture for real time monitoring and AI processing of sensory data extracted from radars, camera's, Lidar, Cellular V2X and varieties of environmental sensors. Our CDNN AI toolkit, is able to quantize, prune and optimize neural networks and speed up neural network inference processing, a crucial requirement for a fast response time of the vehicle.

These core technologies and competencies were the drivers for the two key agreements we signed during 2020 with two of the largest automotive semi's that plan to use our technologies for powertrain and level 2+ ADAS. We will continue in the coming year to strengthen our relationship with our two key customers and seek to engage with other stakeholders, capitalizing on core technologies and our growing reputation in automotive. It also aligns with CEVA's strong focus and commitment to environmental improvement technologies and products.

Before my closing remarks, we would like to express our concerns and sympathies for those affected by the global pandemic. The ongoing situation presents us with numerous challenges, and we continue to focus on the safety of our employees, customers and suppliers. Our record setting results for the year demonstrates the breadth of our technology portfolio, its resiliency to global events and primarily our employees' focus and devotion to maintain and even exceed aggressive targets that we set for ourselves.

As we enter 2021, we look to continue to be at the forefront of the digital transformation and capitalize on our core technologies and customer diversity to grow our market share and maximize our return from growing industries, in particular 5G RAN, Wi-Fi, TWS earbuds and automotive that I discussed earlier. These industries present multi-year growth opportunities for our connectivity sensing and AI technologies, and we are well positioned to take advantage of it.

Finally, I would like to take this opportunity to thank all of our employees for their hard work, innovation and fantastic execution. I would like to extend my thanks to our partners, suppliers and last but not least to our investors for their confidence and support. We wish you all healthy, happy and prosperous year and please stay safe.

With that said, I now turn the call over to Yaniv, who will outline our financials and guidance.

Yaniv Arieli -- Chief Financial Officer

Thank you, Gideon. Good morning, everyone. I'll start by reviewing the results of our operations for the fourth quarter of 2020. Revenue for the fourth quarter was $28.1 million, down slightly as compared to $28.3 million for the same quarter last year. The revenue breakdown is as follows: licensing and related revenue was approximately $12.1 million, reflecting 43% of total revenues, 18% [Phonetic] lower as compared to the fourth quarter of 2019.

Royalty revenue was a record $16.1 million, reflecting 57% of total revenues, up 19% from $13.5 million for the same quarter last year and up 28% sequentially. Base Station & IoT royalty revenue contributed $6.4 million in the quarter, up 50% year-over-year, with all-time record high royalty contributions from our Bluetooth, Wi-Fi and sensor fusion product lines.

Quarterly gross margin was 91% on GAAP basis and 92% on non-GAAP basis, both higher than projected. Non-GAAP quarterly gross margin excluded approximately $0.2 million of equity-based compensation expenses and $0.2 million for the amortization of other assets associated with the Immervision investment. Out total opex for the fourth quarter were $23.2 million, just over the high-end of our guidance, mainly due to accrued compensation related benefits and commission associated with the higher 2020 revenues.

Opex also included an aggregate equity-based compensation expense of approximately $3.4 million, amortization of acquired intangible assets associated with the acquisition of the Hillcrest and Immervision of $0.6 million. Our total opex for the fourth quarter, excluding these items were $19.3 million, about $0.5 million above the high end of our guidance due to the same reasons I just highlighted.

US GAAP net income for the quarter was $0.6 million, and diluted earnings per share was $0.03, compared to net income of $3.1 million and $0.14 for the fourth quarter of 2019. Non-GAAP net income and diluted EPS for the fourth quarter was $4.7 million and $0.20, respectively, significantly higher than our internal estimates. [Indecipherable] Of notes the fourth quarter 2020 financials includes a $2 million tax expense due to withholding taxes, which cannot be utilized in future years.

Other related data: Shipped units by CEVA's licensees during the fourth quarter of 2020 were a record 484 million units, up 39% sequentially and up 35% from the fourth quarter of 2019 reported shipments. Of the 484 million units shipped, 217 million units, or 45% were for handset baseband chips, reflecting a sequential increase of 45% from 149 million units of handset baseband chips shipped during the third quarter of last year and a 11% increase from 196 million units shipped year-over-year -- a year ago.

Our base station and IoT product shipments reached a second sequential all-time record high of 268 million units, up 34% sequentially and up 63% year-over-year. Of the 268 million units, Bluetooth was 187 million units, a new all-time quarterly record high. As for the year, our total shipments increased 27% year-over-year to over 1.3 billion units, an all-time record high, which equates to approximately 42 CEVA-powered devices sold every second in 2020.

Annual shipments of handsets was flattish year-over-year at 575 million devices. After a slow start of the year, handset shipments from our large China-based customers grew significantly in the second half of the year. Base station and IoT product royalty revenue continued to grow and reached a new record high of $22.3 million, up from $13 million in 2019 and $8.9 million in 2018. In terms of units, base station and IoT product shipments were up 60% year-over-year to 750 million device. Overall, we surpassed the $100 million total revenue milestone for the very first time. This is a significant accomplishment that was achieved as a result of an all-time high licensing annual royalty revenue that we are proud of.

As for the balance sheet, as of December 31, 2020, CEVA's cash and cash equivalent balances, marketable securities and bank deposits were $160 million. We did not repurchase any shares in Q4 and have approximately 498,000 shares available for repurchase. Our DSO for the fourth quarter was 48 days. During the fourth quarter, we generated $6.8 million of cash from operations, our depreciation and amortizations were $1.5 million and purchase of fixed assets was $0.4 million. At the end of the year, our headcount was 404 people, of which 335 were engineers, slightly higher than a total of 398 people at the end of September and 22 people higher over 382 people at the end of 2019.

Now for the guidance, we expect 2021 to be another growth year for CEVA as the momentum in our business continues. We are forecasting total revenue to be just over $106 million -- $106 million for 2021 with growth in both royalties and licensing. Specifically, in regard to royalty revenue forecast, we are taking a wait and see approach, as the semiconductor industry has experienced extended lead times for chip orders and lean inventories, which we expect to last through the first half of the year.

Our licensing business continues to be solid with growing opportunities in 5G, Wi-Fi 6, TWS earbuds and automotive, as Gideon earlier elaborated earlier. We are targeting another record year for licensing, which will set the stage for additional new streams of royalties in the years to come. On the royalty front, we are expecting a decline in royalties from a leading smartphone OEM, who has switched to another baseband supplier for its recently launched 5G smartphone lineup.

With that said, we do maintain our presence in its 4G smartphones that are still expected to ship volume this year. We also see continued progress for our China-based customer, who has recently regained good momentum in low cost smartphones for emerging markets, and has also recently launched its first CEVA-powered 5G chip in China. In our base station and IoT product category, we expect to continue to outgrow the markets we are targeting. Overall, we believe that new royalty growth drivers will more than offset the decline in royalties from the 5G smartphone supplier switch.

On the expense side, we forecast approximately $3 million additional expenses in 2021 versus 2020 that relates to the devaluation of the US dollar compared to other currencies that we use mainly the shekels and euros. On the cost of goods, we expect higher non-GAAP expenses of approximately $0.5 million due to more sensor fusion chip sales and other project expenses.

On opex, with our strong licensing execution in 2020 and even stronger expectations for 2021, we will continue to support these new customers and reinforce our leadership with disciplined investments in R&D. Overall, non-GAAP opex increase will be approximately $6 million, half of it, $3 million is attributed to the FX, as I stated. Equity-based compensation is forecast to be approximately the same as 2020, around $13.3 million. Annual gross margins are forecasted to be similar to 2020, in the region of 89% on a GAAP basis and 91% on a non-GAAP basis.

Interest income is forecasted to be lower than 2020 due to lower interest rate environment at around $600,000 per quarter. Tax rate is expected to be higher on an annual basis due to higher taxes in France for our RivieraWaves business, Bluetooth and Wi-Fi. Approximately 22% of pre-tax income on a non-GAAP basis, this is compares to 2020 level excluding $3 million of expenses due to withholding taxes, which could not be utilized in future years. Last, share count for 2021 is expected to be approximately 23.5 million shares.

Specifically for the first quarter of 2021. Gross margin is expected to be approximately 89% on a GAAP and 91% on a non-GAAP basis. Opex for the first quarter is expected to be slightly higher than the fourth quarter of 2020. Non-GAAP opex is expected to be in the range of $23.2 million to $24.2 million. Of our anticipated total operating expenses for the first quarter, $3.1 million is expected to be attributable to equity-based compensation expenses and $0.6 million to amortizations.

Our non-GAAP opex for the first quarter is forecasted to be in the range of $19.6 million to $20.6 million. Net interest income that is expected to be about $600,000. Taxes for the first quarter a bit higher, they're staying $0.5 million in both GAAP and non-GAAP basis. And share count for the first quarter is expected to be around 23.3 million shares.

Nicole, you could now open the Q&A session, please.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Matt Ramsay with Cowen. Please go ahead.

Matt Ramsay -- Cowen -- Analyst

Thank you very much. Good morning, everybody. Congratulations guys on a strong year, which was challenging from a number of angles obviously. Gideon, I wanted to start, over the last few quarters you -- and particularly today, you've talked much more about the evolution of Wi-Fi from your business both on licensing and what it might mean for future royalties and I was particularly interested in the comments you made about some large vendors going internal or vertically integrated for their connectivity platforms, not just Wi-Fi, but other types of connectivity that might bring home accessories, wireless earbuds, etc.

Maybe you could talk a little bit more about that how pervasive you're seeing that across OEMs? What the merchant suppliers of some of those chips are doing, which may also be your customers and just how you're seeing that market evolve and what kind of royalty contribution are we thinking about for this business in the next two or three years, as it becomes more material part of your revenue? Thanks.

Gideon Wertheizer -- Chief Executive Officer

Hi, Matt. I think, when it comes to Wi-Fi and Bluetooth and IoT in general, there are two aspects to this. One, is what we call internally IoT. Basically, we make a distinction, I saw other people did the same distinction between IoT and non-IoT. Non-IoT is basically the PC, the smartphone and the tablet. And IoT is all the other devices that they use, [Phonetic] smart TV, smart homes, cars, everything that are not these three categories.

In 2020, this was the first time that the non -- the IoT exceeded or surpassed the non-IoT, meaning that you have more shipment of devices that are not PC, smartphone and others in public and tablets and you have [Indecipherable]. And by 2026, this is going to be 30 billion units. So that's the landscape. That's the opportunity that we are targeting in what we call the IoT and for that purpose, we have all the wireless connection, we have 5G, we have Wi-Fi, we have Bluetooths and we have cellular IoT or the narrowband IoT. So we cover all these angles and whoever of this 30 billion try to build a product and set with us in terms of connectivity.

Now the second aspect is the smartphone. Smartphone is a big market, well defined market, recently become a little bit fragmented in terms of the suppliers OEM on building. And what we found out is that they come to us as part of their internalization that we do where they build the other and they also talk to us in mobile [Phonetic], they come to us and say, we need your connectivity technology because we are going to integrate it into our SoC. If we build this SoC, let's integrate those part and not be depended on Qualcomm, MediaTek and the other guys that are -- they dominate the merchant chip market.

And interestingly last week, it's not just OEM, we are talking with semiconductor players, let's say when it comes to Wi-Fi maybe we will expedite our journey, our entrance into this market and we license technology because we own it [Phonetic]. So it's another angle, which we all the time try to be in the mobile space from different angle, we are the 5G, we are the vision, we have sound and we have connectivity. So if we -- anything that relates to mobile is important to us as well.

Matt Ramsay -- Cowen -- Analyst

Thank you. Thank you for the thought there. Much appreciate it. I guess a follow-on question in a different market you gave a lot of stats and Yaniv did as well in the prepared script about the progress in the base station market with ZTE and maybe you could give us a little bit of an update on the timing of how you're expecting the rollout to take place with Nokia as we get into 2021? Are we on the precipice of that now and is that baked into some of the royalty comments for calendar 2021? If there is any comments you could give us about how big that base station opportunity is in the royalty expectation for 2021 that would be really helpful? Thank you.

Gideon Wertheizer -- Chief Executive Officer

It's a bit delicate to start speaking about specific customer about that we have the two mains that you mentioned. ZTE is shipping, ZTE is strongly positioned in the -- in China and in the emerging market and the momentum we don't see any reason it will not continue. When it comes to the second customer, let's wait, they are public, they speak what they see, but as we said in our prepared remark, we think we are in the -- they are in the prime time now, it's, they have the platform to build this momentum there as well.

Yaniv Arieli -- Chief Financial Officer

And I would add, in our forecast for this year, we do take most of our key customers in production, different -- I mean in this environment, but we do have that over the year partially baked in -- in our expectations and plans.

Matt Ramsay -- Cowen -- Analyst

Thank you. And last one from me, I noticed that the smartphone units for royalties in the fourth quarter were up year-over-year, but the revenue and the revenue per unit was down a bit. I presume that was lower units to Intel, and some growth from emerging markets, particularly with Spreadtrum making a bit of a rebound, is that -- do I have that right? And what are your expectations for your China-based base band customer, it sounds like some increased momentum there globally, is that also baked into your forecast for '21? Thank you. Thanks guys.

Gideon Wertheizer -- Chief Executive Officer

Sure, yes, there is no doubt the year started slow, especially for China-based customer with COVID and the shutdown and then some of the Indian market was very slow as they got into the shutdown later in Q2. So it had a big effect on us throughout the year. The second half of the year was strong, both from Intel and from Spreadtrum. Obviously, we did not have the new iPhone 12s in Q4, which we did have a year ago, but the rest of the momentum from the other models and the Chinese guys did push up the units and on an annual basis although we did not have 100% of the US OEMs, which we did in 2019, we came in flat in overall units and almost in dollars as well. So at least for this -- for the last year, we did not feel the hit of this change or change in vendors. And as we said in 2021, we believe that number will decrease a bit, but overall, we will be able to more than offset it from the base station and IoT type of devices.

Matt Ramsay -- Cowen -- Analyst

Thanks, guys. Appreciate it.

Gideon Wertheizer -- Chief Executive Officer

Thank you.

Operator

And our next question will come from Suji Desilva with Roth Capital. Please go ahead.

Suji Desilva -- Roth Capital -- Analyst

Good morning, Gideon and Yaniv. Congratulations on the progress here. Maybe, Yuniv, in the licensing area, can you talk about the news kind of quarterly sustainable range would be or annual, just to get a sense of how you think licenses can progress?

Yaniv Arieli -- Chief Financial Officer

Yes. I think we hit the new record both in dollar as in number of deals, 55 deals. This quarter was very strong with 21 deals that we don't necessarily recognize all of those deals. Specifically in Q4, we had hands full of customers, new customers for us, some of them [Phonetic] that we were more concerned. So we can upfront the payment before we release the technology, but still [Phonetic] we did not recognize every one of them, so it's the wrong math to do to take the licensing revenues and divide it by 21, it's a bit of a different number.

And with that said, some of these guys that as soon as they pay us, we will deliver and be able to recognize in -- hopefully, in Q1, maybe some will take longer. We'll see, but an excellent pipeline to start the year, licensing for us right now within the Q1 is strong. So I hope I managed to give you the color here you asked about.

Suji Desilva -- Roth Capital -- Analyst

Yes, that's very helpful. And perhaps a bigger picture question on the royalty growth you're having. As we look ahead to calendar '21, what are two out of three royalty growth areas that you're most excited about year-over-year?

Gideon Wertheizer -- Chief Executive Officer

Hi, Suji. I think when we say that [Indecipherable] and I said also to Matt -- answered to Matt as well. The category outside of the mobile and PC, whether it's Wi-Fi, whether it's Bluetooth, whether it's cellular IoT, we see a big momentum there. I mean tons of product coming very fast, I mean we -- all sort of product, if you go to Asia, I don't think of any -- I cannot think of any electronic products that doesn't found with connection with the Internet. So that's the excitement and that's what we are going to see a strong impact in the coming year.

The other category, of course, is the 5G base stations. Here, I think in China next year -- this year is going to be stronger, this is a flat and the second customer is coming out as well. What ahead of us and we don't see it -- we don't -- we cannot see it now, is the [Indecipherable] use cases of 5G. In the prepared remark, I mentioned private networks, you have so many manufacturing factories that are going into private network with the wrong cellular network secured and reliable in the small cells and Fixed Wireless Access. These are all designs that we see the rollout of this one, but when it's -- becomes real in those market could be this year or could be next year.

Suji Desilva -- Roth Capital -- Analyst

Okay. And then lastly, on the connectivity -- Go ahead. Sorry, Gideon.

Gideon Wertheizer -- Chief Executive Officer

[Indecipherable] is, when you go to small cells, private fixed wireless access speak about volume, speak about -- of the millions of the product.

Suji Desilva -- Roth Capital -- Analyst

Okay. Great. And then lastly on connectivity, Bluetooth is very strong over 500 million units last year, what's the expectation for Wi-Fi units relative to Bluetooth? Is it an order of magnitude lower with a higher ASP or kind of approach something like a Bluetooth size unit market, understanding the Wi-Fi TAM would be helpful?

Yaniv Arieli -- Chief Financial Officer

So Wi-Fi is a growing market for -- both for us and overall, the world as well and much more used and adopted these last couple of years than four, five years ago when we bought RivieraWaves back in 2014, nobody was using IP for Wi-Fi, it was just merchant chips at that time, and the whole this has completely changed with dozens of deals that we have signed six-fold unit growth in 2020. And I would add that to give you a list and your first question, what are some of the exciting opportunities, Wi-Fi unit growth in 2021 for sure needs to climb significantly with many more products that are out there.

Suji Desilva -- Roth Capital -- Analyst

Okay. Thanks, guys.

Yaniv Arieli -- Chief Financial Officer

Thank you, Suji.

Operator

And our next question will come Tavy Rosner with Barclays. Please go ahead.

Tavy Rosner -- Barclays -- Analyst

Hi. Thanks for taking my questions and congratulations on the strong results. I just wanted to get back to the guidance for 2021. Maybe I didn't hear properly but with regards to the royalty forecast, you mentioned that you guys are taking a wait and see approach because of some of the slowdown in the semi industry. I guess, do you have a way to normalize that assuming that there is a recovery sooner than expected or how meaningful would it be to your revenue forecast?

Yaniv Arieli -- Chief Financial Officer

Hi, Tavy. Good morning. So let me one thing, correct you, really important, the business slowdown in the semiconductor industry, the problem is the opposite. There is huge demand in the semiconductor industry all over the place and this what's causes the inventory issue, the lean inventories than [Phonetic] the long lead-times, the salary are thus fully utilized, it's a great prompt to have if you're in the semiconductor space, it's not great to be -- if you're an OEM and you need to get those chips and you need to build those cars and get them out the door, that's what the problem is, so eventually when there will be enough manufacturing capabilities that not demand to fulfill the demand, we should see both our customers ship more, for us to recognize more revenue on these royalties.

This is what we alluded to, you could see that many companies in the semi space that we reported recently. We don't know, we are not the manufacturer. We don't have that crystal ball, but we just see what's going on in the industry and we have the patience, exactly what you said, the wait and see approach and let's see what comes up. But last year issues with Corona and shutdown and demand, at least how Corona -- the COVID-19 started completely different where the market is today and the need for much more [Indecipherable], which we talked about and we are seeing all over the place, with a lot of new devices in full production.

Tavy Rosner -- Barclays -- Analyst

Great. Thanks for the clarification.

Yaniv Arieli -- Chief Financial Officer

Sure. Thank you.

Operator

And our next question will come from David O'Connor with Exane BNP Paribas. Please go ahead.

David O'Connor -- Exane BNP Paribas -- Analyst

Great. Good morning and thanks for taking my questions. One or two from my side. Maybe, firstly, one for you, Yaniv, on the base station IoT, what's the assumption there for 2021? You did 72% in 2020 and 50% in Q4 and is this plus 50%, is that something you can maintain through 2021? And also can you speak maybe just on the assumption around the first half royalty growth versus the second? And I have a follow-up. Thanks.

Yaniv Arieli -- Chief Financial Officer

Sure. So we are not breaking down the royalties and licensing this year because it's quite difficult to do, and many companies have stopped at all giving guidances, qualitative data. We are trying to help out that the models and to help out with our best understanding of different industries and Gideon talked about many industries that we play in. So it's really hard to put all that in place. We did take -- grow in overall growth. We do believe that we will be able to grow each one or both of the licensing and the royalty revenue streams for us. We did not -- it's just too hard for -- at this point of time to understand how this will be divided between the two. I think, we just need to take it one quarter at a time and see how things progress.

On the royalties, again like every ups and downs, there is a lot of demand right now, I think seasonality in Q1 and the semi is not going to be like prior years, it could be stronger than in the past. On the other hand, we have less new phones that are introduced usually in the first quarter and more toward spring. So we stop -- when ASC 606 started then we don't report in the years that we report when [Phonetic] our customers, we really need to ask all the, it's very long list of customers, what they forecast for Q1 and many of them will not share not with you, not with us and [Indecipherable] and so. Let's take it step-by-step, what is under our control and we do, though is the licensing at least for the first part of the backlog is strong.

David O'Connor -- Exane BNP Paribas -- Analyst

Okay. Understood. And then maybe a question for Gideon. The strategic agreement with the top-tier smartphone OEM, is this a new customer for Saver or can you give us any more detail as to the geography there and how long that licensing deal was in the works? Thank you.

Gideon Wertheizer -- Chief Executive Officer

Yeah. It's the new customer for CEVA, it's in Asia, one of the big Asain guys. Beyond that, you can do -- you can connect the dots, but it's a sizable customer like any branded OEM.

David O'Connor -- Exane BNP Paribas -- Analyst

Understood. Thank you. And one last one if I could squeeze one in on the open platform, you talked about for the TWS earbuds. Can you help us up gauge the level of interest there from customers and the -- you did talk about one customer potentially, an early adopter there, what is the differentiation of the platform versus either what's the merchant guys have or what other competitors have? Thank you.

Gideon Wertheizer -- Chief Executive Officer

I must apologize. We are going to come out with this product in the coming weeks. So I don't want to take the supplies out of our marketing people. The only thing that we say that TWS is -- it's a complex technology. We have the advanced audio, you have connectivity, you have all sort of sensors inside and CEVA is the only company today in the IP space that has all these pieces and ideas to put them together and in our IP package, it's a very unique offering in the IP and we discussed with customer about this product, they're all extremely happy about it because the complexity to build a product like the airport is enormous [Phonetic]. And now the market because of the fact that people are basically looking for merchants' product, it's a huge volume and people wants to move fast into this market, try to differentiate and we believe we can give them the baseline, the trading [Phonetic] a lot of R&D and risk in the project.

David O'Connor -- Exane BNP Paribas -- Analyst

That's helpful. Thanks, guys and congratulations on the strong results.

Yaniv Arieli -- Chief Financial Officer

Thank you, David.

Gideon Wertheizer -- Chief Executive Officer

Thank you, David.

Operator

And our next question will come from Martin Yang with Oppenheimer. Please go ahead.

Martin Yang -- Oppenheimer -- Analyst

Hi, Gideon and Yaniv. My first question is on your TWS market perhaps following up on the previous analyst, how fast do you see more functionalities getting integrated into those headsets? And maybe can you help us conceptualize the new dollar content or additional dollar content you will be able to secure once more functions are integrated? Thanks.

Yaniv Arieli -- Chief Financial Officer

It's a question that we don't really answer about if you meant the ASP in the chip. But the idea is to take on ASP or Bluetooth, which is roughly $0.01 [Phonetic] even below and to by far increase it because the complexity or the comprehensiveness of this technology is much more. And that's the strategy in place meaning, take advantage of the fact that we have more than 80 customer doing designing with our connectivity technology and by combining with other technology to give them higher value and higher ASP for us.

Martin Yang -- Oppenheimer -- Analyst

So a follow-up of that. Can you maybe help us to understand how fast do you think the new functionalities will be implemented in TWS? Are you seeing any major customers stop to -- start to integrate more complex technologies in this year's models or maybe are they start talking about more features for future product roadmaps?

Gideon Wertheizer -- Chief Executive Officer

Usually, in connectivity, it takes about one-year design cycle and depending when we do the license, I believe, so obviously, you'll start seeing the second half of [Indecipherable] the next Christmas season, you start to see this product in the market.

Martin Yang -- Oppenheimer -- Analyst

Got it. My final question is on Wi-Fi 6. Based on your current customer engagement, what are the new functionalities are you seeing in end product that is realized by Wi-Fi 6, which is not available in previous generations of products?

Yaniv Arieli -- Chief Financial Officer

Wi-Fi 6 is a new standard for connectivity, Wi-Fi 6 is even the latest one. And the -- our business is really is to enable customer to grow fast in the customer end market and what we see in terms of customer going into new market is access point, Wi-Fi access point and all sort of IoT devices starting from the TV, smart speaker, all sort of wearable devices and even automotive to do the Wi-Fi in the car -- in the cabin itself. So those are the customers, these customers are usually customers that are not familiar with connectivity and would believe if somebody expert or specialized to provide them these total solution compliant with the standard interoperable wearable device. That's something that we -- CEVA is the only today IP company that -- the only go-to guide today in the IP space, if you're looking for IP, I don't have any other one that is closable and competence with us. That's the reason that we see all this.

Martin Yang -- Oppenheimer -- Analyst

Got it. Thanks.

Yaniv Arieli -- Chief Financial Officer

Thank you.

Operator

This will conclude our question-and-answer session. I'd like to turn the conference back over to Richard Kingston for any closing remarks.

Richard Kingston -- Vice President of Market Intelligence, Investor and Public relations

Great. Thank you. Thank you all for joining us today and for your continued interest in CEVA. As a reminder, the prepared remarks for this conference call are filed as an exhibit to the current report on Form 8-K and accessible through the Investors section of our website. With regards to upcoming conferences and events we will be attending, we have the following virtual conferences upcoming. The Susquehanna 10 Annual Technology Conference, March 9 to 11 and the Roth Virtual conference from March 15 to 17. Further information on these events and all events that we will participate in can be found on the Investors section of our website. Thank you and goodbye.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Richard Kingston -- Vice President of Market Intelligence, Investor and Public relations

Gideon Wertheizer -- Chief Executive Officer

Yaniv Arieli -- Chief Financial Officer

Matt Ramsay -- Cowen -- Analyst

Suji Desilva -- Roth Capital -- Analyst

Tavy Rosner -- Barclays -- Analyst

David O'Connor -- Exane BNP Paribas -- Analyst

Martin Yang -- Oppenheimer -- Analyst

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