Q4 2020 Himax Technologies Inc Earnings Call
Hello, ladies and gentlemen.
The two behind that and allergies.
And incorporated first quarter, 'twenty and 'twenty earnings conference call at.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder of this conference is being recorded.
I'd now like to turn the conference over to your host Mr. Mark The Wallenberg from MZ Group. Please go ahead.
Welcome everyone to IMAX as fourth quarter 2020 earnings call joining us from the company today are Mr. Jordan and will President and Chief Executive Officer, Ms, Jessica and Chief Financial Officer, and Mr. Eric Lee Chief IR PR Officer.
After the company's prepared remark.
We will and we have allocated time for questions and a Q&A session. If you have not yet received the copy of today's results.
Please email H I M acts and MZ group that U S access the press release on financial portals or download a copy from imax's website at Www Dot Com Dot Dot hi, Max Dot Com tw.
Before we begin formal remarks, I'd like to remind everyone that some of the statements on this conference call, including statements regarding expected future financial results and industry growth are forward looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described and its conference call.
And that could cause actual results.
On or events to differ materially from these sort of described in this conference call include but are not limited to <unk>.
General business and economic conditions, the state of the semiconductor industry market acceptance and competitiveness of the driver and non driver products developed by Hi, Max.
And then for end use application products. The uncertainty of continued success and the technological innovation as well as other operational and market challenges and other risks described from time to time and the company's SEC filings, including those risks identified and the sections entitled risk factors and its form 20-F.
For the year ended December 31, 2019 filed with the FCC and March 2020.
Except for the Companys full year of 2019 financials, which were provided and the company's 20-F and.
And filed with the SEC on March 25, 2020 of the financial information included in this conference call.
Unaudited and consolidated and prepared in accordance with <unk> accounting.
The financial information and generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor to which we subject our annual consolidated financial statements and may vary materially from the audited consolidated financial.
The information for the same period the.
The company undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information future events or otherwise I will now turn the call over to Mr. Eric Lee Eric the floor is yours.
Thank you Mark.
Thank you and the thank you everybody for joining of US My name is Eric Lee and I'm, the chief hierarchy of Easter.
Joining me are Joe the move.
Our CEO and the JC Hopkins.
CFO on today's call.
I will first review of the high mass consolidated financial performance for the fourth quarter, and the 44 year 'twenty and 'twenty.
Followed by the first quarter 'twenty 'twenty, one all look.
And then give an update on the status of our business after which we would of tech questions.
We will review all of the financials on both I, Fiat and and the.
All of its basis.
The non <unk> financial and his crew of share based compensation and acquisition related charges.
The impact of COVID-19 has persisted and globally.
New lifestyle, and social activity and the economic practice Oh.
Namely evolving.
One of these influences.
The unexpected long lasting strong demand for electronics, the voice and the component, which is broad and lean capacity shortage and semiconductor foundry and the begins.
And such a favorable by challenging business environment, we continue to steadily improve and prudent execution and the T lever of strong business performance along the way.
We pre announced preliminary key financial results for the first quarter on January seven with revenue gross margin and the EPS or exceeding the guidance issued on November till 'twenty and 'twenty.
Today, our reported result for the revenue gross margin and the EPS.
In line with the pre announce the results.
Both revenue and the gross margin hit record highs in the fourth quarter of 'twenty and 'twenty.
For the first quarter, we recorded net revenues of $275.8 million.
The increase of 14 point, and 9% sequentially and increase of 57, 6% compared to the same period of loss a year.
The 14.9% sequential increase of revenue exceeded our guidance off of the increase of around 10% quarter over quarter.
Thanks to strong momentum across all major business segments.
T V monitor automotive driver IC and the Cmos image sensor contributed more to the bathroom and guide the of sales than other segments.
Gross margin of 31, 2%.
<unk> instead of the prior guidance of around 29% and the significantly improved from the 22 of <unk>, 3% of the third quarter 'twenty and 'twenty.
I asked the highest profit per diluted a D. S was 19.5 since.
Exceeding our guidance of a wrong 15 to 16 cents.
So on sales and the improved gross margin contributed to the bathroom and expected earnings results.
Non <unk> profit per diluted the idea.
<unk> 19, and 27 cents.
Exceeding our guidance of a wrong 15.1 thing to <unk> 0.1 thing.
Revenue from large display drivers was $64 $2 million up 15.
2% sequentially and the up 11% year over year.
The sequential growth was driven by our continuous strong demand for I T paradox, including notebooks and the monitor the rite aid from the ongoing remote working and the distant education.
TV revenue was up slightly quarter over quarter and all of her phone to our previous guidance off of the mid single digits. The sequential decline due to Badger home entertainment demand from the stay at home economics.
Large panel driver IC accounted for 23, 3% of total revenues for this quarter.
Compared to 23.2% in the third quarter of 2020, and the 33, 1% a year ago.
Yeah.
More and the media size display drivers continued to grow in the fourth quarter of Sky did.
With revenue of $177 $9 million up.
Up 17.3% sequentially and off the hunter and 19.4% year over year.
Smartphone and tablet the spray P. D. D is true robustly in the first quarter, but was offset by a decline of the D. Ics.
For year over year perspective.
Both smartphone and the type of liked demonstrated extra ordinary sales growth.
Yet growth was constrained by the severe foundry capacity shortage.
Small and medium sized segment accounted for 64, 5% of total sales for the quarter compared to 63, 2% in the quarter of two two of the lives in 'twenty and $46 four a year ago.
Yeah.
Smartphone sales continue growing in the first quarter with revenue, reaching $66.6 million up five 1% sequentially and the Hunter is 73 point of 1% year over year.
It represented more than 24% of our total sales in Q4.
Our smartphone T T D. I sales were up around 10% sequentially and up more than 300% compared to the same period of loss a year.
The sequential growth was due to favorable mix of both per Doc and declining tail.
In consideration of capacity the mutation.
Our strategy is to part of Hawaii, our support to those customers with whom we are a major supplier or half of long term business and relationships.
So all of the traditional smartphone D D ice's fell by around 10% sequentially and the we're up around 20% from the same period of loss a year.
Plus we have repeatedly indicated.
The additional smartphone D. D. Ics are quickly being replaced by T. D D I and the aim of late.
Our tablet revenue.
One of our top still contributor throughout 'twenty and 'twenty reached.
$67.4 million for the fourth quarter and another record high.
The Q4 sales grew 25, 3% sequentially and the 291, 5% year over year.
The tablet revenue accounted for more than 24% of our and total sales in the first quarter slightly higher than that on a smartphone.
Despite smartphones have a much bigger market size and tablet sales of our smartphone and tablet were equally weighted for the first quarter, indicating our favorable capacity on location Talwar tablet segment of the resection of our leading position and that market.
For tablet P. D D I, the sequential revenue increase significantly by over 80%.
This marked the third consecutive strong quarterly increase since the initial mass production in the first quarter of 'twenty and 'twenty.
It reflects the robust customer demand from the Android tablet market.
Are we on men or sole source of the buyers to old leading and customers.
Improve the proteomics with increasing shipments being high and paradox with active stylus.
Also ascribed to the satisfactory sales growth and to help all of our overall margin improvement.
Revenue of the traditional discrete driver Ics will tabulate the.
Creased, 12.3% sequentially, but increased 68, 8% year over year in the first quarter.
Our first quarter of driver IC revenue flow.
Automotive amounted to 37 $5 million up 32, 4% sequentially and the opposite 11, 9% year over year.
Let's call maker resumed production in response to a recovery of global automotive demand from Q3 to solve the in 'twenty.
However.
We were unable to scale of fast enough to meet the surging demand for all customers do true capacity shortage.
Automotive driver IC accounted for more than 13% of total revenues.
The during 'twenty 'twenty, one we expect to further automotive display driver IC and market share from the current level of more than 30%.
Jordan will elaborate on this inc. A few minutes.
First quarter revenue from all of the non driver of business was $33 $7 million.
Three 3% sequentially, but down six 4% year over year.
The sequential increase was mainly a result of increase of shipment of comm Ics for high frame rate and high resolution displays.
And that's where the swell of Cmos image sensor production with strong demand call me, if on notebook and the web camera application.
However, the increase in sales was offset by a decrease in W. H O shipments to an anchor customer.
The year over year of reduced reduction in sales was due to a decrease in WMA or shipment.
Non driver products accounted for of Chelf, 0.2% of total revenue growth compared to 13, 6%, Inc. Third quarter of 2020, and 25% a year ago.
Gross margin for the first quarter was 31, 3%.
Hey, Hunter and 90 basis points sequentially and up 1060 basis points from the same period of loss a year.
The much improved the gross margin can be ascribed to two main reasons.
Favorable product mix and the industrial capacity shortage.
The growth of higher margin products, notably <unk> T D D I T com and automotive drivers.
I'll pass that of other protocol category still during the quarter, thereby enhancing our corporate gross margin.
The level of gross margin for the first quarter also reflected strong overall demand and the bathroom proved up pricing on rising material cost across foundry assembly and testing or undergoing severe of capacity shortage.
Not meeting all demand.
We were able to allocate the limited capacity to the product with better margins.
Yeah.
Power of Ias <unk> operating expenses were 43 point, Amy and the installers in the first quarter John.
<unk> eight percentage from the preceding quarter, but up 17% on a year ago.
The sequential decrease was caused by negative difference in all of ICU expenses offset by increased cash bonus.
<unk> reported in the loss on these call to.
To further reward employees for the bachelor's day and expected financial results and the higher R&D expenses.
The year over year increase was the result of the increased the salary and the cash bonus along with higher R&D expenses.
Despite a year over year increase in operating expenses.
The operating expenses ratio was reduced from 21, 4% in Q4, two as all the 19 two of 15, 9% and Q4 2020, reflecting our careful management of.
Operating expenses.
Non <unk> operating expenses for the first quarter.
The $43.5 million.
Up.
11, 8% from the previous quarter and up 18, 1% from the same quarter in 2019.
Reflecting higher sales and the bathroom of gross margin of <unk>.
<unk> operating profit was $42.2 million for the first quarter with operating margin of 15, 3%.
And from three 9% the entire quarter and up from minus <unk>, 8%.
In the same period of last year.
First quarter and non <unk> operating profit was $42.5 million or 15, 4% of sales.
Higher from $14 7 million or six 1% of sales the last quarter and the off from minus <unk>, 4% from the same period last year.
<unk> is the profit for the first quarter was $34 million or of 19.5 cents per diluted the Ats.
Compared to $8 $5 million or 4.9 cents per diluted the ats in previous quarters.
And the $1 million or <unk> six cents per diluted EPS a.
On a year ago.
First quarter and on <unk>.
Profit was $34 $2 million or 19.7 cents per diluted EPS.
Compared to non <unk> profit of <unk> $6 million or seven three cents per diluted ads last quarter and the non <unk> profit of $1.5 million or zero point of <unk> per diluted EPS for the same period last year.
Now, let's have a quick overview on 'twenty and 'twenty four year of financial performance.
Revenue totaled $887 $3 million in 'twenty and 'twenty.
The 32, 1% growth over.
2019.
And the first half of the year, COVID-19, and the U S sanctions on China broad shock turbulence two of the market.
However, all business business rebounded strongly through all of the second half with fresh demand brought by the new stay at home economy.
The mountain all three major product categories small and the medium sized display driver posted the highest growth of 67, 7% year over year in 2020 with sales totaling 500, and the $15 $7 million.
That's the leading Android tablet brands, all adopted our T DDI solutions and the global smartphone sales rebounded.
We saw extraordinary business momentum for both for the areas in 'twenty and 'twenty.
<unk>.
Revenue from large panel display driver totaled 240 point, aiming and dollars in 'twenty and 'twenty of mine.
The increase of one five year over year.
During the pandemic the.
Search in demand boosted our sales on monitored the straight drivers op.
By high teens, and the notebook display driver of up around 60% respectively.
Television sales.
Ever declined by high single digit year over year due to weakness in global TV market, which was negatively impact by COVID-19 outbreak.
Non driver of product sales totaled $138 million.
The increase of two 9% year over year.
The year over year increase what's the Manny if on T com and the growing need for high frame rate and the high resolution display and the Cif due to the continued strong demand and notebook and the web camera for work from home and the online education.
This increase was offset by W. A L O.
That's a lack of sleep towards out of an anchor customer gradually decreased.
Gross margin in 'twenty, and 'twenty was 24, 9% up from 25% in 2019.
The year over year improvement was mainly due to strong sales in second half and the <unk>.
More favorable product mix.
As previously mentioned.
Robust and men push foundry capacity constraints.
Two of more severe level, which in turn and enable better pricing.
<unk> operating expenses were $162.9 million up $6.6 million all of four 2% compared to last the year.
The increase came from higher expenses and share based compensation cash bonus R&D expenses.
The way of salary, but offset by lower travel and fee.
Notably the stronger dollar against the U S dollar in 'twenty and 'twenty contributed to the around $3 $9 million of operating expenses increased.
Costs, why our accounting was the U S. Dollar dominated we pay the bulk of our employees said already that's the way of us much of our Taiwan local encourage us and experiences and NT dollar.
However, the operating expenses ratio of 'twenty 'twenty was reduced to 18, 4% from 23, 2% in.
2019 indeed.
Indicating our consistent management of operating expenses.
<unk> operating income was $57 9 million in contrast to a loss of $18 $3 million from 2019.
Due to higher sales and the higher gross margin.
For the same reason non <unk> operating income was $64.4 million and.
The increase of $89 million from the loss of $16 $3 million in 2019.
Our <unk> profit for the year was $47 $1 million or 27.2 things.
Versus a loss of $13 $6 million or seven nine cents per diluted EPS.
Non <unk> profit for 'twenty, and 'twenty was 52.3, meaning dollars or 32 cents per diluted aid gas.
Up $64.4 million yoga.
Year on the loss of $12 $1 million.
The last year.
The upswing in income.
The result of Bachelor of sales and the higher gross margin along with where manage the operating expenses.
Turning to the balance sheet we.
We have 201 point for meeting of the holders of cash cash equivalents and all of the financial assets of <unk>.
And <unk> 'twenty 'twenty.
Compared to of Hungary, Chelf point $1 million at the same time lots of year, and the $142 $9 million a quarter ago.
The high cash balance was mainly a result of and operating cash inflow of.
The 67 $7 million during the quarter.
The restricted cash was a hungry and the $4 million at the end of Q4, the same as the preceding quarter compared to $164 million a year ago.
The restricted cash was used to guarantee the short term and secure the borrowings from the same amount.
We had $58.5 million of long term unsecured loans.
First of all of the end of Q4 of which $6 million was current and potion.
Our year end inventory of December 31, 'twenty and 'twenty.
And we're hungry and eight points.
$7 million downfall of $125 $7 million last quarter, and a hungry $43.8 million a year ago.
Accounts receivable at the end of December of 'twenty, and 'twenty was $243.6 million up from $221.1 million last quarter and off from the.
$164 $9 million a year ago.
DSO was 100 days at the year and that's compared to 90 days a year ago and the 1990 days at the end of last quarter.
That's the highlighted in last earnings call.
Given the foundry and the banking and capacity shortage of inventory level will stay at a relative low level in the quarters to comp.
Net cash inflow from operating activity for the first quarter was the $67 $7 million, let's compare to the inflow of $33 $5 million last quarter and the inflow of $23.4 million for the same period.
Last year.
Cash inflow from operating operations and 'twenty 'twenty, one of hungry and the $2.6 million as compared to $7 $7 million in 2019.
First quarter capital expenditures amounted to $8 million versus $1 2 million last quarter, and the $2 $7 million a year ago.
The first quarter of Capex was for R&D related equipment.
Total capacity capital expenditure for the year was $5.8 million, mainly for design tools and the R&D related equipment.
In comparison, the Capex for 2019 was $45 $9 million of which the vast majority.
Watchful of the purchase of land the.
The construction of a new building and the <unk> capacity expansion.
As of December 31, and 2020, Hi, Max pass the 173.8, meaning Ats outstanding little changed from last quarter.
Our fully diluted basis.
On the fully diluted basis the <unk>.
Total number of ads outstanding is the $174 1 million.
Now turning to our first quarter two 2021 on guidance.
For the first quarter, we expect further revenue growth from the already high level of Q4 of 2020, the most of our business sectors.
Gross margin should see another uptick.
And the could reach another quarter of high.
For the first quarter, we expect revenue to increase by 5% to 10% sequentially.
Gross margin is expected to be 37% two of 38% depending on the final product mix.
With the increase of both revenue and the margin.
Net income should increase substantially in the first quarter.
All of <unk> profit attributable to shareholders.
Expected to be in the range of 30 to 34 cents per fully diluted EPS.
Non <unk> profit attributable to shareholders is expected to be and the range of 31 to 34.1 cents per fully diluted the ADF.
Revenue gross margin and the EPS were all likely reached quota the highest during this quarter.
With that I will now turn the call over to Jordan.
And then the floor is yours.
Thank you Eric.
As we highlighted before on previous earnings call capacity.
Capacity shortage of appears to be of long term phenomenon.
As we entered the year 2021, the shortage has become even more severe.
The extended to the Kansas City piece that includes the assembly and test it and.
As the leading industry player with superior resources engineering capability, so the diversifies and enlarge the wind the poor the loan we slow on term business relationships, we suppose funds, where you havent against the players we engaged early and.
And have successfully and security.
Multiple Stifel 2000 tonnes do you want and as compared to the level of Q4, 2020 quit and when you reach the recent peak quarterly shipment.
In addition, we are also optimizing capacity of location the model the diversify the foundry suppliers.
By making the right products and the right facts within EM to fully utilize the capacity accessible to us.
The amount of the product areas for which we are secure of meaningful capacity inquiries you sell of multiple automotive.
The global shortage for semiconductor supply is the oval, claiming.
We expect the total capacity available to us to increase quarter by quarter in 2000 and thought the oil.
And we'll continue our efforts and security.
<unk> for the capacity.
As far as we can see the overall semiconductor industry supply, we're not of any significant increase anytime soon.
Strong demand is likely to persist longer than expected.
And then Sunshine and the environment high mix use of preferred supplier to work with.
For our sizable scale diversified by the four and the extensive product offerings.
Strength in a number of high margin businesses. We're also help our ongoing margin improvement efforts for example, with strong demand and full tablet expected to remain our feed the pre forever and the four major enjoyed names will ensure the high margin contribution continues.
Likewise, our leading position in the automotive display represents a solid support for our margins as we anticipate a robust sales growth in this high margin business for the coming years.
More of our gross margin improvement can also come from new non driver products, notably our high and timing controller, why Psi ultra low power AI and <unk>.
Again gross margin expansion and we're always you always out of all major of business goals for this year and beyond.
No. It did us a start and we said update on the large panel driver IC business.
For the first quarter, we expect lots of display driver IC revenue to increase by low teens sequentially.
Notebook IC segment.
We anticipate another impressive quarter of high growth in Q1 of.
But the deviation from previous quarters and.
Increasing substantially from the previous quarter due to the extension of strong demand derived from persisting and remote work and that easily.
As for mortgage the mortgage the IGT sales on the other hand, we expect the sequential decline and the first quarter due to the capacity shortage as we are unable to meet all of the demands.
As TV sales through remains true and TV panel shortage and increases our television segment looks set to and the first quarter with the better than seasonal momentum of around 10% sequential growth.
Recently, we saw customers proceeding with the crazy promotion and high resolution models the.
Require of high end drivers and T cars in the day.
In anticipation of subsets of sustained strong demand and full home entertainment during the pandemic.
However, our display driver IC and Pete on shipments Osteo tapped by supply shortage and foundry and packaging despite from demand from customers.
Now, let's turn to the small and medium sized display driver IC business and the <unk>.
First quarter, we see continuous show on TV sales for both smartphone and tablet, which the men SKU of surpassing and supply.
Foundry capacity remains the major issue.
As far as the impacts all shipping capability.
We smartphone and type of the share in December of funds report, we strategically locate capacity in favor of all type of it as we are.
And the dominant supplier and the enjoy tip of the bucket.
For Q1 type of sales, we expect another high single digit sequential growth fueled by.
Consumer demand for home working and we've all learned and knees as far as high of <unk> penetration.
We expect <unk> smartphone sales to slightly increase by the mid single digit in which <unk>.
Smartphone TVD of revenue is projected to have conservative mid teens growth and smartphone TD the would continue.
Glenn and trend.
Type of it was one of our top sales contributors in 2020, thanks, largely to the bus rides and PD the penetration for the enjoyed them.
And the strong demand and true, but by the stay at home and economy.
To further broaden our product offering and so the.
So the unify our market position all the time.
The TDD has smoothed.
Toward higher foreign rate kind of resolution and the largest screen sized solutions.
We have also enhanced accuracy through all of the didn't active status designed full pay the quality and rising and Troy.
As stated before IMAX is highly committed to and bullet technologies. Our development started the strong smartphone and has extended the wearables and tablets and Automotives.
And with some encouraging progress.
Media and Chinese panel makers, and we report in due course.
The AMOLED driver IC will soon become one of the major growth drivers flow of small and medium panel driver IC business in 2000 and towards the what.
Turning to the automotive sector the.
The global shortage of semiconductor components has brought great challenges to the worlds automotive industry.
As most of the world's lockdown periods and.
<unk> tightened and foundry capacity combined we saw the surge in orders due to pent up demand.
<unk> has left the industry facing and even more severe shortage compared to other sectors customers.
Customers now rely on just the entire delivery of IC components to preserve production and some reported to the already suspended production of four days or even weeks.
In consideration of the season sales.
Sales demand.
At the mist tight capacity shortage, we work strategically with panel makers tier ones and then customers across different continents.
And have secured a large volume of foundry capacity, while managing and swift production and adjustment to meet customers' production schedules.
By offering a supportive of logistics, we hope to further our relationships with customers, who can even turn on the help.
Instead of at our new technology into the on new logos going forward.
The limited by large scale of supply shortages automotive Ics.
Segment.
And is expected to deliver mid to mid.
The mid teens sequential increase and the first quarter.
It should be the trough.
We saw it actually vehicles quickly emerging as the next big thing, we see the car market embracing new display technologies, Inc.
Shifting towards larger more sophisticated and higher performing displays like never before.
Already of the market leader in auto on the automotive display driver business, we foresee.
For the market share gains in the coming years and this fast growing market.
Yes.
We continue to sustain our competitive position with the comprehensive product offering for advanced new features such as TDI volume sale touch low voltage and me.
SK topology connection.
Point to point high speed interface, breaching functions and the falloff in sales displays.
As a reminder, we low we launched the world's first TDD of design for automotive displays technologies.
<unk> started shipping in 2019.
We saw meaningful volume anticipated starting in 2000 and taught the you want.
It's EV growth.
Popularity.
And autonomous driving.
Develops.
The logical prowess continues to separate us from peers for the next generation display for.
The automotive.
For the first quarter revenue for the small and medium size sort of IC business is expected to increase by around high single digit which demand continue continuing to surpass supply.
Capacity shortage again remains the major factor is all of production has been unable to respond quickly enough to that and the expected revenue growth.
No the knee share some of the progress we've made only non driver IC businesses either the.
Last quarter.
First of all the timing controller.
The aggressive promotion by major of television brands. The I mentioned earlier will benefit our high and T com business and <unk>.
AK TV timing controllers as word of display drivers have been the widely adopted by multiple DD and <unk>.
Customers.
Our T technologies, not only provides higher resolution higher frame rate and better image quality. He can also enables low power and products.
All of the assumption is critical.
Already 5% or the over 5% of our total sales timing controller products enjoyed by the margin and the ASP.
Of the display drivers and we expect this.
Segment to be in and essentially of long term gross area.
<unk> revenue in the first quarter part of limited by capacity shortage in the IC packaging.
We expect to increase by high teens sequentially.
The next is a quick update on <unk>.
The fourth quarter of the real revenue decline.
Eric reported earlier was the result of lower shipments towards the anchor customer.
However in the first quarter of 2021 sales are expected to increase substantially thanks to resume shipments to fulfill the anchor customers and higher demand.
The sequential shipment increase and the higher capacity utilization and you know the be all factory will positively contribute to all of Q1 gross margin.
Meanwhile, we saw a leading and Italy and printing technologies and the friction.
Upticks design type of PDT with.
Continue to engage and collaborate with key customers and partners for their next generation of products. We focus is on appeal of <unk> sensing.
VR catches on.
Biomedical devices and the others.
Notably we are of seed more fuel of camera design activities among enjoy smartphone makers flow three D sensing and are making good progress by offering the <unk> optical components, including the threats to the Oes Michael is the arrays and Diffusers.
To meet the diversified demand from of quite a variety of cash.
Customers slash process.
Including the XL suppliers tof sensor vendors tof module makers and <unk>.
Oh, yes.
Next let me give you an update on <unk> sensing and full of non smartphone segment.
As mentioned before we provide customers who wish to design their own such a light based on.
The three D sensing solutions, we saw a plethora of proprietary suite of the coal the IC.
All of us really the colder and accelerated total image processing full face with the nation and the.
All four of pacing class secured the authentication.
He was already certified by the leading Chinese electronic payments vendors with the requirements of accurate data at the coding tightened the operation and strict privacy.
We have started volume shipments in the.
Last quarter.
And all of the pipeline through all of this year and for the new design sockets on the way.
On the other hand free.
All of our socialized three D sensing and total solution small volume shippers I expect peaceful.
And as access control and biomedical inspection of the devices in the first quarter.
More design wins and engagements are progressing and we continue to receive numerous inquiries.
New ideas all the applications and then they will accrue to us.
Now switching gears to the Wifi small cells and solutions.
As I mentioned several times on previous earnings calls in order for our wives sites and policy to maximize market visibility and satisfy demand for emergent and reputations two business models, all adopted than the total solution and discrete component.
Portola solution, we are currently at notebook TV.
And the applications and.
And have received positive feedbacks.
We expect to start the solid production and ramp up by the end of 2000 and Todd do you want.
We still and efforts we saw subsidiary of Enzo and now the always on partners for the engagements on the way for more applications such as thought Bill, though of luck automotives and various Iot devices for industrial and commercial uses we are sort of yield of all of the business probe.
Ashish.
For the other business model, where we provide key components as we pulled the over the year.
Our W on plus AI processor, Orthoptic, Google Tensorflow Lite for Michael control the framework.
And types of six for the demonstrated our unrivaled.
The capability with the ultra low power.
In December 2020.
And we partnered with spot funds.
And on line retail store to distribute the <unk> plus ish.
EBITDA in Asia, and board and they always since the molecules.
Developers can now access of our technologies easily from smartphone and.
And transform the AI enabled and concept, which colorful at sort of low power until two of the of each and AI.
Into real products.
Furthermore, we teamed up with impulse.
<unk> provides the leading end to end the AI developer platform offering intuitive user interface.
One issue and pulse platform with a single bottom price and within seconds developers can now generate the latest neural network AI model.
For the it directly onto the Gws plus EBITDA Asia Board.
The high technical obstacles developers, usually phase can therefore be dramatically slower.
Together with our partners, we are carrying out the wide range youll promotional activities to broadly and the <unk> market reach and this type of reach that Rick on pace with small yet of developers.
The illustration, we sent to the high mix and as you can pose joined to the hosted a webinar discussing ways to help developers get started with the world's most powerful playful the EMS and they bleed embedded machine learning and everywhere at extremely low power consumption.
We will continue to aggressively pursue social online marketing and kept pace going forward.
We believe the Wi Fi offerings will start contributing to our top and bottom lines. Later this year, we aim to make it a major contributor to our long term business growth.
Now turning to our Cmos image sensor business update we see continuous surging demands for Cmos image sensors for what camera and notebook is the.
New norm of virtual conferences show and all sizes of receded.
However, our actual shipments has been bad to the capped by the foundry capacity available to us.
Separately, our industry first to ignore the Cmos image sensor, but suppose all xiaomi molt full of videoconferencing and ultra low power AI mode for facial recognition has penetrated the.
The tough market for the most stylish and seamlessly and bezel designs.
We have shipped the smartphones in the force in the fourth quarter and you expect it to ship more during 2000 and thought the oil.
Regarding ultra low power always on Cmos image sensor, which targets in battery powered always always the only applications.
Our kids and promising feedback and design of adoptions from customers in various markets such as car recorders surveillance smart meters Charles whole appliances and.
And as you made of Tronox.
In Q1, and the CFS revenue you expect to be.
Mid single digits sequentially, although we still cannot fulfill all of the demand due to the foundry capacity constraint.
For the non driver IC business, we expect revenue to increase by low teens sequentially in the first quarter.
That concludes my report for this quarter. Thank you for your interest and high mix. We appreciate youre, joining todays call and we are now ready to take questions.
Yeah.
And are we ready to take questions at this time.
Yes.
Ladies and gentlemen, if you would like to ask the question. Please press star and the number one on your telephone keypad against that of stellar one well.
We'll pause for a moment to compile the Q&A roster.
And again the star one.
Your first question comes from the line of Jerry Xu with Credit Suisse.
Hi, Jordan and Eric Thank you for taking my question and congratulations on the good results.
I think the first question is.
Surrounding the industry wide capacity constraint.
And you give us a little bit more color about the.
And what is that you will fulfill mineral right now and then.
And I think for the full in the next couple of quarters do you think debt the.
The supply constraint.
So the industry or for high mix and how should we think about the on the.
The price environment for.
For the upcoming quarters. Thank you.
Thank you Jerry.
Honest, the rather not give specifics on all of our so called fulfill the rates because guess what all of our customers will be lost share and kind of trying to compare the Opel theater and rate because its all average so lot of these kind of a sensitive topic, but I can tell you is it's not very high.
Although I have to say.
Sometimes you wonder with the launch of percent of those demands of Ria. The men's whether they are customers that you can put it in there the mezz because of the shortage.
And so I mean, obviously, we try to screen and out we tried to support those demands we saw solid foundation, but.
We certainly.
And some thoughts about the some of the demands of.
As far as where the the.
<unk>.
The situation, where you use the word the ear.
I think our view is that the.
The industry wide capacity show the east go into loss at least till the end of this year.
Obviously, I'm not a columnist and I cannot really predict how the economy is going to evolve.
The way this year with the.
We still.
The pandemic and also of the vaccination, so I put it out as I've said in the side of it assuming.
We are not going to see of very strong repo during this year and even we set of assumption I think.
The capacity constraint and that is likely to persist for the simple reason debt.
You know, let's use technologies simply we have not seen any meaningful increase the capacity wire.
They are just a ton of new applications.
Chewing up to consume more of those capacities.
And we all I mean all.
All of display driver IC, which always require of us.
The high output voltage and he would have to use mature technologies. So we are sort of any one of the major users of those capacity and from our <unk> point of view certainly we have not seen any sign of.
Of the capacity constraints receded.
Anytime soon and certainly not.
And this year.
Having said that though I think.
I've cut the kind of touch base briefly on my prepared remarks, I think we are.
I can say, we are happy, but I think we are with the parrot.
For the capacity of the sphere.
And for that I'm comparing.
Our expected output meaning.
Because capacity.
But to us offer to us right.
All of them buy off of the various foundry partners. So I'm comparing those numbers on a quarterly basis to the number of last quarter and Q4 of last year. When we reached our peak output as we all know price. So I'm comparing our this year's quarter the output expect the equaled the output.
Two the highest output of last year and.
And even with the comparison.
We expect to see.
Increases from.
Q4 last year, and we expect to have flow.
Quarterly by quarterly increase during this year.
And the very notably I want to emphasize.
All of our stronghold in particular, you see the automotive display driver IC, where we believe we of the world market either.
The number of in market share.
And.
And.
And the appreciate it this is the highest.
Obviously as a result, but also that is an area. We have secured the most meaningful capacity increase of compared to the loss. So thats very good news for us for our customers, including low and customers.
Who very often is.
The slippery slope of direct dialogues with us.
Full force till the tool to get the better feel of all of the capacity increase and.
And not just the.
We have good of a good roadmap for next year as well.
And the capacity you have to deal with the increase from that of the C. So I think that is very good news for us.
Kind of shows our continuous.
Revenue growth for the sphere, and I can't say the pretty much the same for all the major product areas all need that.
And I can say.
Automotive display IC full high message in particular.
We have secured the most meaningful Inc.
And on capacity and.
Probably at least the highest degree of southern piece of soil. So that's something I wish to highlight.
So I'm, sorry, I didn't <unk> and so a question of directly but I hope I do try to give us a.
Although the color of the toughest the situation for high mix.
Right now.
Okay. That's great. Thank you and then in terms of pricing how should we think of the pricing going forward and the.
And I think you guided gross margin to improve to 37, and 38% which is about six to seven percentage point increase.
How much of that is coming from ASP increase.
Well first of the east confidential and so it could be and it's really hard to compare.
Sure.
Because you have to knockdown the the cost increases will bear it might cost also increased rather significantly.
And so you guys all of them.
So we felt the Tracy and directly without giving you the Directv and the number I can't I can't share with you how.
Why the module and improvement and the how the margin outlook.
<unk> is going to be like going forward.
The C right, so firstly, a capacity constraint and that certainly means.
Based on the pricing position for us right.
And many we can very often.
<unk> throws the cost the increase to customers and and.
A bit more.
And and.
And.
And we pulled the bulk better product mix as well.
I wanted to.
Probably elaborate a little bit of all of that what do we mean by the product mix you actually come from several perspectives.
The.
Obviously, you're holding your office and shortage you have a tendency to relocate more female output to Ohio module products to make more money and that's.
And that's very obvious so that's the first most of obvious point.
And secondly, the for similar reasons.
We also have a tendency of our customers as well.
Our total capacity is kept we want to put these more higher end products and that applies to TV monitor and notebook.
On the type of it automotive everything right and.
I think I mean highlight has been the industry leader and our customer of written and livestock. So when occupancy is kept the wanted us to focus more on <unk>.
On those higher end products.
Probably leaving those low end products to some of our less of the competitors so that debt.
And two because it means that the profit that they the as people us.
And certainly.
A few sectors, which is already happening.
Which type of <unk> to enjoy it but the <unk>.
Historically.
They are growing our other businesses.
And although.
And we did average certainly with you the average basis.
As our gross margin so I'm talking of Automotives.
The IC for one and Thats very obvious.
Temporary TDI and timing controller, higher and having control of them.
And the.
Automotive.
There is the.
If you asked me across all different industries, we are in and I would say the.
The sector.
The highest confidence level for growth. This year I would say you you'll be the up on the automotive which is set.
Set to enjoy the liquid rebuilt the phone from the very low of last year.
So that is going to outgrow our other businesses very likely and.
Happens to enjoy the best market the law of products.
<unk> will now of tablet type of really enjoyed growth. This year is the big question Mark.
The pandemic and so on right I don't know, but I think for US is the bulk TDI penetration into the tablet market right. So loss estimates is TDD and associated so about 20% last year and this year you set to grow too low of also the percentage so with the the same number of.
Total illness for the market Youre talking about 50% growth for CBD and that benefits us tremendously because we are the dominant net TVD.
<unk> provides the full of tablets and enjoy market.
Especially.
More of those TDI type of base will start to offer.
Active stylus.
And even more margin for us right.
Now of higher and timing controllers, and they'll go to all of the multiple notebook TB certainly and.
And can be and monitor and so on right.
And again T con is suffering.
Big time from <unk>.
Packaging IC packaging and shortage.
So for that okay, and both customers of US all of it will kick in the ultimate the resources too.
Two of higher end products.
Right. So so I think for those reasons.
Feel pretty good about our gross margin.
Prospect for this year.
Longer term.
One of you guys to focus on.
And on our.
Stephan.
Certain of our non driver IC products.
The the wise I think is really promising I'm personally extremely excited about the progress we are making.
We have our most of the production ready simple out only last September and look at the engagement.
The the degree of engagements of the activities that we already have.
<unk> pulled a lot.
Of all of that in my prepared remarks, so I don't want delivery pizza huts, but yes.
He's very excited and so again, the pull the and things.
We feel.
The muscle of election will commence towards the end of this year and.
After the I believe he is the low very low payout and a low high edge of Bay area of high margin high ASP products.
We are going to play a very unique drilled in terms of providing such AI.
Four of devices with ultra low power. So I think that is.
That is something I feel very good about enhancing our long term gross margin.
The overall.
So I hope that kind of the.
The choice of your questions pretty thoroughly.
Yes, okay. Thank you. Thank you Jordan.
Thank you Jerry.
And as a reminder, please limit yourself to asking two questions. One press star one again to go back into the queue. Your next question comes from the line of Tristan <unk> with Baird.
Hi, Good evening, just following up on the on the prior questions about the gross margin.
The only helped by mix and the supply constrained.
How should we look at the potential timing.
Pete.
Some companies have talked about.
Supply coming back cash in the second half of this calendar year, which places on <unk> would add EBITDA today of a bit the.
The constrained.
Digital so.
And the potential at some point for out of it if the slowdown given debt tender is probably some amount of double ordering and given the tightness currently and the market, so and I'm trying to get of sensors.
When do you think.
Even as supply continues to be constrained.
Actually gets less constrained than the dish now and when do you think.
Supply will eventually catch up on.
Automotive meeting debt to you're starting to sort of the GSE normalization of supply and demand is still way to assess whether that's been paying debt.
And they happen in the second half of the here or what timing do you hedge and mine potentially.
I think.
The my visibility is different for different product segments and.
Again.
Just want to.
Carry on with spy previous and so.
To Jerry's question, you know the highest degree of cognizant and for me will be and automotive sector.
Which I think of.
And there is no sign of receipt and and in fact.
Customers picked by the end customers of panel customers of <unk>, which I'll pick buy and customers.
The tend to place the orders from orders and all kinds of all of this.
Way beyond the year end.
And now rather than worry about.
<unk>.
Order in the oil demand.
The med disappearing.
Or is small and how do we.
And how do we how do we make our shipments in order for the production line and not to be suspended.
It's pretty serious on this pretty serious.
The talking about <unk>.
Because we don't one single driver IC the culture of a cup because they will have now.
No no no critical of display right. So.
So for that I think the visibility is very very low and we are actually.
Sure.
You know we are we are going through different schemes with steeper and customers and our all of our foundry partners.
Many.
All of which.
Sure.
We saw contractual arrangements to secure debt.
Through all of the ecosystem.
We know what we are doing and our customers.
And what they are doing and we.
We can just focus on making more outputs and the security more capacities and making sure the.
Production of its not the suspended.
So for the multi vitamin and I almost the I don't worry a bit but the east.
Certainly hard to say for example of the IP.
The bad people are talking about all of the stay at home and call on me and all of that right. So.
The only of a crystal ball I don't know how hull.
All of that demand and it's going to.
Evolved we saw the vaccination and the COVID-19 situation and all of that.
So what we do is the okay.
We we follow the customers' production and all of those extremely closely and the one thing you know.
Of particular interest is that the through all different sectors. We are now.
Having a much closer.
And certainly share.
And my related.
The discussions directly with the end customer.
Typically the Atwood already customers of our panel makers right cool and deeper industry of your various but they are not the end customers, but now fully snowfalls or television or automotive or sales force or otherwise.
We have a.
Very direct and <unk>.
Frequent dialogues.
We saw recently.
And we just needed and customers.
In the respective sector and.
And for that all of visibility certainly gets the improved right and.
And sometimes the.
You can see the.
And customer stepping in.
To secure the capacity and.
You know.
The health.
The location decisions for example, southern of IC should we shipped to panel <unk>, rather and panel maker of B and so all right. So so we started I think the.
I think we'd all of a crystal ball and we just have to work very hard and.
And it makes sure we are as close as possible to the end customers.
And through and customers throughout the customers. So we will get to have the liquids weighted.
B the ability of all.
The the backlog the inventory level the.
The bulk of production status, even the demand status and all of that right. So we just have to watch very very closely but as far as we can tell you right now.
And at least at this fall and display driver Ics concerned there.
The three D.
The <unk>.
We have not seen the.
We have not seen any signs of the the constrained receded.
Because again I mean, the demand is very strong across different sectors, but the simply no meaningful capacity increase.
And the industry.
Okay.
That's great color, thanks for that and then.
From a photo of that.
Two years ago, you had.
Traction with some early that day.
And yet.
Device and providers with very high content.
You also talked about and that too is maybe up to a year ago about <unk> displays.
Given the.
And the potential for Apple to launch a all devices by and by next year, which presumably would trigger.
A lot of companies to basically had he need of devices of the time, how do you feel your position and what type of <unk> you.
Initial engagement you think you have.
In both.
And the whole graphic displays and whats the potential timing and that's leveraging on both.
Later on and then sticking out of channel.
Caustic and energy.
Well, thank you for the questions for the.
The fewer spec.
We pulled up all of that the loss because there was real major customers and Rio products and unfortunately the.
The loans of those products and the business results.
On full very well as wheel and all right.
And certainly we continue to play a critical role in terms of providing the micro display and related optics for four <unk>.
And particularly at <unk>.
Cause these true feature relative.
See you.
<unk> you.
The eisai is blocked by the image, but we say all of you see true so when you see through our technologies needed.
So I.
I can't say, we saw with degree of confidence that if this does happen if the industry does pick up again pick up momentum, but again, we are going to play the role.
But the.
I don't want to.
I don't want to.
I don't want to be.
The overly optimistic about this because I think to be honest I still see lots of both technical and business barriers ahead of us for the AR goggles to be.
To become a real.
The real affordable and.
The real phone products.
People and general too.
Want to own.
And so the new policy of all talking about <unk> and I don't want to come and on customers and they are the other sort of thing the EIOPA.
And so we'll see.
But the.
And I mean, certainly you are right.
I pulled this low something and successfully and then all of the people that follow so to me.
But again I can't come and the specifics on any specific customers, but the I think.
And I want to give a warm and that we are not too optimistic about it beat and the inside the in the marketplace.
And I've seen steel.
The steel barriers both technique till the end.
<unk> really been.
How do you lower the price substantially the lessons of the previous products.
The it's just way too expensive right is the way Beale antibodies.
Usual consumers affordability and the assumption that that.
Two of industrial use.
Means very low while the price so for a company of all of scale. It is.
It is not something you cannot be something very meaningful price. So so so the challenges of how to you.
The the title of image the size of the color of the bulk of the assumption the process and empowered and so on the card the image that involves not just submit it that's the volatile of optics.
How do you create the kind of the image.
Ah.
Average consumer will find attractive and yet you have two of <unk> substantially with you with the.
The price and.
And if you can achieve that and the next theories of how do you create of comfort.
Let's take the of content.
So I think.
Two years I think is over the optimistic to be honest.
Okay, and we remain to be.
A key player of people do come to us steel.
We still engaging with customers hold projects, but.
But we are.
We just saw.
And we don't want to all of the spend on those older vessels and the overspend on that sector.
We feel we have a growth of the ship already and.
And have to.
100000 with fully to happen and.
With all of things is really beyond our control.
The display and Michael display and of these to provide them, we kind of really cover the whole application and total cost and all of that kind of issues.
Great well, thanks for the color very much I appreciate it.
Thank you Tristan.
Your next question comes from the line of Donnie Teng with Nomura Securities.
Good evening.
Eric Congratulations on the results.
And I have two quick questions. So the first one is debt.
People are talking about how pipe of capacity would be and where.
The likely to be useful.
But the reality.
For example, if we break it down to like ADP and she'll talk.
12 inch capacity.
I think we're proud of.
Which one you think is most likely to be.
Yes.
And the future for example of coffee doing the migration.
Sure.
And so the extension of the time.
And what kind of problems.
Things will be the most likely.
And the <unk>.
And of which one will be the most difficult.
So based on the first question.
Okay Tony.
It's the.
Easy question, it's a good question, but it's not easy the wins because.
And although the Automotives.
Which for high mix and I guess for the entire industry is so I'm talking about the display driver IC auto multi all of the into automotive pushes steel strictly.
Exclusive of the one.
All of those.
By the totally 12 inch or a combination of a cluster of each.
Now.
We saw on automotive.
And we are.
Moving on to TBD.
<unk>.
We are we are of the industry, the pioneer and leader at the moment.
Good momentum expected for the next few years TDD automotive will be <unk> as well.
Sure.
No.
So no so if we and then.
<unk> inch full automotive I mentioned earlier.
Sure.
AEG is extremely tight but because of all of the engagement earlier, both the engineering business preparations, we have been able to secure.
Good Cup is the increase although his age which is super tight and it's the wheel we all understand.
And.
And the.
For 12 inch.
If you'd told the fall.
<unk> for high method of I guess for industry as well.
For smartphone and tablet is also of each because you require a lot of lots of processes and.
And southern cases memory as well so you still need the tail of each more advanced nodes.
And for large panel of though it is the combination of <unk> and thus the panel is the most hotel each primarily.
Because of capacity constraint of the day.
And of the age and that has started.
To take place.
A few of your spec so it's not it's not the industry started to do this because of these capacity constraints now.
A few years ago.
The whole industry and.
And he's one of the power of the years.
Has been moving very aggressively into turtle Beach is the way to alleviate the capacity issue.
H.
Philosophies fleets drivers, so, but the whole of mobile too.
12 inch we typically represent the the most mature process of tell each for large panel for example, so so we are talking about one gen 10 nanometer.
As I mentioned free.
The example for smartphone and tablet TVT.
It is now.
Moving from 80 nanometer to 55 to 40 nanometer.
Certainly there are technology.
The reasons the soil by Eastman the to enlarge the capacity now as we're moving to different new loans, we are competing against the.
The new set of.
The applications right so.
So.
For example, you know and more of that full of smartphone is going to be the next big thing for display driver IC.
And more of that now the ministry the mass production of its 40 nanometer, but people US included on moving to 28.
So it was towards the EA will be competing with the different.
Set of.
You know of of all the applications right. So.
It's kind of difficult to answer in the sense that we <unk>.
If the ace it.
And it shouldn't be tight pushes and not the case I would just say as the example, even thought the extremely tight and there will probably the move of our product spectrum for the a bit more.
Or vice versa and <unk>.
And what is super tight.
It appears to us to.
I'll have more assessable capacity than people have moved more of course of it until the 28.
Otherwise the the big consuming.
<unk>.
Capacity, because you mean product for semiconductors, so our booth.
Yes.
Make a difference in terms of the tightness level of different technology nodes, but our booths and it's also reactionary because some of these very tight Louis has the edge.
So I think is but the slides so I could see I mean, even though on the eight right now is very very tight. So you would tell me no it's not tight right and the people and they'll get a volatile royalties MCU for example in the fourth year of 15 nanometer logic process. They are so occupies so occupied.
The automotive right now and I.
Glen and I can't really blame them, but the.
Why don't we pull up they claim they are giving more priority two of those applications. So.
So.
80 to 50, 540 and 28 the.
The three needle file for.
Of of loosening and capacity.
The situation.
And my mind.
But certainly I mean.
And with my response May change next quarter I, just have to watch the industry situation very closely but the the benefit of our preparation and use that.
We tend to have.
Products cross and different.
Boundaries, even different geos.
And the debt.
Different technology nodes, just to hedge our bets price so we will be able to move.
So the degree of flexibility.
Sure.
Just a quick follow on.
Before I ask the question.
Are you able to quantify home of sales that we have right now.
And Scott.
And how much of the sponsor.
Almost all of the number in front of me, but certainly till he and she is much much larger than the eight inch right now.
I mean again all of the auto multi pushes and probably still right now above 15% or less of our total revenue of lowest growth is outgrowing the he's probably of outgrowing the risks.
So that is totally age and southern portion of all of those channel and thus panel represents.
The panel and totals 30 plus percent of our total sales right and.
A portion of that is Toby each and some other policy and as tobi.
And so he and she is still relatively small for us and.
And the.
Small panel.
They are almost exclusive of the Toby each other.
Other than automotive and I'm talking about tablet and smartphone and that is.
Combined more than 50% of the wall sales already in the U of timing controller, and all others, they're all until each as well.
Yes.
Okay.
And second question on the automotive.
The specter of lots of business.
You mentioned about the you have the pure plugging the bulk capacity already I think from at this time point I would say, it's very impressive because last year lots of Oh.
On the multi and called out the components of that push all of the capacity in the second half last year.
So it looks a lot of Nathan.
The decision.
At this time point.
So could you elaborate more on what kind of trends you are seeing on the auto.
The multi display driver IC sales person you just made.
And the volume is migrating to the got it.
And it gives us more color on.
The whole structural the growth will be or how much volume you will grow and every call in terms of the bigger screen size or the.
A combination of different kind of display side of the callers Inc.
Very good question.
First of the indeed.
The first of all of last year.
And our customers are actually cutting back the orders and the full test and I remember the wheel showing and we are.
Building the wrong headed and everybody you know tier one included even some and customers across Europe and the.
U S debt.
And you know don't overdo that because guess what.
Youre going to be and sauce shortage study youre going to kill to get get capacity right So and.
In fact during Q on Q2 last year, we actually.
Yeah.
Although our customers are cutting back their forecast and we didn't really slipped out of inventory preparedness, because it was very obvious to us that.
It is going to run the tools.
The purpose the shortage of yours also during the time that we started to engage our key foundry suppliers.
For the long term foundry arrangement and the.
The evolves both.
The new process developments.
And also part and of our of all of our products.
8% and <unk>.
To increase our flexibility and the capacity.
Tight in the visual effects.
And he also we until you until kind of.
Contractual arrangement to secure capacity as well so I think we are.
You know thankfully, we make those moves and now we can.
Go around telling of our even though the.
The customers that we are pretty royalty pay although we are still suffering bookshelf. The spot I think of our customers are very pleased to hear that we can actually.
Thus, our capacity quarter by quarter, and the rather meaningful way all the way to next year. So I think that is very important.
Page for Us and.
And having said that the <unk>.
And she capacity is very tight and.
And he is going to remain very tight and.
I don't have the number except to the as far as the the.
Spreads driver IC content consumption per vehicle, how that trends going into <unk>.
And cold.
But the.
I can I can share with you now you just come and industry understanding the agencies and hope this the tight.
So although we can secure of more and also automotive unlike the last panel of smartphone or tablet.
Are most of the support in terms of introducing.
The new capacities.
And that is needed for the multi res natera is the holidays and we all at the spin.
And so rather than fighting to get the.
Traditional discrete.
Discrete driver IC moving into <unk>.
And having to deal with the barrier of qualification and and so on growth.
And it's almost not worth it so we are encouraging our customers to speed up the TBD of adoption.
And guess what TDI is until each and also the kind of capacity pool, we are targeting for TD the okay.
To the.
Sort of.
Certain.
Conjecture of arrangement and we saw foundry partners.
The two of each TDI.
Primarily for example, $82 55, which are basically the occupied by a smartphone type of it but they are all of the trick to migrate to 48 as we all of them.
Milk price so so.
It's certainly our.
Our total demand for automotive parts of VDI would not.
And so for total amount.
And is nothing compared to the theme of demand for the full of smartphone tablet price. So I think the.
You know we are.
You'll be pretty safe there in terms of the toby's TDD and <unk> automotive and so we are pretty aware of pre payable of capacity.
Over there as well.
And so.
So that is the big trend and I think of all of them.
Customers and customers include the agree with us so I've seen the whole industry, the mobilized to speed up the adoption and qualification for TVD Automotives.
One thing and the second thing is the.
The displays and sorry.
Are you of course are in largely in the size with EV, you know with EV, becoming more and more popular the the passenger rule the passage of space It will be and the mall roomy right and when the small room and you.
And you do need a lot of it.
Screen and full Evo payments.
And and.
And what is so such largest thus screen typically you'd need to view of screen to be to.
<unk> of <unk>.
Of the capability of free fall, meaning you start the.
The.
The stupid saw the pizza.
Piece of flip the us right.
So please free form then in sale becomes a necessity in order to achieve it.
The reasonable production year rate for displays.
And therefore, we are actually okay, and we of the industry power than the year in terms of working on we saw panel makers partner selected partners.
And you'll see hopefully very soon the world's first.
Loss large display and ovarian.
Display.
<unk> all of the multis.
And I think he's going to be a very important trend because again.
The the display needs to be larger because you of hesitancy of ruby's logic and <unk>.
Please lodge your day it needs to have free and free.
And free focus required the you need to have.
You need to have in sales despite a fall in sales display and the T. D D, but that requires a very specialty side as opposed to the ordinary small size of display. So we are leading the.
The industry in terms of developing and the kind of <unk>. So we are okay, and we are very happy with the progress and the kit because of all of the all the reasons I've mentioned I.
I think the likelihood this oh.
The penetration of such the screen display and Automotives well so it gets beat up.
So the automotive I think is the most exciting business for us.
We have the industry leader, we are leading and technology and we.
We are seeing the high growth potential.
And we are now very deeply engaged with the Tijuana and customers. All of these are very good signs for us long term.
So thank you can you tell me if the liquidity.
Thank you so much.
Because the ratio of soybean.
Thank you.
There are no further questions on queue I will now hand, the conference back over to Mr. Jordan.
And for closing remarks.
As the final note, Eric Lee, our Chief <unk> Officer will of maintaining this their marketing activities and.
And Haynesville attenuates the covenants. So we will announce the details as they come about thank you and have a nice day.
Ladies and gentlemen, thank you for participating. This concludes today's conference call you may now disconnect.
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And then.
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