Q3 2021 Himax Technologies Inc Earnings Call
Okay.
Hello, ladies and gentlemen.
Did the high Max Technologies incorporated third quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
Later, well conduct a question and answer session and instructions will follow at that time.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host.
Mr. Mark <unk> from MZ group.
Thank you Ron and welcome everyone to <unk> third quarter 2021 earnings call joining us from the company are Mr. Jordan, <unk>, President and Chief Executive Officer, Ms. Jessica Tan Chief Financial Officer, and Mr. Eric Lee Chief IR PR Officer.
After the Companys prepared comments we have.
Allocated time for questions in a Q&A session. If you have not yet received a copy of todays results release. Please E mail <unk> Amex at MZ group.
Access the press release on financial portals or download a copy from <unk> website at Www Dot IMAX Dot com tw.
Unless otherwise specified we will discuss our financials based on non <unk> measures.
You can find the related reconciliation to ifr us on our website.
Before we begin the formal remarks I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth are forward looking statements.
The number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call.
The factors include but are not limited to the effect of the COVID-19 pandemic on the company's business.
General business and economic conditions, and the state of the semiconductor industry.
Market acceptance and competitiveness of the driver and non driver products developed by the company.
Demand for end use application products.
Reliance on a small group of principal customers.
The uncertainty of continued success in technological innovations.
Our ability to develop and protect our intellectual property.
Pricing pressures, including declines in average selling prices change.
Changes in customer order patterns changes in estimated full year effective tax rate shortage in supply of key components changes in environmental laws and regulations.
Changes in export license regulated by export administration regulations.
Exchange rate fluctuations regulatory approvals for further investment in our subsidiaries our ability to collect our accounts receivable and manage inventory and other risks described from time to time in the company's SEC filings, including those risks identified in the section entitled risk factors.
In its form 20-F for the year ended December 31, 2020 filed with the SEC as may be amended.
Except for the Companys full year of 2020 financials, which were provided in the company's 20-F filed with the SEC on March 31.
2021, the financial information included in this conference call is unaudited and consolidated and prepared in accordance with <unk> accounting.
Such financial information is 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 information for the same period the company undertakes.
Under takes 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.
So thank you everybody for joining us.
My name is Lee and I'm, the Chief <unk> Officer.
Joining me our children, our CEO and Jason <unk> our CFO.
On today's call.
First review <unk> consolidated financial performance for the third quarter target, how do you want.
Followed by the fourth quarter 2021 outlook.
Jordan will then give an update on the status of our business.
Also krish we were tech question.
Our third quarter revenue met our guidance issued on August 5th.
Five gross margin and EPS were both at the upper range of the guidance.
Revenue gross margin and EPS again, all reached all time highs in the third quarter of 2021.
For the third quarter, we recorded a net revenue off of $429 million, an increase of 15, 2% sequentially and an increase of 75, 4% compared to the same period last year.
The sequential increase was at the middle range of the guidance.
The increase of around 13% to 17% quarter over quarter.
The 51, 7% gross margin at the upper range of the guidance of 55% to 52%.
What's an increase from the already high level of 47, 5% for the second quarter 2021.
No.
<unk> profit per diluted ads was.
<unk> nine <unk>.
At the upper end of the.
Estimate of 75 to 81.
<unk> profit per diluted.
Loss of 68.
<unk> toward the upper range of the guidance of 63 to 69.
Revenue from large display driver was $117 $6 million in Q3.
37, 6% sequentially and more than doubled year over year with sales growing through all three major product area, mainly TV monitor and notebook.
<unk> monitor and notebook IC revenues delivered impressive growth of around 60% sequentially.
Results of <unk>.
Demand derived from remote working and the defense schooling.
TV revenue was up over 20% sequentially, mainly due to a strong shipments of high end TV product.
Putting those four.
<unk>, leading and customer despite a dip in.
Worldwide TV shipment during the quarter.
Large panel driver IC accounted for 27, 9% of total revenues for this quarter compared to 23, 4% in the second quarter of 2021, and 23, 2% a year ago.
Small and medium sized to defray driver Thor.
<unk> sales with revenue of <unk>, $252 3 million up nine 4% sequentially and up 66, 4% year over year.
Automotive segment continued strong growth momentum and delivered more than 30% sequential increase in Q3.
Our automotive segment has repeatedly been the sockets growing factor among the small and medium sized display driver segment.
Capital sales to demonstrate another consecutive sequential increase up low teens quarter over quarter.
Higher smartphone sales posted single digit sequential decline, reflecting our capacity on location decision fabric capitalized over smartphone.
Small and medium sized driver IC segment accounted for 59, 9% of total sales for this quarter.
Compared to a 63, 1% in previous quarter, and 63, 2% a year ago.
The third quarter smartphone sales reached $77 $1 million of match.
I mentioned earlier down single digits sequentially, but up more than 20% compared to the same period of last year.
The smartphone segment.
Dented a wrong 18%.
Our total sales in Q3.
Even with lower sales, our smartphone TBD, ICL, where steel cap by severe.
Korea severe capacity constraint.
Highlighted many times before our smartphone and the tablet TVD I shared the same profit pool.
We continued with our strategy to favor tablet <unk> shipments over smartphone.
We are the preferred main or sole source vendor for major non iOS tablet names.
Sales of traditional smartphone display driver grew strongly in Q3 as expected due to a seasonal demand from key customers.
Nevertheless, the traditional smartphone DDI seeds are quickly being replaced by TDI and am or late.
Our tablet revenue made another record high in third quarter, reaching $94 $3 million in sales that grew.
Low teens sequentially and were up more than 75% year over year.
Our tablet sales.
<unk> continued to grow with the right days of TDI penetration among leading the Io asked names.
We continue to enjoy leading market share.
Our position is particularly strong in high end area, such as active stylus design high frame rate and the bigger size tablet.
It's worth highlighting that shipment of TDI.
With active stylus feature already represented over 30% of <unk> sales in Q3.
Yet our shipments were still limited by ongoing industry wide capacity shortage.
Revenue of traditional discrete driver IC for capitalized what's up single digit sequentially in third quarter.
Meyer its market continued to be quickly eroded by TDI.
Capital revenue in this quarter represented the highest sales.
Proportion of all product online and accounted for more than 22% total sales.
Our third quarter driver IC revenue for automotive amounted to $71 $6 million up.
34, 3% sequentially.
More than 115 year over year attributable to our market share gains.
Expanding market panel inside a car continue to grow in both quantity and device.
Automotive driver IC business accounted for a wrong, 17% of total revenue in the quarter.
As a reminder, automotive driver Ics enjoy higher gross margins.
The higher revenue contribution from automotive.
When bolstered our culp for a gross margin.
We expect to see robust and sustainable growth in this area for the coming quarters.
Jordan will elaborate on this in a few minutes.
Third quarter revenue from our non driver business.
It was $51 million up mid single digits sequentially and up more than 50% year over year.
Telecom business.
Right.
Mid teens sequential growth and was up more than 140% year over year, driven by our high value added product area, such as the <unk> 8-K, TV gaming monitor and a low power notebook.
Non driver products in Q3, our commentary for Chubb, 0.2% of total revenues as compared to 13, 5% in the second quarter of 2021, and the 13, 6% a year ago.
Non <unk> gross margin for the third quarter was 51, 7% up four two percentage points.
47, 5% of the previous quarter and gratefully increased from 22, 4% of the same period last year.
However, our gross margin was 51, 5% for the quarter.
Sequential increase was <unk>.
Mainly a reflection of the tight foundry capacity, which resulted in more favorable pricing and product mix.
All are in the high <unk>.
Operating expenses for the third quarter or $44 $5 million up 13, 13, 1% from the previous quarter and 14, 2% a year ago, mainly because of the increased salary and R&D expenses.
<unk> operating expenses.
Were $68 $5 million in the third quarter.
73, 1% from the preceding quarter and up 55, 1% from a year ago.
The difference is mainly due to the annual bonus compensation award employees at the end of September each year.
This year the.
Annual bonus compensation, including ICU and the cash payout.
In line with our guidance, we mentioned on last call that totaled $74 $7 million.
Although quitch $24 $8 million.
Immediately.
As I stated in the third quarter.
The remainder will be equally vast paid in the first second and third anniversaries of the grant date.
Reflecting the higher sales and better gross margin now <unk> operating income was $173 $4 million or 41, 2% of sales.
Versus 36, 8% of sales between the last quarter.
Dan.
Both.
Income and operating margin reached historical high.
<unk> after tax profit was $138 9 million or 17, nine five cents per diluted ads.
A new record high and up significantly from Hungary, and the $9 1 million.
Our 62 four.
Per diluted the avs after last quarter.
Turning to the balance sheet.
We have 250 <unk> eight.
$8 million of cash cash equivalents and other financial assets.
<unk> September 32021.
Compared to $142 $9 million at the same time last year and the $274 million.
Further ago.
The lower cash balance what's arrived many from $47 $4 million payment of cash dividends and payments made for the purpose of securing long term foundry capacity.
Somewhat offset by payments received from the customers for the purpose of securing their long term chip supply.
The third quarter saw a strong operating cash inflow of 65, meaning compared to $33 $5 million at the same time last year.
But lower than $85 $2 million a quarter ago for the same reasons stated above.
Restricted cash was $156 $8 million at the end of Q3 compared to 112.
$1 million, a quarter ago, and Hungary, and a $4 million.
A year ago.
The restricted cash was mainly used to guarantee the short term secured borrowings for the same amount.
We had $54 million of long term unsecured along us off and Q3.
Which $6 million, while current impulsion.
Our quarter end inventory was worth $169 million up from $134 $2 million last quarter, and offering a $125 $7 million a year ago.
Pam, it's tight foundry capacity, where demand steel fall pathways to support supply.
We continue to pursue.
<unk> inventory build our strategies.
The vast majority of our inventory position now is composed of work in progress is good.
Quiet finished goods are probably shipped personal system they are rating.
Accounts receivable at the end of September 'twenty, 'twenty, one was $409 million.
From $329 million last quarter and offer on $221 $1 million a year ago due to higher sales.
DSO was 100 days.
And that's compared to 19 nine days, a year ago, and 88 days at the end of last quarter.
Third quarter capital expenditures.
Expenditures were $2 1 million versus $1.4 million last quarter, and a $1.2 million a year ago.
The third quarter Capex.
<unk> R&D related equipment for our IC design business.
As of September 32021, Hi, Max had 174.3, meaning a D ads outstanding little changed from last quarter.
On a fully diluted basis.
The total amount of outstanding was hungry $74 7 million.
Now turning to our fourth quarter 2021 guidance.
For the fourth quarter, we expect further revenue growth from the already high level of Q3, 2021.
We expect revenues to increase by 4% to 8% sequentially.
Now <unk> gross margin is expected to be around 50% depending.
On the final product mix.
Now I have the highest profit attributable to shareholders is expected to be in the range of 78 to 83 cents per fully diluted ads.
<unk> profit attributable to shareholders is estimated to be in the range of $74 five $2 17 nine five.
Per fully diluted.
I would not I would now like to turn the call over to Jordan children's the floor is yours.
Sure.
Thank you Eric.
At this moment, we still see the pressure and stringent amidst stringent labor capacity shortage in the mature process mills.
We are mainly incurred.
Part of the Silicon industry continues to push towards advanced process nodes for applications, such as <unk> and SPC.
But that demand.
It is in power.
This is a presentation of this application also boost the demand as well as there is a companion chips such as.
PMC.
These spreads driver that all shares to me the mature process pores.
In addition, Mr increases a waiver consumption also come from a few fast growing new areas, such as Iot and EV.
Yes.
It will require a material process nodes.
As we have highlighted many times the industry has collect measure of mature process capacity investment in years.
Close in demand from the above applications has led to a disciplined capacity shortage.
That is first of all the industry has been among the most impacted by the severe foundry shortage since the beginning of last year.
And is supply demand imbalance was necessitated by the surge in demand. So some applications triggered by the pandemic.
We believe the supply demand imbalance will continue well into 2022.
As such we have met the long term sufficient decision to enter into multiyear conceptual supply agreements, we saw foundry partners covering a wide range of product lines.
The lost display drivers tablet smartphone pdi's locomotive that even OLED drivers.
To safeguard the capacity needed for short term and long term business.
Literally.
Entering into supply agreements.
The cheese towards some applications, notably automotive and all of it.
More aggressive than others.
Thanks Bye.
Supply agreements.
You can look at it is on track.
Right.
Our single largest revenue contributor.
In 2022.
We will be able to solidify our leading position by further widening the gap with our competitors.
Meanwhile, we also see go similar contractual arrangements with many kind of houses.
Leading customers whereby customers led prepayments or deposits to us to secure the long term just supplies.
Oh this contractual arrangements made following meticulous cancellations.
In bps supply demand projections, among parties and typically cover the quantity.
Sorry to sustain deposit businesses.
Yes.
They help alleviate the capacity pressure.
Poised to post a collective OCA in the growth of our customers foundry partners and ourselves.
Next few years.
Please go ahead to 2022 picked by secured capacity arrangements.
Bunch of capacity available to US you said to increase compared to this year, especially for automotive segment covering both traditional display drivers and <unk>.
Where the overall shortage because the industry is expected to be the most severe.
Revenue wise, we are particularly upbeat, but below the gross prospects.
Few high module product areas.
The smaller the most notable is the automotive sector.
The robust demand for our traditional driver IC, you expect by strong capacity support.
<unk>.
When should we pioneered in mass production.
The trick to grow exponentially from this quarter onwards.
Moreover, non driver products, especially our high end he commented wise ultra low power AI solution.
In addition to our revenue stream.
Related for Veeco of skills in the next few years.
The strength in this high margin businesses will provide a solid support for corporate margin.
Again gross margin expansion will continue to be one of our major business goals we saw.
The more diversified.
Portfolio across sectors and are confident to deliver both top and bottom line growth in 2022.
Sure.
We stuck no did start with an update on the large panel driver IC business.
For the fourth quarter large display driver IC revenue splits shifted to increase by high single digits sequentially.
The <unk> market grows we experience for notebook and monitor is expected to extend into Q4, we sold a 100% sequential sales increase in both sectors.
Yes.
Sure.
The consumer market continues to grow its appetite towards advanced displays with surgeon adoption of high end features such as steam boiler design high refresh rate high aspect ratio curve, new displays and low power.
All of which implies much more ice's use per device.
These advanced features adopt more sophisticate, the ICD device and can chew small river area.
Lower the chip quantity output on a per wafer basis.
On the other hand, it increases the content value in terms of dollar per wafer sales.
We continue to lead in these areas with decent market share, providing one stop shopping for clients, who meet driver Ics advanced T cons or total solution.
Now, let's turn to the small and medium sized display driver IC patients.
In the fourth quarter revenue is expected to increase by low teens sequentially and more than 50% year over year.
Sales of smartphone is set to grow by high teens sequentially and more than 30% year over year.
As for the temporary segment, we expect sales to be flat sequentially. After successive quarterly growth driven by the steady rise of <unk> penetration.
The Q4 automotive driver business again is poised to grow by double digits sequentially and more than double year over year. Despite the adverse impact on global automotive production caused by chip shortage.
However, our girls is hindered by stored capacity supply and capacity that prevents us committing our customer demands.
In the fourth quarter, we expect smartphone type area automotive, China sales to be about equal in revenue contribution.
Automotive sales outgrowing the other two segments.
Now.
Let's have a quick review on each of the three major product segments.
In the small and medium sized display driver IC business.
First the smartphone driver IC business.
In Q4, we expect our smartphone PDI sales to increase double digits sequentially.
By the outbreak of data variant continuing to wait.
Really a worldwide smartphone market.
Especially in this.
In the Southern Asia area.
Our supply for smartphone is still limited by the total capacity accessible to us.
We can only support shipment to selected.
Yes.
Looking ahead at our smartphone TVD I lay ups.
We are undertaking new design developments supporting higher frame rate as Youll slim bezel and higher resolution patients.
So central successful engagements with some key customers have been achieved in Q4 with small customers, indicating their interest.
For their next launches.
Traditional drivers for smartphone running at relatively low volume.
Correct it to decline for the first quarter.
Due.
Due mainly to DVD replacements.
Yes.
Next on tablet IC business.
We maintained our leadership position in the tablet segment, particularly in advanced <unk> sector.
We have more than 60% global share in the non iOS tablet <unk> market.
In the fourth quarter, we expect sales activity of tablet cdti to be up low teens.
Contamination from the solid and high base in Q3.
<unk> supported for the feature upgrades for customers next generation products covering higher frame rate Super high resolution larger than 11 inches.
Display.
Better precision active sliders running on different operating systems.
What's more our temporary television air solutions for the next for the fast expansion educational market has been successfully and widely adopted by leading Chinese players.
Revenue of traditional TV IC for tablet is expected to decline double digits sequentially, resulting from replacement of <unk> as.
As we mentioned repeatedly and also severe capacity constraint.
Okay.
Turning to the automotive sector, the highest growth area among our display driver business.
In Q4.
Our our automotive IC sales are expected to grow double digit sequentially on the backdrop of worldwide key component shortage and series.
Poor congestion.
That is hurting automotive sales.
Right.
Looking ahead, the increase in the number size and sophistication of displays inside the vehicle.
Following at a rapid rate.
Indicating much more driver IC demand per vehicle.
To reinforcing the growing automotive display demand, we enter into long term arrangements.
With strategic foundry partner back in early 2020 and.
Secured a major increase in capacity.
For not only this year, but also next few years.
That together with our strong customer engagement enables our robust shipment and sales growth.
The prevailing IC shortage.
Criterias are increasingly catering to more stylish interactive and freeform displays with ever improving image quality made possible with panels equipped with advanced technologies, such as <unk> and local demand.
In <unk> automotive, whilst still in small volume.
We will continue to increase in penetration and adoption on the center information display and real.
Seat infotainment display.
Hi, Max is a front runner, who kick started the industry's first automotive TDI must production back in 2019.
Followed by our Gen. Two automotive DDI, which also went into mass production in Q3 this year.
Right now we are dominating in the new <unk> design wins with multiple tier one customers panel makers as well as car manufacturers across the continent.
<unk> brings driver IC vendors.
Much higher contract value on a per panel basis provides better profit margin.
Presents a high barrier of entry for Commerce.
We are glad to report that.
Whereas the accounting for a small portion of our automotive business for now we shipped over a million automotive TVD of chips within the third quarter alone.
Making a major milestone for our commodity business.
As automotive TDI is being adopted and put into mass production rapidly as we speak.
We anticipate more aggressive shipment momentum to carryover into Q4 and throughout 2022.
Sure.
We believe <unk> automotive.
Soon become a major growth engine for small and medium sized panel driver IC business.
We mentioned in the last earnings call that we were also leading the industry with the first launch of the cutting edge in OTT.
<unk> lost a large display touch and driver integration solution.
Yes.
This technology incorporates.
Sophisticated multi chip system design and is essential for very large sized screen and curved automotive displays.
We are glad to report that the introduction of the technology was met with enthusiastic responses from several Oems and panel makers.
Combining all these leading.
<unk> with strong capacity support we have secured with our foundry partners, we expect automotive display driver IC business to enjoy exceptional growth going forward.
Next for an update on <unk>.
<unk> remains committed to OLED technology quarter, we continue to commit RMB effort on not only driver IC Basel pecan for smartphone wearable tablet and automotive areas in partnerships with major Chinese and Korean panel makers.
In the fourth quarter, we aim to successfully rollout production for the flexible AMOLED driver.
And T com.
The motive application in collaboration with.
Very Chinese subsidiary of.
The world's largest TMC OCD player.
In view of series constrains on OLED display driver capacity in the next few years.
We have also secured meaningful capacity for smartphone OLED drivers.
Now, let me share some of the progress we've made on the non driver IC businesses.
Let's start from the timing controllers sector.
We anticipate <unk> sales to decrease by mid teens.
Sequentially as a result of weaker demand in TV and Chromebook notebook.
Sectors after multiple quarters of strong shipments.
While still limited by accessible foundry capacity, we are optimistic about the long term growth prospect of the telecom business.
We continue to engage customers with high end product areas, including <unk> Slash AK TV gaming monitor and low power notebook.
Looking ahead, we are particularly excited about the potential for automotive telecom.
Our cutting edge local dimming pecan has won numerous projects awards.
And penetrating into new car model launches of Oems and tier one carmakers.
We believe chicken segment will be one of the driving.
Forces of our non driver businesses moving forward.
Next on <unk> update.
The first quarter <unk> revenue is expected to decline substantially as a result of lower shipments to anchor customer.
Moving forward, we will continue to support the shipments for the customer's legacy products.
Nevertheless, the <unk> technology continues to play an important role in shaping next generation optical applications are exceptional optical design knowledge together with our production proven nano.
No.
Nano in printing capabilities and mass manufacturing experience.
US to deliver high quality solutions to meet the requirements of the future generation of optical applications across automotive consumer industrial and medical applications.
Yes.
Next to our <unk> sensing business Imax's proprietary Australia decoder IC that provides accurate <unk> perception data processing and low power operation with rigorous data security protection plays.
Plays a vital role in areas such as secure payments.
Personnel identification used in door lock and industrial access control applications.
He has been broadly adopted in leading E payment ecosystems in China.
Since its initial mass production in the second half of 2020.
Further new design sockets are underway.
<unk> will lead to growing volume starting next year with accelerated adoption of our <unk> total solution in various fields, such as manufacturing automation medical inspection automotive owner recognition.
Intelligent service robot.
More.
Now I'd like to turn to our Wi Fi Smart sensing solution.
To maximize market visibility and explore potential applications. We continue to push forward with two wider business models, namely total solution and discrete component.
First an update on Wi Fi total solution.
Our lifecycle solution incorporates timex Ausiello policy most image sensor.
Our proprietary AI processor and CNN based.
Lisa.
It is designed for a wide range of ultra low power use cases in consumer electronics.
Pam to modernize legacy endpoint devices.
<unk> AI capability with ultra low power computer vision AI.
Equipped with AI capability Wi Fi is capable of processing data locally.
The <unk> device.
Just metadata output, while avoiding the need to transport massive data to the cloud.
Thereby improving response time.
In bandwidth empower and last but not least enhancing data security.
We are pleased to report that the design win with a top tier name for a mainstream application that we indicated earlier is on track to enter into mass production in Q4.
Equally important the number of awarded projects is growing quickly covering a broad range of applications, including notebook applying.
Appliances utility meter automotive.
<unk> powered surveillance camera.
Parallel make videoconferencing and medical just to name a few.
Some applications are already slated for mass production at the end of this year.
In addition to consumer electronics players, who am too it accurately.
<unk> ability to their products.
Within just one year since we started sampling resi solution has also drawn much attention from.
Our service providers, who look for secure and low power <unk> devices to help collect big data.
For their cloud based services.
We are excited by the potential opportunities presented by the edge to cloud platform collaboration.
Opening up new market frontier for us in areas, such as Smart cities Smart office health care agriculture retail in factory automation.
We anticipate more design win awards and growing margin shipments starting next year.
<unk> key component business model.
We continue to leverage our key hubs in our key partners to amplify our offering and encourage the adoption of our onshore power solution AI communities.
Which also have strong appetites for ultra low power smart sensing.
Being the official partner of permanent AI platforms, such as Google Tensorflow Lite for Microchip controllers Michael.
Microsoft Azure.
AI partner program and tiny Emera Foundation.
We get to enjoy the enormous network of these ecosystems and there are numerous participants.
We continue to receive inquiries from large corporations and individuals developers in light with hundreds of evaluation pause as development fees, and then being purchased online and distributed across the globe.
Additionally, we continue our marketing efforts suturing webinars and other online activities with several well known platform partners such as as impulse is key in smartphone.
We are confident that wise WSI will be one of our major growth drivers for our non driver segment looking ahead into 2022.
<unk> beyond.
For non driver IC business, we expect revenue to decrease single digits sequentially in the fourth quarter.
That concludes my report for this quarter. Thank you for your interest in IMAX. We appreciate you joining today's call and we are now ready to take questions.
Thank you at this time I would like to take any questions you might have for us today.
If you would like to ask a question at this time simply press star one on your telephone keypad.
That would be spire, one on your telephone keypad.
Our first question comes from the line of Christian Gara from Baird. Your.
Your line is open.
Hi, Andrew.
Good evening My first question is.
You're looking at.
Weakness that you described.
The CANTV, that's impacting your E com business.
Does that mean that we're closer to supply demand balance.
Then what you had expected just a quarter ago I know that you are putting supply agreements in place and you expect that tightness.
In 2002, but is it fair to assume that.
Notably the weakness in notebooks that seems more sustainable than than Tvs, which has stabilized.
Suggest that maybe the whole industry gets to supply demand balance earlier than previously expected.
Feedback there would be would be useful.
So this is the operator, Mr. Just in Gara, the presenters will come back to us in one moment.
Thank you.
Yeah.
Hello.
Hello.
Yep.
I'm not sure if you got my question on that or maybe the question.
But he to disconnect.
Sure.
Oh, we got disconnected.
Luckily Ralph too.
The prepared remarks, but we didn't get any of the questions.
And we actually already in the queue, we'll operate there for quite a while but anyway, we are back.
Can you hear me now.
Yes.
Okay great.
I took my question, maybe let everybody to disconnect.
My question is that you know.
Given the weakness in notebooks and Tvs.
Driving you to.
Project your telecom business to be down mid single digits in the quarter.
Is that something and particularly if the weakness in notebooks is sustainable throughout the year.
Like Tvs, where you know that.
The business seems to be stabilizing is the ongoing weakness in notebook at some point to accelerating the point where.
You get back back to supply demand imbalance.
Imbalanced.
I know you've mentioned on the call that.
You're putting a supply agreements in place and expect 22 to remain supply constrained, but again, if if we see sustained weakness, notably in notebooks does that mean supply demand balance comes earlier than you previously expected.
Any feedback would be useful here.
So, particularly on notebook.
So you are you will you want me to common primarily on notebook Robyn.
Overall.
Market situational supply demand balance on driver sits at right.
Supply demand actually overall so in other words, if you have one of your end market that continues to be weak does that mean that your overall business gets back in supply demand balance earlier than you previously expected.
Okay got it actually.
We.
We actually grow the bullish overall large display driver IC business for next year.
And that includes scuffles.
Driver IC and T com.
No.
I'm sure everybody understands.
Nowadays as we speak the market is going through some softness.
Low end small size.
Television segment, but.
In general television market remains soft however on the higher end.
<unk>.
The demand is more persistent while we are seeing pretty.
We have installed a demand coming from sectors, both monitor and.
And.
The notebook.
But most importantly, if you look at our projections for.
Next year, we are at.
Actually as I said, we are very upset upbeat.
The prospect was display.
Sectors, including all the three areas notebook monitor and TV.
While we are not.
Particularly certain about the prospect of the market overall demand.
Oh.
Our forecast is only as good as any ones, but I think our our our optimism.
Our strengths going into next year has a lot of.
Things that are particular to high mix.
And also.
They are also practices.
<unk> will display driver IC.
Again.
In large display market made gold soft or maybe you will face strong I don't know for next year, but what one very important factor for display driver IC.
Paul.
Neglect is the fact that overall the.
The market is shifting towards higher end.
Sure.
Fishes in higher resolutions and that is going to change the dynamics of the.
Of the of the Hiway process I E display driver IC.
Function are substantially.
So the neatest repeat so larger size higher frame rate higher in general.
Our.
Local TV monitor.
<unk> acquired a number of units of panels shipment may remain the same.
Or actually is only is only in direct relationship with the.
Panel area of the cost area consumed.
When you go.
Our high resolution high frame rate.
Better Fisher, but tend to enlarge the waiver consumption of our display driver IC a lot now.
You are one or two very specific examples so you'll get a very clear idea of what I'm talking about.
If I take for example.