Q3 2022 Canaan Inc Earnings Call

It depends are in listen only mode. After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded now I'd like to hand, the conference over to your speaker host today, Mr. Clarke C C Investor Relations director of the company. Please go ahead clock.

Thank you Mel Hello, everyone and welcome to our earnings Conference call the company's financial and operating results were released by our Newswire services earlier today and are currently available online.

Joining us today are our chairman and CEO Mr. <unk> Zhang.

And our CFO Mr. Jin Cheung change in addition, Mr. Shao main Lou our senior VP, Mr. Leo Wong IR Senior director and Mr. <unk>, Zhang IR manager will also be available during the question and answer session.

Mr. Jiang will start the call by providing an overview of the company and performance highlights for the quarter.

Mr. Cheung will then provide details on the company's operating and financial results for the period before we open up the call for your questions. Before we continue I would like to refer you to our safe Harbor statement in our earnings press release todays call will include forward looking statements. These statements include but are not limit.

Two our outlook for the company and statements that estimate or project future results of operations or the performance of the company.

These statements speak only as of the date thereof, and the company assumes no obligation to revise any forward looking statements that may be made in today's press release call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks uncertainties and assumptions.

Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission, including our most recent annual report on form 20-F for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition during today's.

Call and webcast, we will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not a substitute for or in isolation from GAAP results you can find additional disclosure.

<unk> regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website.

With that I will now turn the call over to our chairman and CEO. Mr. <unk>. Zhang. Please go ahead.

Hello, everyone.

And G.

Okay.

Our CFO James <unk>.

Sure I will resolve the English from New York.

Since the beginning of third quarter of this year.

Required by law. These statements do not guarantee future performance and are subject to risks uncertainties and assumptions. Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission, including our most recent annual report on form 20-F for information on risks uncertainties and assumptions that may cause.

On the public currency and a broad change industry has been experiencing a great deal of covenants.

Especially during the past weeks.

There is a lot going on in the industry and now that we've got together on this conference call. We want to take this opportunity to speak openly.

Cause actual results to differ materially from those set forth in such statements. In addition, during today's call and webcast. We will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in <unk>.

With our investors and our stakeholders.

Market conditions have become more.

Severe since the beginning of the quarter of 2022.

The bitcoin price convenience, which Kris.

Addition to and not a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website.

Pass it by federal reverses interest rates increases.

Sure.

Market expectations.

A further hikes. Meanwhile, beef costs total network hash rate remained at a high level and a minus incomes decreased we are fully aware of the <unk>.

With that I will now turn the call over to our chairman and CEO . Mr. Noncore. John Please go ahead.

Hello, everyone.

Difficulties in the mining industry.

And G.

The current situation resembled similar cycles.

For company.

Our central James and I.

We have previously navigated through <unk>.

Delighted to share our quarterly results.

However, the situation is different today.

English from New York.

Since the beginning of third quarter of this year.

We are facing more challenges.

Globally <unk> energy prices.

The public currency and a broad change industry has been experiencing a great deal of covenants.

Among this quantity of the risks and the high financing costs caused by <unk>.

Especially during the past weeks.

There is a lot going on.

Excessive leverage and the high of routine.

Industry and now that we're together on this conference call, we want to take this opportunity to speak openly.

Senses for new mind us.

These factors have led us to.

Two serious issues in <unk> operations.

Our investors and our stakeholders.

Furthermore, what.

Market conditions have become more severe since the beginning of the third quarter of 2022.

It has to be happening in the industry has.

Broad.

Industry.

Participants confidence confidence.

The bitcoin price continued to decrease.

<unk> in the industry is.

Impacted by federal reverses increase the rates increases and.

Variable in the short term.

Half of these headwinds.

Market expectations.

New machine investors in some regions.

Further hikes. Meanwhile, beef costs total network hash rate remained at a high level and a minus incomes decreased we are fully aware of the.

We may.

Sorry money machine inventories in some regions remain high.

These factors negatively impacted customer demand for and the pricing of our mining machines in the near term.

Great difficulties in the mining industry.

Current situation resembled similar cycles, we have previously navigated through.

What I will emphasize is that although currently.

Participants in the industry.

However, the situation is different today.

Dorian, particularly at this time.

So we are facing more challenges such as globally surging energy prices.

We remain confident of navigating through this difficult cycle.

We are going through now we will turn into a valuable experience for us to develop our business.

Among us.

The risks and the high financing costs caused by.

Excessive leverage and high operating expenses for new mind us.

As the industry.

During these difficult times, we will continue our investments in R&D to increase our products have raised and energy efficiency.

These factors have led us to.

Two serious issues in mining operations.

Furthermore, what.

October we released two models of our yields in addition mining machines.

It has to be happening in the industry has.

Making a breakthrough in Cocos in power and energy efficiency.

Broad.

Industry.

Participants confidence confidence.

Artists.

Whether we are.

<unk> in the industry.

Or bear market environments.

We will launch new products and develop our business steadily.

<unk> in the short term.

Half of these headwinds.

Manuel machine investors in some regions.

This commitment demonstrates.

Our confidence in the market's long term prospects.

We may.

Sorry money machine inventories in some regions remain high.

Regarding the sale of mono machines.

These factors negatively impacted customer demand for and pricing our mining machines in the near term.

Late October having received the who have seen the results. They immediately launched our new generation mining machines I would've made a 13th serious.

What I would emphasize is that although currently.

Specificity two models are introduced.

At this event in the industry are enduring.

<unk> 30 in 40 states and certain states it takes.

He's already 50 part time.

We remain confident of navigating through the fifth cycle, we are going through now will turn into a valuable insurance blocks with you about our business.

Model is certainly important stakes.

Our highest rate of about 110 for half a second.

And power efficiency.

It certainly draws.

Josh.

The industry.

Model.

<unk>.

60.

During these difficult times, we continue our investment in R&D to increase our products have raised and energy efficiency.

66 is increased with Patrick above a 100 circuit kind of high for Steffan.

The power efficiency.

75 gross of cash.

In late October we released two models of our new generation mining machines, making a breakthrough in Cocos in power and energy efficiency regardless.

This model of computing power and power efficiency.

<unk> a significant improvement over the previous generation of money machines.

After our new products hit the market with crude today.

Whether we are or bear market environments.

<unk>, our supply chain to more for our mass production, we expect to commence mass production and the star shipments at the end of this year or in next year.

We will launch new products and develop our business Saturday.

This commitment demonstrates.

Our confidence in the market's long term prospects.

Regarding the sell off my new machines.

So prepayments we have pure production capacity for the last year.

In late October .

We received a full half similar results.

This allows us to continuous today provides high performance products.

Yesterday, we launched our new generation mining machines.

A reliable quality superior services all flights.

<unk> made a 13th serious.

Specificity two models are introduced to a 30 and 40 states and a certain states. It takes.

As for our existing mind English sheep products, we deliver a total of 345 million ton per second up.

Model is certainly important stakes caesars harsh rate of about 110 for half a second.

Power generation revenues of RMB $140 million.

Power efficiency ultimately certainly draws are tired of ash.

Our global headquarters in Singapore continues to attract local tenants, who are joining us and further enhance its operations.

Model a certain.

66 is increased with Patrick above a 100 circuit kind of half a second.

<unk> has already established R&D operations finance supply chain and other functions.

The power efficiency.

75 across the cash.

This model of computing power and power efficiency.

Our Singapore based chip design team has contribute 70% leased with the developments of our new products as well as domestic production both at the <unk>.

<unk> a significant improvement over the previous generation of money machines.

After our new products hit the market with crude today.

Southeast Asia supply chain.

Colorado is our supply chain to more for our mass production.

Headquartered in Singapore is performing well and has been steadily fulfilling shipments.

Fab two commerce mass production and the star shipments at the end of this year or in next year.

In her entire operation Julian the Peerless.

Zero prepayments, we have pure production capacity for the last year.

Quarter bid.

<unk> provides diversified parts of our production process.

This allows us to continuous today provides high performance products.

This is Chad.

And it demonstrates our commitment.

Reliable quality and superior services for all flights.

I see.

To continue our internationalization.

Although the overall market, it's relatively sluggish this year.

Yeah.

Thus far were you. This thing mining machine products. We believe are a total of 345 million ton per second.

<unk> built a strong foundation of that.

On the cooperation with our industry leading business process.

Computing power.

Generating the revenues on the <unk> hundred <unk>.

Meanwhile, we're also serving our small and mid sized customers.

40 million.

Our global head of cohorts in Singapore continues to attract local attack highlands for joining us and have further enhanced its operations.

<unk> flexible ways, our online store for retail customers.

Fill her argument is ourselves.

The headquarters has already published R&D operations finance supply chain and other functions.

Tom will address demand.

From all types of <unk>.

Since its launch in the second quarter. It has fulfilled customers odors from 21 countries and regions worldwide.

Our Singapore based chip design teams has contributed significantly to the development of our new products as well as domestic production post that.

By the end of the third quarter having.

Having shutdowns prepared.

The southeast Asia supply chain.

Our total computing power to BCD var had.

Headquartered in Singapore is performing well and has been steadily fulfilling shipments.

Decreased 150 1 million ton of ash.

Second.

Under current market conditions, the industry is facing stronger headwinds and the more uncertainty.

It's in here.

Her operation Julian the Peerless.

Quarter.

It provides diversified parts of our production process and the law.

Customers are taking a wait and see approach.

Logistics chat and.

Soft demand of mining machines has stopped.

It demonstrates our commitment and ability to continue our internationalization.

Low points hustle, the Wisconsin market challenges.

Our business is likely to face higher pressures over the next two quarters.

Although the overall market, it's relatively sluggish this year, we have built a strong foundation of the trough on the cooperation with our industry leading business process. Meanwhile, we're also means just throwing our small and mid sized customers.

At this point facing a severe winter into the industry profitability is no longer our first priority we looked at through this difficult time and to prepare for the future by shifting our focus.

For a variety of flexible ways, our online store for retail customers.

Sure the stability of cash flows reducing unnecessary expenses.

Fill her argument is ourselves.

We continue to invest in the trust and the development of new products.

We'll address demand.

Okay.

From all types of <unk>.

During the current downturn, we are strengthening the operations of our mining business for long term.

Since its launch in the second quarter. It has fulfilled a customized odors from 21 countries and regions worldwide.

We used our operational flexibility.

Propounding Award our mining business in overseas markets.

By the end of the third quarter having.

Having shutdowns prepared older. Our total computing power will be T D var.

New fronts.

Our support and maximize.

Majors he spent our money.

<unk> decreased 150 1 million ton of ash.

Machine itself, and our mining business, notably our mining preparation so.

Yes.

And their funds market conditions, the industry is facing stronger how do we use and the more I am sorry.

United States brought 260 solvent <unk> per second of computing power online Julien this quarter.

Most customers are taking a wait and see approach.

Soft demand of money machines has stopped.

At the same time.

Activity from.

Low points, coupled with current market challenges.

Supply for our Montney operations in Central Asia has further improved.

Our business is likely to face higher pressures over the next two quarters.

I believe more stable operations for our deployed by machines.

At this point facing a severe winter the industry profitability is no longer our first priority we will pass through.

Consequently, our mining business total online computing power.

So approximately three two at the highest for a second.

It's difficult time and to prepare for the future by shifting our focus.

Generating mining revenue on the.

So the stability of cash flows reducing unnecessary expenses.

62 million in the third Booker.

19% quarter over quarter after using.

Continue to invest in the news for us in the development of new products.

Proposal of our good clients to cover our mining costs.

Okay.

During the current downturn, we are strengthening the operations of our mining business for long term.

We have 535 five percentage points.

We used our operational flexibility.

At the end of this quarter.

The violence demonstrators increase.

Propounding for ward, our mining business in overseas markets.

<unk> hundred 88, plus seven these clients from end of the last quarter. We are also actively exploring that geography, both your bus faction of our mining business.

Mining fronts field.

Beyond her support and maximize.

Major pieces of our money.

Machine itself, and our mining business, notably our mining preparation so.

To meet these days.

Attrition risk.

While steadily expanding our global layout.

United States brought 260 solvent Terre Haute, our second of computing power online Julien this quarter.

Scale of our mining business and a bearish market.

Let's now turn to our AI chip business doing in Silverpop her south of our AI chips in Croda comparison was the premise for her.

At the same time, so you rusticity from supply for our Montney operations in Central Asia has further improved.

Downstream manufacturers resume building.

I believe more stable operations for our deployed by machines.

Inventories.

Other results, our AI chips business cells grow by <unk>.

Consequently, our mining business total online computing power is approximately three points to the Hajj for Stefan.

52% quarter over quarter. However.

And user demand for the consumer group to amend our headwinds.

Generating money revenue on B.

While AI chip sales performance.

60 to many in the Star Poker.

The other hand, we have achieved good progress in terms of for us in the UK.

19% quarter over quarter pop her using.

Okay.

For example, our Procacci AI.

Propulsion, our big clients to cover our mining costs, we have at 535 five percentage points.

Out of months, Paul has been used for learning in the process the bottom lines by college students.

Total at the end of this quarter.

From over 100 Union worth at universities across China.

Violence demonstrates increase of 188, plus seven b declines from end of the last quarter.

Same time, we have growing in many years.

Rotational.

Develop platforms actively.

We are also actively exploring that geography, both give us section of our mining business to mitigate concentration risk.

Participating in constructing the risk style equal system.

We will continue to.

Closely collaborate with our downstream and technology partners in the industry.

<unk> spending on global layouts, and the scale of our mining business under a bearish market.

Our open source, we'd also be at a pretty powerful quotation though.

Let's now turn to our AI chip business doing in Silverpop her south of our AI chips in Croda comparator with the parents Booker.

Growth in the demand.

Okay.

During this quarter, we continue to make good progress on our <unk>.

That's true manufacturers resume building off their inventories.

Collyn the share repo.

Inventories.

Our first program approved in March and of which we may repurchase up to.

The results, our AI chips business cells grow by.

52% quarter over quarter, however, weak end user demand for the consumer groups remained a headwind.

100 million U S thorough swaths of our outstanding.

Or class, a ordinary chefs or 24 months.

Yeah chip sales performance.

We have repurchased three points for median.

The other hand, we have achieved good progress in terms of growth in the developed ecosystem for example, our proprietary AI.

For total.

11, 2 million in U S dollars from August four to.

Months, Paul has been used for learning and the practice they bottom lines by college students from over 100 Union worth at universities across China.

No onboard.

This year.

On November.

<unk> 20th century, a tool we have repurchased over six points to medium.

Yes.

Same time, we have drawing and Manny if rotational.

Our total loss.

21, 5 million U S dollars.

Develop platforms actively participating in constructing the risk style equal system.

With average price up.

Three points.

So $3 46 steps or ABS for Ibs.

We will continue to.

Closely collaborate with our downstream and technology partners in the industry uphold our open source, we'd also be at a pretty powerful use of quotation though.

Our own volumes, it's two weeks ago.

This buyback program delivering increased value to our shareholders on the shows our confidence.

In the company's current and the long term prospects.

Growth in the demand.

Yeah.

During this quarter, we continue to make good progress on our <unk>.

Overall, our fuel unit soda for her.

Oasis difficult environments.

Colin the share repo.

Under these micro macro economy and the industry has always been the miners and hung her operating difficulties leading to the decline in demand of money machines lower mine numerous your prices and more to overcome these challenges.

Workers program approved in March.

To which we may repurchase up to.

<unk> hundred meeting U S thorough swaths of our outstanding ABS or class, a ordinary chefs or 24 months as well.

We have repurchased three funds for median.

Yes.

Work diligently through PD, where products and a further.

For our total.

11, 2 million in U S dollars from Argos store to know onboard across this.

Uh huh.

How do you view the market.

Our premise is that guidance.

This year.

As of November four 2020, a tool we have a real purpose.

Yeah addition, we successfully.

Completed the chip in progress for the new generation of <unk>.

<unk> six points to medium.

Competing power chips, and a lot of our newest areas of money machines.

Yes.

Total <unk>.

21, 5 million U S dollars.

Looking ahead, we see that rising interest rates and other macroeconomic dynamics continue to.

With average price up.

Three points.

So $3.46 or ABS pride, yes.

That's for sure.

Our own volumes, it's two weeks ago.

For pressure.

This buyback program delivering increased value to our shareholders on the shows our confidence.

With corn prices and.

A road industry confidence.

There is also a possibility.

In the company's current and the long term prospects.

Further energy price increases during the coming winter.

Overall, our theory on that so the quote her.

During these combined how do we refer.

Wafer demand and demand the industry has passed it.

While we faced a difficult environment.

As a result, we expect our performance to come under further pressure.

Under these micro macro economy and the industry has always been the miners in Hong hurt operating difficulties, leading to the decline in demand of money machines, lower mined membership prices and more to overcome these challenges.

At least here in the next two quarters.

Based on our current.

Productions, we expect our total revenues of the bulk of her upfront the advantage rule to be approximately RMB $310 million.

Yes.

Work diligently through PD, where products and the further.

Please note that this forecast reflects our current and preliminary view.

How do you view the market.

Deals on the market and operational conditions.

Our premise is that guidance.

Yeah, I mean shouldn't we successfully.

<unk> are subject to change.

Yes.

Completed the chip in progress for the new generation of.

It has to be almost 10 years since <unk> inception.

Competing power chips, and a lot of our new series of money machines.

And we are navigating us through multiple different cycles.

Looking ahead, we see that rising interest rates and other macroeconomic dynamics.

Or is the macro environments.

We remain firmly committed to always do.

<unk> two.

Our.

Excellent.

However, most to develop new products.

Or tongue or pressure.

On the issue of superior empower and empower fees.

With palm prices and.

Erode industry accomplish this.

We are continuing to push forward on our internationalization.

There is also a possibility.

And hearing through our flexible and the <unk>.

Further energy price increases during the coming winter.

Prudent operating strategy.

During these combined headwinds.

And one word to enhance synergies between our machine sales and module business.

Wafer demand and demand the industry expected.

As a result, we expect our performance to come under further pressure.

At the same time, we will keep a conservative.

Conservative approach.

At least here in the next two quarters.

Our capital management.

Based on our current productions, we expect our total revenues of the fourth what her upfront the advantage rule to be approximately RMB 310 million.

Streamline our cat.

That streamline our cash outflows.

While continuing our investments beyond D under really since our operations.

Paramount slot to sustain operations approach, the bull and the bear market cycles.

Please note that this forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change.

Holding our responsibility and our commitment to our.

Shareholders.

This concludes my prepared remarks, I will now turn the call over our CFO Jack.

Yes.

It has to be almost 10 years since China is the auction.

Thank you Mr Dong.

Good day, everyone. This is Jane.

We are navigating us through multiple different cycles, regardless of macro environments.

With our deal in New York City.

As we discussed in August all of that.

We remain firmly committed to always.

Second quarter earnings call in the third quarter of 2022, as we expected the overarching industry environment.

Doing our.

Also most to develop new products and pursue a superhero computing power and the power we.

With that to negatively impact our demand and average selling price.

We have continued to push forward on our internationalization.

We reported a total revenue of RMB 978 million in the quarter meeting our guidance range. Despite the year over year and a sequential decrease.

And adhering to our flexible and prudent operating strategy.

And over to enhance synergies between our machine sales.

But typically.

As a bitcoin price further decrease between $16000 recently, we expect the overall demand for mining machine remains constrained.

And my own business either.

At the same time, we will keep a conservative approach.

Ill have to management's kind of streamline our cat and streamline our cash outflows.

In the third quarter, we delivered a total computing power. So the $3 5 million Taro has cause symptoms.

While continuing our investments beyond D under really since our operations.

In response to the softening market, we lowered our selling prices leading to a certain decline in the average selling price for the quarter.

It's horrible slot to sustain operations across the board and the bear market cycles of holding our responsibility and our commitment.

As a result of the combined sales of our bitcoin mining machines decreased to RMB $914 million for the quarter.

Shareholders.

Since my prepared remarks, I will now turn the call over LLC at all Jeff.

In a challenging market downside of the cycle, we'd take the mining business as a hedge against the weakening.

Thank you Mr Dong.

Good day, everyone. This is Jane.

On the wind power deal in New York City.

Mining machine sells it.

As we discussed in August on our second quarter earnings call in the third quarter of 272, as we expected the overarching industry environment.

Helps us better utilize the old machine inventory and bringing additional revenues.

But typically our mining business generates the mining revenue of RMB $62 million, representing a quarter over quarter increase of 19%.

With that to negatively impact our demand and average selling price.

We reported total revenue of RMB $978 million in the quarter meeting our guidance range, despite the year over year and sequential decrease.

In the third quarter, we started mining in the United States by deploying a trial batch of mining machines.

Typically.

Our increased the bitcoin production is also due to further improve the electricity supply.

As a bitcoin price further decrease between $16000 recently.

That's the overall demand for mining machinery remain constrained.

<unk> operations in cost of goods.

Collectively we have three two extra hardship persistence of total computing power deployed for our mining business.

In the third quarter, we delivered a total computing power. So the $3 5 million Taro has put that in.

In response to the softening market, we lowered our selling prices.

As of the end of the third quarter.

After paying certain direct costs, especially electricity bills with bid coins mined.

Leading to a certain decline in the average selling price for the quarter.

As a result of the combined sales of our bitcoin mining machines decreased to RMB $914 million for the quarter.

Now with a 535 five percentage points.

As of the quarter and representing a 188 seven additional bitcoin compared with 346, H bitcoin balance as of June 32022.

In a challenging market downside of the cycle, we'd take the mining business as a hedge against the weakening.

Mining machines built it helps us better utilize the old machine human fee and bringing additional revenues.

We remain prudent in machine deployment.

Thoroughly exploring multiple geographical regions with favorable mining conditions to diversify our mining operation.

But typically our mining business generated a mining revenue of RMB $62 million, representing a quarter over quarter increase of 19%.

Please also note that with the increase of our deploy the machines for mining.

In the third quarter, we started mining in the United States by deploying a trial batch of mining machines.

That too has small machine depreciation.

The total cost.

Yeah.

Our AI revenue, realizing a sequential increase of 52%.

Our increased a bit coin production is also due to further improve the electricity supply.

Reached RMB, two 4 million in the third quarter.

<unk> operations in Kazakhstan.

The total AI chip sales performance reflected the softer demand for its end user use consumer Iot products.

Collectively we have three two extra hardship persistence of total computing power deployed for our mining business.

As of the end of the third quarter.

Our gross profit for the third quarter was RMB $234 million.

After paying certain direct costs, especially electricity bills with big clients mind.

Really reflecting the impact to the top line level.

Additionally, as we know it is a selling price of some older generation machines to even below their cost we incurred an inventory write down of RMB $271 million in third quarter.

Now with a 535 five percentage points.

The quarter's end.

Representing a 188.7 additional bitcoin compared with 346, H bitcoin balance as of June 32022.

Resulting from the complex effects of declining asps inventory write down and a relatively flat product costs.

We remain prudent in machine deployment.

Gross margin was further squeeze since were 23, 9% for the third quarter.

And thoroughly exploring multiple geographical regions with favorable mining conditions to diversify our mining operation.

Please note that if we had not implemented this inventory write down our sales margin for the third quarter would have been 46, 5%.

Please also note that with the increase of our deploy the machines for mining.

We expect to have small machine depreciation in our total cost.

In the third quarter, we continued to enhance our research and development.

Our AI revenue, realizing a sequential increase of 52%.

We launched our new generation mining machine.

Tober as we propelled the commercialization of our R&D efforts.

Which to RMB, two 4 million in the third quarter.

Total AI chip sales performance reflected the softer demand for end user use consumer Iot products.

We also made upfront payments to secure the production capacity for advanced node of wafers to ensure stable supply in the future.

Our gross profit for the third quarter was RMB $234 million.

Yeah.

As the vast majority of our sales contract.

Really reflecting the impact to the top client level.

Or denominated in U S dollars, we recorded a foreign exchange gain of RMB 100 of the over $1 million in the third quarter.

Additionally, as we know it is a selling price of some older generation machines to even below their cost we incurred an inventory write down of RMB $271 million in third quarter.

Due to the depreciation of RMB against U S dollars.

Conversely, if RMB appreciation against the U S dollars in future.

Resulting from the complex effects of declining asps inventory write down and a relatively flat product costs, our gross margin.

We will incur foreign exchange losses correspondingly.

For our bottom line, our net income reduced to RMB $61 million in the third quarter.

Further squeeze since were 23, 9% for the third quarter.

Please note that if we had not implemented this inventory write down our sales margin for the third quarter would have been 46, 5%.

Turning to our balance sheet.

As of September 32022.

The company had a cash and cash equivalents.

In the third quarter, we continued to enhance our research and development.

RMB 2000 to $3 million.

The decrease in cash balance was primarily due to upfront prepayments for securing wafers and the payment of operating and tax expenses.

We launched our new generation mining machine.

Tober as we propelled the commercialization of our R&D efforts.

Which was partially offset by cash inflow from the spot sales of mining machines during the third quarter.

We also made upfront payments to secure the production capacity for advanced node of wafers to ensure a stable supply in the future.

With the rollout of mass production for the new generation of mining machine.

As the vast majority of our contracts.

We expect our cash balance by the end of this year may further decrease as we make additional prepayments to secure production capacity.

Or denominated in U S dollars, we recorded a foreign exchange gain of RMB 100 is there were $1 million in the third quarter.

We don't have any interest bearing debt.

Due to the depreciation of RMB against U S dollars.

In a downward market is critical for us to preserve cash and a sustained cash flows.

Conversely, if RMB appreciation against the U S dollars in future.

We will continue to closely monitor our cash balance.

We will incur foreign exchange losses correspondingly.

And manage it prudently.

From August 13th 2022 through November four 2022.

For our bottom line, our net income reduced to RMB $61 million in the third quarter.

Used approximately $11 2 million U S dollars to repurchase three 4 million a b S.

Turning to our balance sheet.

As of September 32022.

Under our current stock repurchase program approved in March 2022.

The company had a cash and cash equivalents.

<unk> 2000, the $3 million.

With an average repurchase price of U S dollar sorry, <unk> 29 per avs.

The decrease in cash balance was primarily due to upfront prepayments for securing wafers and payments of operating and tax expenses.

In light of an increasingly volatile macro environment.

Which was partially offset by cash inflow from the spot sales of mining machines during the third quarter.

We may reevaluate our repurchase program in accordance to our cash balance.

Sure.

Looking to the near term, we see unfavorable factors may become even worse in the market, including constrained bitcoin prices on the U S rate hike and the high energy costs.

With the rollout of mass production for the new generation of mining machine.

We expect our cash balance by the end of this year may further decrease as we make additional prepayments to secure production capacity.

Essentially the bitcoin price has continued to decline after a series of industry incidents.

We don't have any interest bearing debt.

In a downward market is critical for us to preserve cash and a sustained cash flows.

As such we expect to lingering very soft demands in the near term for worldwide total harsh rate expansion and mining machine purchase.

We will continue to closely monitor our cash balance.

And manage it prudently.

To conclude the third quarter was a difficult one which drive additional manhattan sufficient cash balance and seek opportunities in the market downturn.

From August 13th 2022, which will November 4th 2022.

Used approximately $11 2 million U S dollars to repurchase $3 4 million a b S.

As a company, while the macro economic factors and the industry trends are out of our control we endeavor to control the decision and efforts we made to streamline our business operations maintain cash flow and effectively manage our liquidity levels.

Under our current stock repurchase program approved in March 2022.

With an average repurchase price of U S dollar sorry, <unk> 29 per avs.

To sustain our operations is our minimal an optimal strategy during the half time.

In light of an increasingly volatile macro environment.

Now I would like to briefly walk you through our financial results for the quarter.

We may reevaluate our repurchase program in accordance to our cash balance.

Sure.

Looking to the near term, we see unfavorable factors may become even worse in the market, including constrained bitcoin prices under U S rate hike and the high energy costs.

Revenues in the third quarter of 2022, well RMB 970 820.

$2 million $137 $5 million, representing a decrease of 48% from RMB $1652 7 million in the second quarter of 2022.

Recently, the Bitcoin price has continued to decline after a series of industry incidents.

And a decrease of $25 eight from RMB $1317 6 million in the same period of 2021.

As such we expect to lingering very soft demands in the near term for worldwide total harsh rate expansion and mining machine purchases.

Gross profit in the third quarter of 2022 was RMB $234 2 million $32 9 million U S dollars.

To conclude the third quarter was a difficult one which drive a digital Manhattan sufficient cash balance and seek opportunities in the market downturn.

Presenting a decrease of 74, 8% from RMB $929 7 million in the second quarter of 2022, and a decrease of 68, 4% from RMB $741 7 million in the same period of 2021.

As a company, while the macro economic factors and the industry trends are out of our control we endeavor to control the decision and efforts we made to streamline our business operations maintain cash flow and effectively manage our liquidity levels.

Total operating expenses in the third quarter of 2022, or RMB 275.0 million.

To sustain our operations is our minimal an optimal strategy during the hot tub.

$38 $7 million, representing an increase of one 7% from RMB $275 million in the second quarter of 2022, and a decreased one 2% from RMB $278 4 million in the same period of 2000.

Now I would like to briefly walk you through our financial results for the quarter.

Revenues in the third quarter of 2022 were RMB 970 820.

$2 million $137 $5 million, representing a decrease of 48% from RMB $1652 7 million in the second quarter of 2022.

'twenty one.

Net income attributable to ordinary shareholders in the third quarter of 2022 worth RMB $61 1 million.

And a decrease of $25 eight from RMB $1317 6 million in same period of 2021.

$8 6 million U S dollars.

Presenting a decrease of 99.

<unk>, 19.0% from RMB 600, zero $8 9 million in the second quarter of 2022.

Gross profit in the third quarter of 2022 was RMB $234 2 million $32 9 million U S dollars.

A decrease of 88, 1% from RMB $512 5 million in the same period of 2021.

Presenting a decrease of 74, 8% from RMB $929 7 million in the second quarter of 2022, and a decrease of 68, 4% from RMB $741 7 million in the same period of 2021.

non-GAAP adjusted net income in the third quarter of 2022.

It was RMB $166 3 million $23 4 million U S dollar.

Representing a decrease of 75, 8% from RMB $688 2 million in the second quarter of 2022, and a decrease of $71 seven.

Total operating expenses in the third quarter of 2022, or RMB 275.0 million.

$38 $7 million, representing an increase of one 7% from RMB $275 million in the second quarter of 2022 and decreased one 2% from RMB $278 4 million in the same period of 2000.

7%.

From RMB 587, 5 million in the same period of 2021.

Basic and diluted net earnings per ads for the quarter, both or 36 cents in.

RMB and <unk> in the U S dollar.

'twenty one.

Contract liabilities as of September 32022, or RMB $300 million.

Net income attributable to ordinary shareholders in the third quarter of 2022 was the RMB $61 1 million.

$42 million.

Decreasing from RMB $1340 7 million as of December 31, 2021.

$8 6 million U S dollars.

Presenting a decrease of 99.

<unk>, 19.0% from RMB 600 089.

This concludes our prepared remarks, we are now open for questions.

<unk> 9 million in the second quarter of 2022, and a decrease of 88, 1% from RMB $512 5 million in the same period of 2021.

Thank you we will now begin the question and answer session.

As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

non-GAAP adjusted net income in the third quarter of 2022.

It was RMB $166 3 million $23 4 million U S dollar.

As a courtesy to other investors and analysts who may wish to ask a question. Please limit yourself to two questions at a time. If you have any follow up questions. After the Q&A session Investor Relations team will be available after the call.

Representing a decrease of 75, 8% from RMB $688 2 million in the second quarter of 2022, and a decrease of $71 seven.

But the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.

7%.

RMB 587 5 million in the same period of 2021.

Basic and diluted net earnings per ads for the quarter, both or 36 cents in RMB.

Please standby.

<unk> in the U S dollar.

Yeah.

Contract liabilities as of September 32022, or RMB $301 million.

Your first question comes from the line of Shang Fang from crashing Securities. Please go ahead. Your line is open.

$42 million.

Decreasing from RMB $1340 7 million as of December 31, 2021.

Yeah.

Christina.

Great.

Uh huh.

How what's your question Ghansham syndrome.

This concludes our prepared remarks, we are now open for questions.

That was all in the R&D LNG share woman, who Sheila Sina portal have noticed that wall lunch generally the level of I'm sure. So you'll have these terribly sit at headquarters in Singapore have you ever thought about being a completely flooring company.

Thank you we will now begin the question and answer session.

As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

Okay.

As a courtesy to other investors and analysts who may wish to ask a question. Please limit yourself to two questions at a time. If you have any follow up questions. After the Q&A session Investor Relations team will be available after the call.

Okay.

Our firsthand.

For more how we are.

Visit coffee.

The globalization of our business our business and operations.

Progress along.

But the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.

Global.

The reception of our <unk>.

On the base.

Our goal our company's globalization is to better serve our clients.

Please standby.

With respect to establish our caucus.

In Singapore, we like.

Yeah.

Yeah.

It's business environments local R&D and attack these pilots.

Your first question comes from the line of Shang Fang from crashing Securities. Please go ahead. Your line is open.

As well there.

Dress up.

Our southeast Asia business Hum.

It also has open attitude.

Uh huh.

Our digital currencies.

Great.

We have set up a local R&D and operations teams and how.

You know how what's your portion Ghansham syndrome.

That was all in the R&D oranges here, a woman, who Sheila C. I'm told I have noticed that wall lunch essentially the last of them I'm sure.

Paresh stock.

Stop the Asia ipads by leveraging our operations in Singapore.

For a long term perspective, we.

So you have these terribly sit at headquarters in Singapore have you ever thought about being a completely different company.

<unk> to grow into international.

Is operations not only in Singapore, but also use the U S.

Okay.

Okay.

Southeast Asia.

Our firsthand.

By leveraging the geographical advantages of <unk>.

For more how we are.

Visit coffee.

Each market.

The globalization of our business our business and operations.

We are pleased that we will better serve our customers globally.

Progress along.

Gross values for.

Global.

Shareholders. Thank you.

The reception of our <unk>.

On the base.

Okay. Thank you.

Our goal our company's globalization is to better serve our clients.

Yeah sure.

Does that have you guys had yet.

Sure sure Dr. Joel that's encore set in January.

With respect to establish our headquarters.

Right.

Why is that.

In Singapore, we love.

Great.

Right.

So considering the recent decline they climb plays well have our inventories.

It's business environments local R&D and attack these pilots.

As well there.

Inventory is right that wasn't really a car.

Yes.

Southeast Asia business Hum.

Yeah.

It also has a healthy attitude.

Our test this one that goes on for this.

Our digital currencies.

It's a difficult question.

We have set up a local R&D and operations teams and establish a southeast Asia <unk> by leveraging our operations Singapore.

I think you might have already noticed in.

In this quarter we recorded.

<unk> $221 1 million inventory write down.

Sure our long term perspective.

As we determine that that to the estimated realizable value of our inventory.

We aim to grow into international.

Lower than the holding costs.

Is operations not only in Singapore, but also use U S.

That was due to the lower sales price.

For subsequent orders.

Southeast Asia.

By leveraging the geographical advantages.

Of course, it's linked to the bigger picture like this point price chopper and a softening.

Each market.

Market demand from the miners.

We are pleased that we will better serve our customers globally.

The inventory write down was recorded in cost of revenues and had a net material negative impact on our gross margin of the current quarter.

Great values for us.

Shareholders Patrick.

Okay. Thank you Thiago, let me share.

And does that have you guys had yet.

The impact.

Impact of fifth point price continued to decline in the coming quarters.

Sure sure Dr. John Zuniga Cheung Kong Center.

We may have to consider further decreasing our selling price, which will probably lead to additional inventory write down and also lead to a P&L losses in our bottom line.

Related to that.

Great.

So considering the recent decline they claim price.

So you have.

Sure. It is right that wasn't really a car.

I think Alicia prepare the worst and balance sheets and do our best in operation.

Yes.

Our test this one that goes.

On the other hand going forward, if we could be able to sell that inventory.

For this.

Difficult question.

I think you might have already noticed in.

Above their costs.

In this quarter we recorded.

The cost of sale for those machines will be metals such drive down.

<unk> $221 1 million for inventory write down.

Which in turn will have the effect of increasing our gross profits for the period.

As we determine that that to the estimated realizable value of volume entry.

The lower than the holding costs.

Thank you.

Okay.

That was due to the lower sales price.

James I'm sorry. Your line is you are going through a downturn to walgreens down whether it be leases at Mount Holly Paul Sellers, and there was a contract Saudi ratio.

For subsequent orders.

Of course, it's linked to the bigger picture like this point price chopper and a softening.

Market demand from the miners.

Yeah.

I think currently vast majority of the sales our future contract sales.

The inventory write down was recorded in cost of revenues.

<unk> had a net material negative impact on our gross margin of the current quarter.

The small cells.

At the relatively pretty small quantity.

As Bill previously mentioned, our new generation of mining machine is progressing towards mass production.

The impact.

Impact of bitcoin prices continue to decline in the coming quarters.

We may have to consider further decreasing our selling price, which will probably lead to additional inventory write down and also lead to a P&L office in the bottom line.

We are still not a one off.

100% sure whether shipments will begin at the end of this year or at the start of next year.

Therefore, we expect the sales outlook.

I think we should prepare the worst and balance sheets and do our best in operation.

Our new mining machines to be primarily contract sales.

And we have already secured a production capacity for our new generation machine for next year.

On the other hand going forward, if we could be able to sell such inventories.

To maintain a stable supply.

Above their costs.

The cost of sale for those machines will be metals such drive down.

Thank you.

Okay.

No unusual call cigar in Gaza and counter concerns in that dollars Choctaw Whatsapp program, South cooperation with foundries.

Which in turn will have the effect of increasing our gross profits for the period.

Thank you.

Okay.

Okay.

Okay, we have in Algeria, our multipronged growth strategy.

James Hi.

If you go into a downturn to Walgreens down whether it be leases at Mount Holly, Paul sellers and future contract Saudi ratio.

Our comprehensive R&D.

Yes.

So as to prepare them to capture.

Okay.

<unk>.

I think currently a vast majority of the cell.

In past few years advances towards ethanol.

Therefore, we continue to actively manage has.

Neutral contract sales.

The small cells.

Productive collaborations with our foundry partners.

I said relatively pretty small quantity.

Looking at our operations so like.

As Bill previously mentioned, our new generation of mining machine is progressing towards mass production.

Prepayments have coders.

In return our foundry partners.

Richard last base working with us to optimize the products.

We are still not 100% sure whether shipments will begin at the end of this year or at the start of next year.

For fabrication of RMB and production.

I think money machine of supercomputing shifts.

Therefore, we expect the sales.

Our new mining machines to be primarily contract sales.

Sure.

Vanguard for device.

And we have already secured a production capacity for our new generation machine for.

Zach Kathryn boundaries.

Stabilize their production.

Next year.

Our collaboration with <unk> is definitely weighted.

To maintain a stable supply.

Thank you.

Sure.

Okay. So is it worth it.

Okay.

Michel Combes cigar in Gaza and calendar, so uncertain that dollars Choctaw what's programs South cooperation.

I think the current challenges across industry.

Yeah on the which I personally believe it will be a short term issue.

Andres.

We will continue to you about so you've got a basketball SaaS that would be for.

Okay.

Okay, we have in Algeria, our multipronged restart here in Vegas.

Pro forma.

Sure.

Absolutely.

I don't see why I D.

True to capture more marshal facilities.

Yes.

To prepare for capture.

Yeah.

Sure Okay.

<unk>.

Capacity advantage towards ethanol.

Hey, Shannon.

Therefore, we continue to actively manage.

Thank you, we'll now move on to our next question.

Sure.

Productive collaborations with our foundry partners.

Please standby.

Looking at our operations so like.

Like prepayments or <unk>.

Our next question comes from the line of Kevin that day.

In return our foundry partners.

Please go ahead your line is open.

Richard is working with us to optimize for that.

Hi, good morning to all of you in New York.

For fabrication, our R&D and production.

Thank you very much for taking my question.

I mean, I'm curious now on how much.

I think money.

She is supercomputing shifts.

Of the cash decline was attributed to foundry prepayments.

Sure.

Vanguard for the bus.

Process caffeine foundries for us to stabilize our production.

And how much of.

The September quarter shipments were to customers versus <unk> self mining.

Our collaboration with Congress is definitely a win win.

Sure.

I think the current churn based approach industry.

Yeah.

Yeah.

Yeah on the which I personally believe it will be a short term issue.

Okay.

<unk>.

You know we produce cure hour.

We will continue in school you about you talked about that before.

Foundry partners.

Production.

Pro forma.

Last piece through prepayments.

Absolutely.

True to capture more Marshall <unk>.

We have recently paid for production.

Yeah.

Sure Okay.

<unk> of the new generation of mining machine chips.

Hey, Shannon.

Okay.

Because the wafer.

Thank you, we'll now move on to our next question.

Fabrication, what's actually will take about six months.

Please standby.

Typically we will prepare some inventories for your models machines.

Okay.

Next question comes from the line of Kevin that day.

In the us.

H C. Wainwright. Please go ahead your line is open.

<unk>.

Yes so.

Good morning to all of you in New York.

Uh huh.

So I think it's really hard to capture that.

Thank you very much for taking my question.

The number.

But we also are absolutely happy hour production that salary too.

I mean, I'm curious now on how much.

Of the cash decline was attributed to foundry prepayments.

That's a part of our foundry partners.

We actively manage and wafer costs.

And how much of.

Through last fall.

The September quarter shipments.

Negotiation.

Yeah.

During the third quarter, we saw.

Or to customers versus kirana self mining.

Starts our.

Mining operation.

Yeah.

U S.

Yes.

And we cooperate with us.

Okay.

Local money come into the first fashion or.

<unk>.

You know we produce cure hour.

2000 machines a lot.

Foundry partners.

Operationally, our compliance with laws and regulations.

Production.

Through prepayments.

I think there was demand.

We have recently paid for production batch after immunization mining machine chips.

It gets cold drop rate rest of the.

Tables with co Packers.

And.

Uh huh.

It doesn't cost the wafer fab.

And a third or fourth or fifth.

Fabrication, what's actually will take.

Cool.

We have $3 two extra high voltage and power on a lot more money.

Five six months.

Typically we will prepare some inventories for your models machines.

So this deployed in Miami.

<unk>.

In their lives.

Martin.

Many of these we are linear has already arrived.

<unk>.

Yes so.

Ill turn it on like where do you get comfortable with.

Sure.

Yes.

So I think it's really hard to peg the accurate number.

Compared to our computing power, so our money hungry, but still relatively small.

But we are also actively happy hour production that salary too.

How many operations in Central Asia.

That's a part of our foundry partners.

Yes.

We're also exploring on pushing forward our business is our other regions.

We actively manage and wafer costs.

Through last fall.

Yes.

Negotiation.

Favorable energy prices and the market dynamics.

Yeah.

During the third quarter, we saw.

Starts our.

Given the current group.

Mining operation.

Uncertainties in the industry environments.

In the U S.

We appear to be.

And we cooperate.

Rooted in our strategy for exploring partnership opportunities at Regis.

Local manufacturers to bring the first fashion or.

2000 machines a lot operationally.

This variable power us.

Operationally.

High end market policy issues.

And it's with laws and regulations.

That's right.

Based on North America.

I think there was demand.

South East Asia.

It gets cold drop right recipe I obsess about tables with its co Packers.

Sounds good.

Can you do you have a target for commands internal mining hash rate for.

And.

Uh huh.

<unk> third quarter fiscal.

For the end of the year.

Cool.

We have $3 two extra high voltage and power on a lot more money.

Yes, I think there is.

So this deployed in Miami.

Still some opportunities for us to expand our.

Uh huh.

The money.

Money business.

Many of these we are aligning has already arrived.

You will know the.

Demand.

The market is virtually low so I think that we will move.

10 of them offer these discounts.

Yes.

Compared to our competitors are so our money hungry, but still relatively small.

More machines from fell 32 months, so it's up money.

But I feel that there is no.

Have many operations in Central Asia.

Exactly and number four.

Yes.

We're also exploring unobtrusive forward our business is our other regions.

Our target.

This year. Thank you.

Thank you very much to one last question for me. Please if I may.

With.

Favorable energy prices and the market dynamics.

Can you characterize.

Can you characterize commands position on immersion and how the company might be working in R&D to develop machines, particularly suited for that type of application.

Given the current group.

Uncertainties in the industry environments.

We appear to be.

Our strategy for exploring partnership opportunities in regions.

This variable power us high end market policy issues.

Oh, yes.

We have been providing any more modules to customers for evaluation.

That's right.

North America on the Southeast Asia.

Okay.

And they are ready to be mass produce.

Can you do you have a target for commands internal mining hash rate for.

If we have thus far our customers are.

Our inverter design than Australia's most stable for homeless and or.

For the end of the year.

This is called T shirts, and the kind of improvements are progressing.

Yes, I think there is.

Still some alternatives for us to expand our.

Empowered by maybe a circa.

<unk> mining business.

50% for chip units compared to.

You'll know the.

Demand.

Ara coated products.

The market is especially low so I think that we will move.

Some clients, we all recall for even higher because of power.

More machines from.

I think Omar role.

So two months so it's up money.

Our first half is also a very hard business.

But I feel that there is no.

Factor of four.

Exactly and number four.

Customers, who are trading between the fortunate with our products.

Our target.

This year. Thank you.

Yes.

Thank you very much to one last question for me. Please if I may.

Yeah Okay.

Thanks Jay.

Have a great day. Thank you.

Can you characterize.

However day Bye bye. Thank you, we'll now move on to our next question.

Can you characterize commands position on immersion and how the company might be working in R&D to develop machines, particularly suited for that type of application.

Please standby.

Okay.

Yeah.

Our next question comes from the line of Dennis <unk> from China Renaissance Securities. Please go ahead. Your line is open.

Oh, yes.

We have been providing any more modules to customers for evaluation.

Oh, Thank you and my third question is how do you see any content, especially in indoor dams heiko.

And they are ready to be mass produce.

If we have all of that from our customers.

Okay.

Our inverter design demonstrates more stable for homeless and or.

I think in the near term, we see the <unk>.

He is under pressure.

Physical conditions and the kind of improvements are producing power by maybe a circa.

Ross is still rising.

Interest groups.

Our recent strong downward trend in the future.

50% for chip units compared to.

We are comprised as <unk>.

Ara coated products.

<unk> events.

Some clients wheel overcall for even higher because of power.

Sure.

Henry and going through the.

Low client base that they sort of parks.

I think overall our.

Purchase cost is also a very broad sense.

Navigating through every cycle.

However, I think.

A factor of four.

I don't think that anyone accurately predicted the short term ball become project.

Customers, who are trading between the merchandise to our products.

Yeah Okay.

In regards to the cracker.

Thanks Jay.

Have a great day. Thank you.

Bitcoin I have always believed that there is no need to forecast.

However day bye bye.

We will now move on to our next question. Please.

These comprise the long term.

Please standby.

Our fifth point becomes the most important our Odyssey file it.

Yeah.

Has increasingly.

Yeah.

Laugh.

Our next question comes from the line of Fannie <unk> from China Renaissance Securities. Please go ahead. Your line is open.

User base. Meanwhile.

With clients having mechanism.

It's foreseeable that the supply of each point of view at the lower end market demand.

Oh, Thank you and my third question is how do you see any content.

As a result, I remain cockpit, because long term prospect.

Shame in your down cycle.

Okay.

From the mid term.

I think in the near term, we see the PD <unk> remains under pressure.

Back to Mark up the warrants that we are doing now is in preparation of potential business opportunities.

Or worse.

Still rising.

Chris Graves.

In the coming in maybe a while two years.

Recent strong downward trend in the future.

Sydney each box.

<unk> comprises.

<unk>.

Severity events driver.

Arrive at its core for you always got to.

Henry and going through the low client base does accessories parts.

Gotcha.

Okay. Thank you my <unk>. My next question is Oh.

Navigating through every cycle.

We know that that we can have a packet acquisition issue has greatly impact our industry.

However, I think I don't think that anyone accurate because the short term.

And I'm just wondering what's our view on this event.

The current project.

In regards to the cracker.

And maybe how we.

Bitcoin I have always believed that there is no need to forecast.

How would you react to this equation.

These comprise the long term.

Oh I think this is a very sensitive.

Fifth point becomes a multi partner our RMC.

So obviously something maybe from the investor side.

Has increasingly.

Oh, sorry.

Large.

User base Meanwhile, faced with.

I believe fiber currencies.

These clients having mechanism.

That's a big part.

It's foreseeable that the supply of volumes will be lower than market Matt.

Actually provided people is.

Centralized and attractiveness ways to hold high obesity assets.

As a result I remain constant.

<unk> long term prospects.

100%.

They are all right.

From the mid term.

Sure the operational way of their systems.

Prospect to Mark up the war, that's who we are.

Transactions.

Do you know is in preparation for potential business opportunities.

Should it be completely broad church.

The company can be a while two years.

However, due to technical bars or ordinary people to hold on the trade currencies.

Sure.

<unk>.

Opportunities.

That arrive at its core for you always gotcha gotcha.

Many of them since we use a centralized currency exchanges.

Okay. Thank you.

When you back trading.

Our next question is Oh.

This program is.

<unk> takes many transactions as we reach from Roth Champagne treating to Alcatraz treatment during the last two quarters.

We know that we can have a packet acquisition issue has greatly impact.

And then Chi.

Three years.

And I'm just wondering what's our view on this is Hank.

SaaS users assets tricky.

And maybe how we.

Transaction fees, which has been waived and hence the purity of corrupt tests.

How would you react to the occasion.

I think this is a very sensitive question.

Briefly wrap.

So obviously something maybe from the investor side.

Crypto currency changes centralized quite a currency since it's more due.

Sorry.

Due to lack of really is back to regulation in this area.

I believe private currencies.

But that's a big part.

It's kind of exchanges.

Actually provide if people is.

Exchange of base transaction purpose.

Centralized and attractiveness ways to hold high obesity assets.

Strict requirements.

Changes management abilities and adds to it.

100% on their own right.

Overall, frankly past human.

Human nature.

Sure the operational way of their systems.

I think doing programs strong that's fair markets.

S actions.

If it does close.

Figures.

Trade.

Should it be completely cross checks.

Estimator tool to the issue also occur.

However, due to technical bars or ordinary people to hold on the trade or currencies.

Therefore, we are no surprises so.

We.

Many of them since we use a centralized currency exchanges.

It's really a hole there are through the strong the pivot.

The market is high returns was abroad.

When you back trading.

Got it.

Yeah, so the centralization.

This program is.

<unk> takes many transactions.

Total class a current phase III front basis rebrand refurbish densify it.

Rothschild phase treating to Alcatraz treatment during the last two calls.

Demonstrates.

Vance teachers that are far beyond a modern way of.

Three years.

Our SaaS users assets and tricky.

Saturation.

Is that the industrial deal that hurt you guys.

Transaction fees, which has been a wave and <unk>.

So you're crazy.

The purity of corrupt tests have.

Yes.

Sure.

Pete.

Briefly back to local currency changes.

Hi, Thanks for the column and my last question.

<unk> quite a currency since it's more.

Creative apps Terry guidance after ASP average mining machine selling price.

Due to a lack of a really effects two resolutions in this area.

<unk> Palmas node and gross margin for next quarter.

It's kind of exchanges.

I will take this one.

Change of pace transaction purpose strip.

Strict requirements.

I think you just noticed from our earnings release.

Changes management abilities and adds to it.

Slightly declining in the third quarter.

Overall, frankly attack human nature.

This decline was partially because we adjusted down the selling price.

I think doing programs strong that's fair markets.

With a machine models is slower as rates.

It does.

Both figures.

Similar to the issue also.

In response to macro conditions.

Some models or other stuff and sell packages.

Sure.

Therefore, we are not surprised.

At a lower than cost cost to price.

<unk>.

They are through this round of pivotal as the market returns was abroad.

So in addition, we our new generation of machines launched in October.

It says so in centralization.

It's just that become available for preorder some.

Clarify the current phase III front based rebrand refurbish it defies the clients demonstrates.

Some machines may be delivered in the fourth quarter, but as of today.

I'm not able to give a specific.

Thanks take care of that.

Specific guidance.

Beyond a modern way of.

The selling price for contract sales of our new model demonstrates.

Speculation.

Is that the industrial deal better.

Plant level gross margin so in combination we expect in the fourth quarter.

With your previous statement.

Oh.

Sure.

Gross margin.

Probably.

I think Florida column and my last question.

Increase compared to the third quarter.

Creative apps Terry guidance after ASP average mining machine selling price.

Yeah.

The ASP could it be a little bit lower.

Third quarter. So I think the currently that's how prediction. Thank you.

Computing Palmas node and gross margin for next quarter.

I will take this one Venice.

Okay. Thank you.

I think it was just the loadings from our earnings release.

Thank you.

We'll now move on to next question.

Gross margin declined in the third quarter.

Please standby.

I think that this decline was partially because we adjusted down the selling price.

Yeah.

And our next question comes from the line of Hans Chung from D. A Davidson. Please go ahead.

Both our machine models is slower cash rates.

In response to market conditions.

Hi, Good morning maintain 19, thank you for taking my questions. So far.

Some models or other stuff and sell packages.

At a lower than cost cost to price.

First Oh.

I was wondering how much inventory label, Amit the antibody label in the industry right now and how long.

So in addition, our new generation of machines launched in October .

Could tag for a monkey to digest the inventory.

It's just that become available for preorder some.

Some machines may be delivered in the fourth quarter, but as of today.

Finance charges.

<unk> sensor.

At the same time songs that Guy.

I'm not able to give a specific.

Specific guidance.

<unk> yeah.

The selling price for contract sales of our new model demonstrates.

That actually helps those houses in China, but I shop off.

What level of gross margin. So in combination we expect in the fourth quarter.

Okay, I think thats a good question.

<unk> is a month.

In terms of U S market is relatively high.

Gross margin.

Probably.

And their current markets.

Kris compared to the third quarter.

Conditions.

The asps could it be a little bit lower compared to the third quarter. So I think the currently that's how prediction.

Smart take I think it might take at least six.

Six months is to be.

Check the inventory.

Mandated 10, how electricity costs will decrease and the speed of Miami facility construction.

Thank you.

Okay. Thank you.

Thank you.

We will now move on to the next question.

Steve.

Please standby.

<unk> <unk> relates to the issue.

Or.

Sure.

Be installed soon then the overstocked machine mining machines serious B C. Geoff it's Stuart.

Our next question comes from the line of Hans Chung from D. A Davidson. Please go ahead.

Hi, Good morning maintenance 19, Thank you for taking my question. So.

So we have observed was that the core networks total computing power Sean upward trend.

First I was wondering how much inventory label, Amit is the inventory level in the industry right now and how long.

Scott the corn price.

<unk>.

Things could tag for a monkey to digest the inventory.

So wrong U S dollars.

<unk>.

Finance charges.

For more than one quarter.

<unk> sensor.

And there is a trend or further decreases.

As yet.

Sometimes some bad guy called transaction causes up yes.

I think this situation, we accelerated E Malaysia older models from funding would shake inventories.

That actually helps those offices in Shanghai.

Drop off.

Okay, I think thats a good question.

Markets and the miners will be more.

Currently the amount of inventory in the U S market is relatively high.

Yes.

E lines to deploy money machines is higher computing power and energy.

And the current market conditions.

Conditions.

On the lower energy efficiency.

Mike take a I think it might be.

I think when become price trends towards upward trend to occur.

Six months.

Sure.

P J the inventory.

As mandates at 10.

Inventory.

Install king will be accurate.

Electricity costs will decrease and the speed up minus facility construction.

Yes.

Yes.

Hi.

And last question.

Steve.

Supply chain related issues or.

So do you start to.

Or.

<unk> with the customer regarding your new.

Be installed soon then the overstocked machine mining machines serious B C. Geoff it's Stuart.

A 13 dinner.

Generation machine.

And then what the initial feedback.

So we have observed was that the core networks total computing power strong upward trend in rates.

Especially with the U S.

Pass on them.

So they will find out zones.

Susan aging coal.

Coal yields are canceled.

Got it.

In fact, it does seem bobble that Dave.

On price is.

<unk> machine.

So wrong U S dollars.

<unk> not seen that.

Thank you.

For more than one quarter.

Oh, there you go back quite as Hong Kong, Japan now tell.

And there is a trend or further decreases.

<unk>.

The compound.

I think this situation, we accelerated the E Malaysia older models from funding would shake inventories.

Not quite.

Paul I think follow the new Cirrus logic.

Markets and the minus will be more.

Colbert.

<unk> 830 machines still in the pre stage for a basketball reduction and we Havent started shift.

Got it.

Uh huh.

Lines to deploy money in machines is higher computing power and energy.

Products in large quantities.

On the lower energy efficiency.

Currently we are introducing our new products to the market and I'll start with two small bad case of preorders.

I think when become price trends towards upward trend it to her.

Inventory.

Which oh Wow, having many other holders intense as it gets.

We installed and will be accurate.

Yes.

Let's face it starts up.

Hi.

All right.

And last question.

I think in terms of our older procurement plans.

So do you start to.

Gauge with the customer regarding your new.

We expect it to ramp up.

Action.

<unk> dinner.

<unk> hundred 10, Suraj model end of this year.

Generation machine.

And then what the initial feedback.

But meso.

Last year our production.

Especially with that U S passengers.

I think they will become.

Pass on them.

They will find out zones Disneyland Susan aging.

Essentially the two producing 100 tenants, perhaps to the 20th Rados.

We also canceled.

Give us some bobble that Dave.

Our fabrication technology improvements.

<unk> machine.

<unk> not seen that cohort that you got that quite as Hong Kong.

Costs reduced over time.

Machines to be awarded 100 circuits or a hutch.

<unk>.

I expect it to be.

<unk> com our mainstream products.

The Carnival there you go.

Some quick.

Yeah.

Uh huh.

Yeah.

Paul.

February efficient technology and performance of our new generation of pardon me chip.

Follow the new serious loss.

Based on October eight.

FIFA similar performance, our waitress comparable with our peers and strip products.

A 13 machine is still in the pre stage for a basketball or action and are we havent started shift.

He was at our numerous shapes there so you'll be accident option for us.

Products in large quantities.

Currently we are introducing our new products to the market and I'll start with two small bad case of preorders.

North America is very important market for US previously, we havent shipped a large deposit products to this region.

Which oh Wow I mean, many other holders intense its cost base.

We had a relatively small market share.

Stops I still need we still need some time to build up our brand.

All.

Anthony in terms of our older Procurements labs.

Finishing with the strategic.

We expect it to ramp up production.

We have set out to work ourselves after sale service.

<unk> hundred 10, Suraj mobilized end of this year.

Operations and other functions to provide more support for local if you backwards.

But meanwhile, the net.

Last year our production.

I think they will become.

Essentially the two producing the 110 to $120.

But no we are seeing that many monitors it goes off the virus.

So at this stage pressure or find out and see that the operational costs.

Fabrication technologies improvements.

This situation is likely to resolve big changes to the all.

Cost to reduce over time.

<unk> was awarded 100 circuits.

Of the tier two months.

I expect it to be from our mainstream products.

The region.

We will closely monitor.

Market dynamics to resize opportunities.

Uh huh.

February efficient technology and performance of our new generation of pardon me chip.

For Boston showcase.

At 700.

FIFA similar performance, our waitress comparable with our peers mainstream products.

We have been actively exploring opportunities.

Others such.

As such as well.

He was at our numerous shifts there so there will be a accident auction or findings.

Asia.

Middle East, Yes, that's it.

Yes.

North America is very important market for US previously, we havent shipped a lot for that.

Okay, Great. One last question if I may.

So I was wondering.

In terms of that technology roadmap beyond.

<unk> with its region.

We had a relatively small market share that's our stocks I still need we still need some time to build up our brand.

The <unk> series, which is based on final let me to a process node.

Given that the U S band on the EDA tool for 10 nanometer.

Finishing with the strategic.

How it's set up low teens.

As announced in August how.

To walk ourselves soccer self service.

How do we how do we make sure our new technology transition in product in duration going forward.

Operations and other functions to provide more support for local if you backwards.

Hi.

Thanks Jackie.

What is that.

So at the same time.

But no we are seeing that many monitors it goes off the virus.

But.

19.

So at this stage pressure or find out and see that the operation cost.

In April I guess.

Thank you.

Means also declining and so it will be a tour attraction.

This situation is likely to resolve it.

No.

Changes to the.

So called.

Got it.

Of the tier two months.

So home anchor mall to ship, our <unk> take that same type of thing.

The region.

We will closely monitor.

Market dynamics to resize opportunities.

You bet.

This is a tough question.

For Boston showcase.

I think the results.

At the same time, we are.

To the U S that is.

We have been actively exploring the opportunities.

It's still unclear.

Others are such a small piece.

So now it has.

Yes.

Note that impacted the R&D of our 15 and Neil dilution.

Asia and Middle East.

That's it.

Oh, Okay, great one.

Maam shakes.

One last question if I may.

So I was wondering.

In terms of.

Fabry patients with all of our newsletters finding.

In terms of the technology roadmap beyond.

Finally machines now stands.

The F 15 is unchanged based on final, let me to a process node.

At the same process in all of our.

Our peers mainstream products.

Given that the U S and on the EDA tool 14 on me two.

So far we already secured.

Sure I'll start that fall or toxic.

As announced in August how do we how do we make sure new technology transition in product in duration going forward.

Hi, Sophie.

Otherwise no.

Things are bad.

It's kind of cool process from.

Thanks Jack.

What is that number.

Utilization to exclude pacer.

Some of the things happening I think the line too but.

We will continue to monitor the evaporates.

19.

Impacts.

In April I guess.

As a listed company, we will continue to operate in compliance.

Thank you.

Do you mean by any means that you'd be a tour.

And our goal.

As it relates to the laws and regulations.

<unk> done that in China.

Now to home anchor mall to ship all of them.

And in door.

Solutions.

<unk> take that same type of thing.

Sure.

Steve.

Did that.

Our product design.

Well I think that this is a tough question.

And the manufacturing strategy.

I think the results.

Okay.

To the U S band.

Impact is still unclear.

Thank you.

Thank you, we'll now move on to our next question.

So now.

It has not impacted the R&D of our 15 and yield in our region.

Sure.

All right.

Yes.

Martin shapes.

Please standby.

Uh huh.

Yeah.

In terms of.

Sure.

Fabry patients with all of our newsletters finding machines now stands.

Our next question comes from the line of Michael <unk> from the Benchmark Company. Please go ahead. Your line is open.

At the same process in all of our peers mainstream products.

Thank you just two quick questions. One could you kind of go over your capital allocation strategy. During this period of industry weakness and then secondly can you just give us your viewpoint on 2024 is expecting having its impact on the miners in rig demand.

So far we already secured circa false or toxic.

Sophie all the otherwise no.

I think the band will also take time school process upfront.

<unk>.

I will take the second award at Cannes.

Utilization to exclude pacer.

This deal could across lines.

We will continue to monitor the evaporate.

<unk>.

So I think good point hanmi message and value of our house.

Impacts.

As a listed company, we will continue to operate in compliance.

Henry worse or Neil Gras generated stop this really impacts of minus <unk> two summit.

There's laws and regulations.

Let's see as packs that.

And <unk> solutions.

This will result in considerable shelf from decrease.

In alignment.

Alliance boots.

Our product design.

The beauty clients colorful computing power.

On the manufacturer strategy.

However, I don't see it.

Okay.

Lastly for loss.

Yeah.

Yes.

The having Memphis unhappy with it.

Okay.

Thank you, we'll now move on to our next question.

Well each client trading system.

It was designed with great lineup.

Sure.

Okay.

Yes.

Overtime Saturday.

Please standby.

Geez.

Sure.

Kong pass up or.

Sure.

Our next question comes from the line of Michael <unk> from the Benchmark Company. Please go ahead. Your line is open.

You saw us a fiat currency.

It's a hobby messes up bringing surpassed two quite surprised.

Thank you just two quick questions. One could you kind of go over your capital allocation strategy. During this period of industry weakness and then secondly can you just give us your viewpoint on 2024 is expecting having its impact on the miners in rig demand. Thanks.

The long run.

For the long term.

Got it.

Because having.

Porous minors upgrades their devices.

To.

With higher computing power and.

I will take the second one.

The Bachelor entities, Mississippi coastal this mining machine manufacturers.

Janice deal.

I think pinpoint hanmi message and value of the house.

We need to constantly upgrade our technology.

On rewards or the overall generated this.

Our products provide the miners is pure remind me.

This really impacts of minus nine with them too.

Some experts see attacks that.

It is higher.

Computing power.

This will result in a considerable shelf from decrease.

Better cost effective.

<unk>.

This is what we have been doing.

And the beauty clients coastal computing power.

Yeah.

However, I don't see it.

The capital of 71 I think the.

Lastly for loss.

At the end of the third quarter.

The having Memphis unhappy with it.

We have the cash balance the RMB 2 billion.

Well each client trading system.

So we do not have any interest bearing debt on our balance sheet.

It was designed with Chris Lai plus overtime Saturday.

That's not like the hour here.

Geez.

In the other listed companies, we don't we do not need to pay interest.

Congress passed up Oh.

Sure.

You saw us a fiat currency.

We do not make any principal repayments.

It's a hobby message on free support to reclassify.

So about the allocation in future I think.

If I'm wrong.

The release NFL sales of our new generation of mining machine.

Part of the long term.

Back to.

Because hanmi.

I think we would definitely deploy a certain amount of cash to secure wafer capacity.

Ports minors upgrades their devices.

Two.

With higher computing power and better energy efficiency because of this.

According to our plans and also this will enable us to fulfill clients' demand.

In time, and then maintain our close cooperation with foundries.

Finally machine manifest Chris.

We need to constantly upgrade our technology.

We make sure we can capture more market share when the market recovers in the future.

Our products provide the miners is pure remind me.

That's the first thing that I'm, saying that I think that we will continue to invest.

I.

But it is higher.

In the R&D part.

Computing power.

To develop a more advanced.

Better cost effective.

Yes.

No.

This is what we have been doing.

And also in addition, we will prudently carryout collaborations.

Yeah.

Capital extended you one I think.

In mining and.

At the end of the third quarter.

Explore business opportunities in different regions.

Our cash balance the RMB 2 billion.

We may need to pay some upfront fees.

So we do not have any interest bearing debt on our balance sheet.

But it has been a less limit.

Willing to make to develop a new business.

That's not like the hour.

Here in the other listed companies, we don't we do not need to pay interest.

Last but not least I think we will still use some of our cash to continue share repurchases.

We do not make any principal repayments.

Two.

To show the confidence on our business for longer term.

So about the allocation in future I think.

With the release end of sale sales of our new generation of mining machine.

I think that that's it.

Thank you Mike.

Thank you I appreciate it.

I think we will.

Thank you as there are no further questions now I'd like to turn the call back over to the company for any closing remarks.

Absolutely deploy a certain amount of cash to secure wafer capacity. According to our plans and also this will enable us to fulfill clients' demands.

Thank you Hello, everyone. This is clarke once again, thank you very much for joining us today for the call. If you have any further questions. Please feel free to reach out to us through the contact information provided on our IR website. Thanks again.

In time, and then maintain our close cooperation with foundries.

We make sure we can capture more market share when the market recovers in the future.

Thank you that concludes the call today. Thank you everyone for attending you may now disconnect.

That's the first thing that I'm, saying that I think that we will continuously invest in.

In the R&D part.

To develop a more advanced.

Yes.

And also in addition, we will prudently carryout collaborations.

In mining and it's.

Explore business opportunities in different regions.

We may need to pay some upfront fees.

But it has been a less limit.

Willing to make to develop a new business.

Last but not least I think we will still use some of our cash to continue with share repurchase.

Two.

To show the confidence on our business for longer term.

I think that that's it thank.

Thank you Mike.

Thank you I appreciate it.

Thank you as there are no further questions now I'd like to turn the call back over to the company for any closing remarks.

Thank you Hello, everyone. This is clarke once again, thank you very much for joining us today for the call. If you have any further questions. Please feel free to reach out to us through the contact information provided on our IR website. Thanks again.

Thank you that concludes the call today. Thank you everyone for attending you may now disconnect.

Yes.

The conference will begin shortly to raise your hand during Q&A you can dial down one one.

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Yes.

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<unk>.

Okay.

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Yes.

Yes.

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Yes.

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Okay.

Ladies and gentlemen, thank you for standing by and welcome to Kaman Inc's third quarter 2022.

<unk> conference call at this time, all participants are in listen only mode. After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded now I'd like to hand, the conference over to your speaker host today, Mr. Clarke Cc Investor Relations.

Director of the company. Please go ahead clock.

Thank you Mao Hello, everyone and welcome to our earnings Conference call the company's financial and operating results were released by our Newswire services earlier today and are currently available online.

Joining us today are our chairman and CEO , Mr. <unk>, Zhang and our CFO Mr. Jin Cheung change. In addition, Mr. Shao main Lou our senior VP, Mr. Leo Wong IR Senior director and Mr. <unk>, Zhang IR manager will all.

Also be available during the question and answer session.

Mr. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Chen will then provide details on the company's operating and financial results for the period before we open up the call for your questions. Before we continue I would like to refer you to our safe Harbor statement in our earnings press.

Lease.

Today's call will include forward looking statements. These statements include but are not limited to our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements speak only as of the date thereof, and the company assumes no obligation.

To revise any forward looking statements that may be made in today's press release call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks uncertainties and assumptions. Please refer to the press release and the risk factors and documents, we file with the securities and exchange.

<unk> Commission, including our most recent annual report on form 20-F for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

In addition, during today's call and webcast will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not a substitute for or in isolation from GAAP results.

You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website.

With that I will now turn the call over to our chairman and CEO . Mr. Nagao John Please go ahead.

Hello, everyone.

<unk> and <unk>.

For our company.

Our CFO James and I.

Delighted to share our quarterly results the English from New York.

Since the beginning of third quarter of this year.

The foreign currency, an abrupt change industry has been experiencing a great deal of covered us.

Especially during the past two weeks.

There is a lot going on in the industry and now that we're together on this conference call.

You want to take this opportunity to speak openly.

With our investors and our stakeholders.

Market conditions have become more so.

Are there since the beginning of the third quarter of 2022.

The bitcoin price convenience, which Kris.

<unk> by federal reverses increased the rate decreases and.

Market expectations.

Further hikes.

Meanwhile, beef costs total network hash rate remained at a high level.

Minus incomes decreased.

We are fully aware of the <unk>.

Difficulties in the mining industry.

The current situation resembled similar cycles.

We have a premier yesterday navigated through <unk>.

However, the situation is different today.

We are facing more challenges.

Globally surging energy prices.

Among this priority.

The risks and the high financing costs caused by.

Excessive leverage and high operating expenses for new mind us.

These factors have led us to.

Two serious issues in mining operations.

Furthermore, what.

Has to be happening in the industry has.

Broad.

Industry.

Participants confidence.

Yes.

Evidence in the industry.

<unk> in the short term.

Half of these headwinds.

Our new machine investors in some regions.

We may.

Sorry money machine inventories in some regions remain high.

All of these factors Leo negatively impact customer demand for and pricing of our mining machines in the near term.

Yeah.

What I will emphasize is that although current city.

Participants in the industry are enduring, particularly tissue part time.

We remain confident of navigating through this difficult cycle.

We are going through now will turn into a valuable experience for us to develop our business.

The industry.

During these difficult times, we will continue our investment in R&D to increase our products have raised and energy efficiency.

October we released two models.

Our yields in addition mining machines, making a breakthrough in Cocos in power and energy efficiency.

Chris.

Whether we are or bear market environments, we will launch new products and develop our business steadily.

This commitment demonstrates.

Our confidence in the market's long term prospects.

Regarding the sell off my new machines in.

Late October having received a full testing results.

Yesterday, we launched our new generation myeloma shares avid made a 13th serious.

Specificity two models are introduced.

<unk> 46, and <unk> 66.

Model is certainly important stakes caesars harsh rate of about 110 for half a second.

And power efficiency ultimately certainly draws.

Sure.

Model.

66 is increased.

Patrick above a 100 circuit kind of half a second.

And power efficiency.

Is it a 75 across the cash.

Both models computing power and power efficiency demonstrates a significant improvement over the previous generation of mining machines.

After our new products hit the market with crude today currently.

<unk>, our supply chain to more for our mass production.

We expect to commence mass production and shipments.

The end of this year or in next year.

Zero prepayments, we have pure production capacity for the last year.

This allows us to continue today provides high performance products.

Reliable quality.

Our services for our clients.

As for our existing mining machine products. We believe are a total of three.

<unk> four 5 million times per second.

You can power generation revenues of RMB $140 million.

Our global headquarters in Singapore continues to attract low cost tax highlands, we're drawing us and further enhance its operations.

Headquarters has already established R&D operations finance supply chain and other functions.

Our Singapore based chip design key has contribute significantly to the development of our new products as well as domestic production process.

Southeast Asia supply chain.

Headquartered in Singapore is performing well and has been steadily building shipments CSS and her entire operation Julian the Peerless.

Quarter it.

<unk> provides diversified parts of our production process and the logistics chain.

It demonstrates our commitment and ability to continue our internationalization.

Although the overall market is relatively sluggish this year.

Bill.

Our strong foundation of the car.

On the collaboration with our industry leading business process.

Meanwhile, we will also use this.

Considering our small and mid sized customers via a variety of flexible ways, our online store for retail customers.

Fill her arguments is our cells.

Tom will address demand from.

From all types of.

Since its launch in the second quarter. It has to fulfill the customer's odors from 21 countries and regions worldwide.

By the end of the third quarter having.

Having shipped out prepared.

Our total compute empower <unk> ever had before.

101 million tons of ash.

Yes.

Under current market conditions, the industry is facing stronger headwinds and the more uncertainty.

Customers are taking a wait and see approach.

Soft demand of mining machines has dropped.

Low points, coupled with current macro challenges.

Our business is likely to face higher pressures over the next two quarters.

At this point facing a severe winter into the industry profitability is no longer our first priority we looked at through this difficult time and to prepare for the future by shifting our focus.

So the stability of cash flows reducing unnecessary expenses.

We continue to invest in the distress in the development of new products.

Okay.

During the current downturn, we are strengthening the operations of our mining business for long term.

We used our operation.

Quiddity, we are preparing for our mining business in overseas markets.

Our new fronts.

Sales of our support and maximize.

Our mining.

Machine itself, and our mining business, notably our mining preparation so.

United States brought 260 <unk> per second of computing power online during this quarter.

At the same time, so elasticity from.

Slide four our Montney operations in Central Asia has further improved.

I believe more stable operations for our deployed by machines.

Consequently, our mining business total online computing power.

Approximately three two at the hatch for Stefan.

Generating mining revenue RMB.

62 million in the third quarter.

19% quarter over quarter.

After using.

Proportion of our big clients to cover our mining costs.

We have 500 surface five five percentage points.

Total at the end of this quarter.

The balance demonstrates increase of 188, seven with clients from and after last quarter.

We're also actively exploring that geographical give us section of our mining business to mitigate concentration risk.

Stephanie expanding our global layoffs at the scale of our mining business.

Bearish market.

Okay.

Let's now turn to our AI chip business during the third quarter South of our AI chips in crude in comparison with the premise clutter.

That's true manufacturers resume building up their inventories.

The results, our AI chips business sales grow by.

52% quarter over quarter, however, weak and user demand for the consumer group remained a headwind to our AI chip sales performance.

The other hand, we have achieved good progress in terms of growth in the developed ecosystem for example, our proprietary AI.

Paul has been used for learning and the practice development by college students.

From over a 100 unit worth at universities across China.

Same time, we have drawing in many years.

Rotational.

Develop platforms actively participating in constructing the risk style ecosystem.

We will continue to.

Closely collaborate with our downstream and technology partners in the industry.

Our open source will also be adequate powerful these quotations.

Growth in the demand.

<unk>.

During this quarter, we continue to make good progress on our <unk>.

Current share re protract markers.

<unk> approved in March under which we may repurchase up to.

$100 million loss of our outstanding the avs or class a ordinary shares or 24 months.

<unk> repurchased three points for median.

For our total.

11, 2 million in U S dollars from August to.

No onboard Ross.

This year.

As of November four 2022, we have repurchased over.

Four six points to median.

For a total of 20.

21, 5 million U S dollars.

With average price up.

Three points.

So $3.46 or ABS for Ibs.

Our volume is too.

This buyback program delivers increased value to our shareholders on the shows our confidence.

In the company's current and the long term prospects.

Overall during the subsequent her.

We faced a difficult environment.

Under this micro macro economy, and the industry headwinds, mainly manners in Concord operating difficulties, leading to the decline in demand of mining machines, lower mining machine prices and more to overcome these challenges.

Yes.

Work diligently through PD, where products and further.

Alright.

How do you view the markets are achieving on our premise is that guidance.

Yes addition, we successfully.

Completed the chief in progress for the new generation of <unk>.

Competing power chips, and a lot of our new series of mining machines.

Looking ahead, we see rising interest rates.

Other operating economics dynamics continued to.

Thanks for that Tom.

Or pressure.

With corn prices and.

I wrote industry confidence.

There is also a possibility.

Further energy price increases during the coming winter.

Hindering these combined headwinds wafer demand and demand the industry expected.

As a result, we expect our performance to come under further pressure.

At least here in the next two quarters.

Based on our current projections, we expect our total revenues of the first quarter of 'twenty advantage for.

To be approximately.

<unk> $310 million.

Please note that this forecast reflects our current and preliminary views on the market and operational conditions.

<unk> are subject to change.

Yes.

It has to be almost 10 years since China is action.

And we are navigating us through multiple different cycles, regardless of macro environments.

We remain firmly committed to always.

Doing our.

However, most to develop new products and pursue a superhero includes empower and empower fees we.

We are continuing to push forward.

Our internationalization.

Okay adhering to our flexible and.

Prudence operating strategy.

<unk> and onward to enhance synergies between our machine sales and mining business.

Same time, we will keep our concern.

Conservative approach to our.

Ill have to management's kind of streamline our cat.

The streamline our cash outflows.

We will continue our investments beyond <unk> and.

<unk> operations.

It's paramount slot to sustain operations across the board and the bear market cycles are holding our responsibility and our commitment.

Shareholders.

Solutions My prepared remarks, I will now turn the call over our CFO Jeff.

Thank you Mr <unk>.

Good day, everyone. This is Jane.

And the way our deal in Europe .

As we discussed in August on our <unk>.

Second quarter earnings call in the third quarter of 2022 as we expected.

<unk> industry environment started to negatively impact our demand and average selling price.

We reported a total revenue of RMB $978 million in the quarter meeting our guidance range. Despite the year over year and a sequential decrease.

Specifically.

A bitcoin price further decrease between $16000 recently, we expect the overall demand for mining machine remains constrained.

In the third quarter, we delivered a total computing power so the $3 5 million Taro ash persistence.

In response to the softening market, we lowered our selling price leading to a certain decline in the average selling price for the quarter.

As a result of the combined sales of our bitcoin mining machine decreased to RMB $914 million for the quarter.

In a challenging market downside of the cycle, we'd take the mining business as a hedge against the weakening.

Mining machines built.

Helps us better utilize the or machine inventory and bringing additional revenues.

So basically our mining business generating the mining revenue of RMB $62 million, representing a quarter over quarter increase of 19%.

In the third quarter, we started mining in the United States by deploying a trial batch of mining machines.

Our increased the bitcoin production is also due to further improve the electricity supply.

<unk> operations in Canada.

Collectively we have three two <unk> per second.

Of total computing power deployed for our mining business.

As of the end of the third quarter.

After paying certain direct costs, especially electricity bills with big clients mind.

With now the 535 five percentage points as of the quarter and representing 188, seven additional bitcoin compared with 346, H bitcoin balance as of June 32022.

We remain prudent in machine deployment.

And thoroughly exploring multiple geographical regions with favorable mining conditions to diversify our mining operation.

Please also note that with the increase of our deploy the machines for mining.

We expect to have small machine depreciation in our total cost.

Our AI revenue, realizing a sequential increase of 52%.

Each to RMB, two 4 million in the third quarter.

<unk> AI chip sales performance reflected the softer demand for its end user use consumer Iot products.

Our gross profit for the third quarter was RMB $234 million.

Primarily reflecting the impact to the top client level.

Additionally, as we lowered the selling price of some older generation machines to even below their cost.

Incurred an inventory write down of RMB $291 million in third quarter.

Resulting from the complex effects of declining asps inventory write down and a relatively flat product costs. Our gross margin was further squeeze since were 23, 9% for the third quarter.

Please note that if we had not implemented this inventory write down.

Our sales margin for the third quarter would have been 46, 5%.

In the third quarter, we continued to enhance our research and development.

We launched our new generation mining machine.

October as we propelled the commercialization of our R&D efforts.

We also made upfront payments to secure the production capacity for advanced node of wafers to ensure stable supply in the future.

Right.

As the vast majority of our sales contract.

Or denominated in U S. Dollar we recorded a foreign exchange gain of RMB 100 of the over $1 million in the third quarter.

Due to the depreciation of RMB against U S dollars.

Conversely, if RMB appreciation against the U S dollar in future.

We will incur foreign exchange losses correspondingly.

For our bottom line, our net income reduced to RMB $61 million in the third quarter.

Turning to our balance sheet.

September 32022.

The company had cash and cash equivalents.

<unk> 2000, the $3 million.

The decrease in cash balance was primarily due to upfront prepayments for securing waivers and payments of operating and tax expenses.

Which was partially offset by cash inflow from the spot sales of mining machines during the third quarter.

With the rollout of mass production for the new generation of mining machine.

We expect our cash balance by the end of this year may further decrease as we make additional prepayments to secure production capacity.

We don't have any interest bearing debt.

In a downward market is critical for us to preserve cash and a sustained cash flows.

We will continue to closely monitor our cash balance.

And manage it prudently.

From August 13th 2022 through November four 2022.

Used approximately $11 2 million U S dollars to repurchase three 4 million ABS is.

Under our current stock repurchase program approved in March 2022.

With an average repurchase price of U S dollar sorry, <unk> 29 per avs.

In light of an increasingly volatile macro environment.

We may reevaluate our repurchase program in accordance to our cash balance.

Sure.

Looking to the near term, we see unfavorable factors may become even worse in the market, including constrained bitcoin prices on the U S rate hike and the high energy costs.

Recently, the Bitcoin price has continued to decline after a series of industry incidents.

As such we expect to lingering various softer demand in the near term for worldwide total cash rate expansion and mining machine purchase.

To conclude the third quarter was a difficult one we strive to maintain a sufficient cash balance and seek opportunities in a market downturn.

And as a company, while the macro economic factors and the industry trends are out of our control we endeavor to control the decision and efforts we made to streamline our business operations maintain cash flow and effectively manage our liquidity levels.

To sustain our operations is our minimal an optimal strategy during the half time.

Now I would like to briefly walk you through our financial results for the quarter.

Revenues in the third quarter of 2022 were RMB 970 820.

$2 million $137 $5 million, representing a decrease of 48% from RMB $1652 7 million in the second quarter of 2022.

And a decrease of $25 eight from RMB $1317 6 million in same period of 2021.

Gross profit in the third quarter of 2022 was RMB $234 2 million $32 9 million U S dollars.

Presenting a decrease of 74, 8% from RMB $929 7 million in the second quarter of 2022, and a decrease of 68, 4% from RMB $741 7 million in the same period of 2021.

Total operating expenses in the third quarter of 2022, or RMB 275 zero million.

$38 $7 million, representing an increase of one 7% from RMB $275 million in the second quarter of 2022, and a decreased one 2% from RMB $278 4 million in the same period of 2000.

'twenty one.

Net income attributable to ordinary shareholders in the third quarter of 2022 was the RMB $61 1 million.

$8 6 million U S dollars.

Presenting a decrease of 99.

90.0% from RMB 600, zero $8 9 million in the second quarter of 2022.

A decrease of 88, 1% from RMB $512 5 million in the same period of 2021.

non-GAAP adjusted net income in the third quarter of 2022.

RMB $166 three.

3 million $23 4 million U S dollar.

Representing a decrease of 75, 8% from RMB $688 2 million in the second quarter of 2022, and a decrease of $71 seven.

Kevin.

From RMB 587, 5 million in the same period of 2021.

Basic and diluted net earnings per ads for the quarter, both or 36.

In RMB.

End of <unk> in the U S dollar.

Contract liabilities as of September 32000, 2002, or RMB $300 million.

$42 million.

Decreasing from RMB $1340 7 million as of December 31, 2021.

This concludes our prepared remarks, we are now open for questions.

Thank you we will now begin the question and answer session.

As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

As a courtesy to other investors and analysts who may wish to ask a question. Please limit yourself to two questions at a time. If you have any follow up questions. After the Q&A session. The Investor relations team will be available after the call.

But the benefits of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.

Please standby.

Okay.

Yeah.

Your first question comes from the line of Shang Fang from <unk> Securities. Please go ahead. Your line is open.

Okay.

Great.

Liana, how what's your question Ghansham syndrome.

That was all Linda R&D LNG share woman.

Now Paul will have noticed that generally the last four months or so.

All you have is terribly sit at headquarters in Singapore.

Let's talk about being a completely flooring company.

Okay.

Okay.

Our firsthand.

For more how we are U S listed company.

The globalization of our business our business and operations.

Progress along is global.

The reception of our client base.

Golar power companies.

Mobilization is to better serve our clients.

We scrap is established our headquarters.

In Singapore, we like.

It's business.

<unk> local R&D and attack these pilots.

As Wes said.

Yes.

Southeast Asia business Hum.

It also has open attitude.

Our digital currencies.

We have set up a local R&D and operations teams and how.

Publish stock.

<unk>.

<unk> bye bye and leverage our operations in Singapore.

Sure a long term perspective.

And to grow into international.

Is operations not only in Singapore, but also in the U S.

<unk>.

By leveraging the geographical advantages of each market.

We are pleased that we will better serve our customers globally.

Credit values for.

Shareholders Patrick.

Okay. Thank you <unk>.

Ken Please go ahead.

Yeah.

Oh sure sure Dr. John Zuniga Encore set January February .

Related to that.

Great.

Considering the recent decline.

<unk>.

You have.

Inventory is right on where we are in a car.

Ah.

I'll take this one.

It goes on for this.

Difficult question.

I think you might have already noticed in.

In this quarter we recorded.

<unk> $271 1 million inventory write down.

As we determine that that to the estimated realizable value of volume entry.

Lower than our holding costs.

That was due to the lower sales price.

For subsequent orders.

Of course, it's linked to the bigger picture like this point price chopper and a softening.

Market demand from the miners.

The inventory write down was recorded in the cost of revenues and <unk>.

Net material negative impact on our gross margin of the current quarter.

The impact.

Impact of pitch prices continue to decline in the coming quarters.

We may have to consider further decreasing our selling price, which will probably lead to additional inventory write downs and also lead to a P&L losses in the bottom line.

I think we should prepare the worst and balance sheets and do our best in operations.

On the other hand going forward, if we could be able to sell such inventories.

Above their costs.

Cost of sales for those machines will be metals such dropdown.

Which in turn will have the effect of increasing our gross profit for the period.

Thank you.

Okay.

James.

Yes, you are going through a downturn to walgreens down whether it be leases at Mount Holly Paul cells and future contract sales ratio.

Okay.

I think currently vast majority of the cell.

Total contract sales.

The small cells.

Relatively pretty small quantity.

As Bill previously mentioned, our new generation of mining machine is progressing towards mass production.

While we are still not 100% sure whether shipments will begin at the end of this year or at the start of next year.

Therefore, we expect the sales outlook.

Our new mining machines to be primarily contract sales.

And we have already secured a production capacity for our new generation machine for.

Next year.

To maintain a stable supply.

Thank you.

Okay.

No unusual call cigar in Gaza and calendar, so uncertain that dollars do Whatsapp program South cooperation with foundries.

Okay.

Okay, we have been hearing our multipronged growth strategy on our behalf.

So your R&D.

So there is.

So as to prepare for capture.

Okay.

In past advances towards ethanol.

Therefore, we continue to activity.

Ed.

Two collaborations with our foundry partners supporting their operations so.

Prepayment <unk>.

In return our foundry partners.

Richard last base working with us to optimize the products.

For fabrication RMB and production.

I think money.

She is supercomputing shifts.

Sure.

Vanguard for the best.

Zach Kathryn foundries.

Stabilize their production.

Our collaboration with Congress is president and CEO .

Partnership.

Okay.

I think the current current based approach industry.

Yes on the which I personally believe it will be a short term issue.

We will continue to you about you talked about before.

Pro forma.

Absolutely.

To capture more market opportunities.

Higher.

Market share okay.

Okay.

Yeah.

We will now move on to our next question.

Please standby.

Okay.

Next question comes from the line of Kevin that day.

H C. Wainwright. Please go ahead your line is open.

Good morning to all of you in New York.

Thank you very much for taking my question.

Ah.

I am curious now on how much.

Of the cash decline was attributed to foundry prepayments.

And how much of.

The September quarter shipments.

Or to customers versus kirana self mining.

Yeah.

Yeah.

Yeah.

Okay.

You know we produce pure hour.

Foundry partners.

Production.

Passes through prepayments.

We have recently paid for production batch of the new generation of mining machines chips.

Because the wafer fab.

Fabrication, what's actually will take about six months.

Typically we will prepare some inventories for your models machines.

In the us.

<unk>.

Yes so.

Sure.

So I think it's really hard to capture the accurate number.

But we are also.

Really happy hour production that salary too.

That's a part of our foundry partners.

We are actively managing wafer costs.

The <unk> platform.

Negotiation.

Yeah.

During the third quarter we.

Starts our.

Mining operation.

In the U S.

And we cooperate with local language film to resell <unk> fascia or.

2000 machines online.

Ricky.

It's with laws and regulations.

I think due to known.

Go drop request of the.

Tables with its co Packers.

And.

As at the end of third quarter.

Cool.

We have $3 two extra high voltage and power online.

Hi.

So this deployed Miami.

<unk>.

Many of these we are aligned.

Already around the top 10 on liquidity, it's comparable with Q U S.

Compared to our computing power, so our Miami, but still relatively small.

We have many operations in Central Asia.

All right.

We are also exploring unobtrusive forward our business is.

Other regions.

Yes.

Favorable energy prices and the market dynamics.

Given the current group.

<unk> uncertainties is the industry environments.

We adhere to.

Our strategy for exploring partnership opportunities at Regis.

This variable power us high end market policy issues.

That's right.

North America on the us.

Okay.

Yeah Okay.

Can you do you have a target for commands internal mining hash rate for.

For the end of the year.

Yes, I think there is.

Still some alternatives for us to expand our.

<unk> mining business.

As you all know the.

Demand.

The market is.

We're pretty low so I think we will more.

More machines from Bell <unk>.

<unk> two months, so some money, yes, but I feel that there is no.

Exactly number four.

Our target.

Yes. Thank you.

Thank you very much to one last question for me. Please if I may.

Can you characterize.

Can you characterize commands position on immersion and how the company might be working in R&D to develop machines, particularly suited for that type of application.

Yes.

We have been providing any more modules to customers for evaluation and.

We are ready to be mass produce if we have thus far our customers.

Our inverted design demonstrates more stable performance.

They're busy.

Physical conditions.

Improvements.

In power by maybe a circa 50% for chip unit compared to <unk>.

<unk> recorded products.

Some clients, we all recall for even higher because of power.

Across our active overall.

Purchase cost is also a very hard business.

A factor of four.

Customers, who are trading between the merchandise to our products.

Yes. Thank you.

Thanks Jay.

Have a great day. Thank you.

However day bye bye.

Thank you we will now move on to our next question. Please.

Please standby.

Yeah.

Yes.

Our next question comes from the line of Dani <unk> from China Renaissance Securities. Please go ahead. Your line is open.

Thank you.

The third question is how do you see any content, especially in India.

Carl.

Okay.

I think in the near term, we see the telecom price remains under pressure.

Alright.

Is still rising.

Great.

The recent downward trend in the future.

We are comprised as severity events.

Sure.

Anthony and going through the.

Low client base does that necessarily parks of navigating through a recycle.

However, I think I don't think that anyone accurate.

Because the short term.

The current project.

In regards to the process.

Bitcoin I have always believed that there is no need to forecast.

These comprise the long term.

Fifth point becomes the most important part of RMC.

<unk> has increasingly.

Locke.

User base Meanwhile, based clients.

Clients having mechanism.

It's foreseeable that.

Hi.

It's a point of view at the lower end market demand.

As a result I remain confident.

Long term prospects.

From the mid term.

Those back to back up the work that we are.

Do you know is in preparation.

Potential business opportunities.

In the coming in maybe a while two years.

<unk>.

Opportunities.

That arrive at its core.

Gotcha.

Thank you.

Okay. Thank you.

The next question is.

We know that we can have a fabulous acquisition issue has greatly impact.

Industry.

I'm just wondering what's our view on that event.

And maybe how we.

How do you react to these occasions.

I think this is a very sensitive question.

So obviously something maybe from the industrial side.

Sure.

I believe private currencies.

But that's a big part.

Actually provide people with.

Centralized and trackless ways to hold high obesity.

Yes.

100% owned.

All right.

Sure the operational way of this comes from <unk>.

Trade shows.

Should that be completed cross checks.

However, due to technical bars or ordinary people to hold on to trade for currencies.

Many of them since we use a centralized.

Currency exchanges.

When you back trading.

This procurement.

Aches many transactions.

<unk> broad Champaign is accretive to Alcatraz treatment during the last two or three years.

Our SaaS users assets.

Trudi.

Transaction fees, which has been waived.

Hence the purity of corrupt Chaz.

Pete.

Briefly back to local currency changes.

<unk> quite what currency changes more.

Due to lack of really effect two resolutions in this area.

This condo exchanges.

Change of pace transaction purpose strict requirements change.

Changes management abilities and attitude.

Overall frankly attached.

Human nature.

I think Julie programs strong that's fair markets.

Yes, it does.

CAGR.

Estimator tool to the issue also Booker.

Therefore, we are no surprises so.

Due to the halt there through this round of pivotal as the market returns was abroad.

Is there any centralization.

Classic currencies III Prime based rebrand.

This is a five clients demonstrates.

<unk> take us that far beyond a modern way of that.

Speculation.

Is that the industry.

That hurt you guys.

Are you crazy.

Paul.

Sure.

Thanks, Florida column and my last question is a creative.

Creative apps Terry guidance after ASP average mining machine selling price.

E Commerce node and gross margin for next quarter.

I will take this one.

I think you just noticed from our earnings release.

Slightly declining in the third quarter.

This decline was partially because we adjusted down the selling price.

With a machine models is slower as rates.

In response to market conditions.

Some models or others.

Packages.

At a lower than cost cost to price.

So in addition, our new generation of machines launching October has just become available for preorder.

Some machines may be delivered in the fourth quarter, but as of today.

I'm not able to give a.

Specific guidance.

The selling price for contract sales of our new model.

Great.

Current level gross margin.

<unk> in a combination.

Especially in the fourth quarter.

Gross margin.

Probably decreased compared to the third quarter.

The asps could it be a little bit lower.

Third quarter, So I think that currently that I'll predict shifts. Thank you.

Okay. Thank you.

Thank you.

We will now move on to the next question.

Please standby.

Yeah.

Sure.

Your next question comes from the line of Hans Chung from D. A Davidson. Please go ahead.

Hi, Good morning maintenance 19, Thank you for taking my question. So.

First.

I was wondering how much inventory label, Amit is the inventory level in the industry right now and how long.

Could tag for a monkey to digest the inventory.

Finance charges.

<unk> sensor.

Yeah.

Sometimes that guy.

Financing costs as of yet.

That actually outdoor sauces in China on Black Fox.

Okay, I think thats simple fashion.

<unk> amount.

For the U S market is relatively high.

And their current markets.

Conditions.

H Mart take I think it might be.

Six months.

Sure.

The jet inventory.

As mandated 10.

Our electricity costs will decrease.

And the speed up minus facility construction.

Steve.

Supply chain related issues or.

Or b.

So the sooner than the Overstock machine mining machine its series B T J F.

So we have observed that the core networks both of computing power Sean.

Our board of translation.

Scott.

With corn price is.

So wrong U S dollar.

As you say for more than a quarter.

And there is a trend or further decreases.

I think this situation accelerates it.

Malaysia older models.

Finally would shake inventories.

Market and the miners will be more.

Uh huh.

E lines to deploy money in machines with higher computing power as a G.

On the lower energy efficiency.

I think when become price trends towards upward trend in future.

Inventory.

Stocking will be accurate.

Yes.

Yes.

Alright.

Next question.

So do you start to <unk>.

Engage with the customer regarding your new.

A 13 Gen.

Generation machine.

And then whats the initial feedback.

Especially with that U S based customer.

So I'd say it will finance loans.

Susan aging.

We also canceled since.

Diabetes, Zimbabwe AC machine.

Oh, not C&I cohort that you got that quite as Hong Kong.

<unk>.

The compound.

Great.

Paul.

Thanks Paulo.

Cirrus logic.

Based on October eight.

13 machine is still in the pre stage for a basketball reduction, although we havent its target shifts.

Products.

Large quantities.

Currently we are introducing our new products to the market and I'll start with two small bad case of preorders.

Which while having many of our elders intense its cost base.

All right.

I think in terms of our older procurement glass.

We expect it to ramp up for that.

<unk>, our 110 Suraj model end of this year.

But meanwhile, the net.

The ear our production.

I say, we will become.

Essentially the two producing 100 tenants Taro has 220.

Are those.

Fabrication technologies improvements.

Costs reduced overtime.

Machines to be awarded 100 circuits.

I expect it to be from our mainstream products.

Uh huh.

Fabrication technology performance, our new generation of pardon me chip.

FIFA similar performance, our waitress comparable with our peers and strip products.

He leaves at our numerous shifts there so we will be accident option for us.

North America is very important market for US previously, we havent shipped a large market for that.

To this region.

We had a relatively small market share.

I still need we still need some time to build up our brand.

Finishing with the strategic.

We have set up <unk>.

To walk ourselves after sales service.

Operations and other functions to provide more support for local backwards.

But no we are seeing that many miners if the bulk of our era.

This page pressure or finance operation costs.

This situation is likely to result in big changes to the.

The tier two months.

The region.

We will closely monitor.

Market dynamics to resize opportunities.

For Boston showcase.

At 600.

We have been actively exploring the opportunities.

Our set top box.

Asia and Middle East.

Okay.

Okay, Great. One last question if I may.

So I was wondering.

In terms of the technology roadmap beyond.

The <unk> series, which is based on final lomita process node.

Given that that you guys spend on that.

Two or three nanometer.

I think as announced in August .

How do we how do we make sure our new technology transition in product duration going forward.

Thanks Jack.

Why is that.

So the same type of thing.

<unk> bye.

19.

Hey, Nick or Tampa.

James as new claims that you'd be a tour.

And our goal.

So call it shadow Okay.

For home anchor mall to ship out.

We sold $18 at.

Fantastic.

Did that.

This is a tough question.

I think the results.

To the U S band.

The impact is still unclear.

So now.

It has not impacted the R&D, our 15th and Neil dilution.

Martin shakes.

Sure.

In terms of.

Fabry patients with all of our newsletters.

New machines now stands.

At the same process in all of our peers mainstream products.

So far we already secured circa <unk> production.

Atrophy.

No.

I think the band will also take time to process upfront.

In position to execute trace it.

We will continue to monitor it evaporates.

Impacts.

As.

This is coffee, we will continue to operate in compliance.

The laws and regulations.

<unk> seeks solutions.

Yes.

Alliance boots.

Our product design.

And the manufacturer strategy.

Okay.

Sure.

Yes.

Thank you.

Thank you.

Now move on to our next question.

Okay.

Yes.

Please standby.

Sure.

Sure.

Our next question comes from the line of Michael <unk> from the Benchmark Company. Please go ahead. Your line is open.

Thank you just two quick questions. One could you kind of go over your capital allocation strategy. During this period of industry weakness and then secondly can you just give us your viewpoint on 2024 is expecting having its impact on the miners in rig demand. Thanks.

I will take the second one.

Ken It's Neal.

Cross the lines.

I think good point, Tom you message and value of the house.

Henry worse or Neil broth generated this.

Brilliant patches minus line with them too.

Some see us.

<unk> that.

This will result in considerable shelf from decrease in.

In the beauty clients coastal computing power however.

However, I don't see it.

The impact lastly for loss.

Having memphis unhappy with it.

While each client trading system.

It was designed with Chris Lai plus overtime Saturday.

Geez.

Kong test of the AUM.

Sure.

You saw us a fiat currency.

It's a hobby methods of bringing the park to be quite high.

Andre.

For the long term.

Got it.

Because hanmi.

For us our miners upgrades their devices.

Two.

With higher computing power and.

Spectra energy efficiency cost of this mining machine manufacturers.

We need to constantly upgrade our technology.

Our products provide the miners is pure remind me.

It is higher.

Computing power.

Better cost effective.

No.

This is what we have been doing.

Yeah.

Capital 71, I think.

At the end of the third quarter.

We have the cash balance.

<unk> 2 billion.

So we do not have any interest bearing debt on our balance sheet.

That's not like an hour.

Here in the other listed companies, we don't we do not need to pay interest.

We do not make any principal repayments.

So about the allocation in future I think.

The release and the sale of our new generation of mining machine.

I think we would definitely deploy a certain amount of cash to secure wafer capacity. According to our plans and also this will enable us to fulfill clients' demands.

In time, and then maintain our close cooperation with foundries.

We make sure we can capture more market share when the market recovers in the future.

That's the first thing.

I think that we will continue to invest.

In the RMB paths.

To develop a more advanced.

<unk>.

And also in addition, we will prudently carryout collaborations.

In mining and <unk>.

Explore business opportunities in different regions.

We may need to pay some upfront fees.

But it has been a less limit.

Willing to make to develop a new business.

Last but not least I think we will still use some of our cash to continue share repurchase.

Two.

To show the confidence on our business for longer term.

I think that's it.

Thank you Mike.

Thank you I appreciate it.

Thank you as there are no further questions now I'd like to turn the call back over to the company for any closing remarks.

Thank you Hello, everyone. This is Clark once again, thank you very much for joining us today for the call. If you have any further questions. Please feel free to reach out to us through the contact information provided on our IR website. Thanks again.

Thank you that concludes the call today. Thank you everyone for attending you may now disconnect.