Q1 2023 Canadian Solar Inc. Earnings Call
Speaker 1: The me.
Speaker 2: for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Isabelle Zhang, IR Director at Canadian Solar. Please go ahead.
Speaker 3: Thank you, operator, and welcome everyone to Canadian Solar's first quarter of the conference call.
Speaker 3: Please note that we have provided slides to accompany today's conference call which are available on Canadian Solar's investor relations website within the events and presentation section.
Speaker 3: Joining us today are Dr. Sean Chee, Chairman and CEO .
Speaker 3: own subsidiary CSI Solar.
Speaker 3: Dr. Huiseng Chen, Senior VP and CFO , and Ismail Guerrero, Corporate VP and President of Canadian Solar's wholly owned subsidiary Recurrent Energy, formerly Global Energy.
Speaker 3: All company executives will participate in the Q&A session after management's formal remarks.
Speaker 3: On this call, Sean will go over some key messages for the quarter. Yan and his mind will respectively review the highlights of the CSI solar and recurrent energy businesses.
Speaker 3: followed by Rifon, who will go through the financial results.
Speaker 3: Shawn will conclude the prepared remarks with the business outlook, after which we will have time for questions.
Speaker 3: Before we begin, may I remind listeners that management's prepared remarks today, as well as their answers to questions, will contain forward-looking statements that are subject to risks and uncertainties. The company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Security Litigation Reform Act of 1995.
Speaker 3: Actual results may differ from management's current expectations. Any projections of the company's future performance represent management's estimates as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law. A more detailed discussion of the risks and uncertainties can be found in the company's annual report on 20th October .
Speaker 3: follow the Securities and Exchange Commission.
Speaker 3: Management prepared remarks will be presented within the requirements of SEC Regulation G regarding Generally Accepted Accounting Principles or GAP. Some commercial information presented during the call will be provided on both a GAP and a non-GAAP basis.
Speaker 3: By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with the
Speaker 4: Welcome and thanks for joining us today.
Speaker 4: Now, please turn to slide 3.
Speaker 4: We had a very strong start to the year in what is typically a seasonally soft quarter. We delivered 6.1 gigawatt of module shipment in Q1 with $1.7 billion in revenue.
Speaker 4: and also a solid growth margin at 18.7%.
Speaker 4: Importantly, this was one of the...
Speaker 4: strongest quarters in Canadian solar history.
Speaker 4: in terms of underlying that problem.
Speaker 4: Our team has done an excellent job in executing our long-term strategy. We continue to build our technology.
Speaker 4: brand and customer relationships.
Speaker 4: This is further strengthening our leadership position and driving high quality, profitable growth.
Speaker 4: I am very thankful to my Global Team for their focused and outstanding work.
Speaker 4: Please turn to slide four. Canadian Solar is a Canadian company listed in the US with a global manufacturing base.
Speaker 4: pretty dark in Asia.
Speaker 4: We proudly support customers across the world in their decarbonization efforts.
Speaker 4: as we work to make a more sustainable world for future generations.
Speaker 4: This is our core motivation.
Speaker 4: We have developed some of the most technology-advanced and competitive clean energy solutions.
Speaker 4: and we care about doing business ethically.
Speaker 4: storing our materials responsibly, and treating our employees fairly.
Speaker 4: We threaten, open and competitive markets where our renewable products come on to our premium, as we leverage our competitive advantages, strong brand and long track record.
Speaker 4: For example, we are strongly committed to the US market where we have been building our long-term partnerships.
Speaker 4: We have that we have delivered some of the most
Speaker 4: iconic project in the US market such as the $1.4 gigawatt.
Speaker 4: Quimson, starry to progette in California. We are also excited about the 100 Maguad solar virtual power purchase agreement. We recently signed in taxes.
Speaker 4: with a consortium of five industry leaders in their respective fields.
Speaker 4: And now we are also investing in US manufacturing.
Speaker 4: further contributing to local communities.
Speaker 4: Over the past week, we have been reviewing the most recent US IRA guidance on domestic content.
Speaker 4: As an initial assessment, we think it is encouraging that the guidance promotes investment in clean energy capacity across the supply chain.
Speaker 4: and provide incentives for both the demand and supply of clean energy.
Speaker 4: Our position is to continue to support and deliver value to our customers.
Speaker 4: Importantly, we believe that this guidance removes a policy overhang from customers' standpoint.
Speaker 4: As a result, we think this will help them make more informed decisions and move faster in executing their growth plans.
Speaker 4: Please turn to the next slide.
Speaker 4: Finally, let me comment on the CSI Stroller carve-out IPO.
Speaker 4: The full financial audit have been completed and I have signed out on the numbers.
Speaker 4: We expect the updated DSI solar prospectors to be published on the Shanghai Stock Exchange website soon.
Speaker 4: We hope the IPO can be completed over the next few weeks before the end of the second quarter.
Speaker 4: With that, let me now turn over to Ian, who will provide more detail on our CSI solar business. Ian, please go ahead.
Speaker 4: Thanks, Sean. Please turn to slide six. In Q1, the CSI solar division delivered 6.1 gigawatts of solar module shipments.
Speaker 4: and 1.7 billion dollars in revenue. Gross Martin expanded to 18.5%.
Speaker 4: which represents 110 basis points in truthment in profitability quarter over quarter.
Speaker 4: and almost 400 basis points improvement year over year.
Speaker 4: and operating profit level. Our improvement is even more significant.
Speaker 4: Our operating profit grow over five times year over year. With operating margin almost touching 10%. During the season that he sought to one.
Speaker 4: I have to say that I'm quite proud of our teens for having achieved this.
Speaker 4: and it was not easy. Let me go over some key drivers and market dynamics. Please turn to slide seven. On the solo module business, costs continue to come down, particularly input costs. Policelicon is the main driver of the decline. Although as we expected, chose it, holiday prices Oi, price is coming down gradually.
Speaker 4: On the manufacturing cost side, our processing costs are also coming down, although slower as the expansion of our upstream manufacturing in ingot, wafer and cell is mostly going to happen in the second half of the year. With greater vertical integration, we expect.
Speaker 4: to further optimize our costs and gain greater control over our supply chain. On the market side we see significant demand up.
Speaker 4: from customers across nearly old channels and regions. Customers and projects.
Speaker 4: that were held up over the past couple of years due to the tricep inflation are starting to come back given the stronger project economies.
Speaker 4: Economics.
Speaker 4: This means we're starting to see module prices come down, although also gradually.
Speaker 4: given the strong demand and steady trajectory in policy-licent pricing. So all these...
Speaker 4: are contributing positively to our margin, even though there are many moving parts.
Speaker 4: positively to our margin even though there are many moving parts. Note...
Speaker 4: that prices remain divergent between the US.
Speaker 4: and the rest of the world, which follow a similar trend to what we see in Europe as strong on the chart in the middle.
Speaker 4: Below the gross margin line, units shipping costs continued to decline for us.
Speaker 4: helping drive operating leverage and further expansion in operating profitability.
Speaker 4: By now, I think we have pretty much reached the bottom in terms of shipping costs declines.
We now expect unit logistic costs to remain relatively stable going forward.
So that means while it will grow with volumes...
The unique cost should remain relatively unchanged.
Please turn to slide 8.
Moving on to our Utility to Skill Storage Business, as we previously communicated, the first half of 2023 is expected to be a relatively small contributor to our Utility to Skill Project Deliveries, as we transition.
from a white label third party product to our own manufactured proprietary battery storage product.
From a development and execution standpoint, our team is preparing for a busy second half of the year led by deliveries of our Solbank product.
The fact that the lithium carbonate prices have fallen by over 60% since the picking Q4 of last year is also a demand driver.
On the commercial side, our teams have been actively finding new contracts.
Our CSI Energy Storage team expanded our contracted revenues from approximately $1 billion at the end of January to $1.3 billion at the end of March.
And this number continues to grow, led by our deep understanding of the market and long-term customer relationships.
For example, yesterday we announced a follow-on transaction with APAP power, a Blackstone portfolio company.
We are expanding our relationship with APAPower from 490 megawatt hours to 850 megawatt hours. And we are expanding from an initial project in California to more projects in Texas.
This is typical as most of our customers are repeat clients that come back to us after our successful initial collaboration.
since we started our turnkey and the historic business. Our execution has been one of the best in the industry.
our turnkey and historic business. Our execution has been one of the best in the industry. Please turn to a slight mind.
On the residential and just storage site, we continue to make good progress on our EPQ product.
We are delivering significant growth and continue to capture new contract opportunities. The APQube is an all-in-one LFP-based residential energy storage solution with integrated hybrid inverter. The product is both AC and DC coupled.
with an AC RAM trip efficiency of just under 94%.
A single system can deliver 7.6 kilowatts of continuous power with solo PV and has a storage capacity from 10 kilowatt hours up to 20 kilowatt hours.
As you can see in the picture on the slide, we designed the product in a Lego-like manner.
such that we can effortlessly add more EPQ stack slots, stacks up to six in parallel. This means the largest system can reach 45 kilowatts in output power and nearly 120 kilowatt hours in energy storage.
This is more than enough for most high load households.
Importantly, each of the cubes we less than 70 pounds.
which makes the physical work of transportation and the installation much easier.
by step instructions. A first time installer could deal it within 30 minutes and match faster in subsequent installations.
In addition, we offer one of the strongest wearing Tuesday market, with at least 80% capacity after 10 years or 6,000 cycles.
Our distributor and installer, installer network have embraced our new solution and we expect to achieve around 100 megawatt hour in shipments in 2023.
We will be showcasing the EP2 again at the InterSodo Conference in Munich next month, and I encourage you to see it for yourself.
Now, let me pass it on to eSmail. eSmail, please go ahead. Go ahead.
to email. Ismail, please go ahead. Thank you, Jan.
Please reference its writing.
Let me say a few words on the branding of our global solar and battery energy storage.
Let me say a few words on the branding of our global solar and battery energy storage project development business.
In echo, we will brand it our business from global energy to recover from the 90.
The current energy was previously our North American utility scale development business.
Going forward, it will encompass our entire global development and services businesses.
The goal of this rebranding
was to strengthen our brand as one of the world's largest energy development platforms.
I am Vinikai Amego Strong Self.
Moving on to our quarterly performance.
Q1 was a small quota for us, I suspect, due to the timing of project sales.
We monetize around 5 megawatts of flakes in Japan and deliver $20 million in revenue, with a 36% gross margin.
As we talked about on the PEO call, we are more collectively holding projects longer-term in certain markets.
As we talked about on the pre-ocle, we are more collectively holding projects longer than the short-term markets such as Europe and the US.
where we believe we can capture higher value being the long-term asset owner and operator. We continue to transition from developing and selling projects which is inherently lumpy.
And while we've had a smaller quarter, specifically, we are in the process of closing a major project stage. As a result, we expect Q2 to be the largest quarter of the year for the modernarity.
Sean will provide more color on the Gaigan.
Next slide, please. As of March 31, our total pipeline stood 25 gigawatts for solar and 47 gigawatt hours for battery storage projects.
This number is unchanged from two months ago. Not because we choose to originate and develop a new pipeline, but rather because we are evidenced in our pipeline that reducing the weight of the Latin America region and increasing the weight of the near region.
where we added healthy reward of solar development pipeline in the last month.
Our pipeline is large and mature.
especially giving the 14 GWT of solar and 12 GWT of batteries and energy storage interconnections. We have been increasingly selective on how we alert our portfolio and how we add the most value. We are also focusing on resources towards executing these projects.
and moving projects from advanced pipeline to backlog and construction. Please turn to slide 12.
Longer term as we discussed.
I was strategy with to retain greater asset ownership in select markets such as North American Europe .
to increase the revenues generated through the government income, such as power sales, operations and maintenance, and asset management income.
This is partially reflected on the shifting of resources towards execution of projects as opposed to the pure development and sale model.
This is partially reflected on the shifting of resources towards execution of projects as opposed to the pure development and tailor model. This means
that instead of monetizing the projects in North America and Europe in a series of one-off transactions
We monetize these assets over 30 or 40 years' periods. This gives us higher visibility on cash flows as 70 to 80 percent of these cash flows are fully contracted, including the Energy Scholars Projects.
It also means that in the short term we may see lower readiness.
However, the aggregate value retained by recurrent energy will be larger and more sustainable than under the previous model.
We should start seeing the positive feedback as these projects have built out and started operating in 2024 and 2025.
Now, let me pass it on to you, Femme, who will go through the financial results in greater detail.
Warren pleaseah verya s
In Q1, we delivered $1.7 billion in revenue.
In 2021, we delivered $1.7 billion in revenue, up to 36% year over year.
Those margin was 18.7%. The sequential increase of 100 basis points
given by lower manufacturing costs that were partially offset by lower module averaging selling price.
Stelling and the distribution expense is in Q1 declined by 30% quota over quarter. After 24% sequentially decline, the previous quarter.
As the N mentioned, shipping costs declined further. At this point, we don't think there is much room for further declines, but we expect the unit costs to remain relatively stable.
General and administrative expenses declined by 12% quarter over quarter.
due to OPAC's efficiencies and the absence of impairment costs.
Overall, total operating expenses were down 19% in Q1 sequentially after 22% decline in Q4.
Total O-PAC sale to 10.1% of total revenue.
or pretty secretive, we are starting to see operating leverage with economies of scale and anomalizing logistics costs.
Netcoin exchange and a derivative loss in the first quarter was $13 million, mainly given by the weaker US dollar.
Total net income was $107 million with net income attributable to Canadian solar shareholders at $84 million or diluted EPS of $1.19.
Now, go to cash flow and enter the balance sheet. Next slide please.
In Q1, we generated approximately $60 million in operating cash.
and spend around $230 million in car packs. Our full year 2023 car pack's expectation remains unchanged, but approximately $1.5 billion.
we ended the period with a healthy cash balance of $2.1 billion and a total debt of $3 billion.
Our average has measured by net depth to a data excluding received cash was stable at 2.8 times.
Lastly, let me make a couple housekeeping comments.
on the feet that I still IPO.
We expect to incur a one-time IPO-related stock incentive expense configured upon the successful completion of IPO.
which we expect to occur in June next month.
The four year impact.
is expected to be approximately $50 million. Or approximately $40 million after allocation to non-conjuring interests.
Also, note that, with the successful completion of the CSISO IPO,
Another income attributable to non-controlling interest.
lavery? ?
given that minority investors in CSI solar will account for a greater ownership share.
Please consider this in your models as a delta between total net income and net income attributable to Canadian-owned shareholders will be greater after the IPO. So now let me pass it back to Sean who will conclude with our guidance and business outlook. Sean, please go ahead.
Thanks, Huyphone, and let's turn to slide 15.
For the second quarter of January 23, we expect solar module shipment by CSA Solar to be in the range of 8.1 to 8.4 gigawatt, including approximately 60 megawatt.
to recurrent energy projects. Photo revenue are expected to be in a range of $2.4 to $2.6 billion. Gross margin is expected to be between 19 to 21 percent, reflecting further margin improvement.
from low cost, a higher contribution from recurrent energy, partially offset by slightly lower solar module ASPs. For the four years of 2023,
We reiterate CSI Solar's total solar module shipment guidance to be in the range of 30 to 35 gigwatt.
The other solar battery storage shipments are expected to be between 1.8 to 2 gigawatt hours.
Reflecting this year's translation from one label to own manufacturer the product.
I'll explain by you earlier.
We expect 4 year trying to turn this 3 year revenue.
to be between 9 to 9.5 billion.
towards the upper end of our previous guidance branch.
the upper end of our previous guidance branch. How sweet.
come out of a challenging market period. Our business and outlook are strong as we continue to focus on our long-term market position to deliver sustainable and profitable growth.
With that, I would like to open the call to your question. Operator?
Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset and call the
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Our first question comes from the line of Colin Rush with Oppenheimer. Please proceed with your question. Thanks so much guys. You know, it's kind of a two-part question related to polysilicon pricing and availability. You've got a pretty wide range of shipment guidance for the year. I just want to understand how much of that is supply related and how much of that is considerations around demand.
And then we'd love to understand that the margin trajectory as polyprices continue to go lower, how much incremental leverage you think you actually have on the margin sign.
Hi, Connie. Thanks for the question. I would like to ask Yan to answer this question. Yan?
Hi, a column, this is the end. And...
So you have two parts of the question. One is the volume and the shipping volume wrench. For that question, I would say we actually have a pretty high capacity utilization rate. So for the year, so with our volume guidance, it is more about the relatable effective capacity.
supply chain cost. So we're confident that over the year, over the course of the year, our market will continue to improve. So we're confident on this whole year's performance on margin site.
Okay, thanks so much. And then just on the sales side, and how to think about that expense. How much of that sales expense is fixed, and how much is variable at this point, and how should we think about that, that kind of fixed sales expense on a go-forward basis.
Okay talk about the Saude, so who does El Saorde know team?
Yeah, on the OPX line.
the cells on the OPX line.
They are going out of here. Sorry. So, yes, the sales expenses actually we believe is going to actually on the downside trend because the shipping cost has reached to a low level and also with the volume increase Q to Q we believe.
or help us to dilute some part of the overhead and expenses. So, we don't expect any upside on the sales and distribution expenses. Okay, I'll try to clarify that. Fine, thanks a lot, guys. Thank you. Our next question is for
Do you expect to ramp up sell and module capacity? Can you talk to us about the total capacity, timing, and any other detail around that? Also, as it relates to your utility scale module customers in the US, can you talk to
Do you expect many of them to not pursue the domestic content ITC Adder given the complexities? Or what do you think the impact of the guidance has been thus far with your customer base? Thanks.
Hi Philip, this is Sean. So let me answer this question.
Our plan for US manufacturing, as we explained in the past, would go through the order of the mobile module first, and then the upstream.
cell or wafer. Now with the release of the new guidance on the domestic content, I think we are still going to follow the same pattern, which is first solar modules, than either solar cell or solar wafers.
We are pretty advanced in our US based solar module manufacturing plant already. I think in the next while, little while, we are going to make a clear announcement about that.
So please stay tuned. Now, the second question is about our customer. To say the truth, we're still waiting for our customer to come back with their reaction after this new guidance.
on the domestic content. So far, we haven't heard any customer to back off from their purchase intention for CSI, the US-made solar module yet.
But we have not asked them what are they going to, how are they going to handle the domestic content? That's a question we're still waiting for our customer to give us feedback. If somebody wants else what to I remember.
Okay, thanks for that color, Sean. And then shifting to the China IPO, it sounds like you're expecting that to be finished in June . I was wondering if you could give us a little more color on how that process is going. Is there a risk that that's going to be a good thing for China?
could be delayed beyond June and can you guys fund US capacity expansion with China IPO proceeds thanks
Well, this is Sean again. At this moment, we don't see any particular risk of delaying the China IPO after June , behind June .
However, as you know, IPO is always... There always is some possibility of an unexpected event, even some market uncertainty.
So we can't say that for sure. Now the second question, we are not going to fund the US manufacturing through the proceeds from the China IPO. For any IPO or public...
fundraising in the stock market in China, you have to specify the project. And we have already specified the project. In other words, we have already specified how we are going to use the US... No, I use the...
the proceeds from the China IPO, which will be for China project and also for some of our operating cash requirement.
the US manufacturing plant are going to fund it with other sorts of funding.
Great, thanks for the clarity on that, Sean. And then one final question, as we're coming back to the domestic content editor and US manufacturing in general, after you guys ramp up US manufacturing, as you go through your cost structure, or you can look at the data on that page 9. So Aaron,
Yeah, have you guys been able to determine what percentage of your overall US expected module Constructured could be US content versus
And then what is your estimated cost per watt using Southeast Asia? Thanks. Wow. Hui Feng, do you want to handle this question? Hi, Phil. First of all, our U.S.
module will maximize the sourcing in the US for all the components. Second, we are still working on the details, put all the cost of numbers of different components within the module.
It's still a moving part and also we are talking to our customers. We have received very, very strong interest and forward orders for our module, but also many of our customers are willing to pay the forward payments.
to partially fund our manufacturing facility. So we look forward to next few weeks of new developments and also working with all other components manufacturers coming out of the US and eventually to reach the goal.
for our US and RADE solar modules. Thank you. Thank you, Hui Feng. Thank you, Sean. I'll pass it on.
Thank you. As a reminder, if you'd like to join the question, you please press star one on your telephone keypad. Our next question comes from line, a Brian Lee with Goldman Sachs. Please proceed with your question. Thank you.
Hi everyone, this is Miguel on for Brian . My first question was just on the guidance. So you raised the low end of the revenue guidance this year, but you kept the module and battery shipment guidance unchanged. What's giving you the confidence to tighten the range for the year? Is it just
better expected pricing? Is it better timing on the projects business? Just hoping to get some color there. Thank you. Hi, Isabel. You are our guidance master. Do you want to answer this question?
Sure, I'm the co-host of the book. So we've had previously given a pretty wide range for the revenue guidance considering certain certain fees on both volume and price inside. And this one we've left the module shipment number unchanged.
But overall, we think that our ability or confidence to reach the higher end of our previous guidance, i.e. nine to nine and a half billion, is much higher. And therefore, that is the reason why we narrowed and increased the overall guidance range to the upper end. To save thousands of dollars' worth, we are continuing to review our policies and
if you will, and helping customers meet a minimum threshold. So for module assembly, if you were to do that in the US, how much would you have to set up in terms of new domestic supply for things like aluminum frames, glass, back sheets? And does it change at all how you are thinking about setting up?
the manufacturing footprint in the US. Thanks. Hi, this is Sean speaking. Now, first of all, I want to make a comment that we are very open-minded. We are looking to all possibilities. We are looking to the
at all the subcomponents of the solar module, which includes solar cells and also includes other biomaterials. We are actively accessing which components can be produced in the West.
Now, Oivon, you want to shear more color? Yes. Actually, full tractor or the bomb, material such as aluminum frame and also the solar glass. Related to cell factory, it probably requires a longer period of time.
to receive all the permits, etc. All the bomb material are much easier to set up, especially solar glass and aluminum frame. We have glass factories, kind of in the US, and also a lot of aluminum.
related factory in the US. So we are not only seeing that all these manufacturers, they are moving into the solar supply chain. But also we are talking to them, we are in partnership. So it will be a much clearer roadmap.
after I, I, I guidance published earlier. And so I think the next few weeks, we'll get a lot of the answers with much more career. Thank you.
Okay, great. Thanks. I'll pass it on. Thank you. As another reminder, please press star 1 if you'd like to join the question queue. Our next question comes to a line of Praneeth Soteesh with Wells Fargo. Please proceed with your question.
Thanks, maybe just one more follow-up on the domestic content guidelines. It sounds like now maybe you're considering cell capacity in the US after modules. Can you just maybe give us a ballpark of how long it takes to build a cell plant in the US?
how the economics might might compare to building it overseas. Yeah that's my first question. Oh that's a very good question. I think
that the site selection and all the permitting will probably take up to one year. And then it will probably be another two years before we can...
we can bring in machines for a modern solar cell facility because you know in the good old days back 10 years ago or 15 years ago sometimes we can just find an old semiconductor file and then convert it into a solar cell.
facility. By now the solar cell manufacturing line becomes so special. For example, the tube diffusion machine or PECVD machine is so tall, usually it contains
six tubes around you vertically, and each tube can take in the 210-millimeter wafers. Well, that machine is pretty high. And then plus all the facilities below the...
the ground floor and also above the machine. So the building and the facility become very special. So I don't think any of the modern solar cells are...
supply manufacturers are going to convert any old buildings for today's hotel line.
So the building facility and power supply, everything will probably have to be built from zero. So all together, I would say maybe three years minimum to bring the state of art solar cell facility online.
The building, facility and power supply, everything will probably have to be built from zero. Altogether, I would say maybe three years, minimum, to bring a state of water, so myself, facility, online. So it takes time.
Okay, got it. No, that's very helpful. And then maybe if you can help us understand roughly the CapEx that's tied to the recent March 2024 expansions, how much of that CapEx will be spent in 23 versus 24? Is that included in your...
1.5 billion of capex guidance for 2023, the portion that would be spent in 2023. Yes, our new plan basically
It says we're going to build a 30 gigawatt new solar wafer facility. It's an in-ground wafer facility. I believe all together it will take just over 10 billion RMB.
which is maybe about 1.2 to 1.3 US CapEx in total. Now that money will be spread out in 2023, 2024 and some in 2025.
because the typical payment term for the machines are two years after the machine delivery. So I would expect it to be, you know, that gap has to be spent in 23, 24 and also 25.
as a typical payment term for the machines two years after the machine delivery. So I would expect it to be, you know, that gap has to be spent in Chinese 3, Chinese 4, and also Chinese 5. Okay, thank you.
Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to CEO , Sean Q, for any final comments. Okay, thank you. Now, thanks for everyone for joining us today and also for your continued support. If you have any questions or would like to set up a call, please call the CEO .
please contact our investor relations team. Take care and have a nice day. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.