Q2 2024 Magnachip Semiconductor Corp Earnings Call
Thank you for standing by Banca <unk>.
Speaker Change: Chip Semiconductor Corporation second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press.
Steven Pelayo: Star One again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program Steven Pelayo of the Blue shirt group. Please go ahead Sir.
Hello, everyone and thank you for joining us to discuss magnitude of financial results for the second quarter ended June 32020 for the second quarter earnings release that was issued today. After the market closed can be found on the company's Investor Relations website. The webcast replay of today's call will be archived on our website. Shortly afterwards, joining me today are wide.
Jae Kim magnitudes, Chief Executive Officer, and Shin Young Park, our Chief Financial Officer, YJ will discuss the company's recent operating performance and business overview and Shin Young will review financial results for the quarter and provide guidance for the third quarter. There will be a Q&A session. Following the prepared remarks. During the course of this conference call. We may make forward looking statements about.
Magnitude business outlook and expectations are forward looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor statement found in our SEC filings such statements are based upon information available to the company as of the date in Europe.
And are subject to change for future developments, except as required by law. The company does not undertake any obligation to update these statements. During the call. We also will discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of magnitude operating performance that may.
Be useful to investors a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our second quarter earnings release, and the Investor Relations section of our website with that I'll now turn the call over to YJ Kim Hoi Jae.
Hello, everyone and thank you for joining us today and welcome to magnet chips Q2 earnings call Q2 revenue was $53 2 million down 12, 8% year over year, but up eight 4% sequentially. This was above the midpoint of the previous guidance range of 49.
Speaker Change: 254 million Consol.
Consolidated Q2 gross profit margin of 21, 8% was down <unk> four percentage points year over year, but up three five percentage points sequentially. The overall gross margin result was above our previous guidance range of 17% to 19% both.
S. S N P. S gross margins were higher than previous guidance Shin young will provide more details in her section.
Revenue in our standard product business, which is comprised of M. S. S. N. P. S businesses was $50 8 million down one 1% year over year, but up 11, 6% sequentially standard product business gross margin was 23, 1% up nearly two percentage point.
Shin Young Park: Sequentially now, let me provide more detailed comments for each of our standard product business lines.
Shin Young Park: Beginning with M. S. S Q2 revenue was slightly above the high end of our guidance at 11 6 million down six 2% a year over year, but up 28, 7% sequentially quarter over quarter revenue growth was due to increased demand from OLED DDI teach for.
Shin Young Park: China smartphone Oems as well as automotive and power IC for LCD, TV and OLED panels, we continue to collaborate with several OLED panel makers and smartphone Oems targeting the China market. As a reminder, we have multiple DVI season.
Shin Young Park: Various stages of development and customer evaluation the design span the entire smartphone market spectrum from the mass market tier two the premium tiers segments as well as other display markets such as automotive and Wearables likes My watch it.
Shin Young Park: During Q2, we held a formal opening ceremony to mark the launch of our new operations in China on the wholly owned subsidiary manganese Chip Technology Company limited or Mtc.
Shin Young Park: Golar Mtc is to expand the company's display driver IC and power IC businesses in China. The event attracted a broad audience, including representatives from existing and prospective customers strategic investment portfolio managers various members of supply.
Speaker Change: Chain and government officials, we recently hired Mr being loop.
Speaker Change: You co president of Mtc with over 25 years in the semiconductor industry. He brings a wealth of experience in scaling China businesses. Mr. Lou has a diverse background spanning mobile phones automotive or clients Iot P. C enterprise.
Speaker Change: And industrial sectors. He has held key business manager roles at Genoptix invent says TDK, Texas instruments, and NXP semiconductor, we look forward to leveraging Mr. Luiz expert expertise to drive sales and marketing growth in China today.
Speaker Change: We also announced that William Li our general manager of mixed signal solutions has decided to retire after more than a decade with the company. We are deeply grateful for <unk> ears are exceptional service and wish him the very best Inc.
Speaker Change: In Q2, we secured a purchase commitment from the smartphone design in that we referenced in our Q1 earnings call. The commitment is for premium OLED smartphone targeted at a leading Chinese smartphone manufacturer. Our plan is to initiate and mass production of the chip which put.
Speaker Change: Tangible revenue contribution is currently expected to begin by the end of the year. The design win is built on 28 nanometer technology and incorporate advanced eight transistor L. P. P. O panel features.
Speaker Change: In addition, we continue to make progress with another leading Chinese smartphone OEM and are currently in the final design validation phase as previously mentioned, we also had been selected to collaborate on the smartphone makers the upcoming winter 2024 model featuring our next generation chip in.
Speaker Change: Q2, we've provided sample of this trip, which incorporates improved Brian as control and power lower power consumption two panel supplier and upon completion. We will proceed with design validation at the smartphone all yet.
Speaker Change: In June we taped out next generation OLED driver design with key enhanced IP, including self pixel rendering SPR refine color and askmen color filter brightness uniformity control and more than 20% reduction in power.
Speaker Change: Sumption than previous generation, we believe more efficiently the IC will be increasingly important as our smartphones integrate hyperpolarize AI functionality.
Speaker Change: As well as adapt a larger affordable and flexible screens. This children, which is targeted for feature rich smartphones in China is expected to be sample to a broad array of OLED panel makers in Q4.
Speaker Change: Finally, after taping out in Q1, we sampled in Q2 of <unk>.
Speaker Change: First OLED Smart watch T D. I see this opportunity showcases our strategy to expand into new high growth adjacent markets with regard to automotive and Tvs IC business revenue increased for the second quarter in a row. The strongest activity is coming from European end customers.
Speaker Change: Our power IC business, which is included in M. S. S saw strong sequential growth from LCD Tvs and monitors during Q2 further due to earlier design wins with a major Korean customer. We saw notable sequential increase OLED panels is global.
Speaker Change: Notebooks maker continue to launch new models with OLED display.
Speaker Change: We continue to collaborate with this customer for upcoming models and we are developing products for post S. E. T V in OLED panels for potential new customers in.
Speaker Change: In summary, we've seen MSS, which.
Speaker Change: Executing our strategy and making steady inroads with top tier panel makers and major smartphone Oems while also working to drive revenue from our adjacent markets in where it was automotive T V and <unk> panels for Q3, we forecast sequential revenue growth in NSS.
Speaker Change: Driven by previously announced OLED smartphone design wins as well as growth from automotive and republish smartphone display markets.
Speaker Change: Moving on to P. A S Q2 revenue was $39 2 million up slightly by <unk>, 6% year over year, and Samsung, 4% quarter over quarter as Ive said before the sequential increase was broad based so I will share some details by application.
Speaker Change: Oh.
Speaker Change: The industrial segment, so a strong rebound in solar as issues with excess this reader and customer inventory in China now appear largely resolved.
Speaker Change: Our newest 75, and 200 volt LGBT head designer for Trinity installed applications and should begin mass production in the second half of the year E. Bikes to also grew in Q2, and we are well positioned to benefit from the high speed motor market for scooters and motorcycles.
Speaker Change: Where we see an approximate doubling of the bill of materials content compared to a traditional E bike lastly, lightning and other markets such as power tools, so sequential growth.
Speaker Change: What a relatively smaller contributor to P. S. The auto body or the automotive segment rebounded sequentially as we build on our past success in Korea, and now see additional design wins and mass production ramps targeted for automotive customers in Japan.
Speaker Change: And in China. The end application very widely and include <unk> for automotive heaters, and powertrains as well as medium voltage MOSFET for various automotive functions relating to steering water pumps compressors cooling fan seats windows and battery management systems.
Speaker Change: The communications segment increased sequentially driven by continued demand for L. V. MOSFET for high end affordable and leading edge AI smart phones in Korea. We also are seeing incremental design win opportunities for tablets, Wearables and China smartphones as we mentioned on our last.
Speaker Change: Earnings call. The P. S. P. A S design pipeline for low voltage MOSFET positions the company well for the next generation of our smartphone coming in late 2024 and into 2025, we believe our latest smartphone LTE products are well positioned to benefit from.
Speaker Change: The industry trend towards photo was screens and increasing AI chip integration, which requires much low power consumption than before our latest power devices consume 20% less than previous generation.
Speaker Change: In consumer.
Speaker Change: We saw growth from TV, China brands gear up to increase market share.
Speaker Change: Further our Super junction MOSFET and <unk> products are seeing increased demand in home appliances, such as refrigerators and induction cooktop.
Speaker Change: In summary, the overall Q2 P. S results were in line with our earlier expectation for gradual recovery in our power business. During the first half of 2024, driven in part by inventory reductions in the channel. We believe the breadth of demand will continue in Q3.
Speaker Change: Driven by a leaner distribution channels and design wins for existing and new products as well as seasonality, we are continuing to execute and delivering a strong new product pipeline for power in 2024. We believe many of these new products will have similar to Q1 class for Comas and will allow us to.
Speaker Change: New markets in computing and premium OLED Tvs. Additionally, the new products will begin to help fill idle gumede fab capacity in 2025 created by the phase out of the transitional foundry services business.
Shin Young Park: I'll come back to wrap up the call. After Shin Young gives you more details about our financial performance in the second quarter and provide Q3 guidance Chilean Thank you Jay and welcome everyone on the call, let's start with the key financial metrics for Q2.
Shin Young Park: Total revenue in Q2 was $53 $2 million, which came in above the midpoint of our guidance range of $49 million to $54 million.
Shin Young Park: It was down 12, 8% year over year, but up eight 4% sequentially.
Shin Young Park: Revenue from NSS business was 11 $6 million slightly above the high end of our guidance range of nine five to $11 $5 million. This was down six 2% year over year, but up 28, 7% sequentially.
Shin Young Park: <unk> business revenue was $39 $2 million slightly below the midpoint of our guidance range of $38 million to $41 million. This was up 6% year over year and up seven 4% sequentially.
Shin Young Park: Revenue from transitional foundry services declined to $2 $3 million as we continue to wind down. This survey as we've explained previously.
Shin Young Park: Consolidated gross profit margin in Q2 was 21, 8% above the high end up above our guidance range of 17% to 19% down from 22, 2% year over year, but up from 18, 3% sequentially.
Shin Young Park: MSS gross profit margin in Q2 was $34, 6% above the upper end of the guidance range at 30% to 33% down from 36, 4% in Q2, 2023 and down from 44, 6% in Q1 2024.
Shin Young Park: As a reminder, we recognized nonrecurring engineering revenue in Q1 2024.
Shin Young Park: Year over year decline was mostly due to unfavorable product mix.
Speaker Change: <unk> gross profit margin in Q2 was $19, 7% above the upper end of the guidance range of 15% to 17% down from 23, 1% in Q2 2023.
Speaker Change: From 15, 4% in Q1 2024.
Speaker Change: The upside versus guidance was mostly due to stronger than expected U S. Dollar against Korean won and the sale of the German inventories primarily for so long vacations.
Speaker Change: Year over year decline was mainly due to a lower to meet that utilization rate from the wind down of transitional foundry services.
Speaker Change: Turning now to operating expenses Q2, SG&A was $11 $7 million as compared to $11 $3 million in Q1, 2024, and $12 $1 million in Q2 2023.
Speaker Change: Q2, R&D was $12 $7 million as compared to $11 $2 million in Q1, 2024, and $11 $3 million in Q2 last year.
Speaker Change: As a reminder, R&D expense fluctuate quarter over quarter due to the timing of product development in <unk> in Q2. This year had higher masks that cost which was in line with our expectation.
Speaker Change: Stock compensation charges, including operating expenses were $1 $1 million in Q2 compared to $9 million in Q1 and $2 million in Q2 last year.
Shin Young Park: Q2 operating loss was $12 $8 million. This compares to an operating loss at $13 $5 million in Q1, and operating loss at $10.7 million in Q2, 2023.
Shin Young Park: On a non-GAAP basis Q2, adjusted operating loss was $11 $6 million compared to adjusted operating loss of $12 $6 million in Q1, and adjusted operating loss at seven $8 million in Q2 last year.
Shin Young Park: Net loss in Q2 was $13 million as compared with a net loss of $15 $4 million in Q1, and a net loss of $3 $9 million in Q2 last year.
Shin Young Park: Q2, adjusted EBITDA was negative $7 $6 million. This compares to a negative $8 $4 million in Q1 and negative $3 $6 million in Q2 last year.
Shin Young Park: Our GAAP diluted loss per share in Q2 was 34 cents as compared with diluted loss per share of 40 cents in Q1 and diluted loss per share of ninth in Q2 last year.
Shin Young Park: Our non-GAAP diluted loss per share in Q2 of 'twenty was and is.
Shin Young Park: This compares to a diluted loss per share of 28 to one and diluted loss per share of 6% in Q2 last year.
Shin Young Park: Our weighted average diluted shares outstanding for the quarter were 38 2 million shares.
Shin Young Park: Moving to the balance sheet.
Shin Young Park: We ended Q2 with cash of $132 $5 million and we also have an additional non redeemable showed some financial investment of $30 million, which has a maturity date in November 2024.
Shin Young Park: If somebody's classified on our balance sheet as short term financing instruments.
Shin Young Park: Net of countries globally at the end of the quarter totaled 31 between $2 million, which represent an increase of two 9% in Q1 2024.
Shin Young Park: Our days sales outstanding for Q2 was 53 days and compares to 56 days in Q1.
Shin Young Park: Our average days in inventory for Q2 was 76 days and compares to 71 days in Q1.
Shin Young Park: Inventories net at the end of the quarter quarter, $34 $8 million and $31 $5 million in Q1 2024.
Speaker Change: Well, let's say Q2, Capex was $29 million for the <unk>.
Speaker Change: Full year 2024, we reiterate our prior capex to spend $10 million to $12 million, primarily for Rps business and to meet that.
Speaker Change: This includes approximately $3 million to $4 million up one time capex for our newly established operating entity in China.
Speaker Change: Now moving to our third quarter and full year 2024 guidance well actual reserves may there were Q3 2024 may have been as you currently expect consolidated revenue to be in the range of $61 five to $66 $5 million, including approximately $1.5 million of <unk>.
Speaker Change: Foundry services.
Speaker Change: And then that's where we need to be in the range of $14 five to 16 by $16 $5 million up 33, 7% sequentially and 46, 2% year over year at the midpoint.
Speaker Change: This compares with NSS equivalent revenue of $11 $6 million in Q2, 2024, and $10 $6 million in Q3 2023.
Speaker Change: Gis revenue to be in the range of $45 five to $48 $5 million up 19, 8% sequentially and 14, 6% year over year at the midpoint.
Speaker Change: This compares with top tier equivalent revenue at $39 $2 million in Q2, 2021 and $41 million in Q3 2023.
Speaker Change: Consolidated gross profit margin to be in the range of 22, 5% to 24, 5%.
Speaker Change: Gross profit margin to be in the range of 36, 5% to 39, 5%. This compares with NSS equivalent gross profit margin of 34, 6% in Q2, 'twenty 'twenty four and.
Speaker Change: And 28, 8% in Q3 2023.
Speaker Change: She is gross profit margin to be in the range of 18, 5% to 25%.
Speaker Change: This compares with P is equal in gross profit margin of 19, 7% in Q2, 2024, and 28, 6% in Q3 2023.
Speaker Change: For the full year 2024, we currently expect NSS revenue to grow double digits year over year as compared with M. S. N equivalent revenues $44 $4 million in 'twenty, two 'twenty three consistent with what we communicated at the beginning of the year.
Speaker Change: P S revenue to grow double digit year over year as compared with P is equivalent revenue of 151 $3 million in 'twenty two 'twenty three.
Speaker Change: System with what we communicated at the beginning of the year.
Speaker Change: Transitional foundry services revenue will decline in 2024 as expected we expect this revenue to phase out by the end of the year.
Speaker Change: Consolidated revenue flattish to slightly down compared to prior expectation of flat to up slightly year over year.
Speaker Change: Consolidated gross profit margin between 19% to 22% above our prior expectation of 17% to 20%. This compares with a consolidated gross profit margin of 22, 4% in 2023.
Speaker Change: Thank you and now I'll turn the call back over to Jay for his final remarks YJ.
Jay: As you know we are undergoing a transformation of our business that will unfold over the course of two years. The first major transition involves the shifting our priorities to be laser focused primarily in China expansion.
Jay: Our OLED display business. The second major transition involves filling idled capacity in our fab as a result of the previously disclosed wind down of the transitional foundry services business.
Jay: We've already taken initial steps to realize our objective by streamlining the structure of the company by creating separate MSS MTS businesses to better align our product strategies more recently, we formed a wholly on Mtc subsidiary in China with the goal of accelerating our business there.
Jay: We currently are pursuing multiple OLED design opportunities with panel makers and smartphone Oems in China.
Jay: We've said previously filling ideal capacity in gumi with power products is a high priority because of the impact on margins a positive sign is that our power business is expected to show sequential growth again in Q3, as a result of new design wins and leaner channel inventories longer term.
Jay: Tom we have a pipeline of new power plants that we expect to begin contribute to walk wafer starts in gumi over the course of 2025 and beyond.
Jay: Power business.
Tom: In 2024 is currently forecast to grow by double digits over 2023.
Tom: We have much work ahead to achieve our objectives, but I'm encouraged that our business strategy are pointing us in the right direction and I'm committed to take any steps necessary to drive shareholder value now I will turn the call back to Steven Steven.
Steven Pelayo: Thank you that concludes the prepared remarks section of our call. Today, operator, you may now open the call up for questions.
Speaker Change: Certainly you know as a reminder, if you do have a question. Please press star one on your telephone. Our first question comes from the line of Sushi to sell from Roth Capital. Your question. Please.
Speaker Change: Hi, YJ, Hi, Shin young congratulation on the progress here.
Speaker Change: The OLED.
Speaker Change: OLED business is growing again nicely can you talk about how many products are supporting that and how many are still on the come Similarly, maybe customers and models just to give a sense of where we are in fulfilling your pipeline.
Speaker Change: Yes, so it's a very good question. So obviously you see we have a multiple design engagement as well as multiple other products in development. So in terms of the design.
Speaker Change: Model opportunity, we are heavily designing to about full model that will go a production in next few quarters.
Speaker Change: And.
Speaker Change: That includes about a three smartphones and won a smartwatch, obviously bad debt.
Speaker Change: Also discussing a more products.
Speaker Change: As we speak and there are more models in the App to.
Speaker Change: After the service market that we also disclose in.
Speaker Change: In terms of products, we have two new products that we.
Speaker Change: Sample in Q2, one for the next generation OLED smartphone and one for smartwatch and we just taped out the new product that has a next generation IP such as the sub pixel rendering colored enhancements.
Speaker Change: The color uniformly.
Speaker Change: Management, and a less than 20% power reduction than previous generations, where that will be broadly expect to be broadly.
Speaker Change: Our samples.
Speaker Change: Multiple panel maker. So those are the pipeline in stages that we have.
Speaker Change: Okay.
Speaker Change: And then on the gross.
Speaker Change: <unk> side, if I take your full year guide it would seem like gross margin is.
Speaker Change: Is declining in the fourth quarter I just want to make sure. My math is correct. There and then more importantly, what are the drivers for gross margin to improve in Q1's for 25 and remind us what the target gross margins again.
Speaker Change: Essentially the gross margin for the full year and that year over year decline was mainly due to the phase out of the transitional foundry services, because we had those revenue in the first half and also one and a half million dollars in Q3, so that's coming down so the traditional content services comprised approximately 20% to 25% of our equipment capacity.
Speaker Change: So that phone that that portion becomes idle that's kind of impacting our gross margin for the full year. So that's the main driver for the decline, but we were actually we came a little higher in Q2, and we called out during the call that it was mainly due to some of the product mix improvement reversal at some of these European inventory and favorable.
Speaker Change: The impact on us so we kind of have that and also Q3, we guided flat flat almost flat for the pis.
Speaker Change: So at the midpoint, so full year, we've raised our guidance range by 200 basis points at the bottom and at the pump, but that's what we are seeing the improvements at the full year 2024.
Suzie: And Suzie I forgot you also mentioned that the I think Andy today in the script, we said the booster next generation OLED Eic's, 20% less power and our as the MOSFET is also 20% less power. This is very critical.
Speaker Change: We see new smartphone with our AI integrated features that drove more power. So this is kind of power reduction is really needed for next generation smartphones.
Speaker Change: Okay, and then Shin young why do I think the key drivers of gross margin improvement of 25 is that refilling. The the goofy fab capacity, that's freed up or are there other elements to it.
Speaker Change: That is correct that we are going through a transformation as they pointed out and we are trying to see what the either capacity in 2025, So a new product new generation products are rolling out and said that we're going to help us fill our either capacity like begin beginning in 2025.
Speaker Change: Okay, great. Thanks.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Martin Yang from Oppenheimer. Your question. Please.
Zhihua Yang: Thank you. Thank you for taking my question first congratulations on recruiting a bin Liu.
Zhihua Yang: Very solid higher I was shrunk background can you maybe talk about.
Bin Liu: His priority and he is responsible living in China.
Speaker Change: Yes, being Louise very season.
Dave: Exactly Dave and as you said he has very good proven record in China. So he is the co president of Mtc. So he is responsible for sales and marketing and business.
Dave: The mtc, whereas the focus the OLED driver IC and the power IC.
Speaker Change: Got it.
Speaker Change: And also a clarifying question regarding your reference to OLED panels for ITE is youre currently involvement.
Speaker Change: With about your power IC products.
Speaker Change: Those products are you supplying our driver IC for.
Speaker Change: All our panels for IP IP applications.
Speaker Change: The right now initially is our power IC is the main driver.
Speaker Change: Got it.
Speaker Change: And the next question is regarding.
Speaker Change: Your comment on power savings for your new <unk> IC products.
Speaker Change: Can you maybe give us more context around.
Speaker Change: What does that 20%.
Speaker Change: Power savings, meaning, Florida, overall paddle consumption or in a context of how that translates to overall smartphone power savings.
Speaker Change: Yes so.
Speaker Change: These high end smartphone nowadays, either our affordable or integrated AI right, so that consume a lot more power.
Speaker Change: So you need to offset the power consumption.
Speaker Change: Many ways.
Speaker Change: Like today, we have a the MOSFET, we talked about and then drive IC. So you need to you know.
Speaker Change: Save as much power, you can and giving that kind of 20%.
Speaker Change: <unk> in the next generation will really help out on the high end smartphone so again the saving.
Speaker Change: Is it also a function of the feature so I think the high end has a lot more <unk>.
Speaker Change: More functionality in the on chip integrated which consume more power.
Speaker Change: But if you are not to add those things and then you're talking quite chicken at sea and saving them in the actual applications.
Speaker Change: Got it. Thank you that's all.
Speaker Change: That's it for me.
Speaker Change: Thank you and our next question comes from the line of Quinn Bolton from Needham Your question. Please.
Speaker Change: Hi, This is Nick Doyle on for Quinn Bolton, Thanks for taking my questions.
Nicolas Emilio Doyle: You're lowering the fiscal year revenue target just slightly.
Nicolas Emilio Doyle: You pointed out inventory levels are better so could you expand on what accounts for that slight change.
Speaker Change: Yes, so you know.
Speaker Change: Thank the power we are growing some 0.4.
Speaker Change: 4% in Q2, approximately 20% Q3 so.
Speaker Change: So that's quite a very good.
Speaker Change: Gross and leaner channel, but so at the same time with that kind of growth, we do see some seasonality so that.
Speaker Change: The only thing that we would describe that on the fourth quarter.
Speaker Change: Okay. So just a little more seasonality than typical in that December quarter.
Speaker Change: This quarter is.
Speaker Change: Seasonally low quarter.
Speaker Change: For us before the Covid.
Speaker Change: When you go to normal cycle yeah.
Speaker Change: Alright.
Speaker Change: You have a view on whether these AI functions can drive a mobile replacement cycle.
Speaker Change: I think you just touch on it but how are you exposed to the trend is that mainly in the MFS fragment or do you have also a peer of yours.
Speaker Change: Sure.
Speaker Change: Oh, Yeah. In fact, we mentioned about the PSC the low voltage MOSFET that he's going to all the leading.
Speaker Change: The Korea smartphone that has a built in AI.
Speaker Change: So our low voltage MOSFET consumes 20% less than previous generation. So we do see whether it's the OLED DDI or order component in the smartphone empower ease requiring that kind of.
Speaker Change: Competitiveness to be a win to the next generation AI based smart phone or affordable phone, which consumes more power.
Speaker Change: Okay, and then last one if I could sneak in.
Speaker Change: Your gross margins are moving higher so as they continue to improve have you thought about a quarterly breakeven level and is that possible in 2025.
Speaker Change: I mean, we don't really guide for the 2025, but it's really the function of the revenue and the gross margin. So the gross margin is improving as compared with our previous expectation. So there's still some moving pieces. So we have more visibility for 2024. So we guided up our gross margin full year guidance by 200 basis points.
Speaker Change: Going into 2025 definitely new products that are rolling in knowing that we need to see and we're going to help us that's the lever the gummy capacity, but the utilization rate in all of our manufacturing efficiency and costs.
Speaker Change: We're going to be impacting our 2025 gross margin.
Speaker Change: The quarterly lives revenue, we'll have to see like the cheapest 5 million per quarter H that should be a breakeven for the past is it at least.
Speaker Change: Those previously, but again, its all kind of a function of the revenue and the gross margin.
Speaker Change: Thanks, a lot.
Speaker Change: Yes.
Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Steve It play out for any further remarks.
Speaker Change: Thank you. This concludes our Q2 earnings conference call. Please look for details of our future events on Magna chips Investor Relations website, Thank you and take care.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.