Q4 2024 AUO Corp Earnings Call
Some of you to participate in our fourth quarter financial results Conference I'm joined by four executives.
Paul: Paul upon our chairman and group Chief strategy Officer.
Frank <unk>: Frank <unk>, our CEO and president.
James Chin senior VP of the display strategy business group.
Frank <unk>: And our CFO David Chung.
Speaker Change: The agenda for todays conference. It says first of all CFO will go over our 2020 for fourth quarter financial results.
Speaker Change: Our chairman and CEO will then talk about our business updates and provide you with our visions.
Speaker Change: Then we will proceed with questions and answers we have collected questions before the meeting.
Speaker Change: And we'll address these questions in the first part of the Q&A session. After that if there is still more questions. We will take questions from the floor.
Speaker Change: So that was the agenda for today.
Speaker Change: Now before I hand over to CFO. Please allow me to remind you that all forward looking statements contain risks and uncertainties. Please spend some time to read the safe Harbor notice on slide number two.
David Chung: David Please.
David Chung: Good afternoon, I would like to go over a <unk> 2024 fourth quarter financial results.
David Chung: Our net sales came in at $68 7 billion NT dollars.
David Chung: Down by 12% Q O Q.
David Chung: As pooling activity for display subsided.
David Chung: And consumer products demand lessened, leading to decreases in shipments and revenues.
David Chung: Mobility solution was affected by the weaker demand in markets is that being China and delayed purchases by customers, resulting in decreased shipment.
David Chung: Meanwhile, China's car market benefited from policy stimulus and stronger overseas sales, leading to increased shipment, helping to partially offset the drop in revenue.
David Chung: Vertical solution.
David Chung: Due to early procure most lower market demand and less than expected solar PV module demand our vertical solution revenue dropped Q O Q.
David Chung: In terms of profitability due to the slower seasonality in Q4 decreased in decreases in sales in TV and monitor S piece and weaker market conditions for solar PV modules, our gross margin.
Went down to seven 9% Opex was flattish Q O Q.
David Chung: <unk> loss in Q4 was $3 3 billion.
David Chung: Due to a non op gain of $4 8 billion from the sale of Tau nine fab net profit attributable to owner of the company was $1 6 billion.
David Chung: EBITDA was $4 7 billion EBITDA margin Lora to six 9%.
David Chung: EPS in Q4 was point to one NT dollars.
David Chung: Now moving onto 'twenty 'twenty four for year results.
David Chung: Net sales for 2024 was $280 2 billion up by 13% Y O y.
David Chung: In addition to the contribution from ph D C, which was included in the consolidated revenues since Q2.
David Chung: The increases was also were also attributable to display demand recovery more favorable market conditions expansion in our business scale and the higher demand for automotive displays resulting in better performance in 2024, then 2023.
David Chung: Gross profit was $24 2 billion.
David Chung: Okay loss narrowed to 8.5 billion.
David Chung: Net loss attributable to owner of the company was $3 1 billion.
David Chung: EBITDA was $25 6 billion EBITDA margin of nine 1% loss per share was point for N cheese, others, moving down to balance sheet cash and cash equivalents was 684 billion.
David Chung: Long time, no short term debt combined was $118 3 billion.
David Chung: Gearing ratio was 31, 2% down by two two percentage points Q O Q.
David Chung: Inventory at the end of Q4 was flattish Q O Q.
David Chung: However, due to the drop in revenue inventory turnover rose slightly to 49 days, while still at a healthy level.
David Chung: Next slide cash flow.
David Chung: We generated from operating activities.
David Chung: $8 8 billion in Q4, depreciation and amortization was <unk> 8 billion.
David Chung: Cash outflow from investing activities 6 billion Capex $7 3 billion cash outflow from financing activities was $2 6 billion, mainly due to net change in debt of $2 8 billion.
David Chung: Revenue breakdown by pillar.
David Chung: First of all our display B G.
David Chung: Last one percentage point on the back of decreased TV and monitor shipments and the slope, Amit the Florida seasonality and weaker.
David Chung: Weaker consumer application demand vertical solution also lost one percentage point.
David Chung: Due to early procurement by customers slower market momentum and a drop in solar PV module shipment in Q4.
David Chung: Mobility solution at the same time and three percentage points.
David Chung: Due to delayed purchases amid weaker vehicle market demand is that in China, leading to shipment decreases.
David Chung: However, in China benefiting from the stimulus policy and increases in overseas sells our shipment increased thus, resulting in the revenue share gain.
David Chung: From 26% to 29%.
David Chung: Next our business outlook for the first quarter of 2025.
David Chung: For the mobility solution.
David Chung: Due to fewer working days and seasonality.
David Chung: We expect the mobility solution business group to be to the rapid revenue open mobility solutions to be down by high single digit percentage points Q O Q.
David Chung: On the back of stronger demand for our ADP, smart verticals and industrial and commercial display as well as smart surfaces. We expect vertical solutions revenue to be up by low to mid teens percentage points Q O Q.
Lastly for the display segment.
David Chung: Buoyed by the appliance trade in policy in China.
David Chung: And healthier supply and demand across the industry. We expect the display segment to see revenue slight slightly declined Q O Q, which is still better than seasonality.
David Chung: Thank you. This concludes my presentation.
David Chung: Thank you David.
Speaker Change: Yeah, we would like to turn it over to Paul Our Chairman, who will talk about our business updates and our outlook.
Speaker Change: Ladies and gentlemen, good afternoon.
Speaker Change: Is very happy that we got to meet with you face to face again.
Speaker Change: We will talk about the hours future and look back at the.
Speaker Change: Test.
Speaker Change: And we're happy that we are here today once again and yesterday was the last major festival. So let me take this opportunity to wish you health and prosperity in the year of the snake.
Speaker Change: In Q4, our revenue was $68 7 billion NT dollars down Q O. Q. However, it was up Y O y.
Speaker Change: Showing that the industry was progressing in a more orderly fashion.
Speaker Change: The display segment went through the traditional slower season last quarter, hence the Q O Q drop however at the end of the year.
Speaker Change: China implemented the.
Speaker Change: Home appliance trading program and energy saving.
Speaker Change: So subsidy prior a subsidy program, helping to boost demand.
Speaker Change: Especially the demand for large size TV sets.
Speaker Change: Currently display is enjoying strong momentum.
Speaker Change: And our mobility solution.
Speaker Change: <unk> down slightly in Q4.
Speaker Change: Which was in line with our expectations. The only exception was the vertical solution as energy business was affected negatively by the policy.
Speaker Change: Industrial and commercial display demand was hit by macro uncertainties and depressed corporate spending.
Speaker Change: So our vertical solution was affected negatively by the energy business and weaker demand for industrial and commercial products, we expect to see some improvements for the industrial and commercial products in 2025.
Speaker Change: 2024 was the year that the entire world went through some fluctuations economically and politically.
Speaker Change: At AUO our transformation efforts.
Gradually bear for fruits.
Speaker Change: We started to include ph D C in our revenue in Q2.
Speaker Change: And our revenue for the full year reached 280 billion NT dollars up by 13% Y O Y and we also got to enter the tier one segment as a automotive solution provider <unk>.
Speaker Change: Expanding our manufacturing and sales presence around the world.
Speaker Change: And we also are becoming much more complementary with ph D. C in terms of utilizing our advantages.
Speaker Change: And strengthen.
Speaker Change: Our the benefits that we in that we generated with the acquisition and consolidation with ph D C.
Speaker Change: For the next few years, we're going to experience.
Speaker Change: Growth from the segment from the automotive segment.
Speaker Change: In 2024.
Speaker Change: Display segment posted improvements and the mobility solution reached our target.
Speaker Change: For the vertical solution, we will have to work harder to.
Speaker Change: Two a reed deliver improvements basically the energy business has been affected by the energy policies around the world last year in Taiwan alone the installed base of solar PV equipment.
Speaker Change: Lowered by 40% and our revenue slipped by 60% go forward, we will strive for more.
Speaker Change: A more purchase orders and more projects in Q4, we had a revenue drop.
Speaker Change: And our Ot loss expenses Q O. Q. However, it we had a nun up gang, helping us to return to the black at the bottom line for 2024 hour gross margin and EBITDA also improved significantly from 2023 of course, we still hope that we can.
Speaker Change: Returned to profitability at the operating level, although we have been working very hard last year across the company, we still didn't.
Speaker Change: Managed to return to the black at the operating level for the full year. So we will continue to work harder our goal is to become a much more financially 30 company currently we have.
Speaker Change: Our robust financial structure, and our inventory amount was flattish from the last quarter.
Speaker Change: And if you look at if we look ahead at 2025, we don't think that the political and economic conditions will improve much from 2024 and there is also a very big uncertainty that is with one tweet.
Speaker Change: The policy on terrorists could change overnight. So we are constantly thinking how we can adapt to the changing environment.
Speaker Change: Let me talk about what we know and what we think will happen for sure with the stimulus policy in China, including the energy saving subsidy program.
Speaker Change: The ICT products and also the automotive segment are getting a boost Q1 is the traditional floor season, but this year, we are expecting to see some growth sequentially and this means the normal seasonality with celgene.
Speaker Change: Display will see some slight decrease in revenue in Q1, but recovery can be expected since Q2 as.
Speaker Change: As restocking demand increases in advance or higher CNET seasonality throughout the year.
Speaker Change: Performance of the mobility solution will depend on the automotive market conditions, while demand in China remains strong.
Speaker Change: Last year, the automotive market in Europe and in America was one was rattled by competition from China, while they are taking the steps and they are improving recently, we hope that more and.
Speaker Change: And struck a growth will materialize.
Speaker Change: For the vertical solution, we are accelerating the focus into.
Speaker Change: Systems and solutions.
Speaker Change: For both of which we are expecting and hoping for double digit percentage growth.
Speaker Change: So as to.
Speaker Change: Improve our resiliency too.
Speaker Change: The cyclicality of the market.
Speaker Change: For 2025, we will place our focus on improving our profitability, improving our cost structure and optimizing our product mix.
Speaker Change: Moreover, we will also have a tighter control on our Opex, we had in increasing opex due to acquisitions.
Speaker Change: And fab or reorganization.
Speaker Change: For this year, we will impose tighter control on our expenditures while at the same time, creating synergies through acquisitions and consolidation.
Speaker Change: As a result, we hope that we will improve better we would achieve better profitability and achieve more efficient cost control. Our view is that our Opex has peaked and will go down progressively as far as our management principles too.
Speaker Change: Go this year, we will implement asset like model.
Speaker Change: And continue to implement carbon reduction schemes set.
Speaker Change: Secondly, we will not hold inventory.
Speaker Change: As you can see we have relatively healthy inventory levels. This will bring us and very important benefit that is as demand increases we will have in hand, the latest the most advanced technology and products.
Speaker Change: That deliver the strongest.
Speaker Change: Cost competitiveness, Inc.
Speaker Change: In July last year, I have shared with you a slight.
Speaker Change: On the three pillars of our business.
Speaker Change: This time around.
Speaker Change: I have.
Speaker Change: A slight to share with you tube, but you will see there is a slight difference that is in the middle there are two additional two way arrows.
Speaker Change: This means that we leverage our display expertise.
Speaker Change: And our core competencies.
Speaker Change: To support and enable the development of the other two pillars.
Speaker Change: At the same time they these two pillars.
Speaker Change: Well hope.
Speaker Change: Enable the growth of the display segment.
Speaker Change: By utilizing our core competency in the display technology. So these three are mutually complementary.
Speaker Change: Of course, each of them has their distinct missions.
Speaker Change: First of all for the display segment it is.
Speaker Change: Aimed to create additional to create more cash flow to improve our profit because most of our up depreciation comes from the display segment.
Speaker Change: So we hope that we will strengthen the development of the display segment to support.
Speaker Change: The operations.
Speaker Change: Of AUO and the innovation of the other two pillars.
Speaker Change: <unk> solution will be a very important growth engine.
Speaker Change: In addition to our.
Speaker Change: Organic growth.
In the Akamai in the automotive segment.
Speaker Change: Which reached 20% plus of growth last year with the inclusion of ph D. C last year, our mobility solution revenue increased by 60% plus last year, and we are expecting double digit percentage growth for the coming years.
Speaker Change: The feature of the nature of mobility solution is that they have higher visibility as we transform from a display provider to a provider of smart systems as smart cockpits.
Frank <unk>: As Frank will share with you later.
Speaker Change: We demonstrated.
Speaker Change: A entire card at least CES show this year to demonstrate our concept for the smart cockpit.
Speaker Change: Last year on November 21st our board of directors.
Speaker Change: Approved the resolution to incorporate.
Speaker Change: Mobility solutions business.
Speaker Change: Segment.
Speaker Change: And ph D C into a new company AUO mobility solution cooperation MSC.
Speaker Change: So we'll turn Ams is C assay enterprise life business group.
Speaker Change: In the future of the three pillars will be three companies.
Speaker Change: Display will be spearheaded by AUO.
Speaker Change: Mobility solution by MSC.
Speaker Change: Vertical solution by ADP.
Speaker Change: And several of our smart solution entities.
Speaker Change: So for the three pillars for there for each of their operating performance.
Speaker Change: And.
Speaker Change: Other shipments that we will be able to demonstrate the results more efficiently.
Speaker Change: And also implement more.
Well defined objectives.
Speaker Change: And together, we will award toward improving our performance.
Speaker Change: Of course.
Speaker Change: In terms of the incorporation of the new company.
Speaker Change: MSC.
Speaker Change: We currently do not have plans for lifting MSC. So there's no issue related to shareholder interests divestment.
Speaker Change: Besides the M C.
Speaker Change: We also have a tpa or display plus under ADP, we have smart retail education health care Enterprise solutions, and we also have smart services.
Speaker Change: For example.
Speaker Change: We have smart services from AUR environment, inverter Tech, which specializes in water recycled then and management and we also have <unk> tech.
Speaker Change: Which which specializes in carbon emissions reduction in services.
Speaker Change: So in the future, we will have very specific well defined objectives.
Speaker Change: And clear approaches for demonstrating the performance of each of our companies and entities.
Speaker Change: This will allow us to show clearly the resources allocated in the revenue achieved.
Speaker Change: And the performance delivered.
Speaker Change: Besides our achievements from our operations.
Speaker Change: I would also like to share with you. The results that we have achieved in the aspect of certain about sustainability.
Speaker Change: With this slide I'd like to share with you lap that last year. We were included in the D. J as I am for the 14th year.
Speaker Change: And we were.
Speaker Change: Ranked at the top two in the subgroup and also yesterday it was announced in a S&P global sustainability yearbook that we were included as one of the companies among 7000 plus firms worldwide and we were ranked among the top 5%. So it was quite a feat.
Speaker Change: <unk> to be included in such a prestigious yearbook Marvel we garnered very good ratings in C D T and MSCI.
Speaker Change: Additionally, in terms of carbon reduction.
We have set out our 2015 as they were imperative versus 2018.
Speaker Change: Our carbon emissions.
Speaker Change: Lord by 39% in 2024, we also have said Spi based reduction objectives.
Speaker Change: And are aiming to achieve 42% reduction between 2021 and 2030.
Speaker Change: In terms of revenue a renewable energy utilization through generating green power and the use of bricks, we reached and R. E. A five 6% in 2024, we will seek to include offshore wind power in our power portfolio.
Speaker Change: So as to reach the 30% or your target by 2030.
Speaker Change: Also with this slide I'd like to share with you that we published the worlds and the industry's first nature related financial disclosures reports in 2024.
Speaker Change: Hoping to.
Speaker Change: Better and more effectively identify the impact of our operations on biodiversity and the environment.
Speaker Change: Secondly.
Speaker Change: Our headquarters building.
Speaker Change: With the very first one in Taiwan and also the first one in the panel industry around the world to achieve carbon neutrality and this was this has passed ISO 14 068 verification.
Speaker Change: Moreover.
Speaker Change: Today at the board of Director meeting a resolution was passed.
Speaker Change: We will focus more on our operations.
And to have better utilization of our assets.
Speaker Change: We have announced that.
Speaker Change: We have decided to.
Speaker Change: So the <unk> fab of AUO, Crystal, which is that 100% subsidiary of AUO.
Speaker Change: At wholly tied shown to micro.
Speaker Change: That time, we have so the west side of the fab. The total sale value of these two transactions will amount to $3 75 billion NT dollars and you Christo specializes in mono crystalline silicon.
Speaker Change: Solar PV chip manufacturing and also as a provider of semiconductor materials, we have decided at the board of director meeting today too.
Speaker Change: To maintain on the semiconductor material business going forward and the operations will be consolidated in our Taichung fab. So the wholly fab will be emptied out for the first two years going forward.
Speaker Change: Some of the facilities will be leased back and the fab and the whole facility will be cleared out by 2027 year end 2027, although we have decided at the board of director meeting to have a cash distribution of <unk> three push antibody per share for foreign capital surplus and to buyback too.
Speaker Change: Percent of stock, which will amount to two to 3 billion NT dollars.
So going forward, our dividend policy well.
Speaker Change: Characterized by.
Speaker Change: Assessing our free cash flow and returning some of the cash flow through our shareholders at the same time, we will seek to adjust our capital structure consistently.
Speaker Change: So this is the announcement that we made this.
Speaker Change: Today.
Speaker Change: So let me comment on the display market this year.
Speaker Change: In Q1 demand is quite strong however, due to the fewer working days, especially.
Speaker Change: Especially during the lunar new year holidays revenue is expected to go down slightly however, due to the home appliance trading policy and energy saving.
Speaker Change: Subsidy program.
Speaker Change: Basically sell through starting from October one to double 11 festivals have been quite strong. The average size sold was 75 inch and more bigger sizes.
Speaker Change: Also enjoying strong purchases.
Speaker Change: Some even more than 100 each.
Speaker Change: With size migration large generation fab capacity is being consumed quickly.
Speaker Change: Plus.
Speaker Change: Panel makers are manufacturing products.
Speaker Change: In a more orderly fashion.
Speaker Change: They are making their products based on demand.
Speaker Change: Which will lead to more virtuous cycle across the industry.
Speaker Change: While our revenue in Q1 will go down slightly however demand is expected to grow sequentially.
Speaker Change: T V screen size will increase by more than one inch this year.
Speaker Change: The point for your reference is that.
Speaker Change: An increase in screen size by every inch will consume an additional capacity of a gen eight five fab.
Speaker Change: In terms of the <unk> segment.
Speaker Change: With win 10 will reach end of life.
Speaker Change: And the.
Speaker Change: Launches of AIP C will likely spur replacement cycle. This year during COVID-19 in 2021 the installed base of Pcs alone increased by $60 million 60 million units and usually replacement cycle occurred every four to five years.
Speaker Change: This year, we will see some 250 million units of win 10 P C.
Speaker Change: Unable to upgrade to win Windows, 11, which will have to.
Speaker Change: The decommissioned gradually.
Speaker Change: We believe that demand over the next two years will grow more visibly.
Speaker Change: However.
Speaker Change: There are still uncertainties, including tariffs.
Speaker Change: Political issues and more and tensions so we will have to watch.
Speaker Change: Market dynamics very closely and very prudently.
Speaker Change: At the same time, we are relatively up thomistic about the market conditions in the operations.
Speaker Change: This is also because we have set out much more well defined.
Speaker Change: Operating objectives for our three main pillars.
Speaker Change: When it comes to the AI P C last year only a handful of models.
Speaker Change: Were released.
Speaker Change: And not much splash was made in the market, but this year France.
Speaker Change: Our launching many more models new models of AI P C.
Speaker Change: Also during the lunar new year.
Speaker Change: Keep seek was launched.
Speaker Change: Which allows for more cost efficient and easier implementation of functions.
Speaker Change: This also means that <unk> will be more affordable.
Speaker Change: And much more ubiquitous.
Speaker Change: Compared with.
Speaker Change: Only high end models value at more than 12 hungry Ust.
Speaker Change: To be able to implement AI functions.
Speaker Change: In the future Ait's, he's penetration rate will rise quickly.
Speaker Change: Meanwhile, the power consumption requirements of Air T C will be higher at <unk>.
Speaker Change: We utilize low temp poly technology.
Speaker Change: And augmented with touch functions.
Speaker Change: And we have been in the leading pack for these kinds of technologies.
Speaker Change: When you use.
Speaker Change: The power consumption of L. G. P. S is much lower than our lead.
Speaker Change: This allows the battery running time of a L. P. S low temp poly panels to be doubled than that of the OLED panels.
Speaker Change: Over in the jewelry manufacturing.
Speaker Change: The power consumption and carbon footprint of low temp poly manufacturing process is also much lower than that of OLED panels. This is why we believe low temp poly technology well.
Speaker Change: Enjoy.
Speaker Change: Higher opportunities M more opportunities in the era of AI tea season.
Speaker Change: So in 'twenty 'twenty four or in the fourth quarter of 294.
Speaker Change: They were some.
Speaker Change: Changes to our operations and they are also things that we can we should have a chief better and we will make it will make well strive to do better.
Speaker Change: In 2025, we have set our new strategies and new plans, we will ensure better and more efficient resource allocation across our three pillars.
Speaker Change: At the same time, we are reorganizing.
Speaker Change: And revamping some of our fabs seeking to revitalize our assets at the same time.
Speaker Change: Our hope is to improve our profitability to accelerate the improvement of our financial structure, including our capital structure.
Speaker Change: Our debt structure and optimize our free cash flow.
Speaker Change: Hoping to.
Speaker Change: Deliver better returns for our shareholders.
Speaker Change: So this concludes my opening remarks, I will now hand over to Frank.
Frank <unk>: Who will talk about the.
Frank <unk>: Operations and the outlook for the other two pillars.
Frank <unk>: Good afternoon.
Frank <unk>: Ladies and gentlemen.
Frank <unk>: Paul has just talked about.
Speaker Change: Our operations and our business structure as well as our progress made in the display segment now.
Frank <unk>: Now I would like to share more with you about the other two pillars.
Frank <unk>: Which is which are E mobility solution and vertical solution out we're talking about there.
Frank <unk>: Long term and short term goals and their current status.
Frank <unk>: In the beginning of January in the figure of the U S. We exhibited.
Frank <unk>: Our products and our seniors.
Frank <unk>: But before I delve into more details I would like to highlight that this exhibition has a very significant meaning to us that is it was the very first time that we joined hands with DCC to exhibit at sea as.
Frank <unk>: We not only showcase the unique products of each of the company at the same time, we also demonstrated the achievements that we deliver through joint development over the past.
Frank <unk>: Half a year.
Frank <unk>: We exited a concept vehicle there to demonstrate the smart vehicle based on Microalgae Dean.
Frank <unk>: In the smart cockpit, we equip it with micro Leds.
Frank <unk>: Two.
Frank <unk>: Demonstrating the unlimited possibilities of smart card, but going forward, we leverage the HDMI and mechanical as well as interfacing and.
Frank <unk>: Many other functions from PTC.
Frank <unk>: Two.
Frank <unk>: Demonstrate our vision for smart topic in the future here on this slide there are several photos.
Frank <unk>: On the upper left.
Frank <unk>: It is the horizon image glass.
Frank <unk>: Which combines the dashboard central council and passenger seat display in.
Frank <unk>: In an integrated panoramic view so it is both a display and a head up display.
Frank <unk>: Providing in vehicle infotainment.
Frank <unk>: And at the same time it is a transparent display.
Frank <unk>: And is able to show the real conditions very clearly the seawell is also affordable.
Frank <unk>: Yes.
Frank <unk>: Which is in line with the self driving trend.
Frank <unk>: So week applied micro OLED flexible micro OLED displays to produce this kind of steering wheel and in the middle the upper and middle is the.
Frank <unk>: The virtual Sky canopy. It is the first the worlds first large sized transparent.
Frank <unk>: Micro OLED displays integrated in the sky roof of a vehicle on the upper right.
Frank <unk>: Transparent interactive window.
Frank <unk>: So micro OLED technology is applied in the car windows.
Frank <unk>: Two.
Frank <unk>: Allow passengers to engage with the road conditions in the outside World and also they get to be presented with navigation and shopping features.
Frank <unk>: It provides the AI interactive features.
Frank <unk>: So with touch functions enabled and edge AI.
Frank <unk>: And to attainment and stimulation as well as.
Frank <unk>: Shopping enablement can be provided.
Frank <unk>: Also at this exhibition we collaborated with our ecosystem partners, we engage with a leading car window glass provider to enable this kind of light adjustable windows to enable privacy and ensure safety.
Frank <unk>: And to avoid exposure.
Frank <unk>: On the lower right.
Frank <unk>: This theme morphine center control.
Frank <unk>: Which utilizes the flexible and extensible feature of micro <unk> technology plus.
The design capability of BGC.
Frank <unk>: This morphine central control.
Frank <unk>: Is April two.
Frank <unk>: Integrate the mechanical Hum opponents with the fleet feature of the display.
Frank <unk>: So the buttons can rise dynamically.
Frank <unk>: And which are also programmable.
Frank <unk>: Two.
Frank <unk>: Morph and too.
Frank <unk>: A.
Frank <unk>: AP.
Frank <unk>: Media for display images for example, you can display essential.
Clinical information and also provide.
Frank <unk>: Infotainment messages for passengers.
Frank <unk>: In the middle.
Frank <unk>: In our lower middle is.
Frank <unk>: The micra AGL habit tactical display.
Frank <unk>: It.
Frank <unk>: Utilizes the floor.
Frank <unk>: Flexible feature of micro L E D to extent the screen to the sites.
Frank <unk>: To allow for more intuitive experience. So these showcases our capability to integrate to our display technologies with mechanical components to deliver.
Frank <unk>: Whole new innovations and on the lower left is.
Frank <unk>: A car a feeler, which is developed by Sony Honda along with AUO.
Frank <unk>: So on the exterior.
Frank <unk>: Of the on a from the exterior LTV the vehicle is the.
Frank <unk>: Micra L E D media bar.
Frank <unk>: And this vehicle will be launched in 2026.
Frank <unk>: Our media bar micro OLED display will also be launched along with the launch of this vehicle in the U S.
Frank <unk>: This was off this is one of the key products being mass produced by our Gen four and five fab.
Frank <unk>: The meanings of the association this year.
Frank <unk>: Are quite significant.
Frank <unk>: This means that we are we're there as a one team post the consolidation with ph D. C. We've demonstrated our innovations.
Frank <unk>: Very efficiently effectively Moreover, we got to collaborate with our customers.
Frank <unk>: Compared with last year, the number of visitors from car Oems has increased by 40% and demand them high level executives increased by three times.
Frank <unk>: So this shows that.
Frank <unk>: Customers recognize our positioning in the market after the consolidation and this also allows us to increase our opportunities to engage.
Frank <unk>: And communicate with our customers directly.
Frank <unk>: After the exhibition we continue to bring this new technology to other exhibitions in the vehicle industry, so as to generate more opportunities.
Frank <unk>: When it comes to the vision for the mobility solution, we completed the transaction with BTC in April last year and.
Frank <unk>: There are some very avid interest in knowing about our results so far.
Frank <unk>: Of course internally, we are moving forward.
Frank <unk>: Steadily.
Frank <unk>: As Paul shared with you we will set up a new entity called AUO mobility.
Frank <unk>: Solution incorporation, which will incorporate the capabilities and expertise of AUO and PTC, so as to integrate our resources and R&D capacities and build a more efficient supply chain and improve our competitiveness of course a M. S. C. We're also.
Frank <unk>: And the fact that AUO will become a very unique entity, combining tier one and tier two.
Frank <unk>: Service capabilities.
Frank <unk>: And technology integration capabilities, we will be able to engage with Oems.
Frank <unk>: A much more comprehensive ways.
Frank <unk>: When we look ahead at 2025, we expect that the automotive market will experience a slight increase this year of course, EV and new energy cars will enjoy high growth.
Frank <unk>: But when it comes to automotive displays the number of automotive displays will lie.
Frank <unk>: Likely increase by 3% to 4% this year.
Frank <unk>: But at AUO, we are not satisfied with mirror the growth in volume we are more.
Frank <unk>: Interested in improving.
Frank <unk>: The actual profit and the quality of our services since.
Frank <unk>: Q2, the Wii.
Frank <unk>: Included in our consolidated revenue, we have seen 26, 62%.
Frank <unk>: Growth in our revenue while while in 2024, excluding the contribution of PTC.
Frank <unk>: Auo's organic growth in revenue.
Frank <unk>: He is also very cyclical and the significance with revenue, reaching 50 billion NT dollars up by 20% Y O y.
Frank <unk>: What is worth to note is that we have improved our product mix significantly including L. G. P S plus in cell touch.
Frank <unk>: Many L E D backlight.
Frank <unk>: And display Ajay my products their share of display H M. I also improved significantly this year last year.
Frank <unk>: And because of the improvements in the product mix.
Frank <unk>: Going forward throughout this year, we believe the <unk>.
Frank <unk>: Premium product ratio will continue to increase allowing us to maintain low to mid teens growth in our revenue this year.
Frank <unk>: We owe the achievements to our efforts over the past three years, what the nature of automotive projects is that.
Frank <unk>: Every new automotive solution project will not start making contributions to revenue. After two two until two to three years. Later this means that when we secured new projects. This date. This year, we will have to see revenue contribution years later.
Frank <unk>: Over the past three years, the combined Patria Award.
Frank <unk>: Secured by AUO and B, a T C amount to over 15 billion in U S dollars, which will help contribute to our revenue growth over the next few years, helping us to maintain double digit percent CAGR. Our goal is to become a unique.
Frank <unk>: Rider.
Frank <unk>: With the capabilities of providing display products complemented by the expertise from ph D C as a tier one supplier.
Frank <unk>: As you can see from this slide from panel to smart cockpit, increasing value add we will be shifting from EMEA panel module provider to also extend our presence in the display centric H M. I segment to provide this IDM.
Frank <unk>: Augmented with.
Frank <unk>: The technologies from PTC to provide more comprehensive solutions, including.
Frank <unk>: Turning knobs and mechanical control functions combined with displays.
Frank <unk>: Okay.
Frank <unk>: This will also be more in alignment in the safety regulations and requirements of vehicles.
Frank <unk>: Based on this decision our goal is to provide smart cockpit for example, we.
Frank <unk>: Half new easy you products.
Frank <unk>: That utilizes our advanced technologies in displays such as micro OLED.
Frank <unk>: To enable a more intuitive experience and deliver higher values.
Frank <unk>: So you can imagine from the from left to right. The unit price of each product will grow a multifold.
Frank <unk>: This is also why we believe the revenue of our mobility solutions business will exceed that of the average 3% to 4% growth of automotive displays now I'd also like to share with you.
Frank <unk>: Our.
Frank <unk>: Prospects as a vertical solution for the resolution.
Frank <unk>: Is categorized by smart.
Frank <unk>: New applications, which is spearheaded by the smart display applications of ADT.
Frank <unk>: Which building upon the foundation of commercial and industrial applications.
Frank <unk>: Moreover, we also have energy business built upon solar PV and also smart services in conjunction with digital transformation as the Green solutions segment.
Frank <unk>: Let's first look at smart displays more verticals last year.
Frank <unk>: While industrial and commercial display.
Frank <unk>: See lackluster growth we.
Frank <unk>: We do have.
Frank <unk>: Strong shipments for our smart retail enterprise health care, delivering 20% growth Y O y.
And we are seeing the contribution of the segment growing continuously.
Frank <unk>: Actually since the establishment of a display plus ATP.
Frank <unk>: Display centric solutions.
Frank <unk>: Contributed 210% plus to our revenue last year.
Frank <unk>: So is growth potential and its gross margin are both higher than the pure display business.
Frank <unk>: As for Green solution business as Paul just share with you due to the impact of the policy on energy from the government, we saw negative growth last year.
Frank <unk>: This year, we will place more focus on the overseas markets, we will increasingly in integrate.
Frank <unk>: Solar PV panels into building materials.
Frank <unk>: And we will also.
Frank <unk>: Seek more opportunities with AUO energy shop, and to provide the products and solutions required by further sites.
Frank <unk>: So it's a sustained the development of our solar PV business.
Frank <unk>: Moreover, about AUO crystal or ACC, we have just shared with you that.
Frank <unk>: We will be selling the facility of ACC for the second time to my from the gain from disposal of the fab will be used to support the group organization of ACC, 80% of the company's revenue comes from solar PV mono silicon solar PV and another 10% to 15% comes from <unk>.
Frank <unk>: Conductor materials and with the sale, we will be winding down the <unk>.
Frank <unk>: Mono crystalline solar PV business of ACC to focus more on the <unk>.
Frank <unk>: Testing of wafer and providing components.
Frank <unk>: Components and parts.
Frank <unk>: We will also relocate the manufacturing site in holding to other facilities and continue to work with our key customers to pursue improvements in profitability and revenue all in all vertical solution.
Frank <unk>: Faces temporary headwinds from the solar PV business. However in terms of our revenue. If you look at the smart vertical solutions and Green solutions growth, we expect vertical solution to maintain double digit cake or over the last few years at the same time, we are seeing return.
Frank <unk>: Recovery in demand for commercial industrial displays. These factors combined allowed us to think that particular solution.
Frank <unk>: We'll see.
Frank <unk>: C growth in the first quarter.
Frank <unk>: So let me sum up.
Frank <unk>: Looking ahead at 2025.
Frank <unk>: The display industry will enjoy healthier supply and demand.
Frank <unk>: Buoyed by new demand.
Frank <unk>: And replacement demand.
Frank <unk>: <unk> to achieve 30 profit of the display business and improvement of our operational efficiency for the mobility solution, we will accelerate our integration with UGC and achieve greater synergies. We will also expand the <unk>.
Frank <unk>: Expand project award.
Frank <unk>: Moreover, given the uncertainties from Keryx.
Frank <unk>: Inflation War.
Frank <unk>: We still target to achieve low to mid single.
Frank <unk>: Low to mid teens percentage points growth and also to maintain double digit cake or over the coming years.
Frank <unk>: Yes.
Frank <unk>: The third pillar vertical solution.
Frank <unk>: Including the solutions for E E O you display plus and our smart services, we aspire to achieve more than 10%.
Frank <unk>: Of growth for 2025, and we are also setting the target to achieve double digit CAGR over the coming years for.
Frank <unk>: The vertical solution.
Frank <unk>: So these are my updates for the other two pillars other than the split.
Speaker Change: Thank you Paula and Frank.
Frank <unk>: Yes.
Speaker Change: Now we will address the questions that we collected from analysts before the meeting the first question is finishing related.
Speaker Change: Could you provide some color on a huge capex and depreciation and amortization for 2025 will capex and depreciation and amortization physics differ can do a decline in years ahead, what is the trend for 2026 and beyond.
Speaker Change: Our depreciation and amortization was $34 1 billion in 2024, which is on par with our guidance, we estimate that DNA will be around 30 billion NT dollars.
Speaker Change: In 2025, which will be down from 2024, mainly due to the expiration of the depreciation of some equipment is for capex.
Speaker Change: 'twenty 'twenty four Capex was $26 9 billion.
Speaker Change: Down by <unk> 4 billion from the 31 billion.
Speaker Change: The guidance that we provided earlier.
Speaker Change: The $4 billion.
Speaker Change: Will be carried over to 2025.
Speaker Change: Including the 4 billion, we estimate that the Capex for 2025 will be no more than $30 billion for.
Speaker Change: For the Capex and.
Speaker Change: DNA trend going forward as we shared with you in the last couple of.
Speaker Change: Virtual conferences, our goal is to allocate more resources towards the vertical solution in mobility solutions pillars.
Speaker Change: We will be implementing asset light model.
Speaker Change: This means over the longer period in the mid and longer term of our DNA and Capex will go down sequentially. Thank you. The next two questions are display related whether it's the TV monitor in I T sell through in Q4, 2024, and the outlook for 2025.
Speaker Change: Although China's increase efforts to boost consumption and the impact of terrorists affect demand in 2025 is there a concern that early consumption could lead to a less busy second quarter or a weaker peak season in the second half of the year could Joseph please provide an update on the overall channel inventory for TV 90 products James would you. Please.
Speaker Change: Good afternoon is Paul and Frank said.
Speaker Change: In Q4, with the home appliance trading programs in China and the.
Speaker Change: Peak season promotional activities in the west Tvs or sell through was quite strong in.
Speaker Change: In Q4 end markets set sell through increased by four 3% Y O Y in Q4.
Speaker Change: Ore increased by 8%.
Speaker Change: With the large size models being the main stream of sales above 85 inch or even in the range of 98 insurers who are hungry inch.
Speaker Change: Large size TV sets through series sets are very popular in China. We believe that this year going forward these products and the price points will be implemented and shifting to the markets in Europe and America.
Speaker Change: America, So the demand for TV sets remains very strong.
Speaker Change: And the inventory levels at channels have been quite healthy with bright dialogue with the demand for large size Tvs sets.
Speaker Change: Capacity utilization requirements will also be quite significant and that is for the TV segment as for the IP segment, while in 2024 commercial demand remained lackluster in the consumer segment.
Speaker Change: With the demand for our gaming products and the promotional activities from brands there.
Speaker Change: Is there was 4% to 5% growth Y O Y in the fourth quarter looking ahead at 2025 with the expected Sunset of E. O N E O L of Windows 10, and the.
Speaker Change: Increasing launch launches of the ITC.
Speaker Change: As well as the upcoming replacement cycle, we are expecting for two 5% growth.
Speaker Change: For this year, however, as our customers told us they expect commercial.
Speaker Change: Replacement cycle to commence in the second half helping to boost.
Speaker Change: Demand in the second half so to sum up demand for TV is quite strong this year.
Speaker Change: And there are new.
Speaker Change: Demand.
Speaker Change: Signals for the AG segment, and we are very optimistic about demand this year.
Speaker Change: Thank you we now open the floor for questions to ensure equal opportunities for each participant please.
Speaker Change: And the number of your questions to two per person and please stay them. All in one go. Please provide your name and your affiliation before you start to pose questions.
Speaker Change: Online participants please enter your questions in the online chat box.
Speaker Change: <unk> from UBS.
Speaker Change: Afternoon.
Speaker Change: Thank you for taking my questions. My first question is as the American as the American government continues to impose new tariff policies, which are impacting the prices and inventory restocking demand of the pan industry.
Speaker Change: Have you observed any adjustments from your customers.
Speaker Change: Or from your supply chain partners.
Speaker Change: Also do you have any plans to.
Speaker Change: Allocate your manufacturing sites in the longer term.
Speaker Change: Are you also making any adjustments to your sales strategy.
Speaker Change: And my second question is.
Speaker Change: About the automotive segment.
Speaker Change: As you noted that you expect your revenue to achieve double digit percentage growth over the next few years.
Speaker Change: And you are also enjoying increasing odor streams.
Speaker Change: Do we expect to see new progress in terms of synergy.
Speaker Change: Creation.
Speaker Change: In terms of expenditures. Moreover.
Speaker Change: At CES this year, many products utilize micro Iot technology your views on the content improvements four out of the <unk>.
Speaker Change: Automotive segment, and what do you expect the impact on the profitability to be.
Speaker Change: Thank you for your questions for the terrorists.
Speaker Change: To be quite Frank we're not sure about the impact of the terrorists or the dynamics in changes of the tariffs.
Speaker Change: Terrorists because.
Speaker Change: Take Mexico and Canada for example, they were supposed to be imposed with 25% tariffs.
Speaker Change: But seven hours before the new tariff to be effective there was the announcement that the terrorists will be delayed. So there is others, obviously room for negotiation. So it's up to the purpose of the new tariff scheme was it is therefore improving security or.
Speaker Change: To mitigate trade deficit.
Speaker Change: Or to improve its domestic manufacturing industry.
Speaker Change: In terms of the impact of the tariff scheme.
Speaker Change: Before the terrorists fit scheme.
Speaker Change: As announced was announced for Mexico, We made stock of our current operations and we found that.
Speaker Change: The products that are produced in Mexico, or the U S bound shipment from Mexico of hours totals less than 200 million USD revenue. Moreover.
Speaker Change: Through the consolidation of ph D. C. We now have manufacturing footprint around the world from Europe is Europe, India, Taiwan mainland China to Mexico. So we have presence in the major continents around the world.
Speaker Change: Even if there is any tariff impact we will get to make adjustments flexibly.
Speaker Change: Of course, the adjustments won't be made overnight.
Speaker Change: Because we still have to take into consideration the interest and the.
Speaker Change: Plans of our customers and supply chain partners for example, we saw.
Speaker Change: Serve branded customers and will also have to work with OEM customers. How will these OEM customers deal with the tariffs we will have to work with them. So we will have to pay close attention to see how our customers supply chain partners cope with the tariff schemes.
Speaker Change: That means we will have to pay close attention, but as I said that we will have to engage with our ecosystem partners very closely but what I can assure you of that.
Speaker Change: We will be able to mitigate the risks very dynamically and.
Speaker Change: With the geopolitical risks.
Speaker Change: And other uncertainties, we are placing these factors.
Speaker Change: On top of our risk management priorities and we are constantly reviewing and discussing how to deal with them.
Speaker Change: However, I cannot.
Speaker Change: Tell you that we have.
Speaker Change: A very solid solution as I said things are changing very quickly.
Speaker Change: And we all we can do is to be very.
Speaker Change: A child to cope with the situation dynamically.
Speaker Change: But our advantage is that we have a full and comprehensive footprint around the world and we got to make adjustments and allocation of resources very nimbly.
Speaker Change: About your questions on the.
Speaker Change: Automotive segment's revenue and the synergies from the acquisition of BGC.
Speaker Change: Now to provide several examples recent examples.
Speaker Change: With the acquisition investment of PTC, we have been able to.
Speaker Change: Make a great progress for example.
Speaker Change: And this wave of the impact from the changes of tariff policy and changes in the supply chain subsequently.
Speaker Change: We get to build a very comprehensive manufacturing presence. So we are more flexible than our peers and we get to be.
Speaker Change: Complementary across our manufacturing sites second.
Speaker Change: Secondly, we get to expand our business opportunities in the past week have been able to deliver a double digit nearly 20% growth for the past few years and last year, we generated.
Speaker Change: And in organic revenue.
Speaker Change: And organic revenue of $50 billion in the past, we haven't been able to build close relations with European Carmakers. However, after the acquisition of ph D. C. We now have a much more comprehensive ecosystem relationships with European car makers and we are also exploring new opportunities.
Speaker Change: With other carmakers in other regions.
Speaker Change: Moreover, in the spec of commercial vehicles, which are.
Speaker Change: Very appropriate.
Speaker Change: Applications for our smart cockpit today as.
Speaker Change: Labor cost increases and the demand for <unk>.
Speaker Change: Long haul transportation increases safety cost.
Speaker Change: <unk> also increased significantly because of these concerns we have been able to secure orders from.
Speaker Change: And U S. Carmaker very quickly and we are also expanding our presence to India at the same time.
Speaker Change: For example, the number and the quality of carmakers that visited our booth at CES This year.
Speaker Change: Was the case in point that we have been able to improve opportunities to lend news purchase odors.
Speaker Change: Utilizing the synergies created with the consolidation of BGC as for the cost reduction.
Speaker Change: We have shared with you that we expect in the next few years the cost savings will achieve 50 million USD, but now we believe the cost saving will be to the tune of 60 million and USD.
Speaker Change: And we are working to accelerate synergy creation.
Speaker Change: And we will continue to improve our topline and create more synergies.
Speaker Change: If there is any new GTO annual progress made we will share with you.
Speaker Change: As for the future growth in the past three years, the two companies' ph D C and U S U AUO combined.
Speaker Change: Has secured more than 15 billion USD project Awards.
Speaker Change: Of 60%.
Speaker Change: Is attributable to our negotiation and engagement directly with the carmakers.
Speaker Change: This means that we'll be able to sustain our growth prospects going forward.
Speaker Change: Personally I'm very positive about the outlook for smart cockpit.
Speaker Change: S AI becomes ever more lightweight.
Speaker Change: And as a I spent from server to the edge being.
Speaker Change: <unk> become a very good platform for the deployment of AI.
Speaker Change: At CES we.
Speaker Change: <unk> XR.
Speaker Change: Exhibitions.
Speaker Change: The.
Speaker Change: Horizon image of glass.
Speaker Change: And car Windows, because we believe vehicles will provide the most comfortable virtual space you don't have to put on a our glasses you just have to sit in your car to enjoy the full panoramic virtual experience.
Speaker Change: So those are the best platform for enabling innovations.
Speaker Change: So our topic is very important inside of a cop out. It's also as important in the exterior of the car because onto the trend of self driving first sample test others promoting self driving taxis.
Speaker Change: It is a very important to enable the interaction between inside and outside of a vehicle for example, with a fever.
Speaker Change: We are enabling more interactive functions and we are also discussing the possibility of enabling exterior display of vehicles to allow Ford interaction engagement between passengers and the Alpha where for example, when you are charging your EV.
Speaker Change: You can tap a coffee enjoy your time and at the same time just bias look at your car you will get to see the progress of charging. These are all some examples where we can leverage these group synergy efficiently.
Speaker Change: Yeah.
Lisa: Lisa please.
Lisa: Good afternoon executives I'm, Lisa from JMP Securities I have two questions also related to the other automotive segment you talked about the fact that your joint development with Sony Honda Mobility will see the launch of the car a feeler in 'twenty.
Lisa: 26.
Lisa: Could you share your share with us your components provided in the new car.
Marvin: Marvin you talk about the sky roof, the virtual sky canopy.
Speaker Change: This kind of technology is not available yet in the market could you tell us what makes this <unk>.
Marvin: So a unique white.
Speaker Change: What makes it so difficult to achieve to acknowledge building.
Speaker Change: Firstly with the sale of your wholly Fab you said you are going to shift into the to the testing interface of semiconductors.
Speaker Change: Preference do you have any plans for the mid to long term are you, making any plans in alignment with your existing products.
Speaker Change: About our collaboration with Sony Honda on the Feeler.
Speaker Change: It is actual extension of all exist of our long existing.
Speaker Change: Partnerships with Sony we have been working with Sony on notebooks and Tvs for more than 20 years.
Speaker Change: As the company enters into this new arena.
I wanted to pick the best partner and then Youll happens to be the best partner that fits their requirements. So we joined them in discussing and defining the design of the product.
Speaker Change: This is achieved through our 20 plus year of <unk>.
Speaker Change: Collaboration with this customer.
Speaker Change: Within this car, which is an EV.
Speaker Change: Many cameras will be installed which happened to be the strong suits of Sony.
Speaker Change: This call will be equipped with level two or level three capability.
Speaker Change: Very quickly.
Speaker Change: Depending on regulation. So we said that our collaboration will extend from the interior to the exterior of the vehicle because under the self driving trend.
Speaker Change: The requirements for smart carpets or infotainment inside of the car will increase.
Speaker Change: And even working inside the vehicle will.
Speaker Change: Emerge as a new requirement and such functions will be incorporated in the car that's where the.
Speaker Change: Virtual care cannabis I think of course it is the first challenges that is it is very big in size because the sky roof is very big the reason that we wanted to invest in the Gen. Four five fab line.
Speaker Change: Is that we want to meet the requirements for large size micro OLED displays.
Speaker Change: Utilizing large gen capacity would get you lowered the number of displays to be assembled and to increase efficiency subsequently.
Speaker Change: This technology is derived from.
Speaker Change: Our mass per pharma technology that has already entered mass production.
Speaker Change: When it comes to applications on car Windows, we have to make sure that the windows are vibration proof and are able to withstand temperatures and elements. This happened to be the advantages of micro OLED technology as a inorganic.
Speaker Change: Technology Micro E D is able to withstand harsh weather conditions.
Speaker Change: This is why we believe that.
Speaker Change: Automotive applications.
Speaker Change: Will it be.
Speaker Change: The niche application of micro Leds.
Speaker Change: And finally, I would like to ask the three points to the <unk> acquisition through the sale of AUO Crystal.
Speaker Change: The sale of the fab.
Speaker Change: Is intended for reorganizing the business of Crystal.
Speaker Change: Part of the plan is to wind down the.
Speaker Change: Solar PV is mono silicon solar PV business and to increase capacity.
Speaker Change: For meeting the demands of rising semiconductor demand of course, we don't have to support such kind of.
Speaker Change: Demand.
Speaker Change: Using.
Speaker Change: A whole fab or an entire set of facilities.
Speaker Change: Hence the business organization.
Speaker Change: In the interest time, we will take one last question Derik. Please.
Speaker Change: Cause than expected I am Derek from Morgan Stanley I have two questions first of all you talk about your transformation.
Speaker Change: From being a <expletive>.
Speaker Change: Display centric business to be centered around the three pillars could you provide some color on your expected profitability in the form of.
Speaker Change: Okay.
Speaker Change: Margin.
Speaker Change: Operating margin or Opex ratio.
Speaker Change: In normalized conditions. The next question that I have.
Speaker Change: There's also associated with the your transformation.
Speaker Change: You are shifting more focus to the two new.
Speaker Change: Pillars.
Speaker Change: But you have existing capacity in the display segment.
Speaker Change: In addition to the sales of Fabs recently do you have any plans that you wind up.
Speaker Change: Could you share with us if you have any.
Speaker Change: Thank you for the questions from their perspective of the company.
Speaker Change: The purpose of having three pillars is to propel the company to achieve steady profitability because.
Speaker Change: The panel industry suffers from very drastic cyclicality. This is very challenging for all the vendors given the current competition.
Speaker Change: Landscape, we hope we can gear our accumulative.
Speaker Change: Resources in the form of all of our customer relationships and our technology toward propelling the two new growth engines.
Speaker Change: And then two new engines in terms of the revenue we are seeing steady growth in the two pillars.
Speaker Change: In Q4 last year, the displaced revenue contribution Laura to 54%.
Speaker Change: In the entire year in 2024 display accounted for a 50, 55% of our revenue versus 57% in 2023.
Speaker Change: For the mobility solution.
Speaker Change: <unk> revenue contribution has gone from 18% in 2023% to 25% last year.
Speaker Change: And we are moving steadily towards achieving the 30% target.
Speaker Change: Vertical solutions accounted for 21% in 2023, and the revenue share Lora to 14% in 2024 due to solar business performance.
Speaker Change: However for this year with the growth potential from our vertical businesses.
Speaker Change: We expected to achieve more than 20% of growth this year.
So our hope is too.
Speaker Change: Lowered the revenue share of display business to.
Speaker Change: 50% and below this means that the other two should contribute to more than 50% combined and so this is our goal for the next two to three years as for gross margin.
Speaker Change: Our targets for.
Speaker Change: Mobility mobility solution, a vertical solution is for them to reach.
Speaker Change: Low to high teens.
Speaker Change: For gross margin.
Speaker Change: The display segment, usually experiences more drastic.
Speaker Change: Changes.
Speaker Change: But our hope is that for it to.
Speaker Change: Achieved positive contribution to our revenue.
Two gross margin.
Speaker Change: Going forward, we will advance our operational synergy and to achieve complementary benefits among the three pillars.
Speaker Change: Given our efforts to implement M&a's and two upgrades and vitalize. Our Fabs. In addition to asset revitalization, we have seen an increase in the opex over the past two years. These are the items that we have to improve on going forward.
Speaker Change: Although we will have to advance our operational efficiency, so as to improve our gross margin.
Speaker Change: The other question on our capacity utilization plan and whether there are further plans to revamp our fabs.
Speaker Change: One thing for sure and we have defined a task to carried out is too.
Speaker Change: Dispose of the fab in Singapore, we have already prepared the fab.
Speaker Change: And we are looking for.
Speaker Change: A partner to buy the fab from us.
Speaker Change: Going forward, we will focus more on implementing premium and higher quality capacity and we will prioritize supporting <unk>.
Speaker Change: Our regional at key customers key customers that we have in the display segment, so as to enable stronger deployment of the other two pillars.
Speaker Change: These two new pillars will not be able to consume all the capacity. So we will still have sufficient capacity to support the requirements and needs of our display customers.
Speaker Change: At the same time, we will continue with.
Speaker Change: Go premium strategy through leveraging our L. T P as technology touch integrated capable capability and micro OLED applications.
Speaker Change: These efforts will also help us to improve the profitability of the displays business. Thank you.
Speaker Change: We embarked on the by Astro transformation from five or six years ago.
Speaker Change: At present.
Speaker Change: The total workforce of AUO reaches 40000, or so the number of indirect employees above the level of engineers are around 12 to 13000.
Speaker Change: And more than 2000 of them are not in the display segment. This shows our achievements in terms of refilling and upscale esol's leveraging.
Speaker Change: External hires and M&A to fill it up the skill gap within the company.
Speaker Change: So we have been able to feel that our.
Speaker Change: Skills set.
Speaker Change: M&a's to obtain new expertise.
Speaker Change: Today more importantly, we have a very stable and steady strong management team as you can see we are.
Speaker Change: Seated here and many of you known us for many years.
Speaker Change: This shows that we have a very consistent management profile to enable this.
Speaker Change: Development and implementation of our strategies. Moreover, in terms of asset revitalization.
Speaker Change: Virtualization is not just about selling the assets. They also call for replacing the outdated with a more efficient and valuable for example, our long tail of fab.
Speaker Change: Yeah.
Speaker Change: Our Gen four and Gen five lines, we have already shut down.
Speaker Change: All of the Gen four lines and shutdown one Gen. Five line, because we want to accommodate the new micro LCD capacity.
Speaker Change: For the.
Speaker Change: Fabs or lines that are not suitable for replacing with new technology.
Speaker Change: We will seek to implement <unk>.
Speaker Change: Premiums are of high quality highly value added product technology instead at the center, we will seek to implement revitalization strategies.
Speaker Change: Those with application future application potential will be subject to revitalize Ruby utilization and sells to recoup investment in enable financial structural change or replenishing our working capital.
Speaker Change: So this will be part of our strategies over the next few years.
Speaker Change: I would like to add some more comments to our profitability in Opex and just too.
Speaker Change: And to what Fred said previously in.
Speaker Change: Transfer of the objectives or targets of the three pillars that.
Speaker Change: Target that we.
Speaker Change: Have four vertical solution a mobility solution is for them to achieve high teens to low 20% in terms of gross margin.
Speaker Change: <unk> gross margin as for display the targeted for there to be in the single digit range.
Speaker Change: As for our Opex ratio.
Speaker Change: The opex ratio has been a bit higher over the past few quarters. In Q4. For example, it was 12, 8% for the full year of 2024. It was 11, 7% due to our M&A and consolidation and requirements in the initial stage.
Speaker Change: Because we want to support the development of the mobility solution in particular solution businesses.
Speaker Change: So the Opex ratio was already in the peak and going forward, we will implement tighter controls of our opex.
Speaker Change: Also with the.
Speaker Change: New teams in their position.
Speaker Change: We believe synergies will start to play out and to really materialize.
Speaker Change: So our goal for the Opex. This year is range between 12, 11% to 12% over the mid to long term.
Speaker Change: Company wide opex ratio.
<unk> be at 10%.
Speaker Change: Thank you.
Speaker Change: Thank you in the interest of time this concludes our Investor Conference.
Speaker Change: Do you have any other questions. Please feel free to contact us at the IR Department at AUO will see you next quarter. Thank you very much.