Q2 2026 Novatek Microelectronics Corp Earnings Call

August 6, 2026

Speaker #1: 各位投资人，呃，分析师，还有媒体，大家午安。我是联咏科技的副总经理以及发言人陈建新，呃，非常欢迎大家再一次来参加联咏科技2026年第二季的法人说明会。今天线上跟我们在一起的有我们联咏科技的副董事长王守仁先生，还有我们的财务长陈恒真兼副总，还有投资关系的Tony处长。很高兴能再一次跟大家在线上见面。今天的法说会同时会用中英文来进行，今天会议的议程，呃，如下：首先会有Tony这边先用英文报告联咏2026年第二季的结果，接下来会有我们的王副总针对第二季的结果做进一步的说明，同时也报告2026年第三季的展望。最后会开放给各位，呃，Q&A的时间。目前手上已经有收到一些投资人要问的问题，各位仍然可以透过线上把您想要问的问题上传给我们，呃，我们收到以后会帮忙整理，也帮大家来发问。会有我们的王副总、我们的兼副总，还有我本人用中英文来回答各位的问题，然后再翻译成英文。 Good afternoon, everyone. Oleg to extend a warm welcome to everyone for joining in to Novatek 2026, second quarter online earnings call.

David Chen: Good afternoon everyone, I'd like to extend a warm welcome to everyone for joining in to Novatek 2026 Second Quarter Online Earnings Call. This is David, Vice President and company spokesperson. I'll be the host of today's conference. Joining me on the call are Vice Chairman Steve Wang, our CFO and VP Jane, and our Director Tony. Thank you so much for joining in and good to see you all again. The agenda for today's event is as follows: First, Tony will report on Novatek Q2 results in English. Following that, Steve will provide further details on our Q2 results and guidance for Q3 2026. Next, we will proceed with the Q&A sessions. We have already received some questions from our investors, and we will start with those questions first later on. If you have any additional questions, please feel free to submit them online. We'll review and read each question in both Chinese and English. After that, we'll try our best to answer all your questions in Chinese, and I'll later translate them into English. We encourage your active participation and look forward to addressing your concerns. Now, I'll hand over the time to Tony to report on our Q2 results.

David Chen: [Foreign language]

Speaker #1: This is David, Vice President and Company Spokesperson. I'll be the host of today's conference. Joining me on the call are Vice Chairman Steve Wang, our CFO and VP Jane, and our Director Tony.

Speaker #1: Thank you so much for joining in, and good to see you all again. The agenda for today's event is as follows: First, Tony will report on Novatek's second quarter results, in English.

Speaker #1: Following that, Steve will provide further details on our Q2 results and guidance for the third quarter of 2026. Next, we'll proceed with the Q&A session.

David Chen: Next, we will proceed with the Q&A sessions. We have already received some questions from our investors, and we will start with those questions first later on. If you have any additional questions, please feel free to submit them online. We'll review and read each question in both Chinese and English. After that, we'll try our best to answer all your questions in Chinese, and I'll later translate them into English. We encourage your active participation and look forward to addressing your concerns. Now, I'll hand over the time to Tony to report on our Q2 results.

Speaker #1: We've already received some questions from our investors, and we will start with those questions first later on. If you have any additional questions, please feel free to submit them online.

Speaker #1: We will review and read each question in both Chinese and English. After that, we will do our best to answer all your questions in Chinese, and I will later translate them into English.

Speaker #1: We encourage your active participation and look forward to addressing your concerns. Now, I'll hand over the time to Tony to report on our Q2 results.

Speaker #2: Thank you, David. Cool. I have tenure, and a good morning. This is Tony. For the next page, please take a look at our Safe Harbor notice.

Tony Tseng: Thank you, David. Good afternoon and good morning, this is Tony. For the next page, please take a look at our tech market logic. Let's start to look at our Q2 financial results. First page is the net sales of TWD 28.66 billion in Q2, increased 23.8% quarter-over-quarter from Q1, and also rose by 9.6% year-over-year from a year ago. Next. Let's look at our gross profit. Gross profit of TWD 12.16 billion in Q2, increased 34.5% quarter-over-quarter from Q1, and also increased 28.1% year-over-year from Q2 2025. Next. This page shows our gross margin trend. Q2 gross margin of 42.42% increased 3.36 percentage from Q1, and also 6.12 percentage from Q2 2025. This result also exceeded our guidance of 38% to 41%. This page shows our operating expense. Q2 operating expense of TWD 5.69 billion, increased 13.5% quarter-over-quarter from Q1, and also 21.6% year-over-year from Q2 2025. Next. Moving to the operating income. Operating income of TWD 6.47 billion in Q2, increased 16.5% quarter-over-quarter from Q1, and also 34.1% year-over-year from Q2 2025. The next page shows our operating margin trend.

Speaker #2: Now let's start to look at our second quarter financial results. The first page is the net sales of $28.66 billion in the second quarter, which increased 23.8% quarter over quarter from the first quarter.

Speaker #2: And also grew by 9.6% year over year from a year ago. Next, let's look at our gross profits. Gross profit of $12.16 billion in the second quarter increased 34.5% quarter over quarter from the first quarter, and also increased 28.1% year over year from the second quarter of 2025.

Speaker #2: Next. this page shows our gross margin trend. Second quarter gross margin of 42.42, increased 3.36 percentage from first quarter, and also 6.12 percentage from second quarter 2025.

Speaker #2: This result also exceeded our guidance of 38 to 41 percent. Next, this page shows our operating expense. Second quarter operating expense of $5.69 billion increased 13.5% quarter over quarter from the first quarter, and also 21.6% year over year from second quarter 2025.

Tony Tseng: Next. Moving to the operating income. Operating income of TWD 6.47 billion in Q2, increased 16.5% quarter-over-quarter from Q1, and also 34.1% year-over-year from Q2 2025. The next page shows our operating margin trend. Q2 operating margin of 22.56%, increased 5.16 percentage from Q1, and also 4.12 percentage from Q2 last year-over-year. This result of 22.56% also exceeded our guidance of 16% to 19%. Next. Moving down to the net income. Q2 net income of TWD 6.33 billion, jumped by 68% quarter-over-quarter from Q1, and also 69.2% year-over-year from Q2 2025. Next. On the EPS. Q2 EPS of TWD 10.4 increased TWD 4.21 quarter-over-quarter, and also TWD 4.26 year-over-year from Q2 last year.

Speaker #2: Next, now moving to the operating income. Operating income of $6.47 billion in the second quarter increased 60.5% quarter over quarter from the first quarter, and also 34.1% year over year, from the second quarter of 2025.

Speaker #2: Next, the next page shows our operating margin trend. Second quarter operating margin of 22.56% increased 5.16 percentage points from the first quarter, and also 4.12 percentage points from the second quarter last year, year over year.

Tony Tseng: Q2 operating margin of 22.56%, increased 5.16 percentage from Q1, and also 4.12 percentage from Q2 last year-over-year. This result of 22.56% also exceeded our guidance of 16% to 19%. Next. Moving down to the net income. Q2 net income of TWD 6.33 billion, jumped by 68% quarter-over-quarter from Q1, and also 69.2% year-over-year from Q2 2025. Next. On the EPS. Q2 EPS of TWD 10.4 increased TWD 4.21 quarter-over-quarter, and also TWD 4.26 year-over-year from Q2 last year. Next. This is the summary page for our income statement for Q2 compared with Q1 2026 and Q2 2025. Next. The next is the consolidated income for our H1. H1 revenue of TWD 51.8 billion, slightly down 2.75% year-over-year.

Speaker #2: This result of 22.56% also exceeded our guidance of 16 to 19%. Next, moving down to net income. Second quarter net income of $6.33 billion jumped by 68% quarter over quarter from the first quarter, and also 69.2% year over year from the second quarter of 2025.

Speaker #2: Next. Now, on the EPS, second quarter EPS of 10.4 dollars, increased 4 dollars and 21 cents quarter over quarter, and also 4 dollars and 26 cents year over year from second quarter last year.

Tony Tseng: Next. This is the summary page for our income statement for Q2 compared with Q1 2026 and Q2 2025. Next. The next is the consolidated income for our H1. H1 revenue of TWD 51.8 billion, slightly down 2.75% year-over-year. Gross profit of TWD 21.2 billion increased 4.54% year-over-year. Operating expense of TWD 10.7 billion increased 9.69% year-over-year. Net income of TWD 10.095 billion increased 12.13% year-over-year. As for EPS, it reached TWD 16.59 in H1, compared with TWD 14.8 a year ago. Let's look at our revenue breakdown for Q2. In Q2, SoC/DDIC accounted for 52% in Q2 revenue, which is up from 44% in Q1 and 37% a year ago.

Speaker #2: Next. Now, this is the summary page for our income statement for the second quarter, compared with the first quarter of 2026 and the second quarter of 2025.

Speaker #2: Next, the next is the consolidated income for our first step, first half. First half revenue of $51.8 billion, slightly down 2.75% year over year.

Tony Tseng: Gross profit of TWD 21.2 billion increased 4.54% year-over-year. Operating expense of TWD 10.7 billion increased 9.69% year-over-year. Net income of TWD 10.095 billion increased 12.13% year-over-year. As for EPS, it reached TWD 16.59 in H1, compared with TWD 14.8 a year ago. Let's look at our revenue breakdown for Q2. In Q2, SoC/DDIC accounted for 52% in Q2 revenue, which is up from 44% in Q1 and 37% a year ago. For the large-size driver, which accounted for 20% of Q2 revenue, compared with 23% in Q1 and 20% in Q2 2025. Lastly, on the small, medium-size driver, which accounted for 28% of Q2 revenue, down from 33% in Q1 and compared with 40% a year ago. We are also reporting our July revenues.

Speaker #2: Gross profit of $21.2 billion, increased 4.54% year over year. Operating expense of $10.7 billion, increased 9.69% year over year. Net income of $10.095 billion, increased 12.13% year over year.

Speaker #2: As for EPS, we reached $16.59 in the first half, compared with $14.80 a year ago. Next, let's look at our revenue breakdown for the second quarter.

Speaker #2: In the second quarter, SOC business accounted for 52% of second quarter revenue, up from 44% in the first quarter and 37% a year ago.

Speaker #2: Then, for the large-size driver, which accounted for 20% of second-quarter revenue, compared with 23% in the first quarter and 20% in the second quarter of 2025.

Tony Tseng: For the large-size driver, which accounted for 20% of Q2 revenue, compared with 23% in Q1 and 20% in Q2 2025. Lastly, on the small, medium-size driver, which accounted for 28% of Q2 revenue, down from 33% in Q1 and compared with 40% a year ago. We are also reporting our July revenues. July revenue of TWD 10.296 billion increased 26.8% year over year, Also up 2.73% month over month. For the first seven months, total revenue of TWD 62.1 billion also increased 1.15% year over year. We also released our revenue breakdown for July revenue, We can see good momentum from our driver IC business. Next. The next page show our monthly revenue trend since the January 2025 until July 2026.

Speaker #2: Lastly, on the small- to medium-size driver, which accounted for 28% of second quarter revenue, down from 33% in the first quarter and compared with 40% a year ago.

Speaker #2: Next, we are also reporting our July revenue. July revenue of $10.296 billion increased 26.8% year over year, and was also up 2.73% month over month.

Tony Tseng: July revenue of TWD 10.296 billion increased 26.8% year over year, Also up 2.73% month over month. For the first seven months, total revenue of TWD 62.1 billion also increased 1.15% year over year. We also released our revenue breakdown for July revenue, We can see good momentum from our driver IC business. Next. The next page show our monthly revenue trend since the January 2025 until July 2026. As you can see, the year over year growth on a monthly basis start to happen from April this year, We continue to see this trend in May, June, and also July. July alone, the year over year growth reached 27% year over year. Next. This page shows our summary for our key items as our balance sheet. On the cash side, cash of TWD 53.99 billion, up 10.37% quarter over quarter, Slightly down 1.33% year over year.

Speaker #2: For the first seven months, total revenue was $62.1 billion, which also increased 1.15% year over year. We also released our revenue breakdown for July, and we can see good momentum from our Driver IC business.

Speaker #2: Next, the next page shows our monthly revenue trend since January 2025 until July 2026. As you can see, the year-over-year growth on a monthly basis starts to happen from April this year, and we continue to see this trend in May, June, and also July.

Tony Tseng: As you can see, the year over year growth on a monthly basis start to happen from April this year, We continue to see this trend in May, June, and also July. July alone, the year over year growth reached 27% year over year. Next. This page shows our summary for our key items as our balance sheet. On the cash side, cash of TWD 53.99 billion, up 10.37% quarter over quarter, Slightly down 1.33% year over year. Account receivable of TWD 20.4 billion, up 13.79% quarter over quarter Also 2.46% year over year. Lastly, inventory of TWD 13.31 billion also increased 22.66% quarter over quarter Also 45.02% year over year. Now let me pass the call back to David. Thank you.

Speaker #2: So in July alone, the year-over-year growth reached 27%. Next, this page shows a summary of our key items on our balance sheet.

Speaker #2: On the cash side, cash was $53.99 billion, up 10.37% quarter over quarter but slightly down 1.33% year over year. Accounts receivable was $20.4 billion, up 13.79% quarter over quarter and also 2.46% year over year.

Tony Tseng: Account receivable of TWD 20.4 billion, up 13.79% quarter over quarter Also 2.46% year over year. Lastly, inventory of TWD 13.31 billion also increased 22.66% quarter over quarter Also 45.02% year over year. Now let me pass the call back to David. Thank you.

Speaker #2: Lastly, inventory of $13.31 billion also increased 22.66% quarter over quarter and 45.02% year over year. Now, let me pass the quote back to David.

Speaker #2: Thank you.

Speaker #1: Thank you, Tony. The following slides are a recap of our recent major events. Novatek has once again been awarded the 1.5-degree climate action certificate by Commonwealth Magazine for the fourth consecutive year, in recognition of our effort in keeping global warming within the 1.5-degree threshold.

David Chen: Thank you, Tony. The following slides is a recap of our recent major event. Novatek has once again been awarded the 1.5 Degree Climate Action Certificate by The CommonWealth For the fourth consecutive year, in recognition of our effort in keeping global warming within the 1.5-degree threshold. We also have completed the ISO 14064 greenhouse gas inventory across our global operations, not just the headquarters. Novatek has also achieved ISO 26262, the ASIL B compliant product certification, marking a new milestone in automotive functional safety. We also have been selected and included into various indices, like the Taiwan Sustainability Index for a seventh consecutive year, Also the Taiwan Employment Creation 99 Index for the fifth year, Also as a Taiwan High Compensation 100 Index for 13th consecutive years.

Speaker #1: We have also completed the 2025 ISO greenhouse gas inventory across our global operations, not just the headquarters. Novatek has also achieved ISO 26262 ASIL-B compliant product certification, marking a new milestone in automotive functional safety.

Speaker #1: And, we also have been, selected and included into various indices like the Taiwan Sustainable Ability Index for seventh consecutive year, and also the Taiwan Employment Creation 99 Index for the fifth year, and also as a Taiwan High Salary 100 Index for 13 consecutive years.

Speaker #1: Our 2025 ESG report has also been published and is available for review and download at the provided link above. And now, I'll turn over the call to our Vice Chairman, Steve Wong, to provide us with more details on our Q2 results.

David Chen: Our 2025 ESG report has also been published and is available for review and download, provided by our link as see above. Now I'll turn over the call to our Vice Chairman, Steve Wang, to provide us more details on our Q2 results and Q3 guidance. Okay. Steve, just want to good afternoon to everybody, As Tony already reported our Q2 results, you can see that the revenue in Q2, QOQ increased by 23.83% Is exceeding our guidance. This is mainly due to increase in early pull-in demand. All the three main product lines experienced growth, which resulted in a significant QOQ growth for both the revenue and profit. As for Q2 margins, Q2 gross margin is 42.42%, up by 3.36 percentage point quarter over quarter, This also exceeded our guidance too.

Speaker #1: And Q3 guidance. 接下来我们邀请我们的王副总先对第二季的结果做进一步的说明，同时也报告第三季的展望。

Speaker #3: 呃，各位线上投资界的先进朋友，还有媒体界的朋友们，大家午安。我想那个Tony呢，已经跟各位报告了林勇在第二季的这个营运的这个结果。那第二季的营收呢，叫第一季呢，成长了大概有23.8%，超出了我们guidance的这个上缘。所以只要是因为客户拉货的需求增加呢，呃，Novatek三大产品线的业绩呢，在第二季同步向上。所以公司的营收及获利呢，也较第一季呢，有显著的这个增长。那第二季的毛利率呢，42.42%呢，也比我们，呃，Q1的这个毛利率呢，大概提升了3.36个百分点。这个也超过了我们的这个guidance的这个上缘。这第二季的，呃，营运的这个result大概是这样。至于有关这个第三季的这个展望呢，呃，由于今年上半年呢，呃，部分的零件跟材料的供应紧缺，成本上扬，特别是这个memory chip。呃，终端产品的售价也有反映这个成本调涨。那厂商呢，在上半年也提前拉货，所以目前我们观察到下半年呢，呃，消费性电子的这个产品的需求呢，有开始减缓的这个情形。不过呢，呃，林勇第三季的营收呢，呃，由于有这个手机客户的这个备货需求的拉升呢，以及Edge AI影像视觉晶片出货持续稳健成长呢，因此我们预期呢，第三季林勇的这个营收呢，应该可以持续的成长。目前在营收上呢，我们的guidance大概会介于，呃，新台币300亿到312亿之间。那这个是用汇率32来计算。毛利率呢，呃，应该会介于38.5%呢，到41.5%之间。至于营业利益率呢，大概会介于19%呢，到22%之间。我想以上呢，简单先跟大家报告一下这个第三季的这个指引。

Steve Wang: [Foreign language]

David Chen: Okay. Steve, just want to good afternoon to everybody, As Tony already reported our Q2 results, you can see that the revenue in Q2, QOQ increased by 23.83% Is exceeding our guidance. This is mainly due to increase in early pull-in demand. All the three main product lines experienced growth, which resulted in a significant QOQ growth for both the revenue and profit. As for Q2 margins, Q2 gross margin is 42.42%, up by 3.36 percentage point quarter over quarter, This also exceeded our guidance too. Since the beginning of this year, the shortages of certain components and materials, especially memory chips, have led to higher input costs. Our end product prices have also been raised accordingly while customers are accelerating purchases in H1. As a result, consumer electronics demand has shown some moderation in H2.

Speaker #1: Okay. 呃，Steve just, want to. Good afternoon to everybody. And as Tony already reported, our Q2 results, and you can see that the revenue in Q2, Q of Q increased by 23.83%, and this exceeding our guidance.

Speaker #1: And this is mainly due to an increase in early pull-in demand, and all three main product lines experienced growth, which resulted in significant quarter-on-quarter growth for both revenue and profit.

Speaker #1: And as for Q2 margins, Q2 gross margin is 42.42%, up by 3.36 percentage points quarter over quarter, and this also exceeded our guidance.

Speaker #1: And since the beginning of this year, the shortages of certain components and materials, especially memory chips, have led to higher input costs. Our end product prices have also been raised accordingly.

David Chen: Since the beginning of this year, the shortages of certain components and materials, especially memory chips, have led to higher input costs. Our end product prices have also been raised accordingly while customers are accelerating purchases in H1. As a result, consumer electronics demand has shown some moderation in H2. Despite this, Novatek expect Q3 revenue to maintain sequential growth, and basically, it's driven by solid expansion in Edge AI vision-related chip business and stronger inventory build-up demand from smartphone customers. Based on the above, our 2026 Q3 guidance will be as follow: Revenue TWD 30 billion to 31.2 billion, at an exchange rate of 1 to 32. Gross margin is expecting to be around 38.5% to 41.5% range. Operating margin between 19% to 22% range. Thank you, Steve, for the Q2 guidance.

Speaker #1: While customers are accelerating purchases in the first half of the year, as a result, consumer electronics demand has shown some moderation in the second half.

David Chen: Despite this, Novatek expect Q3 revenue to maintain sequential growth, and basically, it's driven by solid expansion in Edge AI vision-related chip business and stronger inventory build-up demand from smartphone customers. Based on the above, our 2026 Q3 guidance will be as follow: Revenue TWD 30 billion to 31.2 billion, at an exchange rate of 1 to 32. Gross margin is expecting to be around 38.5% to 41.5% range. Operating margin between 19% to 22% range.

Speaker #1: Despite this, Novatek expects Q3 revenue to maintain sequential growth, and basically, it's driven by solid expansion in Edge AI vision-related chip business and stronger inventory build-up demand from smartphone customers.

Speaker #1: And based on the above, our 2026 Q3 guidance will be as follows: revenue of NT$30 billion to NT$31.2 billion, at an exchange rate of 1 to 32.

Speaker #1: Gross margin is expected to be in the 38.5% to 41.5% range. Operating margins are projected between 19% and 22%. Thank you, Steve, for the Q3 guidance.

David Chen: Thank you, Steve, for the Q2 guidance. Next, we'll move on to Q&A sessions. Please be reminded to send in your questions.

Speaker #1: Next, we'll move on to Q&A sessions. Please be reminded to send in your questions. 接下来是我们进入到Q&A的时间。那我们把时间交给，呃，Tony。我们手上已经收到了一些投资人事先传给我们的问，问题。我们会以那些问题先进行，后面还有一些没有cover到的，那后面收到以后我们会来，来一一的帮大家来提问。Tony。

David Chen: Next, we'll move on to Q&A sessions. Please be reminded to send in your questions. 接下来是我们进入到Q&A的时间，那我们把时间交给Tony。我们手上已经收到了一些投资人事先传给我们的问题，我们会以那些问题先进行，后面还有一些没有cover到的，收到以后，我们会来一一的帮大家来提问。Tony。

David Chen: [Foreign language]

Speaker #3: 好的，谢谢David。那第一个问题就是还是想请管理层就第三季的话，对公司几个主要的应用需求的趋势，呃，麻烦分享一下您的看法。

Tony Tseng: 好的，谢谢David。那第一个问题还是想请管理层，就第三季对公司几个主要的应用需求的趋势，麻烦分享一下您的看法。

Tony Tseng: [Foreign language]

Speaker #2: 呃，第三季呢，各主要应用的需求趋势呢，呃，目前我们的观察呢，大致如下。这个主要是以panel的生产base来看的话，就TV的应用来看的话呢，QOQ看起来需求有这个，呃，略减的这个情形。至于monitor呢，呃，QOQ呢，看起来是进入了这个，呃，生产的这个，呃，淡季，所以会进入衰退。那以notebook来看的话呢，因为上半年品牌客户提前拉货呢，第三季呢，看起来有需求减少的情形。不过呢，平板这里呢，看起来需求有略微增加。就mobile的产品来看的话呢，呃，非中国品牌的客户看起来有增加的情形。至于中国品牌的客户看起来需求是比较疲软。至于auto的这个，呃，产品呢，以QOQ来看的话，看起来是持平的。

Steve Wang: 第三季各主要应用的需求趋势，目前我们的观察大致如下：这个主要是以panel的生产base来看的话，就TV的应用来看的话，QOQ看起来需求有略减的情形。至于monitor，QOQ看起来是进入了生产的淡季，所以会进入衰退。那以notebook来看的话，因为上半年品牌客户提前拉货，第三季看起来有需求减少的情形。不过平板这里看起来需求有略微增加。就mobile的产品来看的话，非中国品牌的客户看起来有增加的情形。至于中国品牌的客户，看起来需求是比较疲软。至于auto的产品，以QOQ来看的话，看起来是平的。

Steve Wang: [Foreign language]

Tony Tseng: Could management share the view on the sequential trend across major application in terms of order flows into Q3 2026?

Speaker #3: Could management share their view on the sequential trend across major applications in terms of order flows into the third quarter of 2026?

Speaker #1: Based on panel production data for the third quarter, we observed the following demand trends across major applications. Looking at TV demand, it is expected to be slightly down quarter over quarter.

David Chen: Based on panel production data for Q3, we observed the following demand trends across major applications. Looking at TV demand, it is expected to be slightly down QOQ. As monitor production is entering a seasonal slowdown and is also expected to decline. Due to customer pull-in in H1, notebook demand is expected to decline while tablet demand should see modest growth. As for mobile phone demand, it is improving among customer outside China, whereas demand from Chinese customer remains soft. As for automotive demand, it is expected to remain largely flat QOQ.

Speaker #1: As monitor production enters a seasonal slowdown and is also expected to decline, and due to customer pull-in in the first half of the year, notebook demand is expected to decline while tablet demand should see modest growth.

Speaker #1: As for mobile phone demand, it is improving among customers outside China, whereas demand from Chinese customers remains soft. As for automotive demand, it is expected to remain largely flat quarter over quarter.

Tony Tseng: 第二个问题，刚管理层有给第三季的营收的guidance，想请问一下，那在您的三大产品线的营收季对季的表现的情况会是怎么样呢？

Tony Tseng: [Foreign language]

Speaker #3: 第一个问题。刚刚管理层有给第三季的营收的guidance，想请问一下，那在您的三大产品线的营收季对季的表现的情况会是怎么样呢？

Speaker #2: 呃，就第三季联咏三大产品线的营收呢，呃，季对季来看的话，大概，呃，如下。以中小尺寸的驱动IC来看的话呢，因为有手机客户呢，进入这个备货需求的旺季呢，我们预估第三季的营收呢，会有强劲的成长。但以SOC产品来看的话呢，呃，我们预估呢，营收大概是持平。虽然呢，呃，Edge AI影像视觉晶片呢，看起来会持续成长，不过呢，在大面板相关应用的这个出货呢，看起来会减少。所以会营收大概持平，SOC的产品。但是大尺寸的驱动IC呢，呃，营收看起来会下滑，这个主要由于这个，呃，大尺寸的面板的需求衰退。那面板厂呢，呃，目前是减产因应，主要的三大产品线情况大致如此。

Steve Wang: 就第三季联咏三大产品线的营收，季对季来看的话大概如下：以中小尺寸的驱动IC来看的话，因为有手机客户进入备货需求的旺季，我们预估第三季的营收会有强劲的成长。那以SoC产品来看的话，我们预估营收大概是持平。虽然Edge AI影像视觉晶片看起来会持续成长，不过在大面板相关应用的出货看起来会减少，所以营收大概持平，SoC的产品。但是大尺寸的驱动IC，营收看起来会下滑，这主要由于大尺寸的面板的需求衰退，面板厂目前是减产因应。主要的三大产品线情况大致如此。

Steve Wang: [Foreign language]

Speaker #3: Uh, therefore, could you also provide your quarterly revenue trend across your three business groups?

Tony Tseng: Therefore, could you also provide your quarterly revenue trend across your three business group?

Speaker #1: Looking at our three major product categories of business group, we expect the following: the small and medium driver IC revenue is expected to increase significantly quarter-over-quarter.

David Chen: Looking at our three major product categories of business group, we expect the following: the small medium driver IC revenue is expected to increase significantly QOQ, basically driven by seasonal inventory replenishment from smartphone customers. SoC revenue is expected to remain relatively stable. A growth in Edge AI, vision-related products should largely offset lower shipments associated with large panel applications. As for large driver IC revenue, it is expected to decline QOQ as demand for large-sized panels softens and panel manufacturers are reducing production accordingly.

Speaker #1: Basically driven by seasonal inventory replenishment from smartphone customers, and SoC revenue is expected to remain relatively stable. Growth in Edge AI vision-related products should largely offset lower shipments associated with large panel applications.

Speaker #1: As for large driver IC revenue, it is expected to decline quarter over quarter, as demand for large-sized panels softens and panel manufacturers are reducing production accordingly.

Speaker #3: 下一题想请教一下，呃，公司第二季SOC的营收季成长有大概40%，年对年的成长也有占，呃，到达50%，也占了整个公司营收50%左右。请问上半年SOC营收产品线中占比的顺序如何？还有产品的成长的顺序如何？那这些的，呃，这个动能除了反映记忆体涨价外，还有其他的原因吗？那也想，呃，管理层提一下关于整合AI功能的产品现在占SOC产品线的比重为何？

Tony Tseng: 下一题想请教一下，公司第二季SoC的营收季成长有大概40%，年对年的成长也到达50%，也占了整个公司营收50%左右。请问上半年SoC营收产品线中占比的顺序如何？还有产品的成长的顺序如何？这些动能除了反映记忆体涨价外，还有其他的原因吗？那也想关经理提一下，关于整合AI功能的产品，现在在SoC产品线的比重为何？

Tony Tseng: [Foreign language]

Speaker #2: 呃，SOC产品线呢，上半年的营收成长呢，呃，主要以这个Edge AI相关产品，呃，成长最大。这个除了受惠这个反映记忆体的涨价以外呢，在出货量呢，呃，也大幅的增加。至于这个上半年Edge AI相关产品的营收呢，占SOC产品线的这个百分比呢，目前看起来是持续往上增加。

Steve Wang: SoC 产品线上半年的营收成长，主要以 Edge AI 相关产品成长最大。除了受惠反映记忆体的涨价以外，在出货量也大幅地增加。至于上半年 Edge AI 相关产品的营收，占 SoC 产品线的百分比，目前看起来是持续往上增加。

Steve Wang: [Foreign language]

Tony Tseng: Revenue for SoC product Q2 increased by 40% QOQ and around 50% year-over-year, accounting for 50% of total revenue. Could you provide the ranking in terms of revenue mix and growth in the H1? In addition to the ASP inflation from higher memory pricing, any other factors behind this robust growth? What percentage of revenue from AI-related products in the H1?

Speaker #3: Revenue for the SOC product in the second quarter increased by 40% quarter over quarter and around 50% year over year, accounting for 50% of total revenue.

Speaker #3: Could you provide the ranking in terms of revenue mix and the growth in the first half? Also, in addition to the ASV inflation from higher memory prices, were there any other factors behind this robust growth?

Speaker #3: And also, what percentage of revenue came from AI-related products in the first half?

Steve Wang: Within the SoC product line, Edge AI-related product actually achieved the highest year-over-year revenue growth in the H1 of this year. In addition to reflecting higher memory prices, the shipment volumes also grew substantially. Edge AI-related products continue to account for a growing proportion of revenue within the SoC product line during the H1 of the year.

David Chen: Within the SoC product line, Edge AI-related product actually achieved the highest year-over-year revenue growth in the H1 of this year. In addition to reflecting higher memory prices, the shipment volumes also grew substantially. Edge AI-related products continue to account for a growing proportion of revenue within the SoC product line during the H1 of the year.

Speaker #1: Within the SOC product line, Edge AI-related products actually achieved the highest year-over-year revenue growth in the first half of this year. In addition to reflecting higher memory prices, the shipment volumes also grew substantially.

Speaker #1: Edge AI-related products continued to account for a growing proportion of revenue within the SoC product line during the first half of the year.

Speaker #3: 下一个问题是想请教一下，我们看到，呃，汽车的需求，呃，产业相对没有受到第一季涨价的影响，所以想请问公司上半年车用相关的产品的年成长如何？那主要的成长因素为何？那也想公司提可以提一下关于您的TDDI的出货量或成长的情况吗？还有，呃，目前TDDI占营收的情况，车用的营收为何？以及车用产品占整个公司的营收的比重是怎么样？

Tony Tseng: 下一个问题是想请教一下，我们看到汽车的需求产业相对没有受到记忆体涨价的影响，所以想请问公司上半年车用相关的产品的年成长如何？主要的成长因素为何？那也想可不可以提一下关于你的TDDI的出货量或成长的情况吗？还有目前TDDI在营收的情况，车用的营收如何，以及车用产品在整个公司的营收的比重是怎么样？

Tony Tseng: [Foreign language]

Speaker #2: 呃，Novatek呢，呃，车用产品线上半年呢，我们有这个不错的成长。这个主要来自市场份额的这个提升，尤其是车用TDDI出货呢，呃，有大幅增加。这个预期呢，我们全年在车用产品线呢的营收呢，应该会较去年呢，呃，有不错的成长。

Steve Wang: Novatek 车用产品线上半年我们有不错的成长，主要来自市场份额的提升，尤其是车用 TDDI 出货有大幅增加。预期我们全年在车用产品线的营收，应该会较去年有不错的成长。

Steve Wang: [Foreign language]

Tony Tseng: As demand on auto product has been less affected by higher memory prices. What's the year-over-year growth rate for auto-related product in H1? Any major factor for this growth? How about shipments or growth for the auto TDDI product? What percentage of revenue from TDDI product is auto? What percentage of company overall revenue now comes from automotive business?

Speaker #3: Uh, demand for our auto products has been less affected by higher memory prices. What's the year-over-year growth rate for auto-related products in the first half? Any major factors for this growth?

Speaker #3: And also, how about shipments or growth for the auto TDDI product? And also, what percentage of revenue comes from TDDI products and auto? And also, what percentage of the company’s overall revenue now comes from the automotive business?

Steve Wang: The overall revenue from automotive related product actually posted solid year-over-year growth in H1. This is largely due to market share gains, particularly given the robust growth of TDDI product, TDDI business, touch and driver integrated solution. Based on the current status, we are expecting 2026 revenue in the automotive area to outgrow 2025.

David Chen: The overall revenue from automotive related product actually posted solid year-over-year growth in H1. This is largely due to market share gains, particularly given the robust growth of TDDI product, TDDI business, touch and driver integrated solution. Based on the current status, we are expecting 2026 revenue in the automotive area to outgrow 2025.

Speaker #1: The overall revenue from automotive-related products actually posted solid year-over-year growth in the first half, and this is largely due to market share gains, particularly given the robust growth of the TDDI business—Touch and Driver Integrated solution.

Speaker #1: So, based on the current status, we are expecting 2026 revenue in the automotive area to outgrow 2025.

Speaker #3: 下一个问题是想请教一下公司的DDIC驱动IC产品中的跟所谓的ASIC进展的情况为何？

Tony Tseng: 下一个问题是想请教一下公司的DDIC驱动IC产品中的跟所谓的ASIC进展的情况为何？

Tony Tseng: [Foreign language]

Speaker #2: 呃，以TD以D呃，DDIC产品线的ASIC产品来看的话呢，Novatek跟客户的engagement呢，事实上涵盖了各种不同的应用范围广泛。呃，这个包括了手机啊、穿戴啊、gaming啊、呃，车用啊，甚至IT等等。我想这个对未来营收的贡献呢，应该是值得期待的。

Steve Wang: 以 DDIC 产品线的 ASIC 产品来看的话，Novatek 跟客户的 engagement 事实上涵盖了各种不同的应用，范围广泛，包括了手机、穿戴、gaming、车用，甚至 IT 等等。我想这个对未来营收的贡献应该是值得期待的。

Steve Wang: [Foreign language]

Tony Tseng: For your DDIC product, could you also provide update on the ASIC product data?

Speaker #3: For your DDIC product, the producer provided an update on the ASIC product data.

Steve Wang: Well, in the driver IC related ASIC projects, Novatek is actually actively engaged with customers across a diverse range of applications like the automotive, IT, gaming, a lot of them. Given the broad scope of these engagements, we do believe that it has the potential to become meaningful revenue contributor in the future.

David Chen: Well, in the driver IC related ASIC projects, Novatek is actually actively engaged with customers across a diverse range of applications like the automotive, IT, gaming, a lot of them. Given the broad scope of these engagements, we do believe that it has the potential to become meaningful revenue contributor in the future.

Speaker #1: Well, in the driver IC-related ASIC projects, Novatek has actually actively engaged with customers across a diverse range of applications, like automotive, IT, gaming—a lot of them. Given the broad scope of these engagements, we do believe that it has the potential to become a meaningful revenue contributor in the future.

Speaker #3: 那，呃，关于SOC产品这边，可不可以也提一下您这边在ASIC或者先进制程产品的一些进展？

Tony Tseng: 关于SoC产品这边，可不可以也提一下您这边在ASIC或者先进制程产品的一些进展？

Tony Tseng: [Foreign language]

Speaker #2: 呃，Novatek呢，我们会持续投资在先进制程的产品设计。另外，我们也会同时布局呢，呃，Edge AI或者是代理式AI机器视觉应用领域的这个，呃，产品。而且我们也会持续开拓这个ASIC相关的业务。那目前看起来呢，呃，逐步顺利在推进当中。呃，这些应用呢，比如说包括了智能家居啦，呃，代理式的NVR啦，还有这个，呃，VLOGCAM啦，智慧眼镜啦，Drone啦，安防啦等等。

Steve Wang: Novatek 会持续投资在先进制程的产品设计。另外我们也会同时布局 Edge AI 或者是代理式 AI、机器视觉应用领域的产品，而且我们也会持续开拓 ASIC 相关的业务。目前看起来逐步顺利在推进当中。这些应用比如包括了智能家居、代理式的 NVR，还有 Vlock Cam、智慧眼镜、drone、安防等等。

Steve Wang: [Foreign language]

Tony Tseng: For SoC product, could you also provide the update on ASIC and also on related to advanced node products?

Speaker #3: For SOC products, the producer provided an update on ASIC and also on the products related to advanced nodes.

Steve Wang: Regarding to the SoC ASIC area, we'll continue to invest in advanced node product development and try to broaden our footprint in agentics like Edge AI, machine vision applications including smart home devices, AI-enabled NVR, Vlock cameras, smart glasses, drones, security surveillance systems. We are actively pursuing ASIC opportunities in these markets and project execution is progressing steadily and according to plan.

David Chen: Regarding to the SoC ASIC area, we'll continue to invest in advanced node product development and try to broaden our footprint in agentics like Edge AI, machine vision applications including smart home devices, AI-enabled NVR, Vlock cameras, smart glasses, drones, security surveillance systems. We are actively pursuing ASIC opportunities in these markets and project execution is progressing steadily and according to plan.

Speaker #1: Well, regarding the SoC ASIC area, we'll continue to invest in advanced node product development and try to broaden our footprint in agentic-like Edge AI and machine vision applications, including smart home devices, AI-enabled NVRs, VLOG cameras, smart glasses, drones, and security surveillance systems. We are actively pursuing ASIC opportunities in these markets, and project execution is progressing steadily and according to plan.

Speaker #3: 呃，在上次的说明会中，呃，管理层有提到手机OLED DDIC的产品线近两年切入国际一线品牌，预期年营收构建在2026年跟明年都可以持续增加。请问目前能见度有到2028年吗？这方面的客户除了在手机的成长外，还有其他产品线的机会吗？

Tony Tseng: 在上次的说明会中，管理层有提到手机 OLED DDIC 的产品线近两年切入国际一线品牌，预期年营收贡献在 2026 年跟明年都可以持续增加。请问目前能见度有到 2028 年吗？这方面的客户除了在手机的成长外，还有其他产品线的机会吗？

Tony Tseng: [Foreign language]

Speaker #2: 呃，Novatek呢，呃，目前我们和客户手机OLED DDI DDIC的这个产品开发呢，还有这个出货呢，呃，是进展顺利的。相信对未来几年呢，营收的贡献呢，我们应该是正面可以期待的。那当然了，除了手机以外，事实上其他的应用专案呢，的产品呢，我们也顺便，呃，顺利的在开发当中。

Steve Wang: Novatek 目前我们和客户手机 OLED DDIC 的产品开发和出货是进展顺利的，相信对未来几年的营收的贡献，我们应该是正面可以期待的。当然了，除了手机以外，事实上其他的应用专案的产品我们也顺利地在开发当中。

Steve Wang: [Foreign language]

Speaker #3: Given the penetration of OLED DDIC for smartphones into first-tier customers recently, your management mentioned last time that revenue from these customers will grow year-over-year in both 2026 and 2027.

Tony Tseng: Given the penetration of OLED DDIC for smartphone into first-tier customers recently. Your management mentioned last time that the revenue from the customers will grow year-over-year in both 2026 and then 2027. How about the visibility into 2028? Also, in addition to smartphone product, are you working on with other product lines?

Speaker #3: How about the visibility into 2028? Also, in addition to smartphone product, are you working on with other product lines?

Speaker #1: Novatek OLED driver IC product development and shipment programs with some of the smartphone customers are progressing very smoothly, and we believe these products have the potential to become meaningful contributors to future revenue.

Steve Wang: Novatek's OLED driver IC product development and shipment programs with some of the smartphone customers are progressing very smoothly, and we believe these products have the potential to become meaningful contributor to future revenue. Beyond smartphone applications, the development projects across a variety of other applications are also advancing as planned.

David Chen: Novatek's OLED driver IC product development and shipment programs with some of the smartphone customers are progressing very smoothly, and we believe these products have the potential to become meaningful contributor to future revenue. Beyond smartphone applications, the development projects across a variety of other applications are also advancing as planned.

Speaker #1: And beyond smartphone applications, the development projects across a variety of other applications are also advancing as planned.

Speaker #3: 呃，下一个问题是想请教一下关于手机OLED DDIC FinFET的制程，是否已经确定，有预计量产的时间表吗？

Tony Tseng: 下一个问题是想请教一下关于手机 OLED DDIC FinFET 的制程是否已经确定，有预计量产的时间表吗？

Tony Tseng: [Foreign language]

Speaker #2: 呃，Novatek的手机OLED DDIC产品呢，呃，我们目前已经采用了2奈米的高压制程来这个量产。至于FinFET的制程的导入呢，我想公司呢，会配合客户对规格的要求呢，我们适时来导入。基本上呢，我想只要具有竞争力的制程呢，Novatek呢，我们都会进行这个评估和这个采用。

Steve Wang: Novatek 的手机 OLED DDIC 产品，我们目前已经采用了 22 纳米的高压制程来量产。至于 FinFET 制程的导入，我想公司会配合客户对规格的要求，我们适时来导入。基本上，我想只要具有竞争力的制程，Novatek 我们都会进行评估和采用。

Steve Wang: [Foreign language]

Tony Tseng: As for the node process of FinFET OLED driver IC for smartphone, has the timetable been decided? Do you have the timetable for the mass production of FinFET OLED DDIC for smartphone?

Speaker #3: As for the node process of FinFET OLED driver IC for smartphone, has the timetable been decided? Do you have the timetable for the mass production of FinFET OLED DDIC for smartphone?

Speaker #1: Uh, okay. Smartphone OLED driver IC and display driver IC products are currently being mass-produced on a 22-nanometer high-voltage process. As for the FinFET technologies, we'll adopt them in line with our customers' specification requirements and our product development plan.

Steve Wang: Our smartphone OLED DDIC, display driver IC products are currently being mass produced on a 22 纳米 high voltage process. As for the FinFET technologies, we will adopt them in line with our customer specification requirements and also product development plan. In general, Novatek will continue to evaluate and adopt process technology that offers strong competitiveness.

David Chen: Our smartphone OLED DDIC, display driver IC products are currently being mass produced on a 22 纳米 high voltage process. As for the FinFET technologies, we will adopt them in line with our customer specification requirements and also product development plan. In general, Novatek will continue to evaluate and adopt process technology that offers strong competitiveness.

Speaker #1: In general, Novatek will continue to evaluate and adopt process technologies that offer strong competitiveness.

Speaker #3: 那，呃，目前比较关于，呃，top line的营收的需求的问题，目前这样一个段段落，我们现在往毛利率这个方向，呃，有好几位投资人也对于我们第二季的毛利率非常的惊艳，所以特别想请教一下第二季毛利率超过指引的上缘，并较第一季大幅的增加336个basis point。请问主要的因素为何？

Tony Tseng: 目前关于top line营收的需求的问题，目前在一个段落。我们切换往毛利率这个方向，有好几位投资人也对于我们第二季毛利率非常地惊艳，所以特别想请教一下，第二季毛利率超过指引的上缘，并较第一季大幅地增加336个basis points，请问主要的因素为何？

Tony Tseng: [Foreign language]

Speaker #2: 呃，这个主要的因素有三点。第一个是因为公司反映成本有调整售价，这个最主要是因为，呃，部分的材料和这个offset的封测成本呢，有上扬。第二个呢，是Q2呢的销售产品组合是属于比较有利的组合，因为SOC产品的营收占比提升。我想这个有利于毛利率。第三个是我们有较低的这个，呃，库存的成本，这个也是对，呃，这个第二季毛利率的这个，呃，增加呢，有一些贡献。

Steve Wang: 这个主要的因素有三点，第一个是因为公司反应成本有调整售价，这个最主要是因为部分的材料和OSAT的封测成本有上扬。第二个是Q2的销售产品组合是属于比较有利的组合，因为SoC产品的营收占比提升，有利于毛利率。第三个是我们有较低的库存的成本，这个也是对第二季毛利率的增加有些贡献。

Steve Wang: [Foreign language]

Speaker #3: Regarding the previous question, shifting to gross margin—some investors are quite surprised by the strong second quarter gross margin result. They are wondering why the Q2 gross margin exceeded guidance and also increased by 336 basis points quarter over quarter. What were the factors behind this?

Tony Tseng: Now the questions are shifting to gross margin, related to the good Q2 gross margin result. They wonder why Q2 gross margin exceeded the guidance and also increased by 336 basis points quarter-over-quarter. What are those factors?

Steve Wang: The reasons for the increase in Q2 gross margins are as follows. First of all, in response to the rising cost of certain materials such as KGD wafers, substrates, as well as the higher outsource packaging and testing cost, Novatek has implemented corresponding selling price adjustments. Secondly, a more favorable product mix, particularly the increased revenue contribution from SoC product, has been beneficial to gross margin. Last of all, the lower inventory costs have also provided support to profitability.

Speaker #1: The reasons for the increase in Q2 gross margins are as follows. First of all, in response to the rising cost of certain materials, such as KGD wafer substrates, as well as the higher outsourced packaging and testing cost, Novatek has implemented corresponding selling price adjustments.

Speaker #1: Secondly, a more favorable product mix, particularly the increased revenue contribution from SoC products, has been beneficial to gross margin. And, last of all, the lower inventory costs have also provided support to profitability.

Speaker #3: 呃，下一个问题是，呃，请问一下第三季毛利率的指引与第二季，呃，相比影响的因素为何？可以特别就成本的增加与售价的调整，呃，来加以说明吗？谢谢。

Tony Tseng: 下一个问题是，请问第三季毛利率的指引与第二季相比，影响的因素为何？可以特别就成本的增加与售价的调整来加以说明吗？谢谢。

Tony Tseng: [Foreign language]

Speaker #2: 哎呀，第三季的毛利率的这个guidance呢，我想影响的因素呢，也有三点。我想第一点呢，也是跟刚刚一样的，由于这个，呃，部分的材料跟offset成本呢，第三季仍有上涨的这个情形。我想我们会持续跟供应链和客户来沟通呢，同时考量产业的长期健康发展呢，我们未来决定售价怎么反映。第二点呢，呃，由于这个，呃，较低的库存的成本呢，呃，会比第二季呢减少。我想这个也是影响的这个因素之一。第三点呢，这个产品销售的组合呢，在第三季跟第二季呢，可能也会有一些不同。我想这个也会影响到这个毛利率的这个guidance。

Steve Wang: 第三季的毛利率的 guidance，影响的因素有三点。第一点，也是跟刚刚一样，由于部分的材料跟 OSAT 成本，第三季都有上涨的这个情形。我们会持续跟供应链和客户来沟通，同时考量产业的长期健康发展，我们未来决定售价怎么反应。第二点，由于较低的库存的成本会比第二季减少，我想这个也是影响的因素之一。第三点，产品销售的组合在第三季跟第二季可能也会有一些不同，这个也会影响到毛利率的 guidance。

Steve Wang: [Foreign language]

Speaker #3: Given the gross margin guidance for the third quarter, while major factors compare with those in the second quarter, could you particularly provide comments on the cost increases and the sales seeing price adjustment?

Tony Tseng: Given the gross margin guidance for Q3, what major factors compare with those in Q2? Could you particularly provide comments on the cost increases and the sales team price adjustment?

Speaker #1: Well, as for the Q3 gross margins, they are pretty similar to Q2. As for the cost for certain materials and offset services, we continue to expect them to increase in Q3.

Steve Wang: Well, as for the Q3 gross margins, it is pretty similar to Q2. As for the cost for certain materials and OSAT services, we're expecting to continue to increase in Q3. Novatek will continue to work closely with our supply chain partners and customers, and evaluate pricing adjustments while taking into account the long-term and healthy development of the industry. The positive impact from lower cost inventory is expected to diminish compared with Q2. The product mix will continue to remain an important factor influencing our gross margin performance.

David Chen: Well, as for the Q3 gross margins, it is pretty similar to Q2. As for the cost for certain materials and OSAT services, we're expecting to continue to increase in Q3. Novatek will continue to work closely with our supply chain partners and customers, and evaluate pricing adjustments while taking into account the long-term and healthy development of the industry. The positive impact from lower cost inventory is expected to diminish compared with Q2. The product mix will continue to remain an important factor influencing our gross margin performance.

Speaker #1: And Novatek will continue to work closely with our supply chain partners and customers, and evaluate pricing adjustments while taking into account the long-term and healthy development of the industry.

Speaker #1: And the, positive impact from lower cost inventory is expected to diminish compared with Q2. And the product mix will continue to remain an important factor influencing our gross margin performance.

Speaker #3: 下一个问题是，想请问一下下半年晶圆跟封测的涨价幅度跟上半年相比的情况如何？目前供应商对2027年的涨价的计划是怎么样呢？

Tony Tseng: 下一个问题是，想请问一下下半年晶圆跟封测的涨价幅度跟上半年相比的情况如何？目前供应商对2027年的涨价的计划是怎么样呢？

Tony Tseng: [Foreign language]

Speaker #2: 呃，由于持续受到这个AI需求畅旺的资源排挤效应呢，呃，下半年看起来有部分的这个晶圆和材料，还有封测呢，呃，有上涨的这个情形。那目前呢，我们是和供应商呢，在持续的讨论协商当中，有关这个2027年。

Steve Wang: 由于持续受到AI需求昌旺的资源排挤效应，下半年看起来有部分的晶圆材料，还有封测有上涨的这个情形。目前我们是和供应商在持续地讨论协商当中。有关2027年。

Steve Wang: [Foreign language]

Tony Tseng: By how much will foundry and packaging costs increase in H2 compared with H1? Also, could you provide any indication for the cost increases into 2027?

Speaker #3: By how much will foundry and packaging cost increase in the second half compared with the first half? Also, could you provide any indication for the cost increase into 2027?

Steve Wang: Well, due to the continued resource crowding out effect driven by the strong AI-related demand, cost for certain wafer foundry OSAT services are still trending up in H2 of the year, and we are actively discussing and negotiating with suppliers to address these cost increase in 2027.

David Chen: Well, due to the continued resource crowding out effect driven by the strong AI-related demand, cost for certain wafer foundry OSAT services are still trending up in H2 of the year, and we are actively discussing and negotiating with suppliers to address these cost increase in 2027.

Speaker #1: Well, due to the continued resource crowding-out effect driven by strong AI-related demand, costs for certain wafer foundry offset services are still trending upward in the second half of the year.

Speaker #1: And we are actively discussing and negotiating with suppliers to address these cost increases in 2027.

Speaker #3: 下一题，由于，呃，记忆体成本涨幅，呃，较大，公司的SOC产品是否都已可陆续转嫁给客户？之前有提到第二季有部分低，呃，驱动IC已经反映成本。请问其他产品，呃，在第三季的反映的情况如何？如果有的话，请问一下幅度大概多少？

Tony Tseng: 下一题，由于记忆体成本涨幅较大，公司的SoC产品是否都已可陆续转嫁给客户？之前有提到第二季有部分驱动IC已经反映成本，请问其他产品在第三季反映的情况如何？如果有的话，请问一下幅度大概多少？

Tony Tseng: [Foreign language]

Speaker #2: 呃，Novatek的部分SOC的产品呢，呃，带有这个KGD。那由于记忆体价格涨幅大呢，而且供应紧缺呢，因此我们除了，呃，在供货上尽力满足客户的需求以外呢，呃，同时也会和客户沟通这个售价的调整。当然也会考虑有这个新的solution。另外呢，部分的DDIC的Q2呢，呃，在第二季呢，部分DDIC在第二季呢，事实上我们也有反映成本。那第三季呢，呃，我们也会依产业的供应链的状态呢，跟客户呢，来这个，呃，动态的协商。

Steve Wang: Novatek 部分 SoC 的产品带有 KGD。由于记忆体价格涨幅大，而且供应紧缺，因此我们除了在供货上尽力满足客户的需求以外，同时也会和客户沟通售价的调整，当然也会考虑有新的 solution。另外，部分 DDIC 在第二季，事实上我们也有反映成本。第三季，我们也会以产业的供应链的状态，跟客户来动态的协商。

Steve Wang: [Foreign language]

Speaker #3: Given the surging memory cost, could you reflect those costs in your selling price for your SoC product already? In addition, as the price for part of the DDIC product will raise to reflect higher cost in the second quarter, how about other DDIC product lines in the third quarter?

Tony Tseng: Given surging memory cost, would you reflect those costs to your selling price for your SoC product already? In addition, as price for part of DDIC product were raised to reflect higher cost in Q2, how about other DDIC product lines in Q3? If it's yes, how about the price increase magnitude?

Speaker #3: If it's yes, how about the, the, the price increase magnitude?

David Chen: For certain SoC products, it has KGD in it. As you know, memory supply remains tight and prices have risen significantly. While striving to fully support customer demand, Novatek is also working closely with customers on appropriate pricing adjustments. At the same time, we are also working on new solutions to deal with such impact. Following the pricing adjustment implemented for certain DDI back in Q2, we will continue to negotiate with the customer in Q3 based on supply chain conditions and market dynamics.

Speaker #1: For certain SoC products, it has KGD in it. And as you know, memory supply remains tight, and prices have risen significantly. While striving to fully support customer demand, Novatek is also working closely with customers on appropriate pricing adjustments.

Speaker #1: But at the same time, we are also working on new solutions to deal with such impact. Following the pricing adjustment implemented for certain DDIC back-end in the second quarter, we'll continue to negotiate with customers in Q3 based on supply chain conditions and market dynamics.

Speaker #3: 那，呃，也想先请教一下，就是公司在第二季的时候，您，呃，给的这三大产品线中，可以给我们一下这个毛利率的，的排序是怎么样子呢？那第三季这样三个产品线会，它的毛利率的顺序会有所改变吗？

Tony Tseng: 也想先请教一下，在第二季的时候，您给的这三大产品线中，可以给我们一下毛利率的排序是怎么样子的呢？那第三季这样三个产品线，它的毛利率的顺序会有所改变吗？

Tony Tseng: [Foreign language]

Speaker #2: 我想基本上您有三大产品线呢，以SOC相关的产品呢，事实上毛利率是相对较好的。这个顺序看起来第三季也应该不会改变。

David Chen: 基本上你有三大产品线，以SoC相关的产品，事实上毛利率是相对较好的。这个顺序看起来第三季也应该不会改变。

Steve Wang: [Foreign language]

Tony Tseng: Could you provide ranking of gross margin for your three product groups in Q2? Will this ranking change during Q3?

Speaker #3: Could you provide the ranking of gross margin for your three product groups in the second quarter? Will this ranking change during the third quarter?

Speaker #1: Basically, the SOC-related products enjoy higher gross margins, and this will change in Q3.

David Chen: Basically, the SoC related product enjoy higher gross margin. This won't change in Q3.

Speaker #3: 呃，接下来我们有一些关于比较是我们财务的数字。那尤其第二季这个业外这边的金额，呃，比较高，所以也有好几位投资人都有在问。第一个就是第二季的业外金额为新台币13.16亿，较第一季3.62亿增加。请问主要的项目与金额？

Tony Tseng: 接下来我们有一些关于比较我们财务的数字，尤其第二季这个业外这边的金额比较高，所以也有好几位投资人都在问。第一个就是第二季的业外金额为新台币3.16亿，较第一季3.62亿增加。请问主要的项目与金额。

Tony Tseng: [Foreign language]

Speaker #1: 请Jane帮我们回答一下。

David Chen: 请 Jin 帮我们回答一下。

David Chen: [Foreign language]

Speaker #2: 呃，嗯，第二季的营业外收入金额为13.16亿，主要是人力投资收益8.6亿，利息收入2.4亿及股利收入1.08亿所贡献。

Jane Chen: 好。第二季的业外收入金额为13.16亿，主要是认列投资收益8.6亿、利息收入2.4亿及股利收入1.08亿所贡献。

Jane Chen: [Foreign language]

Tony Tseng: Top major items for non-operating income of TWD 1.316 billion in Q2 compared with TWD 396 million in Q1 2023.

Speaker #3: How are major items for non-ready income of $1.316 billion in the second quarter compared with $396 million in the first quarter of 2006?

David Chen: The non-op income of TWD 1.32 billion in Q2 mainly came from investment income of TWD 860 million, interest income of TWD 240 million, and dividend income of TWD 108 million.

Speaker #1: The non-op income of $1.32 billion in the second quarter mainly came from investment income of $860 million, interest income of $240 million, and dividend income of $108 million.

Tony Tseng: 第二个，我们也注意到公司最近有公告，在第二季有认列Marvell的收益超过3亿元。可以请管理层说明一下这个金额，或者关于这个策略投资方面。

Tony Tseng: [Foreign language]

Speaker #3: 第二个我们也注意到这个公司最近有公告在第二季有认列，呃，呃，Marvell的收益超过3亿元，可以请管理层说明一下，呃，这个金额获得关于这个策略投资方面。

Jane Chen: 第二季，因为公司的转投资公司为 Marvell 收购，因为收购交易，公司也换取了 Marvell 的股票，产生了实现及未实现认别的投资收益约 TWD 7 亿元。未来公司会持续通过投资外部的创新企业，提前掌握关键技术及策略合作机会，进而提升公司长期竞争力与企业价值。

Jane Chen: [Foreign language]

Speaker #2: 第二季，呃，因为公司的转投资公司为Marvell收购，因为收购交易，公司也换取了Marvell的股票，产生了实现及未实现认列的投资收益约7亿元。未来公司会持续透过投资外部的创新企业，提前掌握关键技术及策略合作机会，进而提升母公司长期竞争力与企业价值。

Tony Tseng: The company booked investment income of over TWD 300 million from Marvell in Q2. Could management provide more detailed amount, and also comment on your strategic investment?

Speaker #3: And the company booked investment income of over $300 million from Marvell in the second quarter. Could management provide a more detailed amount and also comment on your strategic investment?

David Chen: Well, following Marvell's acquisition of an investee company of Novatek recognized approximately about TWD 700 million of investment income in Q2, including both realized and unrealized gains associated with the Marvell shares received in the transaction. Novatek will continue to invest in innovative external companies to gain early access to key technology and strategic collaboration opportunities, and to enhance company's long-term competitiveness, and also the corporate value.

Speaker #1: Following Marvell's acquisition of an investee company of Novatek, Novatek recognized approximately $700 million of investment income in the second quarter, including both realized and unrealized gains associated with the Marvell shares received in the transaction.

Speaker #1: And Novatek will continue to invest in innovative external companies to gain early access to key technology and strategic collaboration opportunities and to enhance company's long-term competitiveness and also the corporate value.

Speaker #3: 接着想请教一下公司第二季底的这个整体的库，库存存货的天数与第一季相比如何？那可以也提供一下第三季末的库存金额与天数的趋势，以及在记忆体存货天数的趋势吗？

Tony Tseng: 接着想请教一下公司第二季底的登记的库存存货的天数与第一季相比如何？那可以也提供一下第三季末的库存金额与天数的趋势，以及在第一季存货天数的趋势吗？

Tony Tseng: [Foreign language]

Speaker #2: 嗯，第二季底存货天数为77天，较第一季底的74天增加3天。目前库存天数增加主要是受部分加工成本以及原材料涨价所，所导致的。那目前的库存主要是正常。

Jane Chen: 第二季底存货天数为77天，较第一季底的74天增加3天。目前库存天数增加，主要是受部分加工成本以及原材料涨价所导致。目前的库存水平是正常。

Jane Chen: [Foreign language]

Tony Tseng: What are your inventory days at the end of Q2 compared with those in Q1? Could you also provide the comments into Q3, and also particularly, could you also give some color on your inventory on the memory side?

Speaker #3: What are your inventory days at the end of the second quarter compared with those in the first quarter? Could you also provide comments on the third quarter, and in particular, could you also give some color on your inventory on the memory side?

David Chen: Well, the inventory days for Q2 were up by 77 days, up by 3 days from 74 back in Q1. This is mainly due to the rising raw material cost. If you look at the numbers, it is still at the healthy levels.

Speaker #1: Well, the inventory days for the second quarter were up by—were 77 days, up by three days from 74 back in the first quarter. And this is mainly due to the rising raw material cost. But if you look at the numbers, it's still at healthy levels.

Speaker #3: 公司第二季的营业费用金额为56.9亿，呃，相比第一季跟去年第二季金额都有所增加。请问公司还维持2026年营业费用金额会比2025年温和增加的指引吗？那也请教一下百分比的话，2026年跟2025年比会有所改变吗？

Tony Tseng: 公司第二季的营业费用金额为56.9亿，相比第一季跟去年第二季金额都有所增加。请问公司还维持2026年营业费用金额会比2025年温和增加的指引吗？那也请教一下百分比的话，2026年跟2025年比会有所改变吗？

Tony Tseng: [Foreign language]

Speaker #2: 呃，第二季的营业费用较第一季，呃，增加主要是来自研发费用的投入增加。我们公司预计2026年营业费用的指引不变，那全年营业费用的占比和去年如当。

Jane Chen: 第二季的营业费用较第一季增加，主要是来自研发跟我们的投入增加。我们公司预计2026年营业费用的指引不变，全年营业费用的占比和去年比较。

Jane Chen: [Foreign language]

Speaker #3: Uh, operating expense dollars of $5.69 billion in the second quarter increased quarter over quarter from $5.01 billion in the first quarter, and $4.6 billion a year ago. Is your operating dollar guidance in 2026 still on track for a moderate increase from 2025?

Tony Tseng: Your operating expense of TWD 5.69 billion in Q2 increased quarter-over-quarter from TWD 5.01 billion in Q1 and TWD 4.6 billion a year ago. Is your operating expense in 2026 still on track your moderate increase guidance from 2025? How about your operating expense ratio in 2026 compared with 2025?

Speaker #3: And also, how about your operating expense ratio in 2026 compared with 2025?

David Chen: The operating expense increased sequentially in Q2. Primarily, it is due to the higher R&D investment. Our 2026 operating expense guidance remains unchanged. The operating expense ratio is expected to remain broadly in line with last year's level.

Speaker #1: The operating expense increased sequentially in the second quarter. Primarily, it is due to the higher R&D investment. And our 2026 operating expense guidance remains unchanged.

Speaker #1: And the offering expense ratio is expected to remain broadly in line with last year's level.

Speaker #3: 呃，目前最后一个问题是，呃，你的第二季所得税率是8.68%，较第一季的14.2%高。请问原因为何？那也想请问一下2026年全年的所得税率还维持您之前的指引16到17%吗？

Tony Tseng: 目前最后一个问题是，您的第二季所得税率是8.68%，较第一季的14.2%高，请问原因为何？那也想请问一下，2026年全年的所得税率还维持您之前的指引16%到17%吗？

Tony Tseng: [Foreign language]

Speaker #2: 呃，公司目前2026年上半年的所得税率大约17%。那以目前的预估来看，全年所得税率在16到17%之间的指引不变。

Jane Chen: 公司目前2026年上半年的所得税率大约17%。那以目前的预估来看，全年所得税率在16到17%之间的指引不变。

Jane Chen: [Foreign language]

Tony Tseng: Why is the tax rate of 18.68% in Q2 higher than the ratio of 14.2% in Q1? Will you also maintain the full year guidance of 16% to 17% for 2026?

Speaker #3: Why is your tax rate of 18.68% in the second quarter higher than the ratio of 14.2% in the first quarter? Will you also maintain the four-year guidance of 16 to 17% for 2026?

David Chen: The tax rate in H1 was about 17%, and the full year target of 16% to 17% remains unchanged. I think we have covered most of the questions. We still have a little bit of time for one or two questions, and see if, Tony, if there's any question that you would like to pick out if they haven't yet covered.

Speaker #1: The tax rate in the first half was about 17%, and the full-year target of 16 to 17% remains unchanged. I think we have covered most of the questions, and we still have a little bit of time for one or two more questions. Let's see if Tony, is there any question that you would like to pick out if you haven't yet covered one.

Speaker #3: 呃，这里，呃，新加的第一个问题是，呃，记忆体涨价，呃，潮，那公司有应对的，呃，策略吗？那中国大陆的长新的记忆体如果价格比较便宜，有考虑采用吗？

Tony Tseng: 这里新加的第一个问题是，记忆体涨价潮，那公司有应对的策略吗？那中国大陆的长鑫的记忆体如果价格比较便宜，有考虑采用吗？

Tony Tseng: [Foreign language]

Speaker #2: 我想这个有关记忆体的这个涨价，呃，我们会跟客户来做这个，啊，刚刚跟大家报告，我们跟客户呢，跟供应商呢，会来做这个动态的这个协商。不过呢，我们会推出这个新的solution呢，呃，尽量来降低，呃，这个，呃，memory涨价的这个冲击。只要具有竞争力的产品呢，我想我们在这里都会，呃，考虑来使用的。

Steve Wang: 我想有关记忆体的涨价，我们会跟客户来做这个。刚刚跟大家报告，我们跟客户、跟供应商会做动态的协商。不过我们也会推出新的solution，尽量来降低memory涨价的冲击。只要具有竞争力的产品，我想我们在这里都会考虑来使用。

Steve Wang: [Foreign language]

Tony Tseng: Given the surging memory prices, how will your company cope with this trend? If there are cheaper providers from China with lower selling price, will you adopt the products from China?

Speaker #3: Given the surge in memory prices, how will the company cope with these trends? If there are cheaper providers outside, from China, with lower selling prices, will you adopt the product from China?

David Chen: As mentioned earlier, regarding the memory price issues, we'll continue to work with our customers, with our supplier to deal with such issues. At the same time, we are also bringing out new solution to reduce the impact by this price hike. As for whether we'll use any other supplier, I mean, for us, it's always an open issue. As long as it is competitive, we'll use. Okay, I think we have covered most of the questions. Thank you so much for joining in, and wish you all the best, and have a good evening.

Speaker #1: As mentioned earlier, regarding the memory, price, issues, we will continue to work with our customers and with our supplier to deal with such issues. At the same time, we are also bringing our new solution to reduce the impact of this price hike.

Speaker #1: And as for whether we'll use any other supplier, I mean, for us, it's always an open issue. As long as it is competitive, we'll use them.

David Chen: Okay, I think we have covered most of the questions. Thank you so much for joining in, and wish you all the best, and have a good evening.

Speaker #1: Okay, I think we have covered most of the questions. Thank you so much for joining in, and I wish you all the best. Have a good evening.

Speaker #3: 呃，谢谢大家。

Steve Wang: 谢谢大家。

Steve Wang: [Foreign language]

Jane Chen: 谢谢。

Jane Chen: [Foreign language]

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Q2 2026 Novatek Microelectronics Corp Earnings Call

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