Q2 2026 BizLink Holding Inc Earnings Call

August 21, 2026

Speaker #2: Okay. Good afternoon and good morning. Welcome to BizLink's Q2 earnings call, hosted by UBS. I am Ali Chen, covering BizLink and the industrial sector in Taiwan.

Ellie Chen: Okay. Good afternoon and good morning. Welcome to join BizLink's Q2 earnings call hosted by UBS. I am Ellie Chen, covering BizLink and the industrial sector in Taiwan. It is our honor to host BizLink management today. Let me hand over the call to Mike Wang, the Senior IR Manager. Mike, please.

Ally Chen: Okay. Good afternoon and good morning. Welcome to join BizLink's Q2 Earnings Call hosted by UBS. I am Ally Chen, covering BizLink and the industrial sector in Taiwan. It is our honor to host BizLink management today. Let me hand over the call to Mike Wang, the Senior IR Manager. Mike, please.

Speaker #2: It's our honor to host BizLink management today. Now, let me hand over the call to Mike Wang, the Senior IR Manager. Mike, please.

Speaker #3: Thank you, Ali, for the intro. And once again, thank you to UBS for hosting our results call today. Good afternoon, everyone, and welcome to this Q2 2026 earnings conference call.

Mike Wang: Thank you, Ellie, for the intro, and once again, thank you to UBS for hosting our results call. Good afternoon, everyone, and welcome to BizLink's Q2 2026 earnings conference call. My name is Mike Wang, Senior IR Manager. Joining me today are Roger Liang, our Chairman, Felix Teng, our CEO, and Charles Tsai, our CFO. Our earnings results were released earlier today and are available on our IR website, where you can download the latest earnings materials and access the call through MOPS. Today's call will begin with Felix, who will share strategic updates. Charles will then conclude with our financial highlights before we move to the Q&A session. You may submit your questions at any time through the public or private chat function, and we will address as many as time permits.

Mike Wang: Thank you, Ally, for the intro, and once again, thank you to UBS for hosting our results call. Good afternoon, everyone, and welcome to BizLink's Q2 2026 Earnings Conference Call. My name is Mike Wang, Senior IR Manager. Joining me today are Roger Liang, our Chairman, Felix Teng, our CEO, and Charles Tsai, our CFO.

Speaker #3: My name is Mike Wang, Senior IR Manager. Joining me today are Roger Lam, our Chairman; Dev Stone, our CEO; and Charles Tai, our CFO.

Speaker #3: Our earnings results were released earlier today and are available on our IR website, where you can download the latest earnings materials and access the call through MLPS.

Mike Wang: Our earnings results were released earlier today and are available on our IR website, where you can download the latest earnings materials and access the call through MOPS. Today's call will begin with Felix, who will share strategic updates. Charles will then conclude with our financial highlights before we move to the Q&A session. You may submit your questions at any time through the public or private chat function, and we will address as many as time permits.

Speaker #3: Today's call will begin with Felix, who will share strategic updates. Charles will then conclude with our financial highlights before we move to the Q&A session.

Speaker #3: You may submit your questions at any time through the public or private chat function, and we will address as many as time permits. Before we begin, please note that today's discussion may contain forward-looking statements based on our current expectations and are subject to risk and uncertainty.

Mike Wang: Before we begin, please note that today's discussion may contain forward-looking statements based on our current expectations and are subject to risks and uncertainties. Actual results may differ materially. Please refer to the safe harbor notice in our earnings materials for further details. This call is being recorded and will be available on our IR website within 24 hours. For that, I would now like to turn the call over to Felix.

Mike Wang: Before we begin, please note that today's discussion may contain forward-looking statements based on our current expectations and are subject to risks and uncertainties. Actual results may differ materially. Please refer to the Safe Harbor notice in our earnings materials for further details. This call is being recorded and will be available on our IR website within 24 hours. For that, I would now like to turn the call over to Felix.

Speaker #3: Actual results may differ materially. Please refer to the Safe Harbor Notice in our earnings materials for further details. This call is being recorded and will be available on our IR website within 24 hours.

Speaker #3: With that, I would now like to turn the call over to Felix.

Speaker #4: All right. Thank you, Mike. Good afternoon, everyone, and thank you for joining us. Before Charles discusses our Q2 financial performance, I would like to spend some time on how we see our markets evolving, what is changing in our customers' requirements, and how BizLink is positioning itself for these changes.

Felix Teng: All right. Thank you, Mike Wang. Good afternoon, everyone, and thank you for joining us. Before Charles Tsai discusses our Q2 financial performance, I would like to spend some time on how we see our markets evolving, what is changing in our customers' requirements, and how BizLink is positioning itself for these changes. Over the past several years, BizLink has changed significantly. Connectors, cables, and interconnect products remain important parts of our business, but they no longer fully describe where our business is heading. The more important question today is what engineering problems our customers need us to solve, and whether we have the capabilities to solve them. AI infrastructure is entering a new phase. The first phase of this investment cycle was heavily focused on securing compute. That remains important, but the challenge is increasingly shifting toward deploying that compute at scale.

Felix Teng: All right. Thank you, Mike. Good afternoon, everyone, and thank you for joining us. Before Charles discusses our Q2 financial performance, I would like to spend some time on how we see our markets evolving, what is changing in our customers' requirements, and how BizLink is positioning itself for these changes. Over the past several years, BizLink has changed significantly.

Speaker #4: Over the past several years, BizLink has changed significantly. Commuters, cables, and intercommunity products remain important parts of our business, but they no longer fully describe where our business is heading.

Felix Teng: Connectors, cables, and interconnect products remain important parts of our business, but they no longer fully describe where our business is heading. The more important question today is what engineering problems our customers need us to solve, and whether we have the capabilities to solve them. AI infrastructure is entering a new phase. The first phase of this investment cycle was heavily focused on securing compute. That remains important, but the challenge is increasingly shifting toward deploying that compute at scale.

Speaker #4: The more important question today is: What engineering problems do our customers need us to solve, and whether we have the capabilities to solve them? AI infrastructure is entering a new phase.

Speaker #4: The first phase of this investment cycle was heavily focused on securing compute. That remains important, but the challenge is increasingly shifting toward deploying that compute at scale.

Speaker #4: As compute density rises, the infrastructure surrounding it has to keep pace. More power has to be delivered safely and efficiently. More data has to be moved at higher speeds.

Felix Teng: As compute density rises, the infrastructure surrounding it has to keep pace. More power has to be delivered safely and efficiently. More data have to move at higher speeds. Thermal and mechanical requirements are becoming more demanding, and increasingly, these systems need to be designed, manufactured, and deployed together. This is why we continue to emphasize deployment first. The demand for compute is substantial, but compute only creates economic value after it is deployed and operating. The ability to deploy, therefore, depends not only on GPUs or accelerators, but on the availability and readiness of power, networking, cooling, mechanical infrastructures, facilities, and utilities. As AI factories become larger, synchronization across these infrastructure layers become increasingly important. This also means deployment will not always be linear.

Speaker #4: Thermal and mechanical requirements are becoming more demanding. And increasingly, these systems need to be designed, manufactured, and deployed together. This is why we continue to emphasize deployment first.

Speaker #4: The demand for compute is substantial, but compute only creates economic value after it is deployed and operating. The ability to deploy therefore depends not only on GPUs or accelerators, but on the availability and readiness of power, networking, cooling, mechanical infrastructures, facilities, and utilities.

Felix Teng: The demand for compute is substantial, but compute only creates economic value after it is deployed and operating. The ability to deploy, therefore, depends not only on GPUs or accelerators, but on the availability and readiness of power, networking, cooling, mechanical infrastructures, facilities, and utilities. As AI factories become larger, synchronization across these infrastructure layers become increasingly important. This also means deployment will not always be linear.

Speaker #4: As AI factories become larger, synchronization across these infrastructure layers becomes increasingly important. This also means deployment will not always be linear. At different points in the cycle, the constraints can shift from compute to networking.

Felix Teng: At different points in the cycle, the constraints can shift from compute to networking, from networking to power, or from equipment availability to facilities and utilities. This can create variability in procurement and deployment schedules, even when the underlying requirements for this infrastructure remains strong. We believe this distinction between underlying demand and deployment timing is increasingly important. For BizLink, it also expands the opportunity set. As performance requirements increase and systems become more complex, customers need suppliers that can address a broader range of engineering and manufacturing requirements. We have been building this thing around that direction for several years. Well, how we frame the business. We do not view our strategy as building a collection of individual products. We view it as expanding the capability we can bring to customers.

Speaker #4: From networking to power, or from equipment availability to facilities and utilities, this can create various variabilities in procurement and deployment schedules, even when the underlying requirements for this infrastructure remain strong.

Speaker #4: We believe this distinction between underlying demand and deployment timing is increasingly important. For BizLink, it also extends the opportunities. As performance requirements increase and systems become more complex, customers need suppliers that can address a broader range of engineering and manufacturing requirements.

Felix Teng: As performance requirements increase and systems become more complex, customers need suppliers that can address a broader range of engineering and manufacturing requirements. We have been building this thing around that direction for several years. Well, how we frame the business. We do not view our strategy as building a collection of individual products. We view it as expanding the capability we can bring to customers.

Speaker #4: We have been building BizLink around that direction for several years, in terms of how we frame the business. We do not view our strategy as building a collection of individual products.

Speaker #4: We view it as expanding the capability we can bring to customers. What began with traditional interconnectivity solutions has evolved to include power delivery, high-speed data connectivities, optical connectivities, engineering, new product introductions, advanced manufacturing, and increasingly broader system-level integration.

Felix Teng: What began with traditional interconnect solutions has evolved to include power delivery, high-speed data connectivity, optical connectivity, engineering, new product introductions, advanced manufacturing, and increasingly broader system-level integration. The value of this capability increases when they work together. Engineering allows us to engage earlier in a customer's deployment process. NPI converts engineering solutions into products that can be qualified and manufactured reliably. Manufacturing allows those products to scale, and system integration allows us to address a larger part of the customer's requirement. This is a direction in which we have been moving. We are already seeing this evolution across several businesses. In capital equipment, our scope has extended from components toward higher-level assemblies and system integration. Our engineering involvement is also increasing as customers engage us earlier in the development process. In HPC, we have expanded from traditional connectivity into higher-speed data solutions and increasingly sophisticated power solutions.

Speaker #4: The value of this capability increases when they work together. Engineering allows us to engage earlier in a customer's deployment process. NPI converts engineering solutions into products that can be qualified and manufactured reliably.

Speaker #4: Manufacturing allows those products to scale, and system integration allows us to address a larger part of the customer's requirements. This is the direction in which we have been moving.

Felix Teng: Manufacturing allows those products to scale, and system integration allows us to address a larger part of the customer's requirement. This is a direction in which we have been moving. We are already seeing this evolution across several businesses. In capital equipment, our scope has extended from components toward higher-level assemblies and system integration.

Speaker #4: We are already seeing this evolution across several businesses. In capital equipment, our scope has expanded from components toward higher-level assemblies and system integrations. Our engineering involvement is also increasing as customers engage us earlier in the development process.

Felix Teng: Our engineering involvement is also increasing as customers engage us earlier in the development process. In HPC, we have expanded from traditional connectivity into higher-speed data solutions and increasingly sophisticated power solutions.

Speaker #4: In HPC, we have expanded from traditional connectivity into higher-speed data solutions and increasingly sophisticated power solutions. Across the company, the common denominator is that our customers are asking us to do more.

Felix Teng: Across the company, the common denominator is that our customers are asking us to do more. This is important strategically. The more capabilities we have, the more problems we can potentially solve. Earlier participation gives us a better understanding of the customer's system requirements, and when we execute successfully, that creates opportunities to participate in more programs and more content over time. It also makes our business less dependent on the success of any single product or architecture. Individual products will change. Technology architectures will change. Customer requirements will change. Our objective is to build capabilities that remain relevant through those changes. This is one reason we have continued to expand both the depth of our products and the breadth of our capabilities. Greater product depth allows us to participate in more parts of a customer's system. Broader capabilities allow us to respond as the technology makes changes.

Speaker #4: This is important strategically. The more capabilities we have, the more problems we can potentially solve. Earlier participation gives us a better understanding of the customer's system requirements.

Speaker #4: And when we execute successfully, that creates opportunities to participate in more programs and more content over time. It also makes our business less dependent on the success of any single product or architecture.

Speaker #4: Individual products will change, technology architectures will change, customer requirements will change. Our objective is to build capabilities that remain relevant through those changes. This is one reason we have continued to expand both the depth of our products and the breadth of our capabilities.

Felix Teng: Technology architectures will change. Customer requirements will change. Our objective is to build capabilities that remain relevant through those changes. This is one reason we have continued to expand both the depth of our products and the breadth of our capabilities. Greater product depth allows us to participate in more parts of a customer's system. Broader capabilities allow us to respond as the technology makes changes.

Speaker #4: Greater product depth allows us to participate in more parts of a customer's system. Broader capabilities allow us to respond as the technology changes.

Speaker #4: We do not need to predict every technology transition correctly. We need the engineering and manufacturing capabilities to remain relevant as those transitions occur. This is also why NPI has become increasingly important to BizLink.

Felix Teng: We do not need to predict every technology transition correctly. We need the engineering and manufacturing capabilities to remain relevant as those transitions occur. This is also why NPI has become increasingly important to BizLink. Engineering creates an opportunity, but engineering alone does not create revenue. The solution still has to be validated, qualified, industrialized, and produced reliably at scale. NPI connects those stages. As our NPI capabilities strengthen, we can work with customers earlier, improve manufacturability, shorten the transition into volume production, and build the operating knowledge required to support a program over its life cycle. This makes the relationship deeper than supplying an individual component. As the system becomes more complex, customers increasingly value suppliers that can take on a broader part of that responsibility. This does not mean one supplier needs to do everything.

Speaker #4: Engineering creates an opportunity, but engineering alone does not create revenue. A solution still has to be validated, qualified, industrialized, and produced reliably at scale.

Speaker #4: NPI connects those stages. As our NPI capabilities strengthen, we can work with customers earlier, improve manufacturing ability, shorten the transition into volume production, and build the operating knowledge required to support a program over its lifecycle.

Felix Teng: As our NPI capabilities strengthen, we can work with customers earlier, improve manufacturability, shorten the transition into volume production, and build the operating knowledge required to support a program over its life cycle. This makes the relationship deeper than supplying an individual component. As the system becomes more complex, customers increasingly value suppliers that can take on a broader part of that responsibility. This does not mean one supplier needs to do everything.

Speaker #4: This makes the relationship deeper than supplying an individual component. As the system becomes more complex, customers increasingly value suppliers who can take on a broader part of that responsibility.

Speaker #4: This does not mean one supplier needs to do everything. It means the value of having suppliers with broader engineering, manufacturing, and integration capabilities is increasing.

Felix Teng: It means the value of having suppliers with broader engineering, manufacturing, and integration capabilities is increasing. That is where we want BizLink to compete. What is changing? AI infrastructure provides the clearest example of the evolution to date. Power requirements are rising rapidly as compute density increases. This is changing how power needs to be generated, transmitted, and delivered all the way to the rack. At the rack level, the industry is evaluating multiple approaches, including higher amperage and higher voltage. We do not believe there will be one solution for every customer or every data center. Existing infrastructure matters. Deployment schedules matter. Reliability matters. The transition will therefore involve multiple power architectures operating at the same time. For BizLink, this is important because we are not dependent on one architecture winning. Our power capabilities span cables, busbars, and increasingly higher power solutions.

Speaker #4: That is where we want BizLink to compete. So, what is changing? AI infrastructure provides the fairest example of evolution today. Power requirements are rising rapidly as compute density increases.

Speaker #4: This is changing how power needs to be generated, transmitted, and delivered, all the way to the rack. At the rack level, this industry is evaluating multiple approaches, including higher amperage and higher voltage.

Felix Teng: At the rack level, the industry is evaluating multiple approaches, including higher amperage and higher voltage. We do not believe there will be one solution for every customer or every data center. Existing infrastructure matters. Deployment schedules matter. Reliability matters. The transition will therefore involve multiple power architectures operating at the same time. For BizLink, this is important because we are not dependent on one architecture winning. Our power capabilities span cables, busbars, and increasingly higher power solutions.

Speaker #4: We do not believe there will be one solution for every customer or every data center. Existing infrastructure matters. Deployment schedules matter. Reliability matters. The transition will therefore involve multiple power architectures operating at the same time.

Speaker #4: For BizLink, this is important because we are not dependent on one architecture winning. Our power capabilities span cables, busbars, and increasingly higher power solutions.

Felix Teng: As customer requirements evolve, our objective is to support those requirements across different architectures. The direction is clear: more compute requires more power, and higher power requirements create more engineering challenges throughout the infrastructure. These changes will also extend beyond the data center. The growth in AI-related electricity demand is accelerating investments across power generations, grid infrastructures, and electrical equipment. As those systems become increasingly electrified, capabilities developed around power delivery, power management, and higher density electrical systems can also become relevant to industrial automations, capital equipment, and other end markets over time. Data connectivity is evolving in parallel. As compute clusters become larger, more data needs to move within and between those systems at higher speed. Copper continues to play an important role, particularly where distance and system architecture allow it. At the same time, optical connectivity becomes increasingly important as bandwidth requirements and transmission distances increase.

Speaker #4: As customers' requirements evolve, our objective is to support those requirements across different architectures. The direction is clear: more compute requires more power, and higher power requirements create more engineering challenges throughout the infrastructure.

Speaker #4: These changes will also extend beyond the data center. The growth in AI-related electricity demand is accelerating investments across power generation, grid infrastructures, and electrical equipment.

Speaker #4: As those systems become increasingly electrified, capabilities developed around power delivery, power management, and higher-density electrical systems can also become relevant to industrial automation, capital equipment, and other end markets over time.

Felix Teng: As those systems become increasingly electrified, capabilities developed around power delivery, power management, and higher density electrical systems can also become relevant to industrial automations, capital equipment, and other end markets over time. Data connectivity is evolving in parallel.

Speaker #4: Data connectivity is evolving in parallel. As compute clusters become larger, more data needs to move within and between those systems at higher speed. Proper connectivity continues to play an important role.

Felix Teng: As compute clusters become larger, more data needs to move within and between those systems at higher speed. Copper continues to play an important role, particularly where distance and system architecture allow it. At the same time, optical connectivity becomes increasingly important as bandwidth requirements and transmission distances increase.

Speaker #4: Particularly where distance and system architecture allow it. At the same time, optical connectivity becomes more important as bandwidth requirements and transmission distances increase. We have capabilities in both.

Felix Teng: We have capabilities in both. Our position in copper connectivity continues to evolve with higher speed architectures, while XFS has materially expanded our optical capabilities. We do not see this as a simple transition from copper to optics. Different system architectures will require different combinations of both, and those requirements will continue to evolve. For BizLink, the strategic point is straightforward. We can participate across power, copper, and optics. This gives us more than additional content opportunities. It gives us greater flexibility as customer architectures evolve. If content shifts between technologies, our objective is to participate in the transition rather than depend on one technology outcome. As these infrastructure layers become more closely connected, that breadth becomes increasingly valuable. Importantly, we do not expect the industry to change every part of the infrastructure at the same time. Customers need to deploy.

Speaker #4: Our position in copper connectivity continues to evolve with higher-speed architectures. While XFS has materially expanded our optical capabilities, we do not see this as a simple transition from copper to optics.

Speaker #4: Different system architectures will require different combinations of both, and those requirements will continue to evolve. For BizLink, the strategic point is straightforward: we can participate across power, copper, and optics.

Felix Teng: We can participate across power, copper, and optics. This gives us more than additional content opportunities. It gives us greater flexibility as customer architectures evolve. If content shifts between technologies, our objective is to participate in the transition rather than depend on one technology outcome. As these infrastructure layers become more closely connected, that breadth becomes increasingly valuable. Importantly, we do not expect the industry to change every part of the infrastructure at the same time. Customers need to deploy.

Speaker #4: This gives us more than additional content opportunities; it gives us greater flexibility as customers' architectures evolve. If content shifts between technologies, our objective is to participate in the transition rather than depend on one technology outcome.

Speaker #4: As these infrastructure layers become more closely connected, that breadth becomes increasingly valuable. And importantly, we do not expect the industry to change every part of the infrastructure at the same time.

Speaker #4: Customers need to deploy. New technologies, therefore, have to coexist with existing infrastructure. Architecture transitions will occur at different speeds depending on the customer and applications.

Felix Teng: New technologies therefore have to coexist with existing infrastructure, and architecture transitions will occur at different speeds, depending on the customers and applications. This reinforces our view of deployment first. The winning solution is not necessarily the newest architecture in isolation. It is a solution that allows customers to bring reliable compute capacity online at the scale and timing they require. Our execution strategy follows directly from these changes. If customers' requirements are becoming broader, our capability needs to become broader as well. We continue to invest organically in engineering and NPI. We are expanding manufacturing capacity and capabilities where customer demand supports those investments. We are increasing the level of system integrations we can provide, and we continue to evaluate strategic investments where acquiring an established capability can accelerate our progress. Our global footprint is an important part of this strategy.

Speaker #4: This reinforces our view of deployment first. The winning solution is not necessarily the newest architecture in isolation. It is the solution that allows customers to bring reliable compute capability and capacity online, at a scale and timing they require.

Speaker #4: Our execution strategy follows directly from these changes. If customers' requirements are becoming broader, our capability needs to become broader as well. We continue to invest organically in engineering and APIs.

Felix Teng: Our execution strategy follows directly from these changes. If customers' requirements are becoming broader, our capability needs to become broader as well. We continue to invest organically in engineering and NPI. We are expanding manufacturing capacity and capabilities where customer demand supports those investments. We are increasing the level of system integrations we can provide, and we continue to evaluate strategic investments where acquiring an established capability can accelerate our progress. Our global footprint is an important part of this strategy.

Speaker #4: We are expanding manufacturing capabilities and capacity where customers' demand supports those investments. We are also increasingly raising the level of system integrations we can provide.

Speaker #4: And we continue to evaluate strategic investments where acquiring and establishing capability can accelerate our progress. Our global footprint is an important part of this strategy.

Speaker #4: Customers increasingly require suppliers that can support them across multiple regions, while maintaining consistent engineering, quality, and manufacturing standards. We therefore continue to invest in our manufacturing network.

Felix Teng: Customers increasingly require suppliers that can support them across multiple regions while maintaining consistent engineering, quality, and manufacturing standards. We therefore continue to invest in our manufacturing network where we see sustained customer requirements. Strong demand does not mean we need to pursue every available opportunity. We remain selective in how we allocate capacity and capital. We prioritize programs where our capabilities, customer relationships, and expected returns justify the resources required. This is particularly important in the current environment. We do not intend to build capacity simply because demand expectations are high. Capacity expansion needs to be supported by customers' requirements and attractive long-term economics. We also actively manage how existing capacity is used. As our business mix evolves, we can reallocate manufacturing space equipment, and organizational resources toward opportunities where we see stronger growth, greater strategic value, or better returns.

Speaker #4: We see sustained customer requirements. But strong demand does not mean we need to pursue every available opportunity. We remain selective in how we allocate capacity and capital.

Speaker #4: We prioritize programs where our capabilities, customer relationships, and expected returns justify the resources required. This is particularly important in the current environment. We do not intend to build capacity simply because demand expectations are high.

Felix Teng: This is particularly important in the current environment. We do not intend to build capacity simply because demand expectations are high. Capacity expansion needs to be supported by customers' requirements and attractive long-term economics. We also actively manage how existing capacity is used. As our business mix evolves, we can reallocate manufacturing space equipment, and organizational resources toward opportunities where we see stronger growth, greater strategic value, or better returns.

Speaker #4: Capacity expansion needs to be supported by customers' requirements and attractive long-term economics. We also actively manage how existing capacity is used. As our business evolves, we can reallocate manufacturing space, equipment, and organizational resources toward opportunities where we see stronger growth, greater strategic value, or better returns.

Speaker #4: In some cases, this may mean allowing more mature business to roll off, rather than adding capacity simply to preserve revenue. Our objective is therefore not to maximize revenues at any cost.

Felix Teng: In some cases, this may mean allowing more mature business to roll off rather than adding capacity simply to preserve revenue. Our objective is therefore not to maximize revenues at any cost. It is to allocate our resources toward the opportunities where business can create the greatest long-term value. This discipline is important because capacity decisions made during periods of very strong demand can affect returns for many years. We want to participate fully in the growth opportunities ahead of us without building the company around the assumption that every demand signal will continue indefinitely. At the same time, we are seeing increasing opportunities to participate earlier in customer projects. Earlier engagements allow us to contribute more engineering value and give us a better understanding of how the complete system is evolving. The progression we are pursuing is clear. Earlier engineering engagement, stronger NPI, scalable manufacturing, and broader system integration.

Speaker #4: It is to allocate our resources toward the opportunities where BizLink can create the greatest long-term value. This discipline is important because capacity decisions made during periods of very strong demand can affect returns for many years.

Speaker #4: We want to participate fully in the growth opportunities ahead of us, without building the company around the assumption that every demand signal will continue indefinitely.

Felix Teng: We want to participate fully in the growth opportunities ahead of us without building the company around the assumption that every demand signal will continue indefinitely. At the same time, we are seeing increasing opportunities to participate earlier in customer projects. Earlier engagements allow us to contribute more engineering value and give us a better understanding of how the complete system is evolving. The progression we are pursuing is clear. Earlier engineering engagement, stronger NPI, scalable manufacturing, and broader system integration.

Speaker #4: At the same time, we are seeing increasing opportunities to participate earlier in customer projects. Earlier engagement allows us to contribute more engineering value and gives us a better understanding of how the complete system is evolving.

Speaker #4: The progression we are pursuing is clear: earlier engineering engagement, stronger API, scalable manufacturing, and broader system integration. This is also how we approach MA.

Felix Teng: This is also how we approach M&A. We evaluate acquisitions based on more than their immediate revenue contribution. We look for capabilities, technologies, customer relationships, geographic reach, and other strategic strengths that can make BizLink more competitive over time. Increasingly, we also think about M&A through the durability of the capabilities we acquire. Individual products can have relatively short technology cycles. A strong engineering design or manufacturing capability can potentially remain relevant across multiple product generations, customers, and end markets. That matters to how we allocate capital. We prefer strategic assets that strengthen what BizLink is capable of doing, rather than simply adding exposure to a product that is attractive at one point in the cycle. The contemplated acquisition of Interplex Datacom fits our broader capability expansion framework.

Speaker #4: We evaluate acquisitions based on more than their immediate revenue contribution. We look for capabilities, technologies, customer relationships, geographic reach, and other strategic strengths that can make BizLink more competitive over time.

Speaker #4: Increasingly, we also think about MMA through the durability of the capabilities we acquire. Individual products can have relatively short technology cycles. Strong engineering design or manufacturing capabilities can potentially remain relevant across multiple product generations.

Felix Teng: A strong engineering design or manufacturing capability can potentially remain relevant across multiple product generations, customers, and end markets. That matters to how we allocate capital. We prefer strategic assets that strengthen what BizLink is capable of doing, rather than simply adding exposure to a product that is attractive at one point in the cycle. The contemplated acquisition of Interplex Datacom fits our broader capability expansion framework.

Speaker #4: Customers and end markets—that matters to how we allocate capital, with preferred strategic assets that strengthen what the business is capable of doing, rather than simply adding exposure to a product that is attractive at one point in the cycle.

Speaker #4: The contemplated acquisition of Enterprise Data Comp fits our broader capability expansion framework. It should not be viewed as a change in business strategic direction, but rather as another step along a path we have been following for many years.

Felix Teng: It should not be viewed as a change in BizLink's strategic direction, but rather as another step along a path we have been following for many years. Interplex Datacom's capability in mechanical engineering, precision manufacturing, and design would complement BizLink's existing strengths across electrical, optical, power, and manufacturing engineering. Following closing, we believe these complementary capabilities will broaden the engineering and manufacturing capabilities available across the BizLink platform, particularly where mechanical and electrical requirements increasingly intersect. Because the transaction has not yet closed, Interplex Datacom remains a separate business, and we will therefore remain disciplined about what we discuss before closing. Our broader acquisition philosophy remains unchanged. We will continue to develop capabilities organically where that is the best approach. We will consider acquisitions when they can accelerate our strategy, and we will remain selective. The objective is not simply to make BizLink larger.

Speaker #4: Enterprise data comps capability in mechanical engineering, precision manufacturing, and design would complement BizLink's existing strengths across electrical, optical, power, and manufacturing engineering.

Speaker #4: Following closely, we believe these implementary capabilities will broaden the engineering and manufacturing capabilities available across the BizLink platform, particularly where mechanical and electrical requirements increasingly intersect.

Speaker #4: Because the transaction has not yet closed, Enterprise Data Comp remains a separate business. We will therefore remain disciplined about what we've discussed before closing.

Felix Teng: Because the transaction has not yet closed, Interplex Datacom remains a separate business, and we will therefore remain disciplined about what we discuss before closing. Our broader acquisition philosophy remains unchanged. We will continue to develop capabilities organically where that is the best approach. We will consider acquisitions when they can accelerate our strategy, and we will remain selective. The objective is not simply to make BizLink larger.

Speaker #4: Our broader acquisition philosophy remains unchanged. We will continue to develop capabilities organically, where that is the best approach. We will consider acquisitions when they can accelerate our strategy.

Speaker #4: And we will remain selective. The objective is not simply to make BizLink larger; the objective is to make BizLink more capable. So, what does this mean going forward?

Felix Teng: The objective is to make BizLink more capable. Looking forward, we see a larger opportunity set for BizLink than we had several years ago. AI infrastructure is creating new requirements across power, data connectivity, thermal, and mechanical systems. Semiconductor production equipment is becoming more complex and creating opportunities for greater engineering and system integration content. Industrial automation, transportation, healthcare, and other markets continue to evolve toward higher levels of electrification and automation. This market will not grow at the same rate every quarter. We also do not expect the current AI investment cycle to move in a straight line. The scale and pace of investment across AI infrastructure today are significant. We remain constructive on the structural opportunity, but investment cycles of this magnitude will include periods of acceleration and periods of digestion.

Speaker #4: Looking forward, we see a larger opportunity set for BizLink than we had several years ago. AI infrastructure is creating new requirements across power, data connectivity, thermal, and mechanical systems.

Speaker #4: Semiconductor production equipment is becoming more complex and creating opportunities for greater engineering and system integration content. Industrial automation, transportation, healthcare, and other markets continue to evolve toward a higher level of electrification and automation.

Felix Teng: Industrial automation, transportation, healthcare, and other markets continue to evolve toward higher levels of electrification and automation. This market will not grow at the same rate every quarter. We also do not expect the current AI investment cycle to move in a straight line. The scale and pace of investment across AI infrastructure today are significant. We remain constructive on the structural opportunity, but investment cycles of this magnitude will include periods of acceleration and periods of digestion.

Speaker #4: This market will not grow at the same rate every quarter. We also do not expect the current AI investment cycle to move in a straight line.

Speaker #4: The scale and pace of investment across AI infrastructure today are significant. We remain constructive on the structural opportunity. But an investment cycle of this magnitude will involve periods of acceleration and periods of digestion.

Speaker #4: Our responsibility is not to predict every turn in that cycle. It is to ensure that BizLink is positioned to capture the upside while remaining resilient if conditions change.

Felix Teng: Our responsibility is not to predict every turn in that cycle. It is to ensure that BizLink is positioned to capture the upside while remaining resilient if conditions change. Our strategy is increasingly designed around that flexibility. We are building depth across products so that we can participate as customers' requirements move between technologies. We are building broader capabilities that can remain relevant across multiple products and markets. We are selective about the demand and capacity we pursue, and we continue to diversify the earnings base of the company. We do not need perfect visibility into every technology transition or every point in the investment cycle. We need the ability to adapt as those conditions change. We are not building our strategy on the assumption that today's rate of investment continues indefinitely.

Speaker #4: Our strategy is increasingly designed around that flexibility. We are building depth across products so that we can participate as customers' requirements move between technologies.

Speaker #4: We are building broader capabilities that can remain relevant across multiple products and markets. We are selective about the demand and capacity we pursue, and we continue to diversify the earnings base of the company.

Felix Teng: We are selective about the demand and capacity we pursue, and we continue to diversify the earnings base of the company. We do not need perfect visibility into every technology transition or every point in the investment cycle. We need the ability to adapt as those conditions change. We are not building our strategy on the assumption that today's rate of investment continues indefinitely.

Speaker #4: We do not need perfect visibility into every technology transition or every point in the investment cycle. We need the ability to adapt as those conditions change.

Speaker #4: We are not building our strategy on the assumption that today's rate of investment will continue indefinitely. We are building the company so that we can capture the structural opportunities through different parts of the cycle.

Felix Teng: We are building the company so that we can capture the structural opportunities through different parts of the cycle. Across BizLink, our strategy remains consistent. We want to participate earlier. We want to solve more complex problems. We want to increase our content and value to customers. We want to convert those capabilities into sustainable long-term growth. Our opportunity is no longer defined by any single product. It is increasingly defined by the range of problems BizLink is capable of solving. With that, I will turn the call over to Charles.

Speaker #4: Across BizLink, our strategy remains consistent. We want to participate earlier. We want to solve more complex problems. We want to increase our content and value to customers.

Speaker #4: And we want to convert those capabilities into sustainable, long-term growth. Our opportunity is no longer defined by any single product; it is increasingly defined by the range of problems BizLink is capable of solving.

Speaker #4: With that, I will turn the call over to Charles.

Speaker #1: Thank you, Felix, and good afternoon, everyone. Felix has discussed how our opportunity set and capabilities are evolving, and I will focus on what that evolution means financially.

Charles Tsai: Thank you, Felix, and good afternoon, everyone. Felix has discussed how our opportunity set and capability are evolving. I will focus on what that evolution means financially. Our Q2 performance, the economic of the business as we scale, the breadth of our growth drivers, and how we are managing our capital structure following the recent fundraising. For Q2 2026, consolidated revenue was TWD 33.28 billion, representing a 37% year-over-year growth and 12% sequential growth. Gross profit was TWD 7.15 billion with gross margin of 30.73%, compared with 28.77% in Q1. Operating profit was TWD 4.01 billion with operating margin of 17%, compared with 14.9% in Q1. Net income attributable to shareholders was TWD 2.98 billion, and EPS was TWD 15.28. Net income and EPS reached a new quarterly high. Q2 showed a clear improvement from Q1.

Speaker #1: Our second quarter performance, the economics of the business as we scale the breadth of our growth drivers, and how we're managing our capital structure following the recent fundraising.

Speaker #1: So, for the second quarter of 2026, consolidated revenue was $23.28 billion, representing 37% year-on-year growth and 12% sequential growth. Gross profit was $7.15 billion, with a gross margin of 30.73% compared with 28.77% in the first quarter.

Charles Tsai: Gross profit was TWD 7.15 billion with gross margin of 30.73%, compared with 28.77% in Q1. Operating profit was TWD 4.01 billion with operating margin of 17%, compared with 14.9% in Q1. Net income attributable to shareholders was TWD 2.98 billion, and EPS was TWD 15.28. Net income and EPS reached a new quarterly high. Q2 showed a clear improvement from Q1.

Speaker #1: Operating profit was $4.01 billion, with an operating margin of 17%, compared with 14.9% in the first quarter. Net income attributable to shareholders was $2.98 billion, and EPS was $15.28.

Speaker #1: Net income and EPS reached a new quarterly high. The second quarter showed a clear improvement from the first quarter. Revenue increased sequentially, utilization improved, and the operational issues that affected our first quarter profitability began to normalize.

Charles Tsai: Revenue increased sequentially, utilization improved, and the operational issues that affect our Q1 profitability began to normalize. Last quarter, we explained that gross margin was affected by several factors occurring at the same time, including product transitions, customer deployment schedule, foreign exchange, and business mix. During Q2, we focused on the areas that we can control. The first is cost efficiency. As volume improved, utilization improved with them. We continue working on manufacturing efficiency, material cost, productivity, execution across our operations. The second is operating expense efficiency. We continue to invest where necessary to support growth, but the organization also needs to become more efficient as the revenue base expands. Importantly, the improvement in Q2 was not simply a function of higher volumes.

Speaker #1: Last quarter, we explained that gross margin was affected by several factors occurring at the same time, including product transitions, customer deployment schedules, foreign exchange, and business mix.

Speaker #1: During the second quarter, we focused on the areas that we can control. The first is cost efficiency. As volume improved, utilization improved with them.

Charles Tsai: As volume improved, utilization improved with them. We continue working on manufacturing efficiency, material cost, productivity, execution across our operations. The second is operating expense efficiency. We continue to invest where necessary to support growth, but the organization also needs to become more efficient as the revenue base expands. Importantly, the improvement in Q2 was not simply a function of higher volumes.

Speaker #1: We continue working on manufacturing efficiency, material cost, productivity, and execution across our operations. The second is operating expense efficiency. We continue to invest where necessary to support growth.

Speaker #1: But the organization also needs to become more efficient as the revenue base expands. Importantly, the improvement in the second quarter was not simply a function of higher volume.

Speaker #1: We also made progress in addressing the operational issues that affected the first quarter, while continuing to improve manufacturing efficiency, material cost productivity, and operating efficiency across the organization.

Charles Tsai: We also made progress in addressing the operational issues that affected Q1 while continuing to improve manufacturing efficiency, material cost, productivity, and operating efficiency across the organization. The results this quarter show progress in both areas. We should also be clear about how we manage the business. Our objective is not to maximize gross margin in a particular quarter. Our business model is to deliver strong scale growth at healthy and sustainable margins. Margins will move from quarter to quarter because of product mix, customer mix, utilization, foreign exchange, and program timing. We expect that. What matters is whether we can maintain reasonable profitability while expanding the absolute earning and cash generation capacity of the company. Q2 is a strong demonstration of that model. BizLink today is materially larger than it was several years ago.

Speaker #1: The results this quarter showed progress in both areas. We should also be clear about how we manage the business. Our objective is not to maximize gross margin in a particular quarter.

Speaker #1: Our business model is to deliver strong, scalable growth as well as healthy and sustainable margins. Margin will move from quarter to quarter because of product mix, customer mix, utilization, foreign exchange, and program timing.

Charles Tsai: Margins will move from quarter to quarter because of product mix, customer mix, utilization, foreign exchange, and program timing. We expect that. What matters is whether we can maintain reasonable profitability while expanding the absolute earning and cash generation capacity of the company. Q2 is a strong demonstration of that model. BizLink today is materially larger than it was several years ago.

Speaker #1: We expect that. What matters is whether we can maintain reasonable profitability while expanding the absolute earnings and cash generation capacity of the company. The second quarter is a strong demonstration of that model.

Speaker #1: So BizLink today is materially, logically different than it was several years ago. For several years, we focused on improving the quality of the business. We improved gross margins.

Charles Tsai: For several years, we focused on improving the quality of the business. We improved growth margins. We improved operating efficiency. We maintained discipline around operating expenses. We improved cash generation, and we became more selective about where we deploy capital. Those priorities remain. The next stage of BizLink development is not about maximizing any one financial ratio. It is about maintaining healthy economics while continuing to scale. A healthy margin on the larger revenue base generates greater operating profit, greater net income, and greater cash flow. That increased earning capacity gives us more resources to invest in customer program technology, capacity, people, and strategic opportunities. The important point is that scale and profitability have to work together. Growth without adequate return does not create substantial value. Maximizing margin by walking away from attractive growth opportunity is also not how we intend to manage that company.

Speaker #1: We improved operating efficiency. We maintained discipline around operating expenses. We improved cash generation. And we became more selective about where we deploy capital. Those priorities remain.

Speaker #1: But the next stage of BizLink's development is not about maximizing any one financial ratio. It's about maintaining healthy economics while continuing to scale. A healthy margin on a larger revenue base generates greater operating profit, greater net income, and greater cash flow.

Charles Tsai: A healthy margin on the larger revenue base generates greater operating profit, greater net income, and greater cash flow. That increased earning capacity gives us more resources to invest in customer program technology, capacity, people, and strategic opportunities. The important point is that scale and profitability have to work together. Growth without adequate return does not create substantial value. Maximizing margin by walking away from attractive growth opportunity is also not how we intend to manage that company.

Speaker #1: That increased earning capacity gives us more resources to invest in customer programs, technology, capacity, people, and strategic opportunities. The important point is that scale and profitability have to work together.

Speaker #1: Growth without adequate return does not create sustainable value. But maximizing margin by walking away from attractive growth opportunities is also not how we intend to manage the company.

Speaker #1: Our objective is to capture growth where we have a competitive advantage, while maintaining disciplined profitability and returns. This is increasingly relevant because the composition of BizLink's business is changing.

Charles Tsai: Our objective is to capture growth where we have a competitive advantage while maintaining discipline, profitability, and returns. This is increasingly relevant because the composition of BizLink business is changing. Our growth businesses are becoming larger. Our engineering content is increasing. Our system integration capabilities are expanding. In several businesses, we are moving closer to the customer and participating in more of the value chain. This creates opportunity to increase both the size and the quality of our earning base. We are already seeing that financial impact of that evolution. We can see this change in how we engage with customers. Across several of our higher growth businesses, our participation is moving beyond individual components toward broader assembly subsystems and engineering solutions. We are also becoming involved earlier in customer development cycle and supporting more complex programs.

Speaker #1: Higher-growth businesses are becoming larger. Our engineering content is increasing. Our system integration capabilities are expanding. And in several businesses, we're moving closer to the customer and participating in more of the value chain.

Speaker #1: This creates opportunities to increase both the size and the quality of our earnings base. We're already seeing the financial impact of that evolution, and we can see this change in how we engage with customers.

Charles Tsai: This creates opportunity to increase both the size and the quality of our earning base. We are already seeing that financial impact of that evolution. We can see this change in how we engage with customers. Across several of our higher growth businesses, our participation is moving beyond individual components toward broader assembly subsystems and engineering solutions. We are also becoming involved earlier in customer development cycle and supporting more complex programs.

Speaker #1: Across several of our higher-growth businesses, our participation is moving beyond individual components to broader assembly, subsystem, and engineering solutions. We're also becoming involved earlier in the customer deployment development cycle and supporting more complex programs.

Speaker #1: This increases the value that we can provide to customers and expands the opportunity available to BizLink with each program. So, what is changing? The sources of growth across BizLink are becoming broader.

Charles Tsai: This increases the value that we can provide to customers and expands the opportunity available to BizLink with each program. What is changing? The source of the growth across BizLink are becoming broader. AI infrastructure remains one of our strongest structural growth drivers. The underlying demand for compute remains strong. As Felix discussed, the infrastructure required to deploy the compute is expanding across power, connectivity, and other areas. Another important characteristic of this business is that we are participating across multiple technology generations at the same time. While today's generation is already contributing to our revenue and profit growth, our engineering teams are working with customers on future platforms. In some areas, that work already extends beyond the next generation into N+2 solutions. This matters because each generation is becoming more demanding.

Speaker #1: AI infrastructure remains one of our strongest structural growth drivers. The underlying demand for compute remains strong, and as Felix discussed, the infrastructure required to deploy the compute is expanding across power, connectivity, and other areas.

Speaker #1: Another important characteristic of this business is that we're participating across multiple technology generations at the same time. While today's generation is already contributing to our revenue and profit growth, our engineering teams are working with customers on future platforms.

Charles Tsai: Another important characteristic of this business is that we are participating across multiple technology generations at the same time. While today's generation is already contributing to our revenue and profit growth, our engineering teams are working with customers on future platforms. In some areas, that work already extends beyond the next generation into N+2 solutions. This matters because each generation is becoming more demanding.

Speaker #1: In some areas, that work already extends beyond the next generation into M+2 solutions. So this matters because each generation is becoming more demanding. Power density is increasing.

Charles Tsai: Power density is increasing, data feeds are rising, and system requirements are becoming more integrated. Early participation allows us to accumulate engineering knowledge, qualification experience, and customer trust that can carry forward into subsequent generations. As a result, the capabilities supporting today's earning also help position us for future opportunities. At the same time, we do not assume that current pace of AI infrastructure investment will continue in a straight line. Large investment cycles inevitably include changes in deployment timing, capacity digestion, and shift in where capital is being directed. We do not need to predict exactly when those changes will occur. We need to manage BizLink so that we can continue creating value through them. That starts with the quality of the demand we choose to support. We do not need to address every unit of incoming demand.

Speaker #1: Data speeds are rising, and system requirements are becoming more integrated. Early participation allows us to accumulate engineering knowledge, qualification experience, and customer trust that can carry forward into subsequent generations.

Speaker #1: As a result, the capabilities supporting today's earnings also help position us for future opportunities. At the same time, we do not assume that the current pace of AI infrastructure investment will continue in a straight line.

Speaker #1: Large investment cycles inevitably include changes in deployment timing, capacity digestion, and shifts in where capital is being directed. We do not need to predict exactly when those changes will occur.

Charles Tsai: Large investment cycles inevitably include changes in deployment timing, capacity digestion, and shift in where capital is being directed. We do not need to predict exactly when those changes will occur. We need to manage BizLink so that we can continue creating value through them. That starts with the quality of the demand we choose to support. We do not need to address every unit of incoming demand.

Speaker #1: We need to manage BizLink so that we can continue creating value through them. That starts with the quality of the demand we choose to support.

Speaker #1: We do not need to address every unit of incoming demand. When demand is strong, it can be tempting to add capacity simply to capture additional revenue.

Charles Tsai: When demand is strong, it can be tempting to add capacity simply to capture additional revenue. We do not believe that is always the right decision. We evaluate the capital required, the expected return, the strategic importance of the program, and whether existing resources can be redeployed before committing incremental capacity. This allows to participate in attractive growth without automatically converting every increase in demand into higher capital intensity. Over time, we intend to keep capital expenditure discipline relative to the scale of the business and broadly consistent with way we have historically managed capital intensity. There may be periods where strategic investment justifies higher spending, but the principle is clear. We will not build capacity simply because demand expectations are high. Capital has to be supported by customer requirements and expected returns. Product and capability depth provide another form of resilience, as Felix Teng discussed.

Speaker #1: We do not believe that is always the right decision. We evaluate the capital required, the expected return, the strategic importance of the program, and whether existing resources can be redeployed before committing incremental capacity.

Speaker #1: This allows us to participate in attractive growth without automatically converting every increase in demand into higher capital intensity. Over time, we intend to keep capital expenditure discipline relative to the scale of the business and broadly consistent with the way we have historically managed capital intensity.

Charles Tsai: Over time, we intend to keep capital expenditure discipline relative to the scale of the business and broadly consistent with way we have historically managed capital intensity. There may be periods where strategic investment justifies higher spending, but the principle is clear. We will not build capacity simply because demand expectations are high. Capital has to be supported by customer requirements and expected returns. Product and capability depth provide another form of resilience, as Felix Teng discussed.

Speaker #1: There may be periods where strategic investment justifies higher spending. But the principle is clear: we will not build capacity simply because demand expectations are high.

Speaker #1: Capital has to be supported by customer requirements and expected returns. Product and capability depth provide another form of resilience, as Felix discussed. Broader participation across technologies gives us greater flexibility as architectures evolve.

Charles Tsai: Broader participation across technologies give us greater flexibility as architecture evolves. From a financial perspective, that matters because our growth does not have to depend on one product or one technology outcome. The same principles apply to strategic investment. When we invest in capabilities that can support multiple products, customers, or end markets, we create more ways to generate return from that investment over time. We believe this is a more durable approach than concentrating capital around narrow product opportunities simply because the demand is strong today. Capital equipment has become another important structural growth engine. AI is increasing manufacturer complexity across advanced logic, memory, and packaging, supporting continued investment in increasingly sophisticated semiconductor equipment. Our role in this market has expanded from component toward higher-level assembly and system integration, with deeper engineering engagement and participation in more complex, higher-value programs.

Speaker #1: From a financial perspective, that means our growth does not have to depend on one product or one technology outcome. The same principle applies to strategic investment.

Speaker #1: When we invest in capability that can support multiple products, customers, or end markets, we create more ways to generate return from that investment over time. We believe this is a more durable approach than concentrating capital around a narrow product opportunity simply because the demand is strong today.

Speaker #1: Capital equipment has become another important structural growth engine. AI is increasingly manufacturing complexity across advanced logic, memory, and packaging, supporting continued investment in increasingly sophisticated semiconductor equipment.

Charles Tsai: Capital equipment has become another important structural growth engine. AI is increasing manufacturer complexity across advanced logic, memory, and packaging, supporting continued investment in increasingly sophisticated semiconductor equipment. Our role in this market has expanded from component toward higher-level assembly and system integration, with deeper engineering engagement and participation in more complex, higher-value programs.

Speaker #1: Our role in this market has expanded from component to where high-level assembly and system integration, with deeper engineering engagement and participation in more complex, higher-value programs.

Speaker #1: This is already translating into accelerating growth, with quarterly sales reaching a new level. Today, we have reasonable order visibility extending into the second half of 2027.

Charles Tsai: This is already translating into accelerating growth, with quarterly sales reaching a new level. Today, we have reasonable order visibility extending into the H2 2027, while discussions with customers are already beginning to extend into 2028. We are preparing for the next stage of growth by deepening our engineering engagement and expanding our subsystem capabilities. We also see a gradual recovery across our broader industrial businesses. The recovery is not uniform, and different end markets are moving at different speeds. But the direction has improved. This gives us multiple sources of growth rather than requiring one business to carry the entire company. Our diversification is therefore not simply defensive. It allows us to participate in multiple structural growth opportunities while giving us greater flexibility in where we allocate capital and capacity. This brings me to capital allocation and capital structure.

Speaker #1: While discussions with customers are already beginning to extend into 2028, we're preparing for the next stage of growth by deepening our engineering engagement and expanding our subsystem capabilities.

Speaker #1: We also see a gradual recovery across our broader industrial businesses. The recovery is not uniform, and different end markets are moving at different speeds.

Charles Tsai: The recovery is not uniform, and different end markets are moving at different speeds. But the direction has improved. This gives us multiple sources of growth rather than requiring one business to carry the entire company. Our diversification is therefore not simply defensive. It allows us to participate in multiple structural growth opportunities while giving us greater flexibility in where we allocate capital and capacity. This brings me to capital allocation and capital structure.

Speaker #1: But the direction has improved. This gives us multiple sources of growth, rather than requiring one business to carry the entire company. Our classification is therefore not simply defensive.

Speaker #1: It allows us to participate in multiple structural growth opportunities, while giving us greater flexibility in where we allocate capital and capacity. So, how we're executing.

Speaker #1: This brings me to capital allocation and capital structure. Following our recent fundraising, I want to be clear about how we think about both.

Charles Tsai: Following our recent fundraising, I want to be clear about how we think about both. We manage our balance sheet against a clear internal financial framework. This framework is our North Star for how much leverage and liquidity we believe are appropriate for BizLink. We do not need the balance sheet to remain at exactly the same position at every point in time. Working capital changes. We invest in capacity, we pursue strategic opportunities, and there may therefore be periods where the balance sheet moves away from our preferred position. But we operate within defined guardrails. If the balance sheet moves outside of this guardrail, we will take the necessary steps to bring it back toward our preferred position. That discipline does not change with market sentiment. This is how we intend to manage the company through different parts of the cycle. Our recent financing reflects this philosophy.

Speaker #1: We manage our balance sheet against a clear internal financial framework. This framework is our North Star for how much leverage and liquidity we believe are appropriate for BizLink.

Speaker #1: We do not need the balance sheet to remain at exactly the same position at every point in time. Working capital changes. We invest in capacity.

Charles Tsai: We invest in capacity, we pursue strategic opportunities, and there may therefore be periods where the balance sheet moves away from our preferred position. But we operate within defined guardrails. If the balance sheet moves outside of this guardrail, we will take the necessary steps to bring it back toward our preferred position. That discipline does not change with market sentiment. This is how we intend to manage the company through different parts of the cycle. Our recent financing reflects this philosophy.

Speaker #1: We pursue strategic opportunities, and there may therefore be periods where the balance sheet moves away from our preferred position. But we operate within defined guardrails.

Speaker #1: If the balance sheet moves outside of this guardrail, we'll take the necessary steps to bring it back to our preferred position. That discipline does not change with market sentiment.

Speaker #1: This is how we intend to manage the company through different parts of the cycle. Our recent financing reflects this philosophy. We had alternatives, including relying more heavily on debt financing; we chose not to do that.

Charles Tsai: We had alternatives, including relying more heavily on debt financing. We chose not to do that. We believe maintaining a stable balance sheet is the right approach for BizLink, particularly as the size of our customer programs and investment opportunities continue to increase. This is also why we chose to support our growth through a combination of equity and equity-linked capital. We believe that when capital is deployed well, it should create long-term value for our customers, our BizLinkers, and the communities where we operate, as well as our shareholders. Over the years, as we execute our strategy, the value of BizLink has grown substantially, and the market's recognition of that strategy has grown with it. Our responsibility is to continue earning that recognition by converting the capital entrusted to us into greater capability, stronger earnings, and sustainable long-term value. Greater financial capacity expands our choices.

Speaker #1: We believe that maintaining a stable balance sheet is the right approach for BizLink, particularly as the size of our customer programs and investment opportunities continue to increase.

Speaker #1: This is also why we chose to support our growth through a combination of equity and equity-linked capital. We believe that when capital is deployed well, it should create long-term value for our customers.

Speaker #1: Our BizLinkers, the communities where we operate, as well as our shareholders. Over the years, as we have executed our strategy, the value of BizLink has grown substantially, and the market's recognition of that strategy has grown with it.

Charles Tsai: Over the years, as we execute our strategy, the value of BizLink has grown substantially, and the market's recognition of that strategy has grown with it. Our responsibility is to continue earning that recognition by converting the capital entrusted to us into greater capability, stronger earnings, and sustainable long-term value. Greater financial capacity expands our choices.

Speaker #1: Our responsibility is to continue earning that recognition by converting the capital entrusted to us into greater capability, stronger earnings, and sustainable long-term value. Greater financial capacity expands our choices; it does not change our financial discipline or lower our return requirement.

Charles Tsai: It does not change our financial discipline or lower our return requirements. Our capital allocation priorities remain consistent. We first invest in the existing business where customer demand and expected return justify the investment. That includes working capital, engineering, technology, capacity, automation, and NPI. Before adding capacity, we also evaluate whether existing resources can be used more effectively. As our business makes changes, we can shift resources away from more mature programs toward opportunities where we see stronger growth, greater strategic importance, or better economics. This is how we manage capital intensity. We do not measure success by how much capacity we have, but by what the capacity allows the company to earn. Not every incremental dollar of revenue deserves the same amount of capital. We will remain selective and prioritize opportunities where customer importance, strategic fit, and expected return justify the resource required.

Speaker #1: Our capital allocation priorities remain consistent. We first invest in the existing business where customer demand and expected return justify the investment. That includes working capital, engineering, technology, automation, and capacity. We also evaluate whether existing resources can be used more effectively.

Speaker #1: As our business makes changes, we can shift resources away from more mature programs to where we see stronger growth, greater strategic importance, or better economics.

Charles Tsai: As our business makes changes, we can shift resources away from more mature programs toward opportunities where we see stronger growth, greater strategic importance, or better economics. This is how we manage capital intensity. We do not measure success by how much capacity we have, but by what the capacity allows the company to earn. Not every incremental dollar of revenue deserves the same amount of capital. We will remain selective and prioritize opportunities where customer importance, strategic fit, and expected return justify the resource required.

Speaker #1: This is how we manage capital intensity. We do not measure success by how much capacity we have, but by what that capacity allows the company to earn.

Speaker #1: Not every incremental dollar of revenue deserves the same amount of capital. We will remain selective and prioritize opportunities where customer importance, strategic needs, and expected return justify the resources required.

Speaker #1: We can see the result of this discipline in our returns as BizLink has grown. Both our return on equity and return on invested capital have improved meaningfully over the past several years.

Charles Tsai: We can see the result of this discipline in our returns. As BizLink has grown, both our return on equity and return on investment capital have improved meaningfully over the past several years. We view this as an important measure of the quality of our growth. Our objective is not simply to make the company larger, but to deploy capital in ways that generate attractive return over time. Following our recent financing, that responsibility becomes even more important. We can now have greater financial capacity, and our job is to convert that capital into capability and earnings while maintaining disciplined return. Capital allocation also extends beyond physical capacity. As BizLink grows, we need more than factory and equipment. We need engineers who can solve increasingly complex customer problems.

Speaker #1: We view this as an important measure of the quality of our growth. Our objective is not simply to make the company larger but to deploy capital in ways that generate attractive returns over time.

Speaker #1: Following our recent financing, that responsibility becomes even more important. We now have greater financial capacity, and our job is to convert that capital into capability and earnings, while maintaining disciplined returns.

Charles Tsai: Following our recent financing, that responsibility becomes even more important. We can now have greater financial capacity, and our job is to convert that capital into capability and earnings while maintaining disciplined return. Capital allocation also extends beyond physical capacity. As BizLink grows, we need more than factory and equipment. We need engineers who can solve increasingly complex customer problems.

Speaker #1: Capital allocation also extends beyond fiscal capacity. As BizLink grows, we need more than factories and equipment. We need engineers who can solve increasingly complex customer problems.

Speaker #1: An MPI team that can convert those solutions into scalable production. Leaders capable of managing a larger and more geographically diverse operation, and digital systems and processes that allow our team to operate efficiently across the global company.

Charles Tsai: NPI teams that can convert those solutions into scalable production, leaders capable of managing larger and more geographically diverse operations, and digital systems and processes that allow our team to operate efficiently across the global company. This investment may not produce immediate revenue, but they are necessary to support sustainable earning growth. We also evaluate strategic opportunities through M&A. Our approach is increasingly capability-led. We look for engineering, design, manufacturing, technology, customer, or geographic capability that can strengthen the broader company. We prefer capability that can remain valuable across multiple products, customers, and technology cycles, rather than building our strategy around any single product opportunity. The contemplated Interplex Datacom acquisition is one example of how we may deploy capital when we identify a strategic opportunity that meets our long-term objectives and return criteria.

Speaker #1: These investments may not produce immediate revenue, but they are necessary to support sustainable earnings growth. We also evaluate strategic opportunities through M&A. Our approach is increasingly capability-led.

Speaker #1: We look for engineering, design, manufacturing, technology, customer, or geographic capability that can strengthen the broader company. We prefer capability that can remain valuable across multiple product, customer, and technology cycles.

Charles Tsai: We look for engineering, design, manufacturing, technology, customer, or geographic capability that can strengthen the broader company. We prefer capability that can remain valuable across multiple products, customers, and technology cycles, rather than building our strategy around any single product opportunity. The contemplated Interplex Datacom acquisition is one example of how we may deploy capital when we identify a strategic opportunity that meets our long-term objectives and return criteria.

Speaker #1: Rather than building our strategy around any single product opportunity, the contemplated Interplex Data Com acquisition is one example of how we may deploy capital when we identify a strategic opportunity that meets our long-term objectives and return criteria.

Speaker #1: As the transaction has not yet closed, Interplex DataCom remains a separate business and has not contributed to our reported results. Strategic opportunities do not necessarily appear when internally generated cash is most abundant.

Charles Tsai: As the transaction has not yet closed, Interplex Datacom remains a separate business and has not contributed to our reported results. Strategic opportunities do not necessarily appear when internally generated cash is most abundant. This is another reason we value maintaining financial flexibility. BizLink itself is becoming larger. Our customer programs are becoming larger, and the investment required to support those opportunities are also increasing. A strong balance sheet gives us the ability to act when an opportunity meets our strategic and return requirement without compromising the operating needs of the rest of the company. That is the purpose of financial capacity, not to spend more, but to ensure that capital availability does not become a constraint when the right opportunity appears. Looking forward, we believe BizLink is entering the next stage of its development from a much stronger position. The earning base is larger.

Speaker #1: This is another reason we value maintaining financial flexibility. BizLink itself is becoming larger, our customer programs are becoming larger, and the investment required to support those opportunities is also increasing.

Speaker #1: A strong balance sheet gives us the ability to act when an opportunity meets our strategic and return requirements, without compromising the operating needs of the rest of the company.

Charles Tsai: A strong balance sheet gives us the ability to act when an opportunity meets our strategic and return requirement without compromising the operating needs of the rest of the company. That is the purpose of financial capacity, not to spend more, but to ensure that capital availability does not become a constraint when the right opportunity appears. Looking forward, we believe BizLink is entering the next stage of its development from a much stronger position. The earning base is larger.

Speaker #1: That is the purpose of financial capacity: not to spend more, but to ensure that capital availability does not become a constraint when the right opportunity appears.

Speaker #1: So looking forward, we believe BizLink is entering the next stage of its development from a much stronger position. The earnings base is larger, our structural growth drivers are broader, our product and capability depth are greater, our engineering and manufacturing capability are deeper, our customer relationships increasingly span more product programs and geographies, and our financial capacity has increased.

Charles Tsai: Our structural growth drivers are broader. Our product and capability depth are greater. Our engineering and manufacturing capability are deeper. Our customer relationships increasingly span more product, programs, geography, and our financial capacity has increased. Our responsibility is to convert those advantages into sustainable value. The process is straightforward. We need to convert customer opportunity into earnings. We need to convert earnings into cash. We need to allocate that capital with discipline, and we need to reinvest where we see attractive long-term returns. As we do that, we will maintain several disciplines. We will remain selective about the demand we pursue. We will manage capital intensity rather than automatically adding capacity. We will continue reallocating resources as our business mix evolves. We will favor capabilities that can remain relevant as product and technology change, and we will manage the balance sheet against financial guardrails that we have established.

Speaker #1: Our responsibility is to convert those advantages into sustainable value. The process is straightforward. We need to convert customer opportunities into earnings, we need to convert earnings into cash, we need to allocate that capital with discipline, and we need to reinvest where we see attractive long-term returns.

Charles Tsai: We need to allocate that capital with discipline, and we need to reinvest where we see attractive long-term returns. As we do that, we will maintain several disciplines. We will remain selective about the demand we pursue. We will manage capital intensity rather than automatically adding capacity. We will continue reallocating resources as our business mix evolves. We will favor capabilities that can remain relevant as product and technology change, and we will manage the balance sheet against financial guardrails that we have established.

Speaker #1: As we do that, we will maintain several disciplines. We will remain selective about the demand we pursue. We will manage capital intensity rather than automatically adding capacity.

Speaker #1: We will continue reallocating resources as our business evolves. We will favor capabilities that can remain relevant as products and technology change. And we will manage the balance sheet against the financial guardrails that we have established.

Speaker #1: This discipline becomes more important when markets are strong. The scale of investment occurring across AI infrastructure today is significant, and we remain constructive on the long-term opportunities.

Charles Tsai: This discipline becomes more important when markets are strong. The scale of investment occurring across AI infrastructure today is significant, and we remain constructive on the long-term opportunity. But we are now managing BizLink on the assumption that today's demand environment continue indefinitely. There will be periods of acceleration. There will be periods of digestion. Technology will change, and there will be changes in where the bottlenecks sit. We do not need to predict each one. We need a business model that can adapt to them. This is why product and capability depth matter. This is why diversification matter. This is why capital discipline matter. And this is why we maintain financial guardrails. The second quarter give us greater confidence in this model. We have returned to sequential growth. Profitability has improved from the first quarter, and our absolute earnings continue to demonstrate the benefit of greater scale.

Speaker #1: But we're not managing BizLink on the assumption that today's demand environment will continue indefinitely. There will be periods of acceleration. There will be periods of digestion.

Speaker #1: Technology will change, and there will be changes in where the bottleneck sits. We do not need to predict each one. We need a business model that can adapt through them.

Charles Tsai: We do not need to predict each one. We need a business model that can adapt to them. This is why product and capability depth matter. This is why diversification matter. This is why capital discipline matter. And this is why we maintain financial guardrails. The second quarter give us greater confidence in this model. We have returned to sequential growth. Profitability has improved from the first quarter, and our absolute earnings continue to demonstrate the benefit of greater scale.

Speaker #1: This is why product and capability depth matter. This is why diversification matters. This is why capital discipline matters. And this is why we maintain financial guardrails.

Speaker #1: The second quarter gives us greater confidence in this model. We have returned to sequential growth, profitability has improved from the first quarter, and our absolute earnings continue to demonstrate the benefit of greater scale.

Speaker #1: Looking further ahead, we remain constructive on AI infrastructure. We remain constructive on capital equipment. We're seeing improving conditions nearly across all parts of our industrial portfolio.

Charles Tsai: Looking further ahead, we remain constructive on AI infrastructure. We remain constructive on capital equipment. We are seeing improving conditions near across all parts of our industrial portfolio, and we continue to see opportunities to expand our content and capability across the customer and the market we serve. We do not need every business to grow at the same rate every quarter. We need each business to create value over time, and we need to allocate capital towards the opportunity where BizLink has strongest competitive position and the most attractive returns. Our objective is clear. Grow the earnings base, maintain healthy profitability, allocate capital selectively, and preserve the strategic and financial flexibility required to keep investing through the cycle. This is how we intend to create sustainable long-term value for our shareholders. Thank you. Now let me turn the call over to Mike.

Speaker #1: And we continue to see opportunities to expand our content and capabilities across the customers and markets we serve. We do not need every business to grow at the same rate every quarter.

Speaker #1: We need each business to create value over time, and we need to allocate capital toward the opportunities where BizLink has the strongest competitive position and the most attractive returns.

Speaker #1: Our objective is clear: grow the earnings base, maintain healthy profitability, allocate capital selectively, and preserve the strategic and financial flexibility required to keep investing through the cycle.

Charles Tsai: Our objective is clear. Grow the earnings base, maintain healthy profitability, allocate capital selectively, and preserve the strategic and financial flexibility required to keep investing through the cycle. This is how we intend to create sustainable long-term value for our shareholders. Thank you. Now let me turn the call over to Mike.

Speaker #1: This is how we intend to create sustainable long-term value for our shareholders. Thank you. So now, let me turn the call over to Mike.

Speaker #1: Thank you for this, Charles. This concludes our prepared statement section. Now, let us begin the Q&A section. Please type in your questions, and then we will answer as many of them as possible in the remaining time.

Mike Wang: Thank you for listening, Charles. This concludes our prepared statement section. Now let us begin the Q&A section. Please type in your questions, and then we will answer as many of them as possible in the remaining time. I want to remind everyone that there will be no forward-looking statements or comments. Looking at some of the questions, I think the one that we want to address first is the one on our competitive position. This one to kind of give you an idea, sort of a summary of what's being asked. As competitors broaden their AI infrastructure portfolios, how do you think about BizLink's competitive position and ability to maintain or increase content? For this one, I'd like to hand it over to Roger to provide a little color on that.

Speaker #1: I want to remind everyone that there will be no forward-looking quantity with comments. Looking at some of the questions, I think the one that we want to address first is the one on our competitive position.

Mike Wang: Looking at some of the questions, I think the one that we want to address first is the one on our competitive position. This one to kind of give you an idea, sort of a summary of what's being asked. As competitors broaden their AI infrastructure portfolios, how do you think about BizLink's competitive position and ability to maintain or increase content? For this one, I'd like to hand it over to Roger to provide a little color on that.

Speaker #1: And this one, to kind of give you an idea, is a summary of what's being asked. As competitors broaden their AI infrastructure portfolios, how do you think about BizLink's competitive position and ability to maintain or increase content?

Speaker #1: So for this one, I'd like to hand it over to Roger to provide a little color on that.

Speaker #3: All right. Thank you, Mike. Yeah, we are seeing more competitive respect across data, connectivity, power, and update. Our strategy is not to pursue growth for its own sake, but to build deeper positions where performance requirements are high, qualification is difficult, and customers value reliability and time to market.

Roger Liang: All right. Thank you, Mike Wang. We are seeing more competitors expand across data connectivity, power, and optics. Our strategy is not to pursue breadth for its own sake, but to build deeper positions where performance requirements are high, qualification is difficult, and customer value reliability and time to market. High-speed copper is a good example. Multiple generations of development and qualification have built engineering know-how, manufacturing experience, and customer relationships. That position has helped us accelerate into power and the capability and the system-level knowledge we build in power that support our development in optics. We therefore see copper, power, and optics increasingly reinforcing one another. Being an early mover because these markets do not reset with each area generation. An incumbent supplier enter a market with qualification history, customer relationships, and manufacturing experience. Later entrants need to catch up while the technology itself continues moving forward.

Speaker #3: High-speed copper is a good example. Multiple generations of development and qualifications have built engineering know-how, manufacturing experience, and customer relationships. That position has helped us escalate into power and capability, and the system-level knowledge we build in PowerTech supports our development and updates.

Roger Liang: That position has helped us accelerate into power and the capability and the system-level knowledge we build in power that support our development in optics. We therefore see copper, power, and optics increasingly reinforcing one another. Being an early mover because these markets do not reset with each area generation. An incumbent supplier enter a market with qualification history, customer relationships, and manufacturing experience. Later entrants need to catch up while the technology itself continues moving forward.

Speaker #3: We therefore see copper power and updates increasingly reinforcing one another. Be an early measure, because this market does not respect with every generation.

Speaker #3: A new supplier entering the next architecture, with a qualification system, customer relationships, and the manufacturing experience, later entrance needs to catch up while the technology itself continues moving forward.

Speaker #3: The increasing complexity of AI infrastructure made these steps more valuable. Higher data risk, higher power densities, and liquid cooling increasingly require electrical, mechanical, thermal, and manufacturing capability to work together.

Roger Liang: The increasing complexity of AI infrastructure made steps more valuable. Higher data rates, higher power densities, and liquid cooling increasingly require electrical, mechanical, thermal, and manufacturing capabilities to work together. Customers need suppliers that can solve engineering problems, qualify solutions, and scale them reliably. We can also use targeted M&A to add complementary capabilities when that is faster or more effective than building everything organically. Combined with organic development, this can shorten our strategic moment. We believe that our advantage can compound over time. Being ahead today can help us enter the next generation early, move faster, and potentially widen that lead as AI infrastructure becomes more complex. Okay.

Speaker #3: Customers need a supplier that can solve engineering problems with qualified solutions at scale, and who is reliable. We can also use targeted M&A to complement our capabilities, when that is faster or more effective than building everything organically.

Roger Liang: We can also use targeted M&A to add complementary capabilities when that is faster or more effective than building everything organically. Combined with organic development, this can shorten our strategic moment. We believe that our advantage can compound over time. Being ahead today can help us enter the next generation early, move faster, and potentially widen that lead as AI infrastructure becomes more complex. Okay.

Speaker #3: Combined with organic development, this can shorten our strategic moment, so we believe our advantage can compound over time. Being ahead today can help us enter the next generation earlier, move faster, and potentially widen that lead as AI infrastructure becomes more complex.

Speaker #3: Okay.

Speaker #1: Thank you, Roger. As well as thank you to those who put the question on competition. You know, we've seen a lot of interest on optics, so this is the next question.

Mike Wang: Thank you, Roger. As well as thank you to those who posted the question on competition. There seems a lot of interest on optics. This is the next question. Can you update us on the progress of the optics business and how you see the opportunity developing over the next several years? For this one, I'd like to hand it over to Felix Teng.

Speaker #1: Can you update us on the progress of the optics business and how you see the opportunity developing over the next several years? For this one, I'd like to hand it over to Felix.

Speaker #3: Okay. Thank you, Mike. Yeah. So we see updates as a structural extension of our data connectivity business. As AI clusters become larger and more complex, bandwidth requirements continue to increase.

Felix Teng: Okay. Thank you, Mike. We see our optics as a structural extension of our data connectivity business. As AI clusters become larger and more complex, bandwidth requirements continue to increase. The opportunity is about more than successful transitions from 800G to 1.6T and eventually higher speed. Density is becoming increasingly important. The opportunity is also broadening as optics move closer to system level through architectures such as optical circuit switching and CPO, which many people have heard about that. This technology may develop on different timelines, but collectively, they point toward greater optical complexity. Importantly, we see both greenfield and also in-stock base opportunities. The new AI will be designed with greater optical contents from the beginning. However, the current existing hyperscaler infrastructure can be upgraded or evolved with the network's architecture change.

Speaker #3: But the opportunity is about, you know, more than just successful transitions from 800G to 1.6T, and naturally, higher speed. So yes, density is becoming increasingly important. The opportunity is also broadening as optics move closer to the system level, through architectures such as optical circuit switching and MTOCPO, which is very—I mean, many people have heard about that. And so this technology may develop on, you know, different timelines, but collectively, they point toward greater optical complexity.

Felix Teng: The opportunity is also broadening as optics move closer to system level through architectures such as optical circuit switching and CPO, which many people have heard about that. This technology may develop on different timelines, but collectively, they point toward greater optical complexity. Importantly, we see both greenfield and also in-stock base opportunities. The new AI will be designed with greater optical contents from the beginning. However, the current existing hyperscaler infrastructure can be upgraded or evolved with the network's architecture change.

Speaker #3: So importantly we see both greenfield and also install based opportunities. The new AI will be designed with you know greater optical contents from the beginning and I mean however the current existing hyperscaler infrastructure can be upgraded or evolved with the networks So you know with the environment we see actually we see more and more you know the demands and also increase about our you know the our solution optical solutions and XFS gives this can establish position in fiber assemblies harnesses and also related optical connectivity solutions yeah so so we are therefore very not trying to predict exactly you know which optical architecture wins or you know or when each transition occurs but almost every test towards larger and denser AI infrastructure infrastructure requires more sophisticated optical connectivities and indeed XFS give us a meaningful platform from which you know to participate in that evolution.

Felix Teng: With the environment, we see more and more demands and also increase about our optical solutions. XFS gives BizLink an established position in fiber assemblies, harnesses, and also related optical connectivity solutions. We are therefore not trying to predict exactly which optical architecture wins or when each transition occurs, but almost every path towards larger and denser AI infrastructure requires more sophisticated optical connectivities. Indeed, XFS give us a meaningful platform from which to participate in that evolution.

Speaker #1: Thank you, Felix. Of course, thank you to those who put in those questions on optics. Now let me turn to some financial questions. Let me see.

Mike Wang: Thank you, Felix. Of course, thank you to those who posted those questions on optics. Now let me turn to some financial questions. Let me see. Everybody is asking about what we see about margin trajectory, Q2 recovery that we just reported and of course, what we see going forward. For this one, Q2 profitability grew sequentially. How should we think about margin trajectory into H2, specifically given the changes we have seen to date or not? Which is perfect question for our CFO, Charles Tsai. Mm-hmm.

Speaker #1: Everybody's asking about, you know, what we see about margin trajectory, you know, second quarter of COVID that we just reported, and of course, what we see going forward.

Speaker #1: So for this one, second quarter profitability—consequently, how should we think about margin trajectory into the second half, particularly given the change of business needs to do platform revs? Which is a perfect question for our CFO, Charles.

Speaker #2: Okay. Thank you, Mike. And you know thank you everyone. I I I think the first point I would like to make is that the second quarter showed improvement that we expected from the first quarter of revenue increase sequentially operating addition improve and some of the factor that affected first quarter profitability becomes to normalize so we also continue to working on the area we can control particularly in the manufacturing efficiency you know material cost productivity and and and operating expense efficiency so looking into the second half I I think we meant modeling gross margin as a straight line upward every quarter as we discussed before you know product transition you know customer deployment cycle on foreign exchange business makes that that can all create you know quarter to quarter fluctuation so we're managing business for stable and reasonable margin while growing that earning base.

Charles Tsai: Okay. Thank you, Mike, and thank you, everyone. I think the first point I would like to make is that Q2 showed the improvement that we expected from Q1. Revenue increased sequentially, operating efficiency improved, and some of the factor that affected Q1 profitability began to normalize. We also continued working on the area we can control, particularly in the manufacturing, efficiency, material cost, productivity, and our operating expense efficiency. Looking into H2, I think we remain constructed. But I would not suggest modeling growth margin as a straight line upward every quarter, as we discussed before. Product transition, customer deployment cycle, foreign exchange, business mix, they can all create quarter-to-quarter fluctuation. We are managing business for stable and reasonable margin while growing that earning base. Also, I think it is the more important point is what is happening underneath the margin.

Charles Tsai: Looking into H2, I think we remain constructed. But I would not suggest modeling growth margin as a straight line upward every quarter, as we discussed before. Product transition, customer deployment cycle, foreign exchange, business mix, they can all create quarter-to-quarter fluctuation. We are managing business for stable and reasonable margin while growing that earning base. Also, I think it is the more important point is what is happening underneath the margin.

Speaker #2: Also I I think is that the more important is what is happening underneath the margin. The higher growth business are becoming larger so our engineering content is increasing and and in several area we're moving closer to customer and and participating in more evaluations so at at the same time you know some of our more mature business are also beginning to recover so we're increasing both scale and and mix that working for us so so that does not mean that margin will increasing will increasing definitely so so what it means is that you know if we can maintain a health healthy margin while growing the revenue base and improving operating efficiency the absolute earning and and cash rating capacity of the company can continue to increase so so that is the financial model that we're trying to build so I hope that answer your question.

Charles Tsai: The higher growth business are becoming larger. Our engineering content is increasing, and in several areas we are moving closer to customer and participating in more evaluation. At the same time, some of our more mature business are also beginning to recover. We are increasing both scale and mix that working for us. That does not mean that margin will increase indefinitely. What it means is that, if we can maintain a healthy margin while growing the revenue base and improving operating efficiency, the absolute earning and cash generating capacity of the company can continue to increase. That is the financial model that we are trying to build. I hope that answered your question.

Charles Tsai: What it means is that, if we can maintain a healthy margin while growing the revenue base and improving operating efficiency, the absolute earning and cash generating capacity of the company can continue to increase. That is the financial model that we are trying to build. I hope that answered your question.

Speaker #2: Yeah.

Speaker #1: Thank you, Charles. And thank you to those who put the questions on margins. So we have one—we can do one more question.

Mike Wang: Thank you, Charles. Thank you to those who posted questions on margins. We have one. We can do one more question. We will address some of these questions offline. We still can do some of the questions, but I think there was something else to tie up that is also financial-wise. Continuous questions around our spending, so CapEx, right? Obviously, and the discipline around that. For this one, the last question for this call, with demand remaining strong across HPC and other growth businesses, how are we thinking about capacity expansion and capital intensity over the next 1 to 2 years? Again, a financial question. I will hand this over to Charles.

Speaker #1: So yeah we we'll address some of these questions offline. There's there's we still can do some of the questions but I think something else to tie up this also financial wise continuing questions around our spending so CapEx right I would say when and this plan on that so for this one the last question for for this call with demand meaning cross strong cross HPC and other growth businesses how are we thinking about capacity expansion capital intensity over the next one to two years so again a financial question not to hand this over this to Charles.

Mike Wang: For this one, the last question for this call, with demand remaining strong across HPC and other growth businesses, how are we thinking about capacity expansion and capital intensity over the next 1 to 2 years? Again, a financial question. I will hand this over to Charles.

Speaker #2: Okay, thank you, Mike. I think the first thing is that we will definitely continue to invest because the opportunity set in front of us is expanding. But our approach to capacity has not changed.

Charles Tsai: Okay. Thank you, Mike. I think the first thing is that we will definitely continually invest because the opportunity set in front of us is expanding. But our approach to capacity has not changed. We do not believe that every TWD incoming demand should automatically result in another TWD of capacity. We look at our priority. We have priority. We have strategically, we have return requirement, we have durability of the opportunity, and whether this existing resources can be first used to be more effectively. Our business makes changes. We can reallocate resources, capacity supporting more mature programs can sometimes be redirected to faster-growing or higher-value opportunities. Automation and productivity improvement can also generate additional output without requiring the same level of incremental physical capacity. Capacity is only one part of how we support growth. Where do we invest?

Speaker #2: We we do not believe that every dollar incoming demand should automatically result in another dollar of capacity. So we look at you know our priority we have priority we have strategically we have no return requirement we have durability of the the the the opportunity and whether this is 16 you know resources can be first used to you know to be more effectively.

Speaker #2: So, as our business makes changes, we can reallocate resources. You know, capacity supporting more mature programs can sometimes be redirected to faster-growing or higher-value opportunities.

Charles Tsai: Our business makes changes. We can reallocate resources, capacity supporting more mature programs can sometimes be redirected to faster-growing or higher-value opportunities. Automation and productivity improvement can also generate additional output without requiring the same level of incremental physical capacity. Capacity is only one part of how we support growth. Where do we invest?

Speaker #2: So, automation and productivity improvement can also generate additional output without requiring the same level of incremental physical capacity. So CapEx is only one part of how we support growth.

Speaker #2: So so where do we invest you know the the requirement is increasing broader than factory space and and and equipment we're investing in engineering we're investing in technology we're investing in qualification automation we're investing in manufacturing capability also in people in system in organization organizational infrastructure that require the support larger economy so so we therefore intend to manage capital intensity with the discipline and we meant mindful our historical experience rather than building capacity simply against you know higher possible demand scenario we are willing to leave some business on the table if the economic the strategic value and durability of that demand do not justify the capital requirement.

Charles Tsai: The requirement is increasingly broader than factory space and equipment. We are investing in engineering, we are investing in technology, we are investing in qualification, automation, we are investing in manufacturing capability, also in people, in system, in organization, organizational infrastructure that is required to support a larger company. We therefore intend to manage capital intensity with the discipline and remain mindful of historical experience rather than building capacity simply against higher possible demand scenarios. We are willing to leave some business on the table if the economic, strategic value, and durability of that demand do not justify the capital requirement. At the same time, we will maintain a clear internal financial framework around our balance sheet. We do not need the balance sheet to remain just in exactly the same. If we move away from our preferred position, we will just take necessary steps to bring it back toward the position.

Charles Tsai: We are willing to leave some business on the table if the economic, strategic value, and durability of that demand do not justify the capital requirement. At the same time, we will maintain a clear internal financial framework around our balance sheet. We do not need the balance sheet to remain just in exactly the same. If we move away from our preferred position, we will just take necessary steps to bring it back toward the position. I think the important thing is that greater financial capacity also give us more choices. It does not really lower our hurdle rate. I hope that addressed your question.

Speaker #2: So, at the same time, we also maintain a clear internal financial framework around our balance sheet. We don't need the balance sheet to remain just exactly the same.

Speaker #2: So, you know, if we move away from our preferred position, we will just take necessary steps to bring it back toward the position.

Speaker #2: So so I I I think that the important thing is that greater financial capacity also give us more choices so it does not really but it does not really lower our hurdle rate.

Charles Tsai: I think the important thing is that greater financial capacity also give us more choices. It does not really lower our hurdle rate. I hope that addressed your question.

Speaker #2: So I hope that, you know, addresses your question.

Speaker #1: Thank you, Charles. Again, thank you to those who posted the questions on that. And finally, thank you, Roger, Felix, and Charles.

Mike Wang: Thank you, Charles. Again, thank you for those who posted those questions on that. Finally, thank you, Roger, Chris, and Charles. This concludes our Q&A session. A replay of the conference call today will be available on our IR website within 24 hours from now. If you have any further questions, feel free to reach out to BizLink Investor Relations to me or Jimmy. Thank you very much for joining today's call. You may now disconnect.

Speaker #1: This concludes our Q&A section, and a replay of the comments from today will be available on our IR website within 24 hours. If you have any further questions, please feel free to reach out to BizLink Investor Relations, or to me or Jimmy.

Speaker #1: We thank you very much for joining today's call. You may now disconnect.

Operator: Goodbye

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