ASUSTeK Computer Inc. ($2357)

Good afternoon. Welcome to the ASUS 2025 Quarter 4 Earnings Conference Call. Today's meeting is hosted by ASUS Co-CEO, Mr. S.Y. Hsu, Samson Hu; and CFO, Nick Wu. The conference is divided into 2 parts. In the first, the CFO will present ASUS 2025 quarter 4 financial results, followed by the 2 co-CEOs discussing ASUS' operational strategy and future outlook. The second part will be the Q&A session. If you have any questions, you can submit them on the web page, and we will address them after the presentation. Thank you. Now we will begin with the CFO's presentation.

Thank you. Okay. Please refer to Slide 5 of the presentation. Here, we disclose a summary of ASUS 2025 brand consolidated income. The 2025 consolidated revenue reached TWD 688.9 billion, which is a historic high with a year-over-year growth of 26%. The 2025 operating profit was TWD 33.9 billion with a full year average operating margin at 4.9%. The Y-o-Y growth in operating profit was also 24%. After adding nonoperating income, the 2025 net profit post tax came to TWD 445.6 billion. This is also a new high for our brand final profit and represents a Y-o-Y growth of 42%. In terms of EPS, the 2025 earnings per share was TWD 60. And turning to the next page at Slide 6, we have brief report on the 2025 quarter 4 brand income statement. Quarter 4 net revenue reached TWD 189.8 billion. That's approximately flat with the quarter 3 and also at a historic high with a Y-o-Y growth of 34%. Quarter 4 operating profit was TWD 8.07 billion, achieving a multiple-fold year-over-year growth. This effectively translates to a single quarter operating margin of 4.3%. So both revenue and operating profit in quarter 4 actually exceeded the company's original targets and its external expectations. This includes contributions from ASUS' strong branded products and product mix optimizations as well as, of course, strong growth in servers during quarter 4. And in quarter 4, due to changes in tax regulations, we recognized a relatively high deferred tax assets. So as a result, the income tax expense for quarter 4 was lower than in typical quarters. Overall, the net profit after tax reached TWD 11.4 billion, which is a multiple-fold year-over-year growth, while the single quarter EPS was TWD 15.4 per share. Turning to the next page at Slide 7. Looking at the quarter 4 non-op items, we saw that interest income was approximately TWD 630 million. Recognized investment income from investee companies was TWD 1.23 billion, and foreign exchange gains were approximately TWD 1.6 billion, so totaling about TWD 3.59 billion in nonoperating income. Turning to Page 8, looking at the major brand balance sheet item. As of December 31 year-end, cash and cash equivalents remained at TWD 75.1 billion. Total inventory was TWD 185.2 billion, translating to an inventory turnover days of 104 days. The quarter 4 inventory increase generally reflects the company's ongoing revenue growth and stocking needs, including strategic stockpiling of key components and stocking demand for fast-growing equipment server department. Please refer to the above for details. Turning to Slide 9. We have the quarter 4 revenue composition breakdown. In this case, we have made a pro forma presentation for the Infrastructure segment, which is our AI server business group that was just expanded and promoted in the first quarter of 2026. So for Q4 2025, the Systems Business Group revenue was 49% of our revenue share with the Open Platform Business Group at 26%, the Infrastructure Business Group at 22% and the IoT Business Group at 3%. The right half of the slide shows our regional share breakdown. Asia accounting for 44%, Europe at 34% and the Americas at 22%. Now looking down to the next page at Slide 10, this is the full year revenue breakdown. For the full year, we saw that the Systems Business Group revenue accounted for 52%, Open Platform at 28% and the Infrastructure Business Group share at 18%. And now turning to Slide 11. This is our operational plan and outlook for the first quarter of 2026. We expect a traditional seasonal pattern in the first quarter of this year. So revenue for the PC and component BUs are expected to decline sequentially by about 10% to 15%, but from a year-over-year perspective, it still remains at a very stable state. Looking at the PC business group, we expect it to achieve a 10% to 15% year-over-year growth, while the components BU is expected to be flat year-over-year. For the server segment, we will continue the original strong growth momentum. We expect a sequential surge of 50% to 100% in the first quarter this year. Year-over-year, that will be about 4 to 5x growth. And finally, I would like to briefly add that as investors are currently focusing on the rise in memory prices in 2026, and of course, that may suppress the demand and consequently, the profitability in the 2026 PC market. And that is certainly a valid concern that exists in the market. From our perspective, however, we believe that market headwinds do provide a very good opportunity to examine ASUS' brand value and operational resilience. Overall, we see this in 3 parts. First, on the high end, ASUS is a high-end brand. It has high-end brand value and high-end product mix. And that would be our greatest brand capability and operational assets in such industry headwinds, and I'm hopeful that these will allow us to better highlight and demonstrate our company's value. And secondly, ASUS' supply chain management capabilities and the partnerships we have with operational partners is a critical component to our overall operational resilience, and it does pay dividends at such times as right now. And third, in addition to the traditional PC market, we also, of course, manufacture motherboards and graphics cards. And this is a segment where we are already very strong, but we have also established significant growth in servers. And we expect that this ongoing growth momentum will play a major supportive role for ASUS' operations in 2026. So overall, we are very confident in achieving a stable operation in 2026, that we will be able to outperform the industry. We will plan and execute in this direction. And now I will invite our 2 co-CEOs, Samson and S.Y. Hsu to share a more complete operational outlook and strategic plan with everyone. Thank you.

Good afternoon, ladies and gentlemen, from the media and investment community. First, I would like to thank everyone for taking the time to join ASUS' 2025 Quarter 4 Earnings Conference Call. I am Co-CEO, S.Y. Hsu. Next, I will provide a detailed outlook to our strategy, and some of our expectations for the future. So 2025 was a year full of challenges and significant volatility for the global tech industry. In the first half, we faced issues like tariff and exchange rate fluctuations. In the second half, we encountered the impact of memory shortages. However, thanks to our deep technical foundation and agile operational resilience, we not only stood firm, but also delivered outstanding results. First, we are committed to expanding the gaming ecosystem. ASUS continues to maintain a leadership position in the high-end gaming product market share, currently exceeding 40% in the high-end segment. We are also consistently demonstrating leadership across the entire gaming system, creating irreplaceable immersive experiences for gamers. And second, ASUS is fully riding the AI wave to take off. From Edge to Cloud computing growth, we have not only captured significant share in the AI PC market, but also we're deeply collaborating with top global partners in comprehensive AI infrastructure to build solid solutions capabilities. Finally, we are continuing to deepen our presence in the parts market, maintain the global #1 market share in motherboards and graphics cards, and the monitor segment has also seen strong growth. These are key profit pillars for ASUS, supporting the core momentum for driving AI and innovative applications. So looking ahead, we will use these 3 major product pillars as engines to continue our lead in the AI era. Next, as mentioned earlier, despite intense market fluctuations with the full dedication of our colleagues and strong customer support and partner support, we once again delivered impressive results. In 2025, ASUS brand revenue reached TWD 688.9 billion with a year-over-year growth of 26%. This is not only a record high for both revenue and profit in the company's history, but also demonstrate the success of our 3 major product line strategies in driving overall growth momentum. As you can see in the slides, ASUS' growth momentum will continue to focus on the following 3 major product lines: first, the gaming market; second, the consumer market; and third, the enterprise market. These 3 business segments complement each other, enabling us to achieve higher brand positioning while balancing market growth and supporting long-term diversified development. The biggest highlight in the performance mix is the fastest-growing enterprise market, which includes AI servers and commercial PC-related products. The enterprise market definitely showed explosive momentum, achieving an 85% year-over-year growth with an annual revenue share strongly expanding to 27%. This proves that we have gained recognition from key customers in the cloud AI infrastructure and commercial PCs market, and entering the revenue harvesting phase of our strategy. Moreover, given that we are still seeing strong growth momentum in the overall cloud AI infrastructure industry, we are going to concentrate resources in March of this year and spun off the server BU from the open platform BU to formally establish the dedicated BU as the company's fourth major business group. We hope this will bring ASUS to the next level of growth, and we will explain this in more detail later. In addition, our today's core pillars, gaming and consumer products also achieved growth. Gaming-related product businesses accounted for 43%, remaining our most important business segment and delivering higher returns and brand premium. Consumer product business lines accounted for nearly 30%, focusing on maintaining reasonable profits while continuously expanding overall market share. These 2 foundational pillars together contribute about 73% of stable revenue, not only demonstrating irreplaceable brand resilience, but also laying the most solid operational foundation for the development of our comprehensive AI ecosystem. The 3-point strategy has optimized ASUS' business portfolio. And looking forward, ASUS will continue to drive growth with innovation and customer commitment at the core. We will be user-centric, relying on excellent products and services along with integrated comprehensive AI solutions to deepen our influence in gaming, consumers and enterprise markets, becoming a trusted global tech partner for clients, partners and shareholders and continuously create growth long term. Next, we have always emphasized ASUS' layout and strategy in the AI segment because we firmly believe that the massive wave of AI technology will not only trigger a comprehensive revolution, but also breed unlimited new business opportunities. ASUS' vision is clear, ubiquitous AI, incredible possibilities. ASUS AI layout has gone beyond single devices to build a complete ecosystem from cloud servers to endpoint AI PCs and even physical AI. With our unique market positioning, one of the few with a complete ecosystem from high-performance cloud servers to Edge AI and advancing toward physical AI, we believe that this gives us advantage from technical leadership in engineering, whether it's hardware, software or vertical integration or precise implementation in servers and personal computer products, we have in Edge. Additionally, our flexible and agile supply chain deployment helps customers quickly realize maximum AI computing power and application development across various endpoints. At the same time, our strong global service network provides 24/7 technical support for global enterprises and users, ensuring the stability of our AI infrastructure and devices. Finally, we have deep collaboration with key partners. We are building a full AI ecosystem from Cloud to Physical endpoints. ASUS perfectly connects different nodes, delivering to customers the best flexibility, computing speed, competitive costs and user-centric resources. This is ASUS' complete blueprint in the AI era and our irreplaceable competitiveness. Next, we believe we are at a turning point in computing history. ASUS is defining new standards for AI PCs with innovation. First, we have built the most complete Copilot + PC product portfolio through deep integration with cross-platform partners. We ensure ASUS gains a first-mover advantage in AI hardware-software collaboration. Second, we have absolute leadership in performance. With up to 2 petaflops of on-device computing power, we make AI no longer just on the Cloud, but also accessible on Edge in real time. Third, we are expanding the ecosystem across the board from laptops to the world's first Snapdragon-powered AIO and RTX-equipped desktops across different application scenarios such as work, personal life, creator needs and more. ASUS has precisely laid out the corresponding system products to meet diverse customer needs. For example, for everyday AI use, we recommend ZenBook and VivoBook for mainstream use. For workplace AI, we recommend the Expert Center Pro for enhanced commercial productivity. For Creator AI applications, we recommend the Pro PX13 laptop to help creators unleash their imagination. Next, ASUS not only has the most complete Copilot + PC product lines on the market, but also sets technical barriers to breakthroughs in computing performance. ASUS is not just participating in the competition, we're leading the AI PC era. Next slide. 2025 marks the 20th anniversary of the ROG brand. As one of the earliest brands rooted in the gaming industry over these 20 years, ROG has leveraged deep hardware expertise involving from a leader in gaming computers to a comprehensive lifestyle brand encompassing accessories and handheld devices. We've always held dedication through technology R&D to -- and deep co-labs with industry partners, ensuring high recognition from the player base and user communities and establishing significant brand faith in the gaming products market space. This year, ROG will launch multiple highly anticipated products. The ROG flagship dual-screen Zephyrus Duo will once again demonstrate absolute advantages in product design, implementing multi-task performance strategy that precisely meets modern user demands for gaming creation and workloads and accept multiple CES Media Innovation awards. And this year, ROG is celebrating its 20th anniversary and the 10th anniversary of Top Gaming Studio Kojima Production, where we have teamed up to launch the co-branded models including the ROG Flow Z13 KJP, along with branded headphones, mice, keyboards and other peripherals. We are combining technical expertise from ASUS and artistic Foundation for Kojima Production to create something that the media has held as a design piece that will drive Kojima fans crazy and impress even nonfamous. Next slide. In this era where the AI technology wave is driving, it's bringing huge transformations and business opportunities. And under the Chairman's lead, we are looking forward to realizing the ubiquitous AI incredible possibility vision come to life. This year, effective March 1, 2026, the company expanded the original ISG BU into ASUS' fourth major core business group, the Infrastructure Solutions Business Group. With this strategic upgrade, ASUS layout is now clearly divided into 4 core BUs, each independently driving growth. We firmly believe that building a strong and highly integrated infrastructure is key to unleashing AI's potential. ISBU will focus on servers, storage devices, networking, Edge and Cloud solutions and enhance ASUS' competitiveness in the global AI field, particularly in cloud computing, enterprise channels, Edge Computing and Solutions. We are also committed to providing reliable, scalable and long-term value services to clients and partners to support high-growth momentum, fill customer commitments, expand business group resources enhance core competitiveness, optimize value streams and implement design thinking to create maximum value for our customers. We believe a strong and highly integrated organization is key to unleashing team potential and providing robust support to global clients and partners. We look forward to the IS BG partnering with clients and partners to create possibilities thought of previously in the AI era. Next slide, at CES 2026, ASUS once again leveraged its strong R&D foundation to win 8 CES Innovation Awards. This is not only affirmation to our production, but also perfectly validates ASUS' strategic layout. First, in the AI PC field, ZenBook Duo won the AI, artificial intelligence category with its breakthrough dual screen experience, providing -- proving that we are refining users' AI experiences. Second, we transform sustainability into product competitiveness. Our ASUS ZenBook S14 won the Sustainability and Energy Transition Award, showcasing the perfect balance between extreme thing and light design and green technology. Finally, in leading gaming and creative field, we swept multiple hardware and gaming awards from the top-tier ROG Crosshair X870E Glacial Liquid-Cooled motherboard, ROG Swift OLED gaming monitors to ProArt series laptops and Displays built for professionals. These award-winning products are our strongest weapons in optimizing the 2026 product mix facing market changes. ASUS will continue with innovative products honored by prestigious awards to bring unparalleled experience to global users. Now, I'll hand over to Samson. Thank you.

Thank you. Hello, everyone. I am Co-CEO, Samson Hu. Next, I'll share with everyone the operational performance of each business group and some key strategic items. First, looking at this page, we have the Systems Business group. In last year's quarter 4, the Systems BU still delivered stable growth. I want to particularly highlight that ASUS' product mix has a very high proportion of high-value products, including gaming, some high-end consumer models, Copilot + PCs and non-chromebook commercial product lines. And so this entire high-value product mix accounts for nearly 60%. And I think high-value product combinations do have higher average selling prices, providing us with strong operational resilience. This allows us to effectively support overall performance and ensure stable profit results in environment with fluctuating market demand. I think this is a very important detail. Additionally, in the high-end gaming segments with ROG, we broke through 40% market share in quarter 4 last year, and I think this fully demonstrates ROG's powerful brand strength and provides a solid foundation for stable profitability. In the commercial PC segment, we also had quite good performance in quarter 4 with overall shipments achieving over 100% year-over-year growth, continuously expanding our commercial market share. So for our overall PC operational strategy, we will leverage our existing advantages, such as innovative products, complete solutions and strength brand recognition to continuously drive growth and reinforcing our original leadership in consumer gaming, spaces and elevating our commercial market position. And turning to the next page. This is the results for our open platform business group. This time, the server revenue has been separated out and is no longer accounted for here, but even excluding the server revenue, the open platform BG delivered very impressive results in quarter 4 with overall revenue growing over 20% year-over-year. Among them, our motherboards and graphics cards continue to hold the #1 market share position. Graphics cards also achieved over 40% year-over-year revenue growth in quarter 4. This is not only driving upgrades in the overall gaming market, but also brings unparalleled gaming performance to many gamers and consolidating the leadership position for our ROG graphics cards. In addition, the ASUS gaming ecosystem has launched 2 very important products. Gaming monitors achieving 25% year-over-year growth. And secondly, the accessory BU, including gaming mice, keyboards and headsets, seeing over 30% year-over-year growth. And I think all of that demonstrates the strong momentum for the ASUS gaming brand ecosystem. Overall, the open platform BG will continue to build a complete ecosystem and consolidate our leading market advantages. Next, please look at the next page. Regarding the new Infrastructure Solutions business group, we just mentioned before. It is primarily AI server based. And as S.Y shared earlier, we formally established the IS BG in March this year. So it's presented independently here. Now the decision is mainly -- or rather, the performance is mainly benefiting from strong demand for the entire NVIDIA GB series. Server revenue in the fourth quarter of last year achieved a breakthrough growth with sequential growth reaching over 290%, demonstrating very high speed and very strong growth momentum. And as a comprehensive AI infrastructure leader, in November last year at the Supercomputing Conference, SC25, ASUS, together with top partners like NVIDIA, Intel and Micron unveiled a new AI-optimized storage product line. Storage-related product lines are very important, especially in an AI infrastructure total solution context. And I think our presence in the market demonstrates our determination to lay out new directions beyond AI servers by tapping into storage. And on the other hand, the AI Supercomputer Nano4, which was built in collaboration with Taiwan's National Center for High-performance Computing was officially activated in quarter 4 last year. The supercomputer is all liquid-cooled and achieves an impressive 81 petaflops of performance, ranking 29th in the global TOP500 supercomputer rankings. This not only provides unprecedented computing power support for generative AI and hyperscale computing R&D needed by Taiwan's industry, government, academia and research sectors, but more importantly, it validates ASUS' strength in integration of AI infrastructure and in this case, integrating liquid cooling, immersion cooling technologies as well as our overall hardware software platform construction capabilities for AI data centers. And we believe that this is an advantageous capability ASUS has over other AI server hardware vendors. So particularly worth mentioning here, as for the upcoming NVIDIA GTC conference as in previous years, this year, ASUS will participate in NVIDIA GTC 2026 as a diamond level sponsor at the highest specification, showing our strength in building the AI future Schneider with global leaders, along with the latest related fourth-gen technologies and product demonstrations. And among them, thermal management is a key technology. During GTC, we will collaborate with some very important strategic partners to demonstrate our complete thermal solutions, especially liquid-based cooling solutions. I think liquid cooling has leading thermal efficiency and is highly scalable, and I believe it will further strengthen our capabilities in future AI server products. And turning to the next page. This is our AIoT business group. In quarter 4 last year, AIoT revenue grew over 50% year-over-year. And here are a few highlights to point out. First, our ASUS IoT P1, which is an Edge AI computer with over 2,000 FP4 teraflops of powerful computing power. It is built to accelerate physical AI and targeted at high-end needs in smart automation applications. This product will launch in the first quarter of this year, which will bring significant momentum to our subsequent IoT business expansion. Furthermore, ASUS IoT is leading with health care AI by building smart medical ecosystems in Taiwan. We have made a grand appearance at the 2025 Taiwan Healthcare Expo in December last year. And we've debuted 6 themes: robotic collaboration, next-gen digital health care, medical data AI, medical service devices, smart medical devices and advanced medical imaging. And I think this lineup further strengthens our integration and development in the smart health care system. And ASUS will continue to focus on AI technology as the core to fully assist global medical institutions in promoting Healthcare 4.0 digital transformation efforts. And turning to the next page, here are some major awards that I would like to share. Recently, ASUS has received important recognitions domestically and internationally, including being selected as one of the world's top 100 most innovative organizations by Clarivate's in 2026. We also continue to rank #1 in Interbrand's 2025 Taiwan Best International Brand Value ranking. At the same time, we were selected for the 11th time in a row as the #1 in Fortune Magazine's Global Product brand value ranking. In addition, in product innovation, we won 23 product awards at Taiwan's Golden Pin Design Award, topping all Taiwanese companies. Furthermore, at this year's CES, we received 8 CES Innovation Awards. And I think all these achievements fully demonstrate ASUS' comprehensive elevation in innovation, brand and product strength, laying a very solid foundation for future business growth. And turning to the next page. Regarding ESG, ASUS is continuing its dedication to ESG. ASUS' sustainability is implemented from the product design phase in our sustainability strategy, and we have received a lot of international recognition. This includes being selected by a renowned research firm, Corporate Knights in 2026 as one of the global top 100 sustainable companies as well as one of the top 200 globally and top 50 in Asia for sustainable enterprises. Behind this are outstanding performances in green product revenue share, net zero investments and other ESG indicators, reflecting our long-term integration of sustainability concepts into our core operations. Also in the latest annual International Carbon Disclosure Project ratings, we achieved the highest A class recognition in both climate change and water security categories. These net zero sustainability ESG achievements not only demonstrates our sustainability commitment, but more importantly, in practical business terms, build recognition of ASUS as a green brand among an increasing number of commercial clients and general consumers who value green products. This will further strengthen our brand influence and contribute to actual business revenue and profit. And now looking at our final slide. Looking ahead to 2026, although the market is full of variables, but as shared earlier by the CFO and S.Y, ASUS is leveraging its operational resilience advantages, such as by facing cost challenges from key components like memory to use that agile supply chain management and the good long-term strategic partner relationships to ensure ASUS creates a competitive advantage in the industry. In addition, we will continue to consolidate our leading brand position in gaming and the #1 position in motherboards and graphics cards, achieving absolute advantages in the market. All of these ensure we have stable profit revenue sources. And furthermore, as AI continues to develop, as S.Y mentioned earlier, ASUS is all in on AI with a full strategy. In addition to AI servers, we still have significant confidence in this year in continuing that large-scale expansion. AI PCs will also drive growth momentum alongside the industry and physical AI layout, all gives us mid- to long-term growth momentum. So that's roughly what I have to share with everyone. Thank you.

Thank you to our 2 CEOs and CFO. We will now enter the Q&A session. [Operator Instructions] Okay. So we see the first question is from KGI Securities. They would like to ask the CEO about ASUS' outlook for global PC shipments in 2026. Does the company have a target set for its own full year shipments in 2026? And the second part is about the current inventory levels of key components and whether there are plans to raise prices on midrange PC products, and how to mitigate the potential impact of component price increase on gross margins?

Okay. I will take this question. For the 2026 global PC market's outlook, we are seeing figures from research institutions suggest total shipment weight. Shipments might decline by about 10% to 15%. However, if you break it down into gaming, commercial and home use, we're seeing gaming staying flat or maybe taking a slight decline. Commercial is better than home use at around 10%, while home use might be taking a bigger hit, more than 10%, perhaps 10% to 15%. But of course, for ASUS, our target is always to outperform the market average. So if the market drops 10%, we hope to achieve flat or only a slight decline of less than 10%. That's our internal target set for the moment. Regarding memory prices and other component prices, I think the price increase was visible since quarter 4 last year, and the impact is comprehensive across the industry. Recently, CPUs are also seeing some price increases for ASUS internally in terms of supply chain and inventory management, we have certain strategies in place. For items, we anticipate rising price, we, of course, hope to front-load or stock more of that. But actually, since quarter 3 last year, when we saw prices starting to rise, we have been gradually negotiating with upstream suppliers for front-loading or stocking more components, but the upstream suppliers' capacity is quite tight. So even with our requests, it's impossible to fully satisfy our request 100%. So we only put a few extra weeks of stock beyond normal lead times. We couldn't substantially front-load because suppliers knew as well as we did that as the price hike be anticipated, so stocking more means they can sell later at higher profits, and they have their own considerations. So really, we can only do our best. But of course, facing memory price increases, we will also take measures to control component costs as much as possible. In the past, we have signed annual memorandums of understanding MOUs with upstream memory suppliers and our fulfillment rates have been good, plus our long-term positive interactions with these memory vendors, including technical collaborations and new product introductions. All of that gives us a better opportunity to secure a certain level of supply even in shortages. Currently, in addition to following the past patterns of signing annual MOUs with upstream memory vendors, we are seeing that the shortage isn't limited to just 2026. The capacity of upstream vendors is expanding at not as fast a rate as it could be, and although everyone sees strong AI demand and knows that the expand -- it is expanding, but building factories, buying equipment and ramping production takes time. We currently see the newest capacity to come online by the end of 2027 at the earliest. So that means we're going to have a shortage lasting for about 2 or more years. Of course, after 2 years, whether AI servers will remain in that strong demand phase we're seeing right now and seeing those shortages persist is entirely unknown, but what we do know is that the shortages will continue through end of year 2027. So we are already negotiating multiyear MOUs, perhaps 3, 4 or 5 years with upstream memory vendors, depending on each vendor strategy. We hope that through these multiyear MOUs to ensure component supply while keeping prices reasonable, but also competitive. I think at the end of the day, memory prices have risen over 100% from quarter 4 last year to quarter 1 this year. Once all that old stock is used up, we will definitely need to adjust end product prices to some extent to reflect that change. Of course, these adjustments will consider overall market competition. We still hope for our products to remain relatively competitive in the market. Currently, we see that in various global regions and countries, some areas have already seen price adjustments in quarter 1 this year. We will make appropriate adjustments based on our product's local competitiveness to reflect the cost increases. And that's my response.

The next question is from Bank of America Securities. They would like to ask the company's estimate for server revenue growth in 2026 and whether there are any notable profitability margin differences compared to other ASUS branded businesses and when the company expects to start shipments of the next-generation Vera Rubin platform?

Okay. I'll take this one. So as shared earlier, our servers, especially AI servers, have basically maintained growth momentum exceeding 100% annually over the past 2 to 3 years. For sequential growth in 2026 revenue, we have set a very aggressive target. Basically, we're aiming for 50% to 100% sequential growth with the aggressive target, of course, aiming for 100%. So that 50% to 100% is the goal and hoping for 100% as the high goal. But this is, of course, only achievable after years of layout and development and strategic planning, whether that's in overall R&D for software, hardware platform capabilities or other R&D aspects. We have proven that from client side quality to partnering with strategic partners to get corresponding support, we've been very reliable for the past 2 to 3 years, and we were there at the first opportunity for each new generation, and we're able to mass produce in that immediate first batch. And I think that this is a trend that will continue to the next-gen Vera Rubin platforms. We are confident we will remain in that first batch. We will closely follow the mass production timing of strategic partners to mass produce at the earliest opportunity. As for specific mass production timing, I mean, we respect the partners' overall planning. Basically, it will be in the second half of this year, but the exact timing follows the schedule of our strategic partner. But the only certainty we have is that we will mass produce in the first phase at the earliest time possible. Regarding gross margins, as mentioned, after 2 to 3 years of development, including rapid scale up, last year, we already exceeded TWD 110 billion in scale. And this year, as the target brings the overall scale to a very aggressive height, we believe that this represents improved bargaining power for us with suppliers for components. And it also signals that our vertical integration capabilities are competent, including the liquid cooling technologies mentioned earlier. I think these all indicate that our gross margins should approach industry average, but most importantly, with amplified economy of scale and operational leverage, the absolute amount of operating profit maximization is what brings the most value to the company and its shareholders. So that's really what it's all about at the end of the day.

The next question is from Taipei Fubon Bank asking about the 2025 cash dividend distribution amount.

Let me give a simple reply first. ASUS held a Board meeting this afternoon and approved a cash dividend proposal of $42 per share. Corresponding to last year's profit, this is about a 70% payout ratio. And additionally, from Taiwan Life Insurance, asking about the revenue share of IS BG in different quarters of 2025. Roughly, since servers are in a continuous high growth trend and momentum stage, in the first half of last year, we saw that the revenue share was slightly lower, perhaps 10% to 20%, but it already exceeded our original target. By the second half of 2025 in quarter 3 and quarter 4, server revenue share actually exceeded 20%. So for the full year 2025 average, as disclosed in the earnings call presentation earlier, it's about 18% in terms of revenue share.

The next question we see is from Sino Securities asking how ASUS views the impact on the 2026 PC market from Apple's recently launched affordable version of the MacBook, the MacBook Neo, which has considerable price competitiveness.

Okay. I'll take this one. Actually, we heard about the MacBook Neo shipments coming online back in the second half of last year. So we made some internal preparations. But after the product officially released, we found the specs to have some limitations. For example, the memory is not upgradable, and it only has 8 gigabytes of memory. So this may limit certain applications. So I think when Apple positioned the product, it's probably focused more on content consumption. This differs somewhat from mainstream notebook usage scenarios because in that case, the Neo feels more like a tablet because tablets are mostly for content consumption. Of course, it's not that it cannot do all the work, but considering user experience and those hardware limitations, the experience, I think, differs significantly from mainstream products. But given AI -- sorry, given Apple's historically very premium pricing, launching such an affordable product is certainly a shock to the entire market. So I believe all PC vendors, including upstream vendors like Microsoft, Intel and AMD, they're all taking this very seriously, seriously discussing how to compete with this product in the entire PC ecosystem. So I think there are a lot of ongoing discussions about how we can -- or how they can compete with the Neo. But of course, the actual impact on the overall PC market still needs some time to resolve. The reason is that in the past, Apple's faction versus the Intel faction have a somewhat segmented customer base due to software differences. It's not as easy for users to switch between these 2 ecosystems. And is the price of that product entering the mainstream sufficient for incentive, that really remains something that remains to be seen. Really, I think this is something that I can't state for certain for now. But of course, the entire PC system will launch corresponding products to compete with Apple. So the final market competition outcome is hard to predict. We just need more time.

Okay. The next question we have is from TGW asking the company's view on the industry. Currently, cloud AI seems stronger than Edge AI. How does ASUS view the development of Edge AI?

Let me answer this one. Basically, we believe that the long-term development of AI is still going to adopt a hybrid model, where cloud and Edge will coexist. Although currently, cloud seems much stronger in computing power because everyone knows cloud solutions has massive server force behind it, while Edge is an individual device going on its own way. But corresponding to consumer usage scenarios, we still believe that the future is still going to be hybrid. More complex tasks will be, of course, cloud-based, but for latency-sensitive real-time response needs, the part will remain at the Edge. And especially as Edge devices like CPU, GPU and NPU computing capabilities continue to improve, that will be more so the case. Plus everyone knows large language models footprints are getting smaller, but also smarter. Last year, we saw that DeepSeek became a very prominent example of a small, but competent large language model and certainly cornering a lot of traction. And I think all of this helps future development of Edge AI devices. They are small, but they are also quite smart. And additionally, from an application perspective, everyone is very familiar with the recently very trendy Open Cloud. It's a powerful Agentic AI solution. And for Edge devices, this will bring a lot of attention. In the past few years, talking about AI PCs, strictly speaking, besides Microsoft Copilot Plus related applications, what brought consumers the initial AI PC experience was just that Microsoft Copilot Plus applications, but moving forward, we're still really looking for that truly killer AI PC applications to show up in the market. And right now, we believe that OpenCloud's potential as a true Agentic AI who is able to call different agents, not just listen, but execute tasks, i.e., do things for you, is something that will unleash the power of true Agentic AI and bring a very significant momentum to speed up the adoption of Edge AI devices, including AI PCs or other Edge AI devices in the future. So that's something to look forward to.

We have a question from Fubon Securities asking about the company's view on gross margins and profitability.

Let me reply to this one based on the information we have. As the CEO shared earlier, ASUS has been very clear previously about facing component prices increases this year. So we made strategic preparations in advance. And more importantly, ASUS has significant inherent brand value and desirable high-end product mix. And plus, we also have long-term relationships with strategic partners and test understanding with how the dynamics should play out with supply chain partners. All of that really tells us that the potential for continuous high-growth AI server market is the foundation to our operational outlook and plan for 2026. So in the short term, we have already announced guidance for major products in quarter 1 2026 in the earnings call presentation earlier. Based on this guidance, we believe that quarter 1, this year's operating margin can still maintain a fairly stable state. And relative to market concerns about memory price increases and industry profitability concerns, we do believe that they apply less so to ASUS. In other words, we have a lot of confidence going in, and we believe that our execution targets for quarter 1 profitability and full year profitability scenarios will be able to achieve stable operational results that outperform the industry average. I think that's roughly how I will take to that question. Please note that institutional investors can continue to monitor and track our subsequent quarterly guidance and achievement status. Based on ASUS' operational plans and preparations, we probably have a certain degree of operational grasp and strategies in place for the next 1 to 2 quarters in place already. Finally, I would like to hand the time back to our 2 co-CEOs, Samson and S.Y. Thank you.

Okay. Thank you. So first of all, I want to sincerely thank our institutional investors and the media for your continued support of ASUS, allowing us to deliver good results in 2025 under very turbulent market conditions. Looking to 2026, what we see is also a year with many challenges, including the memory price increases discussed earlier and the Middle East conflict that happened shortly after the year started. I think these are all issues we need to carefully address in 2026. Of course, for the so-called high-growth market in AI service, we have our preparations in place. As mentioned, we have made internal organizational arrangements to increase resource allocation for that segment. We hope that under these new adjustments, we can continue to deliver good results in 2026. Thank you.

Thank you to all our investor friends who participated today, and for your long-term support of the company. 2026, as everyone discussed earlier, is full of challenges, including cost challenges from key components like memory and storage, but as mentioned earlier, we are very confident in leveraging the positive strategic partner relationships we have built over many years to ensure supply security. Additionally, very importantly, we will leverage our good channel partner relationships to make appropriate dynamic price adjustments based on real-time costs, and market demand to properly respond and ensure balanced management of profitability and market demand momentums. An important foundational behind this is, as we explained today, ASUS has a fairly high proportion of high-value products, including motherboards, graphics cards, gaming products, commercial PCs or Copilot + PCs. And that's us compared to the industry average. And so this provides us with a very strong operational resilience. And given that, this actually gives us full pricing power in the market for the motherboard and gaming segments. So as we're facing this cost change situation, we will be able to moderately exercise this price-setting power to reflect appropriate costs. Of course, during the process, profitability and demand momentum will maintain -- must be maintained in a balanced way. Additionally, for AI servers, as mentioned earlier, the 50% to 100% jump growth this year is something that we considered viable. This part will bring significant contributions to the year's revenue and absolute profit. This is very important. So please don't overlook this segment's contribution to our profitability beyond just revenue. So basically, although the industry is facing significant challenges, and the world as a whole, is also very turbulent. We will actively respond with the advantages we just discussed earlier to create better than industry average growth, continuously maintain our revenue growth and stable profitability. Thank you. Thank you, everyone. [Statements in English on this transcript were spoken by an interpreter present on the live call.]