Hua Hong Semiconductor Limited ($1347)

Ladies and gentlemen, thank you for standing by. Welcome to the Hua Hong Semiconductor's First Quarter 2026 Earnings Conference Call. Today's call is hosted by Dr. Peng Bai, Chairman and President; and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. [Operator Instructions] The earnings press release and first quarter 2026 summary slides are available to download at our company's website, www.huahonggrace.com. Without further ado, I would like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Thank you.

Good afternoon, everyone. Thank you for joining our Q1 2026 earnings conference. Today we will first have Dr. Peng Bai, our Chairman and President, provide an overview of our first quarter performance. I will then take you through our financial results in detail and offer guidance for the upcoming quarter. We'll then open the floor for a question-and-answer session. With that, I turn the call over to Dr. Bai. Dr. Bai?

Thank you, Daniel. Good afternoon, everyone. Thank you for joining our earnings call. Hua Hong Semiconductor generated revenue of USD 660.9 million in the first quarter of 2026, a year-on-year increase of 22.2%. Gross margin stood at 13%, a year-on-year increase of 3.8 percentage points. Both figures were in line with our guidance. Net profit attributable to shareholders of the parent company amounted to USD 20.9 million, marking substantial year-on-year growth. Despite the rapid capacity ramp-up, the company maintained high capacity utilization rates, with strong performance across all process technology platforms. MCU, standalone flash and BCD products delivered the highest growth rates. The company's results were supported by sustained efforts in cost reduction and efficiency enhancement, and by a positive demand signal that started at the beginning of the quarter and became stronger over the course of the quarter. The global semiconductor industry is undergoing accelerated transformation as AI and related applications play an increasingly central role in market dynamics. The unmistakenly positive impact of AI on worldwide semiconductor market demand, persistent uncertainty in the global supply chain landscape make a more complex market picture that we're facing with. Hua Hong Semiconductor remains steadfast in pursuit of its key objective of becoming a foundry leader in specialty process technologies, with a core strategy of continuous focusing on market needs, strengthening process technology capabilities and substantially increasing production capacity scale. In the first quarter, the ramp-up of our 12-inch capacity progressed steadily, with its revenue contribution rising to 62.7%, while our 8-inch production line maintained sound profitability. Meanwhile, the proposed acquisition of Huali Micro has been accepted by the Shanghai Stock Exchange, entering the substantive review phase. The acquisition is currently progressing according to the established schedule and is expected to be completed in the second half of the year. Finally, as a veteran of the industry, I remain confident in a bright future for semiconductor industry globally and in China. I'm fully committed to make Hua Hong Semiconductor an increasingly important player in the industry and deliver sustainable value to our shareholders. Now I would like to hand the call over to our CFO, Mr. Daniel Wang, for his comments. Daniel?

Thank you, Dr. Bai, for your inspiring comments. Now let me walk you through a summary of our financial performance for the first quarter. I will then provide our revenue and margin outlook for Q2 2026 before opening the floor for the Q&A session. First, let us review our financial results for the first quarter. Revenue was $660.9 million, 22.2% over Q1 2025, primarily driven by increased wafer shipments and improved average selling price, and 0.2% over Q4 2025. Gross margin was 13%, 3.8 percentage points over Q1 2025, primarily driven by improved average selling price and cost reduction efforts, and flat with Q4 2025. Operating expenses were $105.6 million, 8.8% over Q1 2025, primarily due to increased operating expenses for the new production lines in Wuxi and 18.9% lower than Q4 2025, mainly due to decreased labor costs. Other loss net was $2.4 million, 70.5% lower than Q1 2025, primarily due to foreign exchange gains versus foreign exchange losses in Q1 2025, partially offset by decreased government subsidies, interest income and increased finance costs. It was other income net of $34.1 million in Q4 2025, mainly due to increased finance costs and decreased government subsidies. Income tax credit was $4.7 million, primarily due to a reversal of dividend withholding tax for 2025. Net loss for the period was $17.3 million, narrowed by 66.9% compared to Q1 2025 and 7.5% compared to Q4 2025. Net profit attributable to shareholders of the parent company was $20.9 million, 458.1% over Q1 2025 and 19.9% above Q4 2025. Basic earnings per share was $0.012. Annualized ROE was 1.2%. Now let's take a closer look at our Q1 2026 revenue performance. From geographical perspective, revenue from China was $525.2 million, contributing 79.5% of total revenue, and an increase of 18.7% over Q1 2025, mainly driven by increased demand for MCU, other power management IC, flash and IGBT products. Revenue from North America was $85.7 million, an increase of 51.9% over Q1 2025, mainly driven by increased demand for other power management IC and MCU products. Revenue from Other Asia was $28.2 million, an increase of 5.2% over Q1 2025, mainly driven by increased demand for MCU products, partially offset by decreased demand for super junction products. Revenue from Europe was $21.8 million, an increase of 43.2% over Q1 2025, mainly driven by increased demand for smart card IC, IGBT and MCU products. With respect to technology platforms, revenue from embedded non-volatile memory was $184.6 million, an increase of 41.7% over Q1 2025, mainly driven by increased demand for MCU and smart card ICs. Revenue from standalone non-volatile memory was $57.1 million, an increase of 33.2% over Q1 2025, mainly driven by increased demand for flash products. Revenue from power discrete was $170.9 million, an increase of 5% over Q1 2025, mainly driven by increased demand for IGBT and general MOSFET products, partially offset by decreased demand for super junction products. Revenue from logic & RF was $74.4 million, an increase of 11.4% over Q1 2025, mainly driven by increased demand for logic and CIS products. Revenue from analog & power management IC was $173.9 million, an increase of 25.8% over Q1 2025 mainly driven by increased demand for other power management IC products. Now let's turn to our cash flow statement. Net cash flows generated from operating activities was $130.4 million, 159.9% over Q1 2025 mainly due to increased receipts from customers. It was 47% lower than Q4 2025, largely due to decreased receipts of government grants and increased payments of labor costs. Capital expenditures were $924.9 million in Q1 2026, including $886.1 million for Hua Hong 12-inch business and $38.7 million for Hua Hong 8-inch. Other cash flow generated from investing activities was $67.9 million in Q1 2026, including $57.8 million decreased time deposits, $10 million interest income and $100,000 receipt of disposal of the equipment. Net cash flows generated from financing activities were $638.7 million, including $649.4 million proceeds from bank borrowings and $3.3 million proceeds from share option exercises, partially offset by $12.1 million interest payments and $1.1 million lease payments and $0.8 million of bank principal repayments. Now let's move to the balance sheet. Cash and the cash equivalents was $4.8679 billion on March 31, 2026 compared to $4.8938 billion on December 31, 2025. Other current assets increased from $787 million on December 31, 2025, to $894.6 million on March 31, 2026, mainly due to increased value-added tax credit. Property, plant and equipment was $7.1059 billion on March 31, 2026, compared to $6.6764 billion on December 31, 2025, primarily due to capacity expansion in Hua Hong Manufacturing. Interest-bearing bank borrowings increased from $3.1908 billion on December 31, 2025, to $3.8972 billion on March 31, 2026, primarily due to increased drawdowns of bank borrowings. Total assets increased from $14.4538 billion on December 31, 2025, to $14.9473 billion on March 31, 2026. Total liabilities increased to $5.663 billion on March 31, 2026, from $5.2895 billion on December 31, 2025. Debt ratio increased to 37.9% on March 31, 2026, from 36.6% on December 31, 2025. Finally, let's take a look at our second quarter outlook for 2026. We expect revenue to be in the range of $690 million to $700 million with a projected gross margin of 14% to 16%. This concludes my financial remarks. We'll now begin the Q&A session. Operator, please assist. Thank you. Operator?

[Operator Instructions] Our first question comes from the line of Leping Huang of Huatai Securities.

So congratulations for the very strong results. My first question is about the impact of the memory super cycle. So we see the further price hike of the memory in the last 3 months. So Dr. Bai, what's your view on the ripple effect of this trend on the logic foundry investment, especially on your NOR flash business? Can we expect further price hike in memory will drive the ASP and the margin expansion in your logic foundry business in the remaining of this year?

Okay. Thank you, Leping. Good to hear from you. Yes, let me take your question on the NOR flash situation. You are right. First of all, the memory is in short supply, starting with DRAM, and DRAM price, as you know, went up probably like 10x. Then that start -- then they start a spill over into NAND memory. Now it start to spill over a little bit into NOR flash as well. It's not as much spill over as I would like, but definitely, we see the demand going up for our NOR flash memory. That will translate into a price increase, but not as significant as the DRAM, not nearly as significant as the DRAM, but we should expect to be 10%, 15% price increases on the NOR flash. So that would be the -- also with the tight supply, we won't be able to satisfy all the demand, but we do get the benefit of higher prices.

Okay. So my second question is that can you provide some update on the progress of your Wuxi fab expansion. So I remember you mentioned last time I think you start already construction in March and moving in the October. But these days, we see a very fast expansion of most of the foundry and the memory company in the world. Do you see any delay of the equipment delivery? So have you -- or furthermore, today with the U.S. President visiting China, which is a very important milestone for the U.S.-China relation. So do you think that this will help your equipment procurement coming in the rest of the year?

Okay. Yes, let me update you on our Wuxi side in terms of the capacity expansion. As you know, Wuxi side, we have 2 operating fabs already. The third one, as you correctly pointed out, started construction in March. So before I go to the third fab, which we call 9B, the second fab has been on a capacity ramp-up since last year, it is Fab9A. That capacity ramp-up should complete in Q3 this year, which means that we will reach the full capacity in Q3. The output, there's obviously a delay in getting all the output with the full capacity, but we should be getting the full output starting probably by end of this year or beginning of next year. Now the third fab, Fab9B, we kicked off the construction in March of this year. We are doing all the facility work right now because the shell is already there for the third fab. We expect the equipment start to come in, in the fourth quarter of this year. To your question about the equipment procurement, we do not see any impact in terms of the export control, from the U.S. export control on the equipment procurement for Fab9B. That has not been an issue for us. Now President Trump is in China, as we speak. And we certainly hope this environment is going to be further relaxed going forward, but we'll see how they come out. But up to this point, even all the press reports notwithstanding, all the press reports notwithstanding over the last couple of months, we have not been impacted in terms of getting the equipment we need to buy and also the delivery time.

Okay. It's good to see. So final question is, so we see the Hua Hong Group established an advanced packaging subsidiary. Also, the market is very closely watching the next-generation technology like silicon photonics. So my question is that how the Hua Hong Group's advanced packaging subsidiary will coordinate with the Hua Hong ListCo? And how do you -- and what's the technology you have on the silicon photonics? And what's your plan on silicon photonics?

Okay. So let me take your question one at a time. One is the advanced packaging. Yes, there is a newly established effort on advanced packaging. That is not -- it's under the Hua Hong Group, not part of the public company, not part of Hua Hong Semiconductor. Of course, we are having a lot of coordination at the Hua Hong Group level in terms of the technology road map and as well as capacity planning. So in that regard, certainly are coordinated with the existing Hua Hong Group companies. The advanced packaging is basically -- is definitely a high growth area in the industry. We expect that effort to substantially add to our offering and also expect to add to our revenue in the future at a group level. Now the silicon photonics is another area that is growing pretty fast, especially with AI and related application. We are also looking at getting into silicon photonics area, and there's quite a bit of planning activity that's ongoing. And once something gets finalized, I expect that will be soon that we will update you on the details. But suffice to say that, yes, we will get into silicon photonics since this is a growth area, adjacent to what we already do, so it should have a lot of good synergy with what we already have, and we should expect that to be started pretty soon, right?

And the next question comes from the line of Tracy Cui from CLSA Company.

So my first question is regarding your 2Q '26 revenue guidance. Would you please guide us how much growth may come from the shipment growth and how much is from the ASP increase?

It's roughly -- it's about -- we're talking about quarter-to-quarter around close to 5%, okay? And we're pretty confident with that number. It's coming in combination of revenue -- ASP growth and also volume growth.

Okay. And just following up for the wafer price. Perhaps how you will expect your wafer price trend throughout this year? And which type of chips you may see maybe a higher chance to further for the price lift?

Since we have a diverse portfolio of technology platform, we do see the price changes, price increases vary across different platforms. The ones that are in higher demand, we will see higher price increases. The ones that demand are somewhat muted, we will probably trying to stay where it is or just with a very minor increases. The net result is that, on average, I do see -- I do think we're going to be consistent with the industry average of about 10% plus/minus some number here and there. You have to realize the price increases, it takes time to get implemented in a sense that even if you increase the prices is the order from that day forward see the new prices so that it will take some time to fully materialize all the increases to have them fully reflected in the financial results. But during the course of this year, I think we definitely will be seeing above -- on average. Some will increase more, like some of the -- we do this mainly based on market. It's a market-driven methodology. And if you see lot of demand, we can supply, we do tend to increase the prices a little bit more. So some platform might see up to 20%, 25% even, but some are going to be close to where they are and maybe 5%. On average, I think 10% is a reasonable assumption or 10% to 15% by end of this year, somewhere there.

Got it. And can I please also have a follow-up question on Fab9B. Would you mind remind us how much is our CapEx plan and how much is the design capacity? And any updated time line in terms of the CapEx investment and also the ramp-up and what may be the process node and the type of chips platform?

I think the Fab9B, the overall project, I think we're going to be putting down CapEx-wise about $60 billion, maybe right around there. It will be 60 -- we actually originally said $69 billion. We will try to -- $6 billion, not $60 billion. $6 billion, okay? Take off one 0 there. So originally, we think it's 6-point something, but we will try to control it to be about $6 billion overall investment. That will be spent this year and next pretty much. And it will start to -- equipment started coming towards the end of this year. So we are talking about it will start to produce output in 2027. Probably going to take 1.5 years to 2 years to get all the capacity in place, to get -- so you are talking about in 2028, the Fab9B will be at a full capacity. So that's the rough schedule I'm giving you.

And what might be the process nodes or type of chips? Any color that you may be able to share?

It will be focused on specialty technologies. We see that it will be a range of nodes, but the bulk will be 40-nanometer. So 40-nanometer plus/minus something.

And the next question comes from the line of Ziyuan Wang from Citic.

This is Ziyuan Wang from Citic Securities. My first question is about, I'm wondering how was the demand trend in analog and power applications over the past quarters. And is there any further plan for the wafer price to increase on Q2? And have there been any price increase in the materials such as silicon wafers?

The analog area, our main product is power management ICs. We do see strong demand there. That's mostly related to AI and AI-related build-out, like the server boxes, they need a lot of power management chips. And that's some partially offset by some of the consumer weakness because of the DRAM increases. We do see a memory price increases has a small depressing effect on consumer segment. Overall, it's a positive story for us because we obviously have products in both AI-related field as well as consumer. On average, AI-related stronger demand overwhelms -- at least more than compensate for the small weaknesses in consumer. So in that regard, I think the analog, the PMIC area is a good example where you have one part of the market going strong, another part is a little bit muted, but overall, still a positive demand increasing story for us. So yes, we were -- you will see price increases in this particular platform, reasonable price increases here. In terms of the supply chain, because of the -- probably mostly because of the war and some of the disruption that it causes, we do see some particular material, raw material, the prices go up. It's not across the board. Across the board, it's not a very significant factor yet, but there's a few items that prices to go up quite high. And we're managing that and those are manageable, but we don't expect -- I do not expect that it will have a big overall impact. But yes, because of the -- mostly because of the war in the Middle East that is causing some supply chain disruption, in particular, the oil-related or gas oil-related products and some of the items, the prices spiked a little bit, but very few items. So it doesn't have much of a -- and in aggregate, it doesn't have average impact much. All right. Thank you.

Okay. Got it. And my second question is about, does our company have any plan or investments on the compound semiconductor such as the gallium arsenide or silicon carbide or even on indium phosphide. That is my second question.

Thank you for asking. The answer is yes. We are -- we have started efforts in gallium nitride. We already have TD activity going on. So we will get into gallium nitride. And as well as silicon carbide, the compound semiconductor, those 2 that complement our silicon-based power devices that we have decided to get into. The way we'll get into might be a little bit different. Like silicon carbide, we might have a joint venture with some existing -- joint venture in terms of the capital management. But in gallium nitride, we might seek a partner and when we get into the volume manufacturing phase. So that part is still being kind of a planned or is not finalized. But the answer to your question, yes, we will get into gallium nitride. We are getting into gallium nitride and silicon carbide effort because we have a large silicon-based power device capacity. We also have a large base of customer, and they are also asking us to get into the compound, so that -- compound semiconductor to complement our existing silicon-based power devices. Indium phosphide -- we don't hear anybody speaking online.

Okay, that's all my questions. Very clear.

[Operator Instructions] Our next question comes from the line of [ Timothy Wong ] from [ Oriental Asset Management ].

Analyst from Oriental Asset Management. My name is Timothy Wong. My first question would be, I would like to confirm whether we are acquiring 7-nanometers or below to our portfolio since -- through the acquisition of Huali Micro as some news reports suggest? This is my first question.

Sorry, we didn't get the question.

Well, can you repeat that question again or you have not?

Yes. Okay. I would like to confirm whether we are acquiring 7-nanometer or below to our portfolio through the acquisition of Huali Micro as some reports suggested.

A couple of things. One is our Q1 results does not include Huali Micro. That's still outside the Hua Hong Semiconductor because it has now completed the acquisition. Second, Huali Micro we're acquiring -- what are we acquiring from -- for Huali Micro is basically what we call Fab5 asset and the Fab5 asset business. Those are based on 55-nanometer and 40-nanometer IC products, that's what we're acquiring.

Yes. I actually didn't believe such reports. So thank you for your clarification. And my second part of my question is would you mind giving us some color on explosion of CPO, silicon photonics optics, how would these trends will benefit us?

I think right now, in a lot of -- from a technical standpoint of view, a lot of high compute platform, the interconnect become a bottleneck. Therefore, people are looking for ways to speed up the interconnect. Silicon photonics is one way. Now there are some detail there that depending on whether you're talking about the stack to stack, like a box-to-box communication or some chip-to-chip, so you actually require a slightly different silicon photonics technology. But that's an area that would require silicon photonics type of products. This is consistent with now AI is driving a lot of the market growth. So if you believe in thesis that AI is going to drive a lot of the growth, then you would believe that -- you would say that there is going to be more demand for silicon photonics related products because AI, obviously, at a system level is a high compute. So that's the -- and from Hua Hong standpoint of view, we -- our technology -- although silicon photonics is a new technology for us, but it's not -- it's also adjacent technology for us. It's not too different, too far away from what we're already doing. We're already doing a lot of CIS, which require VCD -- not VCD, CIS require a lot of back-side processing of getting into advanced packaging area. So there is quite a bit of synergy from a technology standpoint of view. So that's why we think it's a good area for us to get into because there's going to be market demand, and it also play into kind of our strength or our adjacent area of growth. Thank you.

Congratulations for all the progress.

Thank you.

Next question comes from the line of [ Jen Kuai ] from Orion Securities.

My first question is about the memory price. How do you see the memory price in the next few quarters?

Well, the price is a sensitive topic. In the end, the price will be set by supply-demand balance. As long as we continue to have short supply, then we have a little bit of opportunity to inch up the prices. We actually will stop price increases when the supply/demand balance is reached. So at this point, starting this year, we started to see tightness of the supply, and we continue to see that. So we are going through one round of price increases. We have gone through one round of price increases. That's not fully reflected in -- it takes a little bit of time to see how it's impacting the order and how is it impacting the overall market, but we will be watching that and then decide whether the balance is reached or if it's not reached, we may inch up a little bit more and be frank and open about this one. But if the demand is -- supply/demand is more or less at a good balance, we're probably going to pause or going to stop increasing prices. As I said, for the year, we expect, on average, as I said earlier, 10%, maybe if we're lucky, it will be 15%, 10% to 15%. And memory is one of the platform that increases, probably it will be above the average.

Okay. My second question is about the AI server opportunity. As we know, we already are making some like analog for some -- for AI server, and also we can see power discrete, the usage are also increasing in AI server. So from our point, how do we see the opportunity for us? Maybe just now you also mentioned like silicon photonics or maybe combine all this together, how do we see the opportunity?

Okay. The power devices, the overall market actually, you're correct, is actually increasing because of all the AI boxes need power devices, plus some of the new like robotics or the industrial demand is also increasing the demand for power devices. So the issue there probably is not so much our overall market demand. We do see that part as reasonably healthy. The power devices in terms of -- the issue is probably the supply also increases quite fast, especially the compound semiconductor, like I said earlier, silicon carbide start to contribute a significant portion to power devices. So that here, you have a situation where the supply-demand balance is not off. Therefore, for us to win business, we have to be -- it's a competitive market. We have to compete with our competitors. Now we do have a good silicon-based power device technology. We have led in that area. I think the part that we need to do more is to get the compound semiconductor as part of offering. That's why earlier I said we are getting into silicon carbide and gallium nitride, the compound semiconductor, so that we can first provide a more complete solution to our customers and also give our customers more choices, more flexibility in terms of coming up with an optimal combination of the power devices to support increasing demand. So that's the situation I see. Silicon photonics is a different story. That is -- we are starting from scratch. That is a nascent, a new development that is getting more and more important. I think that we don't have a silicon photonics offering right now. So for us, anything we get there will be a net addition to our business.

Next question comes from the line of Charlie Chan from Morgan Stanley.

So I actually have 2 questions. One is about your PMIC capacity expansion. I'm not sure if it's the right understanding, but could it be like a BCD process? Do you think you can expand that capacity given demand is so strong and also customers are willing to pay higher price? And if they cannot get the capacity from your fab, where they can go to get sufficient supply?

Yes. The power management product does use BCD technology, you're correct, that's the technology platform we're talking about, BCD. So that's number one. Number two, we are expanding the BCD capacity. That is already one of the highest capacity platform we already have, but we are expanding as we speak in both Wuxi as well as maybe in Huali Micro that we are about to acquire. So we will get higher capacity because we're now meeting the customer needs. Third, you are correct that BCD area is a competitive marketplace. There's many players there, but we have been one of the biggest players in China and partly because we have a good -- we think we have a good technology advantage. And we also have some very valuable strategic customers that work with us. So that -- so we think we can increase the capacity and still be able to get good price on them. So that's why we are doing capacity expansion. And this is also an area that we are focusing on in terms of technology development to try to get to next generation faster so that we keep that technology edge for us.

And my second part of this question is, so I also cover some Taiwanese foundry. For example, UMC, Vanguard, if I may quote, those are your industry peers. But it seems like their first quarter, second quarter wafer shipment sort of outgrow. I think 1Q they grow single digit. 2Q, like high single-digit Q-on-Q. So I'm not sure after your capacity expansion, do you feel like you can win back some customers, maybe the consumer side or those non-China customers, maybe the U.S. customers or Taiwan customers, back to your fab for PMIC production?

Our PMIC business has been -- has grown in Q1. If we had more capacity, we probably could have done better. So as our new capacity come online, we do think that we can keep growing that part of the business. We already have customers from overseas, from U.S. and Europe for that matter because for European customer, they have this -- in China for China strategy that we do benefit from. And the U.S. company, mostly because of their business, is growing very fast. So they need more supply. So in that sense, that we think BCD area or PMIC area, it is one area that is benefiting from the AI and AI-related growth. And also all the other -- like the car also need the PMIC and robotics overall. The only -- from an end market standpoint, the only place we see some weaknesses is in the consumer segment, that we do see that. So the hope is that the area that's been growing, keep on growing like AI and robotics and the cars, auto and the consumer maybe will come back because they can't keep delaying those -- they can't keep on pushing out the new model forever. So they have to also get some of the growth or stop the decrease a little bit. So that's the overall picture I see.

Great. And my second question is some clarification on your comments. So in your prepared remarks, you sort of talk about, hopefully, some relaxation of the export control on equipment. But I think your Fab9, right, as you just described is more like 40-nanometer. If that is the case, why there's kind of export control? Or you were referring to your -- not your, but Huali's Fab8. So can you clarify your previous comment about the equipment restriction?

I was not talking about Huali. I was talking about just Hua Hong. You're correct. I also said we have not been impacted in terms of the -- by the export control. in terms of the equipment, we really need to buy. When I say if the restriction is more relaxed, in general, we will get more choices. It's always good to have more choice so that I might be able to have a little bit more optimal combination of the tools. It's not an issue if we can...

I see. So it's kind of nice...

Nice, yes, yes.

Okay. So nice to have. So even if it stays as core, it doesn't change your expansion for Fab9. Is that right way to think about this?

Yes. That's right.

And lastly, I think one of the previous callers asked about some potential new business, right? So I think for global AI semi supply chain, I think there are lots of components, for example, interposer, bridge die, silicon capacitors, there's VIC. So do you have any demand for those? I think the previous question was about CPO related, but I wanted to ask about all those kind of CoWoS or 2.5D packaging related components, no matter silicon capacitor, interposer, bridge die or VIC. Do you have any demand for those components?

Good question. We do see demand for high-density capacitor. So we are having an effort there to do the capacitors, changed or otherwise. So those high-density, high density capacitors. So that it looks like it's been there for a while now that we should start to see some revenue coming. In terms of the other one, can you ask the question -- interposer. Interposer is also something that we are very open to it. I think that we are exploring some options there. That's still in the early stages. That's probably going to go with when we have our advanced packaging coming online. The interposer will also become a significant part of the overall packaging efforts.

Ladies and gentlemen, that's all the time we have for questions. I will now hand back to Mr. Daniel Wang for closing remarks.

Well, thank you very much for joining us today. I mean, you guys had a lot of wonderful questions. All these questions were -- has been very, very helpful, and we look forward to speaking with you again and perhaps seeing you in the next quarter. Thank you very much.

Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.