Innolux Corporation (3481) Earnings Call Transcript & Summary

[Foreign Language] [Interpreted] Good afternoon, everyone. Welcome to Innolux Group First Half 2025 Investor Conference. [Operator Instructions] Today's meeting, we will have 3 speakers provide the company's key messages. The first one is Mr. Jin Hung, Innolux Chairman and CEO. Second is Mr. James Yang, President of Innolux Corporation and Chairman of InnoCare and also Mr. Eric Lee, President of InnoCare. After the presentation, we will conduct a question-answer session. Now I will hand it over to Jin.

Good afternoon, everyone. Thanks for taking time to join us today. I'm always very happy to see everyone face-to-face. But for those of you who cannot join us online, please thank you for you also joining us virtually. Today's analyst conference, we will have the whole Innolux Group, which include both Innolux Corporation and InnoCare. Both companies delivered a positive financial results last year. On the Innolux corporation side, I will have James to help you to update the market outlook and also give you the -- share with you the opportunity ahead of us in the next few years. So without any hesitate, let's have James start.

Yes. Good day, everyone, my dear valuable partner and investor. And thank you for joining us. Now I try to give you some kind of outlook. When we recall previous LCD panel industries is more focused on capacity cost competitiveness but through several years of transformation, now we more focus on value-added manufacturing. So every peer is more focused on their own technology, larger size, more premium products, value-added products. And then by also very disciplined controlled production to maintain a better scheme to transformation to the value-added industries. So now LCD industry is more healthy now, yes. And then I give you some kind of outlook about the different applications. About the TV, of course, thanks to the Chinese government subsidy, the larger size demand is quite good in there. And also thanks to the emerging market, the small sized demand is quite good. So now TV's price got some kind of support and the foundation to bouncing back in the coming Q2 is our expecting. And also thanks to the -- everyday talking about AI. So the AI booming will treat the new application on notebook PC, and that will pave the foundation for the second half notebook applications after the Q1 digest that year's inventory and left over. And then the new application for coming AI era is quite good driver. And also thanks to the sometimes the Windows 11 were booming to replace Windows 10 some kind of loophole to booster your security. These kind of things will also help the notebook applications demand. And then about the automotive, that's most important is that the luxury car also want to give you a very unique user experiences to transfer your office experiences and home experiences. Wherever when you play the game or when you play on your laptop, you can move to the car. And then the very unique and larger size integrated and freestyle large LID, larger size integrated display is quite very unique. And Innolux also adapt the OLED products and with collaboration with JDI, except the traditional LCD microLED OLED product, especially by the eLEAP. It can give you better user experiences by the brighter and very colorful saturation and also the lower power consumption. And most important, during the process of their manufacturing, they use less solvent and the materials. So this eLEAP technology is some kind of let me say green product and environment-friendly product. And then we will use that kind of product on our CarUX company. That is very unique and leading in the industries. And also next page, we not only share with you about the LCD and LED, and we also invest our own, that means time, resources and money on the microLED. And microLED will give you the more lightweight and high brightness, some kind of low color shift. This kind of a wonderful user experience is very important. And then we will more focus on the high-end product first. But of course, the free-tiling information display is our first target to do. And also for the transparent display for the unique and niche application is sometimes we try to focus. Once we ramp up the quantity and then improve our rate, we believe the microLED cost will drop significantly. And then we'll focus on some kind of mainstream product. And finally, we'll enter the commodity product, just like the IT products. Yes. Yes, here, I show you so let me stimulate the tiling product. Simulate the tiling product here that will give you the very clear user experiences and also some kind of -- yes, let me set. So for drivers, we just put our eyes on the row and then we can send this to catch up information and focus on the driving to boost our safety during the driving. So the PHUD is another application and also transparent display whether in the meeting room or in some kind of war room is some kind of very convenient for this kind of image and also for [indiscernible] brand for our export and also health industries, we can find the microLED market is there. Yes, here, we show you some kind of market is there technologies by POC is ready. And now we need excellent products. Here, we show you the 2 case of microLED achievements. That means here, we do it by the high-definition information display by 40 PPI and then we can free tile by 4x4 going into the 106-inch larger display that you in this year CES in Las Vegas. And also, we can use this kind of product by the 12.7 or 12.3 to different applications. But size-wise, it want to shoot in larger size HDID applications. And then we got 2 awards. That means the Gold Panel Award from the Taiwan government and also the SDIA Award. The other here, we improved our resolution to worldwide record high 200 and 229 PPI by the 9.6 microLED display. However, it can use for the automotive and also the luxury product shop to display this kind of image. And also we won this kind of Gold Panel Award from the government by SBIA and then also the TDUA associations. So product is here. And then we have some kind of product road map and then business road map. So we -- from now on, we focus on the HDID and then go into the main HDID application and then also going to the transparent and then high end for the PHUD application for the automotive since the car industry is more willing to adopt the new technology, affordable for the high-end premium products, I think that can help us a lot. And also finally, we'll enter the medical display because we can provide better color performance, lower color shift and also precisely color depth to help the doctor to give the precisely diagnosis that can promote people -- healthy industries. So that's some kind of -- once we have the technology approved by POC and then we got the applied the patents. Through the patents, we protect our products. And then through this kind of trends, let me say, secure Innolux in the microLED industry development. We now got the American government granted us a worldwide #3 IP owner for microLED, especially for the color conversion. That is very important for power saving and cost saving. We believe we can make it and we will deliver it soon in this year. That's it for my presentation and...

Thank you, James. Okay. Corporate strategy. If there is anything worldwide on the technology space, people would all agree on saying, okay, this is a top-down trend. AI is definitely one of that on top of the list, right? I think the way internally, our senior management team include all our Board members, started reviewing this a couple of years ago and seeing how should we be positioned. While just 2 years ago, that was still start at the effectiveness of ChatGPT. 2 months ago, there is DeepSeek coming online. And 2 days ago, there's a new software called Manus, the general AI agent. So all in all, no matter which AI model you prefer, the things in common is we need high-performance computing and we need larger, bigger AI chips. So from that kind of top-down view, we start to reveal ourselves on saying how should we be positioned to catch on this kind of a global trend. Next page shows you -- I think we all agree that Taiwan is noncomparable in -- globally as a value chain on the high end of the IT manufacturing, right? This page, we want to show you that we are proud to say that Innolux is now part of Taiwan's efficient semiconductor supply chain. On this page, you can see a lot of the players from the software providing -- service providing, from the material, from the equipment. And you know that when we say the semiconductor, we are actually more focused on the Fan-Out PLP. This is nothing particularly new, but the reason Fan-Out PLP was come to the people's spotlight again is because this AI era. People start to looking for any more cost compelling solution for the IC manufacturing and packaging, so on and so forth. So this is where we believe that Innolux as an expert on the large size of the glass substrate processing, fine processing, will be able to contribute to the whole value chain for not only us, but the whole technology, especially on the semiconductor value chain. And we are very flexible in terms of working together with our partners, either as a component maker or as a solution provider. And the reason Fan-Out PLP is so exciting, I remember last year in one of the leading Taiwan IC manufacturing companies' annual analyst meeting, the Chairman used to say that he believes Fan-Out PLP is a solid solution provider for the large-size panel. And we have the same view as this leading Taiwan IC manufacturing company. We also believe that around like 2027, the things were getting -- start to kick off. So what we are doing right now in terms of the last 2 years and now is we are getting ourselves ready for the client demand. I want to use this page to explain to you that why Fan-Out PLP could enable for more efficient and low-cost advanced packaging. On the left-hand side, on the up corner, you can see that for the 12-inch wafer, if you use that as a benchmark of 1x, even in just in the rectangular size, it already increased 30% of the area. So Fan-Out PLP will definitely help to improve the larger area size in our Generation 3.5, which is 620x750, that kind of glass size, that is equal to 6.6x of the 12-inch wafer, which means you can process it onetime more than 6x of efficiency on the same area. And on the bottom corner, you can see that also with this kind of large size, we can have a higher throughput versus the 12-inch wafer. If you only put the rectangular size of like 2x, the reticle size you can put into a 12-inch wafer is 28 units. However, right now, the market of the IC usually for the high end will be 5, 6x reticle size. If it goes to 7.5x, you'll only be able to put into 6 IC in one 12-inch wafer, which means if one particle drop into that, your yield will immediately drop 16%, 1-6. So that's a huge damage and also the huge increase on the overall cost. However, if you put a similar size as a comparison like you see on the slide, in our panel, like 510x515 panel, that easily can increase to 35 units, which is around like 6x increase of the throughput. So all in all, from the larger area and also higher throughput, you can conclude into the right-hand side, the cost will be much more efficient. In our estimate, that should be around 15% to 25% lower cost versus the original 12-inch wafer. And that provides a significant advantage for the whole value chain to continue to move up and also increase and multiply the usage of more AI applications. This page shows you that where we start our whole Fan-Out PLP and also the execution plan. And when we talk about, okay, this is the overall market trend, you might say, yes, even I agree with that. But then why Innolux is positioned well? Why can Innolux as a panel maker now can transform into the Fan-Out PLP? That semiconductor has nothing to do with you? No, it is absolutely right. The reason Innolux has a significant competitive advantage on the Fan-Out PLP, simply because we revitalized our legacy panel factory. I think here, there are a lot of the financial experts. You definitely understand that when we leverage our existing panel factories, we have seen that around 60% similarity of the whole manufacturing process of the panels array versus the fan-out -- the high-end packaging. the EUV will be the same, the photo geography or even the spin coating, they are all similar. So with this kind of advantage, we have only need much less of the investment on the CapEx, which can generate a much higher ROE than the other peers. That is a significant reason why we repurposed this fully depreciated panel manufacturing line, which is our Fab 1 in Thailand. It's a 26 years old fab, and we turned that into the largest Fan-Out PLP fab in the world right now. And secondly, we also have a very broad product applications with mass manufacturing experience. As you all know that as a panel manufacturer, we are almost close to the very end to the SI companies, right, the system integration. So we understand the whole process from the very beginning to the very end. And when we're targeting on the automotive, which is one of our current strengths and also like high wattage and energy-efficient PMIC and AI chips, we can simply put into the mass production much faster, much more efficient than the other peers. And that is also one of our key focus. After that, I think you can see that also all the panel fabs are highly automated. Like I mentioned earlier, there are about 60% similarity between this panel and IC packaging process. Given Innolux's 20 years' experience and expertise on this glass panel, we believe that this automation processing will give us a significant advantage. And lastly, like James mentioned earlier, our IP has been accumulated over 300 in the last couple of years. We are actually one of the major leading company globally on the Fan-Out PLP patents. And in terms of our technology, we have been laying out for the whole Fan-Out PLP, we focus on the 3 different trends. First, on the chip-first and second on the RDL-first, that also translate into the chip-let. And lastly, on the TGV, the Through-Glass Via. So all the 3 different applications or the technology, we are investing and doing a lot of research on it. Chip-first is the entry point for a lot of the like RF IC or PMIC IC, which we are passing the R gate with our customers, and we are also waiting for the clients to working closely with the future mass production plans. And for RDL, we are also focusing on the high-end consumer AP. And for TGV, that's also for the -- looking for the high-end, high-performance IC. And all in all, we are positioned well on saying, yes, we are a glass solution provider on the Fan-Out PLP space. After this corporate strategy, I also want to share with you some of the strong financial results we are being posted. Yesterday, our Board meeting has also posted a strong financial results. I believe some of you have seen -- saw some happy face on today's share price outperformance. A lot of analysts actually asked the IR and asked me yesterday last night, I'm saying, how come you guys are able to deliver ahead of your peers on the second quarter turnaround, making to the profit, even the third quarter? There is no secret recipe. The answer is actually very simple. We are focusing on lean CapEx. We are focusing on the light assets and also we are focusing on the agile product mix. What that means is what you see on the slide now, we focus on 4 different pillars from facility, from capacity, from profitability and return, each of this to review our position. Facility side, for example, we used to have 14 fabs, and we review one by one, whether the fab would have competitiveness in the next 5 years, 10 years. And we try to optimize our asset utilization rate on the facility angle. And even with existing facility we have after we maybe dispose one to our partners, for example, for the capacity with that, we also try to optimize to try to find the most agile product mix. We believe that we can even, for example, using the outsourcing capability to provide the maximum capacity to our customers. And with all of this facility and the capacity efforts, we, therefore, see our profitability start to show the improvement. I think later on, there will be page showing you on the different categories that our profitability has significant improvement after we optimize our supply chain management. And that all in all, deliver into our maximized shareholders' return by the ROE and our capital allocation. We are happy to share with all our investors and our shareholders is simply from the open source on the Bloomberg. In the last 6 years, average Innolux is one of the best panel company in the world. We delivered 6.5% TSR, total shareholder return, ahead of all our peers. Like I said, there is no secret recipe. It's the whole team, the whole 40,000 employees working day in, day out, trying to find the best solution for our customers, for our shareholders. And we are very happy to deliver this result and share this with our investors. This further elaborate into the result that when we do the capital allocation, people was wondering that you do the capital reduction, what's the result out of that? In the last 3 years, we do 3 rounds of the capital reduction. Now our capital size is about 20% lower than 2021, where we were. And in the end, that's where we have this stronger ROE than our peers. And this page also gives you another close look of our operation performance by the different domain. You can see the 3 different colors from commodity, non-commodity and the non-display. Each category has different kind of the average gross margin. What we are trying to do is we try to even out the cyclicality. All of you understand that panel is a highly cyclical industry. When the demand was strong, you could enjoy the onetime pick. However, when the demand was bad, you try to fill up the capacity, you were suffering from the loss. So one thing we are trying to do is try to even out this kind of cyclicality by diversifying our product profile, our customer profile into more global and high-end products. On the non-display side, we're currently looking at the margin -- gross margin last year around 11% to 15%. That includes the automotive industry. For the non-commodity side, they also have a higher margin in between 21% to 25%. Both sectors, both categories have double-digit gross margin compared with the commodity side, which is only 6% to 10% and also much more volatile, quarter-on-quarter or year-on-year. This strategy has worked out very well in terms of diversifying and deliver a more stable result to the investors. Like I said earlier, our Board meeting yesterday has announced that we are likely to propose to the AGM, the Annual General Shareholder Meeting, at the 7th of May of $1 cash dividend payout. Among that, $0.75 from the -- our profitability generate and $0.25 from our additional paying capital. And that is a tribute to our strong financial results from last year. And even if you look at the quarterly result, our 4Q gross margin seems to drop significantly. It's actually more because of the seasonality on the quarterly price decline. However, we believe that we see this year's looking ahead, like what James was mentioned, we see the demand was stabilizing, we believe the margin were also improving. Like I mentioned earlier, last year's result was very encouraging, thanks to all the employees, strong efforts and all the shareholder support, our gross margin has improved from 1.5% in 2023 to 6.5% in 2024. Our total EBITDA margin has almost doubled from 5.7% to 10.7%. Net-net, we are -- net cash, we are the only panel company in the world running at a net cash position. That gives us a strong capability and the flexibility to be able to distribute the money back to the shareholders or if there is good opportunity, to invest like Fan-Out PLP, we are able to immediately move into the sector, be able to generate much faster earlier results than others. I think this table shows -- says better than my language, you can see easily from the results. Okay. I will stop here and pass that to Eric. Thank you.

Thanks, Jin, to give us a good story. So I need to share more exciting story. Otherwise, you will lose your focus, right? So first, I will give you InnoCare -- let me -- I will give you the update about the CQ4 last year and the whole year's financial status. And then also later, Eric will share with you about our strategies and business development and also insights about the industries, about Medicare. And of course, welcome your Q&A later on. So first, let me give you some kind of statement about CQ4. Let me the most important thing is we have a single quarter record high revenue in last quarters, thanks to our unique technology, product and also the right business model enter the flat panel detector assembly and also enter the emerging market. So we gained a record high revenues. And after the record high revenues, I think we also got some kind of nonoperating income to record high due to the NRE and the [indiscernible] again and also the foreign exchange gain in the CQ4. And then finally, you can find we've got the net profit, that means still up TWD 40.6 million. So reflecting our solid operations performance. That is very important is that means we reached record high revenue. And after this, and then we can find next page, that means the whole year revenue, we also almost reached TWD 2 billion and beyond TWD 2 billion in this year is my target to Eric. That's the most important thing. And then year-over-year, we gained 8.3% in the net sales. And also, you can find our EPS can reach TWD 3.75. And then we also announced we'll share TWD 1.8 per share to all our shareholders after the approval AGM. The most important things like our net profit also can improve almost 31.4%. And about the gross margin-wise, InnoCare since we are in the Medicare business, so here, we give you the stable gross margin, almost 27.8%, even higher than parent company, which should do. Thank you. Yes. And then the next thing is about talking about, I think, our -- the whole -- next page. Yes, the consolidated balance sheet highlights. And then also, we are running in the net debt. So we actually -- net debt to equity is 48.8% minus. That means we are a bunch of cash for searching the right partner to invest on the technology or market. That is very important. And also, our cash and cash equivalents growth year-over-year is 16.4%. And then also our short debt reduced almost that means TWD 100 million, that means 41.2%. So -- and finally, our current ratio reached 255%, which is very healthy status. We management by our way very well, especially even the inventory by the lean manufacturing and lean management excellent operation, so we control very well on our financial status. And here, I try to hand over to Eric to discuss our further development in this year. Thank you.

Good afternoon, ladies and gentlemen. I'm Eric Lee. So it's my honor and pleasure to share -- to share you about our strategic road map and the outlook for 2025. Just like James mentioned, 2024 was a year of a very strong financial year and fueled by the successful product commercialization, expansion in the emerging market and the increasing adoption of our detector technology. So first, I would like to use this slide to explain the whole market trend for the X-ray sensor technology. Innolux is doing the many kind of the technology, the display, non-display. But for InnoCare, we are very focused on the X-ray sensor technology. So how can InnoCare keep our leading position and grow continuously? So it shows InnoCare's great opportunity for coming years. So first, you can see that there are different kinds of X-ray sensor technology from the film CR type. We are using amorphous TFT, the IICCD, II means image intensify, the IGZO-TFT and the CMOS for the semiconductor and the photon counting detector. So the product feature also cover from the aesthetic one to the dynamic one and applications are including different medical applications, for example, from the GenRad, the dental or even the surgery and to the nonmedical like industrial application. So from this chart, you can see that the green arrow and the red arrow. So green arrow means that this technology is dominating this market gradually. Therefor the red arrow is declining. So first, regarding aesthetic application. So although the film and the CR type is still working in some hospitals for some of the emerging markets, but in order to support the medical imaging digitalization in hospital, film and CR type will decrease rapidly because of amorphous TFT's strong advantage. Actually, the amorphous TFT was becoming the mainstream technology for static application from 10 years ago. And the adoption of amorphous TFT DR in emerging markets like India, Middle East or South America is a major growth driver in coming future. So to support the sensitive price requirement for the emerging market, so InnoCare's strategy is to introduce our Gen 5 TFT solution for the better cost structure. So right now, we are in mass production now and actually more than 3,000 pieces shipments so far. And also, we are supporting the total OEM/ODM solution for the local medical system integrator. So that's the first one regarding the static. And regarding the dynamic application, so InnoCare, we start to introduce our IGZO technology because of the trends of higher mobility and lower off current for the IGZO from year 2020. So IGZO is also becoming the main technology for dental market. And also right now, the IICCD solution vendors plan to terminate their product line due to the market design and higher cost comparing with the IGZO. So we believe that the TFT substrate technology, including amorphous TFT and IGZO is dominating the static application and penetrating to the dynamic application very soon. And last question is how about the high-end CMOS. So InnoCare also want to join this market. So InnoCare has 2 approaches. First one, we will develop our new generation of IGZO, and we have our first device sample, which has a higher -- 2x higher mobility now, and we plan to launch from the Q4 of this year. And our IGZO Pro, that's our -- the new name of our next-generation IGZO, will have a higher mobility, 2 to 3x higher. So the detector frame rate can achieve 50 frames per second. It's similar with the CMOS device. So also, we also can reduce our noise level around 10% to 20% for the lower dose requirement. So IGZO-TFT has a larger size benefit than CMOS. And the second one, of course, CMOS is still very good. So we will -- our second approach will be to cooperate with our partner to build our CMOS with the PLP technology. So I think we can make some differentiation in the CMOS market. So you can see that this page, finally, some of the technology and the II will be terminated. So finally, only the TFT glass and the CMOS will maintain in this market. So that means the InnoCare can do not only for TFT but also IGZO at the same time, and we are leading right now. So that's our good opportunity. So here -- so with the explanation of the previous slide, so I think it could be more easier to understand our growth in 2024. So first one, the mass production for the new products. So first important thing is the Gen 5, 43 sites from Q4 last year and achieved more than 3,000 pieces and it can have the 20% cost reduction than before. And second one is InnoCare IGZO technology. So InnoCare is the first TFT company to introduce X-ray sensor market. So main application now is dental Cone Beam CT market now. But actually, for CM for surgery use is also adopted by the joint system makers now. So actually, it's larger than 50,000 pieces shipment by accumulation base so far. And third one, we have a very strong performance in emerging markets. So local medical system integrator of each country are trying to build their own strength and brand based on the government support, especially after COVID. So medical imaging digitalization is also supported by each country. Therefore, India and South America are the major areas to increase the demand of X-ray detector. Fourth, regarding the Chinese market. Chinese market is still struggling, but actually, we can see some good signal. Actually, China market was quite good during the COVID era, but it's become slower from the 2023 because of the local economic situation. So right now, I think we can see some good signal because the government support the new replacement subsidy and the lower inventory level at the channel side will encourage this kind of demand. So here, we show our product portfolio. So InnoCare is the only one company we can produce the X-ray detector from TFT, CSI coating, real IC bonding and FPG detector assembly in one building in Thailand. Our business model are the total solution provider, and we can provide our diversity solution to different customers for what they need and to create our value. So from that chart, so with the whole X-ray detector market changing, so actually, we are shifting our product portfolio from a pure TFT substrate to the open cell. Open cell means TFP with CSI and the real IC and to the OEM or ODM solution for detector. And OEM/ODM actually contribute around 30% of the sales and the CSI solution also contributed more than 40%. So this kind of change help us to increase our revenue and profit in the last year. So -- but anyhow, we will still keep our different business models from the TFT, open cell and OEM/ODM for our different customers' demand. And the right chart shows that our progress of the growth of our ODM solution. So it's quite good from last year. So we -- the joint customer released their evaluation for our ODM generate models and ready for the mass production from this year. So we are expecting a very good growth for coming years. So sensor technology is InnoCare's core competitiveness. So diversity business models from the sensor device and OEM/ODM and system solution for inspection application are the service value for our customers. So we are aiming for the directions to create value for the customer and ourselves. So first one, go advanced technology for our technical capability, go broader market for the different application and go higher value for our customer certification with our hardware and software service. So this page is regarding the device. So InnoCare, yes, of course, we are former Innolux . We are very dedicating the X-ray sensor technology for more than 20 years. So there are 3 major trends. First one, the new technology collaboration, customized service and long-term customer relationship and keep our leading position in this market. So we are exploring our technology from TFT to CMOS and even IR infrared with the cooperating partners from the medical to inspection industry. So OEM/ODM service, actually, for X-ray detector market, price is also getting sensitive and challenging no matter for emerging market or developed market. So recently, the tariff topic is also changing the whole ecosystem. Also, every country try to establish their medical system much robust and resilient after COVID. So right now, InnoCare is supporting our different regional customers to provide OEM/ODM solutions from the sensor design, supply chain management, manufacturing and medical regulation certificates. Lower cost with higher performance is still essential factor for the customers' requirement, no matter for brand customers or emerging market. So we are working with our local partner to build our repair line or even assembly line in different regions from the Q4 of this year. So with this kind of local service operation, not only a tariff issue can be handled and the faster response also can be fulfilled. This page shows our different kind of service, the inspection system. Actually, it's the nonmedical, but actually, we realize that it's a really good market, even it's also very challenging. So the AXI, the market is still rapid growth market for different applications. So we built up our capability from key components like detector, X-ray tube and the software for the imaging processing and the system integration and even high-end 2D, 3D inspection system during these years. So you can see that we have many installation at our different customers, and it covers different market. So from the agriculture, sports, ICT, automotive industry. And right now, we are aiming the high-end semiconductor and the PLP industry. So X-ray inspection is the best way or even the only way to inspect the deep inside of the object. Recently, the AI chips need many 3D dimension structure. So we are working with Innolux PLP team now to develop the total solution for TGV inspection. So how to combine the AXI solution, AOI solution and the infra inspection can improve the effectiveness and the productivity for manufacturing and quality control. Okay. So that's our outlook for this year. With our growing strategy for new technology, new product and the new market, so that's what we want to aim for this year. First one, we still need to increase and to improve our profitability. So to increase our profit through the first one, optimizing the product portfolio and second one, reducing the product cost. So we will keep -- we will keep migrating our mainstream model from Gen 4 to Gen 5. So our -- another new model, 43x35 size panel will be the mass production from Q2. And our CSI coating also can create the higher performance like 80% higher EQE and lower the material cost by efficient production. And second one, how to expand -- how to expand in the emerging market. So in order to expanding the emerging market continuously, the local assembly line will begin from Q4, and it can increase the tender project opportunity in the emerging market. Also, the local service like repair RNA can enhance the relationship with the customers. The third one, the -- for the ODM, how to strengthen our ODM. So we need to engage with the joint brand makers and the local team of the emerging market, they will continuously drive our growth continuously. Fourth, to deepen the partnership with the system integrator in different markets like in India, U.S. and the EU, so it can bring more business chance for the win-win situation. And finally, regarding the AXI, I think the AXI market is still growing and become bigger for different applications. So I think from this year, we will be more focused on the high-end AXI category. Then we have our group parent company, Innolux and they are changing their kind of different direction for the semiconductor. So we will work with the Innolux PLP team for the PLP and the semiconductor application to catch up with the AI growth. I think that's our outlook for the InnoCare.

[Operator Instructions] [Foreign Language] [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]