Integrated Micro-Electronics, Inc. (IMI) Earnings Call Transcript & Summary

Ladies and gentlemen, and welcome to the 2020 Annual Stockholders Meeting of Integrated Micro-Electronics, Inc. We will begin the proceedings with the Philippine National Anthem. [Presentation]

Presiding over this morning's proceedings is the Chairman of IMI's Board of Directors, Mr. Jaime Augusto Zobel de Ayala.

Thank you very much. Thank you, Jimmy. Good morning. The annual stockholder's meeting of IMI will now come to order. For the first time in our history, because of the current health crisis, we're holding this meeting in a virtual format. Welcome to everyone who's here with us today. Let me welcome our fellow stockholders who've joined us in this live webcast of these proceedings, and thank you to our shareholders who are participating in this meeting through our voting in absentia system or their appointment of the chair as proxy. Thank you for being here with us today. Joining me in this meeting as presenters are: Arthur R. Tan, our CEO and President; Mr. Jerome S. Tan, our Global CFO and Treasurer; Mr. Solomon M. Hermosura, our Corporate Secretary; Mr. Anthony Raymond Rodriguez, Head of Investor Relations; Ms. Joanne M. Lim, our Assistant Corporate Secretary; and 2 of our independent directors, namely, Sherisa P. Nuesa, the Chair of the Corporate Governance and Nomination Committee of our Board; and Edgar O. Chua, the Chair of the Audit and Risk committee of our Board. The other members of our Board and other offices and representatives of SyCip Gorres Velayo & Company, our external auditor, are also joining the meeting through this live webcast. Welcome again. Mr. Secretary, have the stockholders of the corporation been duly notified of this meeting? I think we can -- go ahead, Mon.

Mr. Chairman, on March 23, 2020, we sent to our stockholders of record, as of February 28, 2020, the notice of the annual stockholders' meeting and the definitive information statement in 3 weeks. First, by e-mail to all stockholders who have provided us with their email addresses; second, by posting on our corporation's website; and third, by disclosure in the Philippine Stock Exchange. In addition, Mr. Chairman, the notice was published on March 27, 2020, in the Philippine Daily Inquirer. Accordingly, Mr. Chairman, our stockholders have been duly notified of this meeting in accordance with our bylaws and applicable rules, including our internal guidelines on participation in stockholders' meeting by remote communication and voting in absentia under extraordinary circumstances, which are embodied in our definitive information statement that the Securities and Exchange Commission approved.

Thank you. Mr. Corporate Secretary, do we have a quorum at this meeting?

Mr. Chairman, for the quorum, there are present in this meeting, owning at least 1,488,953,894 shares, representing 67.15% of the 2,217,293,215 total outstanding shares. Therefore, we have a quorum, and this meeting may proceed. Mr. Chairman, we will reflect in the minutes, the breakdown of the stockholder -- of the stockholders present in terms of their mode of attendance and the percentage of the outstanding shares that they own as well as the number of those joining us in the live webcast of the meeting.

Thank you very much, Mr. Hermosura. Though we are holding this meeting in a virtual format because of the government regulations that prevent us from conducting in-person meetings, we'll strive to provide our shareholders the opportunity to participate in this meeting to the same extent possible as an in-person meeting. Our Corporate Secretary, Mr. Hermosura, will now share the rules of conduct and voting procedures for this meeting.

Mr. Chairman, the rules of conduct and voting procedures are set forth in the definitive information statement and in the explanation of agenda items, which forms part of the notice of the annual stockholders meeting. I would just like, Mr. Chairman, to highlight the following points to our stockholders who are joining us on our live webcast. Number one, stockholders who registered under the voting in absentia and shareholder system or who notified the company by e-mail to [email protected] by April 8, 2020, of their intention to participate in this meeting by remote communication may send their questions or comments at [email protected]. Mr. -- number two, Mr. Anthony Raymond Rodriguez, our Head of Investor Relations, will read the questions or comments received before 9:30 a.m during the Q&A period, which will take place after other matters under Item 8 of the agenda. Management will reply to questions and comments not taken up during the meeting by e-mail. Number three, as indicated in the ballot for the voting of shareholders, there are 5 resolutions proposed for adoption by the stockholders in this meeting. Each proposed resolution will be shown on the screen as the same is being taken up. Number four, stockholders could cast their votes on these proposed resolutions and in the election of directors beginning March 27, 2020, through our voting in absentia and shareholder system. The polls will remain open until the end of this meeting for stockholders who had successfully registered to cast their votes electronically using our voting in absentia and shareholder system. And lastly, Mr. Chairman, we have tabulated the votes cast as of April 6, 2020, after the end of the proxy validation process. Those votes are from stockholders owning 1,488,927,128 voting shares, representing 99.99% of the total voting shares represented in this meeting and 67.15% of the total voting outstanding shares. I will be referring to this preliminary tabulation when I report the voting results throughout this meeting. The results of the final tabulation of votes with full details of the affirmative and negative votes and abstentions will be reflected in the minutes of this meeting. Thank you, Mr. Chairman.

Thank you, Mr. Secretary. The next order of business is the approval of the minutes of the Annual Stockholders Meeting held on April 8, 2019. An electronic copy is available on the website of the corporation. I'll now ask our secretary to present the proposed resolution and the voting results to this item.

Mr. Chairman, management is proposing the adoption of Resolution No. S-01-2020 for the approval of the minutes of the annual meeting on April 8, 2019. The resolution is shown on the screen. Shareholders owning 1,488,927,128 shares or 100% of the total voting shares represented in this meeting have voted in favor of the resolution. Therefore, Mr. Chairman, Resolution No. S-01-2020 has been approved.

Thank you, Mr. Secretary. We now move on to the next item on the agenda, which is the annual report, consisting of the message from the Chairman, the message from the Chief Executive Officer and President and some audio-visual presentations. My prerecorded message will now be shown. Thank you. My fellow shareholders, good morning. 2019 was an exceptionally challenging year for IMI as the company experienced many of the same geopolitical headwinds that contributed to the world economy's slowest year-over-year expansion since the financial crisis a decade ago. Global economic growth was a modest 2.9%, amid a general slowdown in more advanced economies. While their individual economies remained relatively stable, the United States and China continue to engage in a trade conflict, whose impact was felt profoundly by those of us who do business within these markets. Meanwhile, European economic momentum decelerated, largely over the prolonged uncertainty of Britain's exit from the European Union and lingering social unrest in other key markets across the continent. These macro headwinds, together with the disruptive changes currently sweeping many key industries, have created a challenging environment for worldwide manufacturing and trade. In the electronics space, intensifying competition and increasing demand posed operational challenges to players like IMI and resulted in longer fulfillment times and higher material costs. Meanwhile, global automotive unit sales likewise experienced weakness as the industry's megatrends of connectivity, autonomy sharing and electrification take hold. In the face of these market conditions, we take comfort in the fact that the company has continued to demonstrate resilience. Its ability to plan and prepare for the future has allowed it to consistently weather the volatile, rapidly evolving nature of the global manufacturing space. IMI also retains and continues to invest in the specialized technical resources that will keep it competitive as its industry and competitive cycles turn. These include proprietary capabilities in power electronics, camera and vision and connectivity components to name just a few. The company also retains the competencies that have formed the foundation of its manufacturing prowess, such as design and development, advanced manufacturing engineering, automation and quality systems, which have in turn allowed it to selectively expand beyond the electronics space into AC Industrials core manufacturing platform. Most of the AC Industrials key products and technologies, including the export-oriented motorcycle joint venture with KTM AG and its specialty photovoltaics arm, Berlin Solar, are supported by IMI. The company's manufacturing expertise has enabled these strategic investments to not only locate manufacturing in the Philippines, but also to help serve their respective global markets. The year 2020 also represents a landmark year for IMI. The company celebrates not only its 40th year in existence but also its 10th year as a publicly traded company. It remains well positioned in the electronics manufacturing space as it ranks among the Top 20 in the world in terms of revenue and fifth in automotive-related business. We will continue to build on these strengths as we leverage key technologies to ensure IMI's continuity and relevance in an evolving environment. Beyond manufacturing, IMI will continue transforming itself to remain a leading corporate citizen in the coming years as the world digitizes, grows more connected and more focused on sustainably doing business. As a final note, I'd like to thank our Board of Directors for their guidance and engagement, our management and staff for their untiring dedication and commitment and our global stakeholder community for their consistent support. We believe IMI's best days continue to lie ahead of it, and we look forward to sustainably building shareholder value in the years to come. As a parting thought, let me end my message with a video that shows how IMI is operating and moving towards a sustainable future. Thank you. [Presentation]

Thank you, Mr. Chairman. Members of the Board, good morning, and fellow shareholders. I just want to take this moment to thank everyone as well as really reiterate what the Chairman has said that these are unprecedented times, but what I do take comfort in is that the core technologies that enable us to do this video assembly right now as well as all the different digital technologies that is helping the world transform and operate are the core technologies that IMI is involved with. And so without further ado, here's my message to all of you. Mr. Chairman, members of the Board, my fellow shareholders, ladies and gentlemen, good morning. Let me start by reflecting on 2019 on the achievements that we were able to accomplish and at the same time, learning from the challenges we were able to overcome despite the business constraints we were faced. Last year proved to be more volatile than we had anticipated as it brought about heightened risk and uncertainty that we are now facing. Geopolitical issues further strained the electronics manufacturing industry that has just begun recovering from a component supply chain imbalance, which had a peak the year prior. Along with a confluence of other factors, key business cycle indicators pulled back such as global semiconductor sales and equipment manufacturing sales, both of which sank, 12% and 10.5% year-over-year, respectively. Across the manufacturing end markets, automotive emerged as the most affected segment, reflecting the negative impact of the U.S.-China trade dispute and market adjustments to new emission standards. This caused production to drop by 4% globally led by China, whose automotive output declined by 8%. Against this backdrop of weaker trading conditions, revenues slightly weakened year-over-year by 7% to USD 1.25 billion, following a slowdown in consumer, telecommunications and industrial segments. The slowdown in global growth, strains on supply chain and significant investments in capacity and technical capabilities into the future growth areas that increased our company's overhead expenditures brought full year performance to a net loss of $7.8 million. However, despite the headwinds, the pipeline remains healthy with the significant new projects we won in 2019 worth over $400 million of annual revenue potential. In fact, as we continue to drive the development of next generation platforms, we were able to grow our automotive segment by 9% from the previous year, completely outpacing the market. Business wins related to the automotive camera continue to rise and provide IMI with leverage in offering more advanced technologies such as mirror replacement and camera video system-level modules. Revenues in this group is seen to double to USD 124 million in the next 5 years. Beyond sales and profitability, our reputation as a leading intelligent solutions provider in automotive, industrial and aerospace markets, continue to reinforce our partnerships with more opportunities in face of newer and faster technologies. In many ways, IMI is learning and finding its niche in higher-value markets and expanded levels of standard business models in electronics manufacturing. With our experience and reputation, we get to collaborate with the best in the industry in project management, from design concept to manufacturing and delivery, while investing to our future. Just to illustrate, back in 2018, among the products we built, only 30% of those were classified as belonging to emerging technologies. By the end of 2019, that number rose to 44%. These activities and developments are all consistent with IMI's trajectory over the past 10 years. Over this period, IMI registered a compounded annual growth rate of 13%, resulting in the tripling of the company's global size. Since 1980, IMI has always adhered to 2 principles as we continue to strive for growth. That we operate and deliver with the highest level of commitment and service to our current customers. And at the same time, that we have the right people, skill set and technologies that will enable us to withstand negative market forces in the foreseeable future. Arguably, the electronics industry is among the most volatile market in the world. As we learn and benefit from our experiences in the past and present, IMI, now a global company that has started as a domestic Philippine integrated circuit assembler, has become among the Top 20 largest electronic manufacturing EMS company in the world and, at the same time, the fifth largest in terms of automotive electronic manufacturing. Today, in addition to its independent mandate as one of the world's leading electronics manufacturing service firms, IMI holds the core manufacturing competencies of AC Industrials, Ayala's Industrial Technologies Group. IMI's manufacturing prowess will continue to enable AC Industrials and its portfolio of businesses in automotive engineering and design, vehicle distribution and retail and smart solar technology. As a global company, IMI will continue to be a leading solutions provider, partner in mobility, connectivity and smart energy spaces, providing higher value contributions in design collaboration, manufacturing and delivery to major brands for regional manufacturing equipment manufacturers and Tier 1 suppliers in the global automotive and industrial segments. As IMI enters its 40th year in 2020 and with the digital age at the forefront of global megatrends, our corporate values of integrity, customer focus, concern for others in excellence remain as strong as ever in our more than 17,000 employees worldwide. We believe these are the true drivers of success that will continue to push us at the edge of innovation, creativity, collaboration and design. At the same time, we will remain true to our aspirations and our goals as we integrate sustainability, risk management and corporate governance in our global strategies. We share in the commitment our parent company, ACI, and principal parent, Ayala Corporation, to address long-term targets in the UN Sustainability Development goals. Today, with our 22 manufacturing sites in 10 countries providing services beyond the standard deliverables of electronic manufacturing, we will continue to aggressively press forward in exploring synergies, partnerships and ventures in the areas of new technologies and markets. With the age of intelligence and digitization, reinventing conventional business, supply chains across global markets, we at IMI put in place the essential elements needed for us to work with the leading players in the world. As I speak, the current challenges of the coronavirus pandemic affecting the entire global market in unprecedented ways is upon us. It is a very dynamic situation as all countries and their respective economies will enter and exit this situation independently. This single event may have hastened a new world order in the way our lives and how we operate our businesses will change. As a global manufacturing partner, we have had systems in place to prepare for these kinds of market disruptions. These systems are currently enforced in some of our sites today. In addition, our diverse manufacturing capabilities across all major markets, puts IMI in a unique position to not only survive this event but to actually rebuild and emerge stronger and better. Today, part of our operations sustain, support most of the essential industrial and medical products that the world desperately needs. To all our stakeholders, thank you for your trust and guidance and support that have enabled us to remain a robust and enduring company now and for the decades to come. Together, we are now ready for more giant leaps in the future. And to close, I would like to show you a video highlighting the capabilities of IMI as we move to a digital and at the same time, a very more -- much more sustainable future. Thank you very much. [Presentation]

Thank you very much, Art, for that presentation and for the videos. I hope the stockholders found that informative. If I could now ask the secretary to present the proposed resolution on this item and the voting results.

Mr. Chairman, management is proposing the adoption of Resolution No. S-02-2020 for the noting of the corporation's annual report and the approval of the consolidated audited financial statements of the corporation and its subsidiaries as of December 31, 2019, as audited by its external auditor, SyCip Gorres Velayo & Company. The resolution is shown on the screen. Mr. Chairman, stockholders owning 1,487,327,470 shares or 67.08% of the total outstanding shares and 99.89% of the shares represented in this meeting have voted for the adoption of the resolution. Therefore, Mr. Chairman, resolution No. S-02-2020 has been approved.

Thank you. Thank you, Mr. Secretary. We now move on to the next item in the agenda, the ratification and approval of all the acts of our Board of Directors and officers since our annual stockholders meeting on April 8, 2019, until today. Mr. Hermosura will explain this matter and present the proposed resolution together with the voting results thereon.

Mr. Chairman, our Board of Directors and management seek gratification of all the acts and resolutions of the Board, the Executive Committee and other Board committees exercising powers delegated by the Board, which were adopted from April 8, 2019, until today. These acts and resolutions are reflected in the minutes of the meetings, and they include the election of officers and members of the various Board committees, revisions of the related party transaction and insider trading policies, updating of the list of authorized representatives and banks signatories, treasury matters and matters covered by disclosures to the Securities and Exchange Commission and the Philippine Stock Exchange. Stockholders ratification is also being sought for all the acts of the corporation's officers performed in accordance with resolutions of the Board, the Executive Committee and other Board committees as well as the bylaws from April 8, 2019, to date. These acts were performed to implement the resolutions of the Board or its committees or as part of the corporation's general conduct of its business. Mr. Chairman, we are showing on the screen Resolution No. S-03-2020. Stockholders owning 1,487,243,470 shares or 67.07% of the total outstanding shares and 99.89% of the shares represented in this meeting have voted for the adoption of Resolution No. S-03-2020. Therefore, Mr. Chairman, the resolution has been adopted.

Thank you, Mr. Secretary. The next order of business is the election of the 11 members of the Board of Directors for the ensuing year. Mrs. Sherisa P. Nuesa, Chairperson of the Corporate Governance and Nomination Committee, will please explain this item.

Mr. Chairman, in accordance with our bylaws and manual of corporate governance as well as the rules of the Securities and Exchange Commission, following stockholders were duly nominated to the Board of Directors of the corporation for the ensuing term: Mr. Jaime Augusto Zobel de Ayala, Mr. Fernando Zobel de Ayala, Mr. Arthur R. Tan, Mr. Diosdado P. Banatao, Mr. Gilles Bernard, Mr. Jose Ignacio A. Carlos, Mr. Edgar O. Chua, Mr. Delfin L. Lazaro, Mr. Jose Teodoro K. Limcaoco, Ms. Sherisa P. Nuesa and Mr. Rafael C. Romualdez. Mr. Edgar Chua, Mr. Diosdado Banatao, and yours truly, Sherisa Nuesa have been nominated as independent directors. The Corporate Governance and Nomination Committee of the Board has ascertained that the 11 nominees, including the 3 nominees for independent directors are qualified to serve as directors of the corporation. All the nominees have given their consent to their respective nominations.

Thank you, Sherisa. Mr. Secretary, may we have the results of the election?

Yes, Mr. Chairman. Each of the 11 nominees for directors has garnered at least 1,448,564,045 votes. Given this, I certify, Mr. Chairman, that each of the nominees has received enough votes for election to the Board. And that Resolution No. S-04-2020 for the election of the 11 nominees to the Board has been approved. We are showing Resolution No. S-04-2020 on the screen, Mr. Chairman.

Thank you very much. Before we proceed, let me also take this opportunity to thank Nishimura-san for his support and service all these years. And I'd also like to welcome back Mr. Diosdado Banatao, and to thank him for his willingness to serve again as Director of IMI. The next item on the agenda is the election of the corporation's external auditor. May I request Mr. Edgar O. Chua, Chairman of the Audit and Risk Committee, to enlighten the stockholders on this item. Ed?

Mr. Chairman, the Audit and Risk Committee evaluated the performance during the past year of the Corporation's present auditor, the firm of SyCip Gorres Velayo & Company, and found it satisfactory. Therefore, the committee and the Board of Directors have agreed to endorse once again the election of SyCip Gorres Velayo & Company as the corporation's external auditor for the present fiscal year for an audit fee of 4,172,500.

Thank you very much, Ed. I'll now ask our secretary to present the proposed resolution of this item and the voting results.

Mr. Chairman, management is proposing the adoption of Resolution No. S-05-2020 for the election of the corporation's external auditor and fixing of its remuneration. The resolution is shown on the screen. I am pleased also to report Mr. Chairman that shareholders owning 1,488,927,128 shares or 100% of the total voting shares represented in this meeting have voted for the adoption of Resolution No. S-05-2020. Therefore, Resolution No. S-05-2020 is now approved.

Thank you, Mr. Secretary. Mr. Secretary, are there other matters that require consideration by the stockholders?

There are none, Mr. Chairman.

If that is the case, then we will now address questions and comments from the stockholders. Our Investor Relations Head, Mr. Rodriguez, will read aloud the questions and comments together with the names of the stockholders who sent them. As mentioned by Mr. Hermosura earlier, management will reply by e-mail to questions or comments not taken up during this meeting. Thank you for your patience in this new process that we have. Mr. Rodriguez?

Mr. Chairman, there's a question coming from Marlowe R. Macatiag. How is the global operations affected by the COVID-19 pandemic?

Thank you very much. If I could ask Mr. -- our CEO, Mr. Art Tan, to address this issue?

Yes, Mr. Chairman. I guess the way that we would view it is that this pandemic has affected the global -- the world in different time frames. Our facilities in China were the first ones to be affected by this virus last February of this year. After imposing very strict health regulations in our plants and actually in the whole country, we are happy to say that all our operating sites in the country have been fully recovered and are now back to complete operating capacity. However, as we are all aware, this pandemic has now traversed to different areas in the world. The next region that affects us to feel the brunt of this virus was actually here in the Philippines. The Philippine government actually instituted an enhanced community quarantine measures in the middle of March and is actually still ongoing. Accordingly, our facilities in Laguna and Cavite and now most recently, Cebu, has also been affected with a partial shutdown since then. The IMI Philippines team has worked tirelessly to increase our operating workforce by being able to provide as being part of the global supply chain for the essential manufacturing products that is needed, and this includes telecommunication, industrial, infrastructure as well as medical products. To date, we started with 100 employees at the beginning of the quarantine, and now we have approximately close to 1,000 employees that we have working on a daily basis. We were able to safely adhere to these requirements by instituting actually strict health protocols, arranging transportation logistics and now providing in-house accommodation facilities and closely coordinating this with the local government units. Apart from these measures, our management teams are also in touch with each of our customers to enact business continuity plans and also garner their support for actually sustaining us with additional cost implications to their products. Most recently, however, Mexico, this month, has now decided to go and expand its shutdown of nonessential activities in the private sector. A number of other operating facilities across the world are now also prioritizing production for our customers in the medical segment in its fight against COVID-19. These components will be used in machines, production of medical textiles, syringe filters, disposable pharmaceutical garments, such as surgical masks and gowns, and we're also proud to be part of the VentilatorChallengeUK through our subsidiary in STI London. Through STI, we have gained a consortium with the industrial technology and engineering businesses across aerospace, automotive and medical sector to produce critically needed medical ventilators. In all of these cases, I'm happy to say that in spite of these challenges, IMI remains to be very relevant to the industrial community and the medical community globally. And unfortunately, it has affected our automotive business with -- but we could see in the current format that mobility continues to be a core requirement in being able to sustain our current needs. And so as we look forward, we're continuing being able to be tapped on by the global supply chain to provide flexibility and capability across the different markets. That's it, Mr. Chair.

Thank you. Thank you very much, Art. Mr. Rodriguez, other questions from the investor community?

Another question coming from Blesilda Santiago. Why do you choose to focus on the mobility segment in driving IMI's growth?

Yes. Thank you very much. I think that's an exciting new area. Obviously, the whole area of living spaces in homes and offices have been a central component, I guess, of this global digitization movement, and now it's basically moving to the whole mobility segment, which involves the automobile industry and perhaps Mr. Tan can, again, maybe expand on this issue. It's an exciting new space.

Yes, Mr. Chairman. The only thing I would add there is that I think mobility will continue to be a future driving force for the whole world. And it is much more -- seen more so today in our current situation. As you can see, with the aerospace industry grounding to a halt and the shipping industry also being challenged. A lot of our requirements for being able to continue to provide the food and the necessary critical items in the current environment is actually through land transport. And this is where the transition is going to happen in the near future where personal vehicle requirements may be challenged and may be slower, but the commercial vehicle requirement will continue to be very robust. And I'm happy to say that in the commercial vehicle environment is where the majority of these forward technologies that we're involved with are actually going to be utilized. So we're going to have to go to a level of environment where the requirement for less physical contact between individuals and also dependence on being able to provide mobility through an automated environment will hold true. A lot of it is also going to be at the vision system that we're very much looking at right now. I mean we're able to perform this shareholder meeting by the telecom industry backbone as well as the vision system, of which VIA and our manufacturing sites are very much involved with. And so I see that the next transition into the mobility space is still going to happen. It's going to happen in a different pace and more so in the commercial space. That's it, Mr. Chairman.

Yes. Thank you, Art. Mr. Rodriguez, other questions.

Question from Aldrin Lopez. How do you see IMI recovering from the COVID-19 crisis?

Thank you very much. Well, clearly, this pandemic has disrupted supply chains globally. We're not the only ones. The whole world has been disrupted by this almost existential shift, I guess, in the way we all work in the capital system. Certainly, I think Art will be in a position to expand more on this. But as a major shareholder group, together with our partner, Resins, we've given the management team of IMI as much support as we can to be able to ride this out. These are challenging times for everyone, not just for ourselves. And rebuilding that supply chain will not be easy. But then again, we have a global footprint, and we have advantages that others don't. So maybe, Art, if you don't mind expanding on this issue?

Yes, Mr. Chairman. But just to alleviate, that those points that you mentioned are exactly the same points that we feel that we're very confident. We're very diverse geographically. And I think I can also ask our CFO, Mr. Jerome Tan, to expand a little bit and explain the different activities that are happening at our different sites and how we're addressing this in order to show that we are recovering in some level across the different world. Jerome?

Yes, Art. Certainly, there's a short-term impact given the shutdown of the business that we see but we actually see new opportunities, for instance, in China, where we had a shutdown from beginning of February until March 10, it has started to normalize. And it has recovered the lost sales that we have in that period in the areas of the medical field and also on the 5G deployment in China. So we're seeing at least for the first half, China will be back on track. So hopefully, that is sustainable. In addition, I think Art mentioned earlier that we do see strong demand now in our vision system, particularly for VIA. The challenge there is the LCD supply chain. So VIA is not able yet to take advantage of the surge in demand beyond our expected demand due to some shortages, but we do see that as China start to open up, that shortage in the LCD supply would start to be alleviated. I think the other areas that we see is in the U.K., where Art mentioned that we are part of the consortium for the VentilatorChallengeUK, which we expect to start production -- already starting production and ramping up in the next few weeks. So definitely, there are short-term challenges, but it also gives us new opportunities that we see opening up in the field of the medical area and more on the efficiencies.

Thank you. Thank you, Jerome. Mr. Rodriguez?

Question from Joel Pena. Is there going to be a strategic shift in IMI after the pandemic?

Thank you very much for that question. Obviously, we've been trying to take advantage at IMI of the megatrends in mobility, connectivity, smart energy. We've also tried to build ourselves up as a unique platform for people who need manufacturing of all kinds. Perhaps I could turn that to Mr. Tan to expand on this topic further.

Thank you, Mr. Chairman. No, in short term, no, I think the strategy that we've had in place in focusing into these key criterias of mobility, connectivity and smart energy still holds very, very clearly. And if we would just look at the current situation and how the new normal is going to transpire with the rest of the world. Number one, as you can see, the social distancing and physical contact would be something that we will have to deal with in the future. And the dependence on the technology of being able to provide now telecommunication backbone as a core infrastructure enabled to be able to do business and as human beings, the only possible way for us to be able to do this is through 2 major points of interface. And this is by vision and by haptics. Both of which are -- we are at the core technology through VIA and VTS. As far as the telecommunication backbone is concerned. As we all know, this next-generation of interconnectivity of being able to now be able to do the sensoring and tracking of all the different dynamics necessary in order to contain this virus as well as in the future, being able to do the artificial intelligence of being able to know what are the things that are necessary in order to combat the next-generation of pandemic that may be happening. These are all anchored behind the 5G technology, which we are very much involved with in putting together this infrastructure on a global basis. So those 2 strategies remain very strong. The next one would be the smart entity. As we can see, the effects on the global world right now is moving towards more focus on renewable energy because this situation is not going to turn in itself. And again, our ability to be able to do and harness that into the power module side for being able to drive the different transportation needs of this economy in a very autonomous environment, again, holds very close to our strategy. So Mr. Chairman, and to the rest of our shareholders, I firmly believe that the strategies we have set for continues to be very relevant and actually going to be very, very important in the very near future.

Thank you. Thank you very much, Art. Mr. Rodriguez, are there any other questions?

There are no more questions or comment, Mr. Chairman.

Thank you. Thank you very much, Mr. Rodriguez. And to the stockholders, thank you for your questions. Happy to have addressed them in some way, and I hope this has given you some insights as to how the company is moving forward. So I guess, Mr. Secretary, there being no other comments or questions from the stockholders, I guess we can consider the meeting adjourned. Thank you very much to everyone for having joined us here today. We will be posting a link to the recorded webcast of this meeting on our website. Stockholders may raise issues, clarifications and concerns on the meeting conducted within 2 weeks from posting of the link by sending an e-mail to [email protected]. It's up there on the screen. If we can leave that maybe on screen so that people can take note of the email address. Let's just leave it there for a minute. So it's [email protected]. Thank you very much. I think we can take that down now. Thank you again to everyone for joining us. I wish everyone continued good health as we press on and move forward during this challenging season. Please take care. Stay safe. And again, thank you to all the stockholders for having joined us here today. It's been a pleasure to have you here, and I hope you found this informative. And to our Board of Directors, again, thank you for your engagement, and we look forward to continuing to work through this difficult period. Thanks very much. Thank you.