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

And welcome to IMI's first quarter operating and financial highlights. With us this afternoon is IMI's President and Chief Executive Officer, Arthur Tan; and our CFO, Jerome Tan. Our President and CEO, will discuss on the operating highlights to be followed by the financial highlights by our CFO. After the presentation, we'll open the briefing for your questions.

Thank you. Thank you, Anthony. Good afternoon to everyone. And my appreciation for everybody to find time to join us this afternoon. I would like to, as was stated, I'd like to give a brief accounting for the first quarter of 2021. I think before I start, I just want to say that it was interesting to hear the U.S. President talk about his U.S. plan, how that is going to affect, I think, the global economy in itself aside from the U.S. economy. So moving forward, what I'd like to touch on is, again, the global economy. I think the global prospects remain to be uncertain, 1 year into the pandemic. And this is brought about by most countries have different vaccination protocol and the rollouts are betting with lesser cases, providing hope and a brighter outlook for these different countries. However, there are virus mutations that we're now seeing that -- and it's accumulating definite human toll that raises concern, especially in the number of countries like India and Brazil. Global growth is projected at 6% in 2021 and then a slight moderation to 4.4% in 2022. Medium-term loss for the global economy are expected to be smaller than in the aftermath of the global financial crisis. The upgrades in the global growth for 2021 and 2022 are mainly due to upgrades of the advanced economies. And this is, again, due to the fact of how each of these countries are able to manage the vaccination and then the opening up of their economies, particularly to a sizable upgrade for the United States that is expected to grow at 6.4% this year. And this is significant. When you attribute this size of growth to the largest economy in the world, the positive assessment for the U.S. is highly driven, of course, by the stimulus package that just got passed of $1.9 trillion and which came into force starting last month, and it's going to triple down into the different levels of businesses within the United States that's going to have a triple effect to the rest of the world. Among the advanced economies, the United States is expected to surpass its pre-COVID -- PDP level this year. While many others in the group are expected to return to pre-COVID levels by 2022. Next, please. On one of the indicators that we've always used is the global manufacturing purchasing managers index, or the PMI. And just to recap, as you know, anything above 50 is an expansion, anything below 50 is a contraction. The global manufacturing PMI continued to be bright at the end of the first quarter, despite the potential for growth to be stymied by rising costs, inflationary pressures, and what we're seeing [Technical Difficulty] Global manufacturing PMI stood at 55 in March. This is a 121-month high, and it's the best leading since February of 2011. However, the ASEAN manufacturing PMI rose to 49.7% in February and then back above the neutral 50 level to 50.8 in March. This signaled a renewed improvement in the ASEAN manufacturing condition. Of course, we know that ASEAN is with all the different countries having different cycles of how they're dealing with the pandemic is also being affected. Indicators are particularly positive in territories of IMI's customer and end markets, particularly in Germany and the rest of the Eurozone. Likewise, China being one of the earliest rebounders in the manufacturing space in 2020, still maintains at PMI growth outlook of 51, which is in an expansion state. Global electronics PMI rose to 59.9% in March, as I said, up from 57.8% in February, with the upturn led by the communications segment. However, the rapid -- in rise in electronics production has also triggered a sharp upturn in raw material input prices for electronics in the recent months. The entire market has been experiencing longer lead times, but IMI, as you know, is actively mitigating the effects by closely coordinating with both the supply side and our customers. Next, please. So diving into the specific markets that we're heavily focused on. On the electric vehicle side, then this is on the mobility part. As countries around the world taking an active initiative in controlling the rate of environmental degradation, the demand for electric vehicles have been booming. The regional shows that the global sales of electric vehicles in 2020. And this is while there's been an active pandemic going through the entire world, increased by 39% year-on-year to 3.1 million units. The contrast against the sales decline of 14% on the total passenger market. So while the total passenger market actually declined in 2020, there was a 39% increase in number of EV vehicles. The number of EV vehicles will rise around 30 million by 2028, and that's a 33% increase from 2020 to 2028. And EVs will represent nearly half of all passenger cars sold globally by 2030. And I think you've seen already the pronouncement made by the largest OEMs in the world, putting a stake on the ground that by a certain year and normally around by 2030, that the majority of their offerings will all be environmentally friendly and EV-backed. This growth extends to enabling technologies, such as battery management systems, EV charging infrastructure systems. And this is focused -- forecasted, I'm sorry, forecasted to grow exponentially in the coming years. One of the key technological pieces that will unlock out of this innovation lies in IMI's growth -- one of IMI's growth pillar, which is the power module. And as we had projected, the power management system will play a major role in enabling next-generation platforms. The automotive power module market is forecasted to double within years. In spite of this simplistic view that electrified vehicle will be run purely by a battery management system, but in essence, will be run by a storage system -- storage energy system and then decoupled into the actual drive system of the vehicle, the key component that will remain to be true to any type of platform will be the power module. And in IMI, though we cater to both EV and the combustion engine vehicle components, we have seen a dramatic shift of customer requirements towards next-generation platforms. And in the first quarter of 2021, we already booked significant wins in the mobility space, totaling over $100 million of annual revenue potential, a significant portion of which is designed for the EV systems. Next, please. In the field of industrial IoT devices, what we see is the number of IoT devices worldwide is forecasted to triple from 8.7 billion in 2020 to more than 25 billion IoT devices by 2030. Today, the highest number of IoT devices is found in China with 3.17 billion devices, and the growth will be driven by industrial automation and the trend towards data-driven businesses in the industrial sector of we know, and this is coupled, again, by the other part of our focus market, which is smart energy. One of the driving segments in the market will be the final fruition of what we call the smart homes, which is estimated to have a mid-term growth of 25% per year. Apart from standard electronic security devices, new wireless solutions for HVAC controllers, integrated entertainment systems and access regulators where all of these will then be interconnected and either cloud-driven or server-based, which in turn also drives the need for more electronics inside the industrial space. Industrial automation market is expected to grow at about 9.3% from 2020 to 2027, and this high demand is attributed for the need for minimizing human contact to prevent the spread of the virus. Asset tracking market will reach $55 billion by 2026, growing at about 17% combined annual growth rate, and this is AI-embedded devices growing at a faster rate of 33%. While fleet comprises over 80% of the market, non-fleet asset tracking is growing by 18% faster. Asset tracking solutions are likely becoming more attractive for the sub 1,000 book value assets. This means that the asset tracking is now moving beyond high-value assets to even sub 1,000 value assets. Leading companies will integrate asset management, logistics, connected device security as combined solutions with the IoT-supported asset tracking market accounting over 90% of all connected enterprises and industrial solutions by 2030. And this is not just inside the industrial phase. This will touch everything from medical to home to even in the mobility space itself. So, these are the 3 large -- the 3 different markets that we look at that we've touched on and we tried to explain. And in that, is where IMI, as you know, have strategically positioned itself over the last decade. And if we were to say, is there any silver lining that we can attribute to this virus and the pandemic that has happened on a global basis, the major silver lining that I can say is that the adoption. And then the proliferation of all of these major megatrends that we said was coming in the future is -- has all been accelerated in exponential terms. And we're happy to note that IMI's capability in terms of technology, manufacturing, processes and in footprint on a global basis touches on all of these major shifts that is happening around us. So with that backdrop, I'd like to then dive into IMI and its financials. And I'll let Jerome talk about that. And if there's any more questions later, we can discuss that at the Q&A part after Jerome. Thank you.

Thank you, Art. Good afternoon, everybody. Jumping right into the financials. So, if you look at our Q1 results, our total group revenue closed at $358 million, up 28% versus Q1 2020, driven by continued strong demand. This actually, however, Q1 is muted by the component shortage that you probably read about that limited our growth in Q1 as well. So we estimate a revenue -- a miss of about 18 -- around $18 million to $20 million related to the component shortage, which we expect at least a significant part of that to be recovered in the next few quarters as the supply constraint starts to ease. In our segment, if you look at our core segment, auto, industrial, aerospace, defense, it's growing significantly in Q1 this year. Auto, up 20%; Industrial, up 67%; aerospace and defense, up 50%. Medical market is also up. That's the other sector we're starting to look at as in a way, not yet our core segment, but there presents quite a bit of opportunities for us, particularly in IMI and also in STI we're watching that space and that also grew versus last year. In automotive, in particular, we start to see strong growth in terms of new projects, and I'll talk a little bit about that in the later pages. So, we do see strong recovery also in terms of new projects in automotive. And we're starting to see traction also in terms of projects related to EV for automotive. In industrial, the strong demand as Art was pointing out earlier is the increase in the IoT devices, particularly in smart -- particular to IMI would be on the smart energy-related and asset tracking business that we have. The one segment that's a big challenge for us is the telecom infrastructure, where it shows a drop of 27% versus last year. That's also mainly because, if you recall, last year, 2020 first half, there was a strong buildup of inventory by our customers based in China related to the U.S.-China trade issue. So we don't see that build up anymore starting the second half of last year into Q1. so that also explains part of the drop in the telecom infrastructure segment. Next page, please. On the financial performance results. On the upper left-hand side, you'll see the quarterly revenue split. You'll see Q1 is below Q4. That's mainly coming off the strong Q4 that we have. And because of the challenges we have in the component shortage, we also have about $18 million to $20 million limited revenue growth in Q1. Going into the gross profit margin, you'll also see a drop in the gross profit margin to 8.8%. That is, I think, 2 main things driving that: one is the lower revenue. So that impacts the margin by about 130 bps. So we have a lower revenue, but we still maintain the same level of fixed costs similar to Q4. And then the other impact would be the component shortage that we see. The impact on the component shortage, this time around is less on the increase in the raw material prices, but more in the inefficiency as a result of the different lead times, the allocation or miss deliveries from the suppliers. So that created a lot of inefficiency in terms of the production. So you have downtime and then all of a sudden, you have overtime requirements, so it impacts both the direct labor and also the fixed overhead. The other component that is impacted based on the shipment for freight out. So significant impact because we have to expedite deliveries, which is instead of sending it via sea shipment, then we would in a number of cases send it by air, which is a lot more expensive. So that is another -- we estimate to be about a 60 basis point impact on the margin. So that accounts for the difference between Q4 gross profit margin and the Q1 gross profit margin. Operating income is $3.5 million. If you look at the non-GAAP, it's $5 million versus the $16 million. Again, it's following the gross profit reduction. At the same time, we also have in our subsidiary, which is growing and they are in the process of preparing for mass production of major projects. They also required additional investments in R&D. So that also have an impact on the operating income overall. We closed the Q1 net income as reported is $2.2 million. On a non-GAAP basis, it's $3.6 million net income. And then EBITDA is down from 7.1% in Q4 to 5.9%, mainly due to the lower profitability of the VIA/STI business. If you look at just the wholly owned IMI subsidiary, the EBITDA is at 7.1%, EBITDA margin. Next page, please. Next page shows the split between the wholly owned subsidiaries. On the left-hand side would be the core business, which is our wholly owned IMI subsidiary. Q1 is still healthy. If you look at our revenue, we closed at $255 million compared to Q4 last year of $262 million. This despite the missed revenue related to the component shortage. And the bulk of the component -- sorry, the missed revenue is really on the wholly owned subsidiary business of IMI. Net income is lower versus Q4, mainly because of what I explained earlier, lower revenue and increase in efficiency in production due to the component shortage. Our net income versus Q1 2020, though, is much better from about $1 million last year Q1 up to $7 million Q1 this year on a non-GAAP basis. Revenue also has increased revenue at the core level is up 22% versus Q1 last year. On the non- wholly owned subsidiary, which is the NSTI, Q4 revenue was down. It's mainly coming from the slowdown in the medical business in STI. So if you follow the U.K. news, the U.K., I think late last year, started shifting more towards detection of the COVID disease into vaccination. So a lot of the products that we have is more on the detection and prevention side, like the -- for COVID-19. So that has slowed down in Q1 versus Q4. Q1 loss on a non-GAAP basis is at $3.4 million. Again, mainly due to lower revenues for both VIA and STI. And on VIA, particular, they have actually also increased their investments related to new projects that's expected to come on stream later part of this year and also into next year. They have shifted a lot of their project from the consumer segment into more the industrial automotive segment. So they need to build that capability to be able to serve both Tier 1s and also the OEMs. Next page, please. On the region update. Again, the versus Q4, we will see most of the regions are better than Q4. The only 2 areas that are below is Mexico, which is at $37 million compared to Q4 at $41 million. The main reason for that is, again, the component shortage. They have about $5 million of revenues that they were not able to book because of missing components. They have, however, started to normalize in Q2. So we expect much higher growth in Q2 for Mexico. And then the other group that is done is VIA and STI, as I mentioned earlier. We see very strong growth in the Philippines. This is coming across the back of increased demand from the IoT and industrial business. And in China, particularly in Jiaxing, Jiaxing has achieved a record monthly revenue level in March. They're very strong demand in both the automotive and industrial segment in Jiaxing in China. Next page, please. So this is on the group program wins. Again, to just remind everybody, the STI bar, that's based on the total project revenue expected, while the IMI bar chart is based on annual revenue potential. So that's the average annual revenue expected over the lifetime of the projects. So you'll see, as I mentioned earlier, for IMI, and especially the mobility segment, we have won significant projects in Q1 about 3.5x higher than the same period last year. And out of that $118 million annual revenue potential, about $100 million of that is related to EV projects. So we're starting to see a lot more EV-related -- directly related to EV. [indiscernible]

Yes. Just to add a little bit color on that STI win. One of the critical things that's happening as what Jerome mentioned, there's 2 parts on this COVID on the medical side: one is the vaccination, part and the other one is the screening part. So one of the activities that STI has been very successful with was, as you know, was the Penlon ventilator system that was developed and then now sent out all over and used. This is the ventilator system that you use for intubation. The next one is the one that we jointly worked on, which is the UCL Ventura CPAP. If you watch the news of the type of ventilators that was being set by the U.K. government into India to help out, these are the UCL Ventura CPAP which is actually produced both in the U.K. and also here in the Philippines for that purpose. The new win here is actually a newer version where it will only -- it will just -- it will only use 10% oxygen requirement in order to deliver the same respiratory support. So this is a new design that actually we're waiting for approval by the NIH. And once that happens, this will then take away the burden of using a lot of oxygen in being able to help for the recovering patients. It will only require 10% of the original number of oxygen that was required previously by the initial systems or the current systems that's being used in the hospitals. So we're very, very excited about this one that hopefully it gets approved. And then once we start shipping it and producing it, it will make a difference across the world. Thanks. Go ahead, Jerome.

And also, I guess the last thing to point out is on STI, as of the growth there is driven by the aerospace defense sector. So we're starting to see more of the project now going into start of production. I think a lot of the uncertainty related to the Brexit also has to a certain degree, been more clarity in that respect. Next page please. So on the capital structure, we haven't had any significant change compared to December. In fact, if you look at our balance sheet, we're in a strong position. Our cash remains around the $243 million level despite the increase in -- continued increase in growth and also challenges from the component shortages. So we're still able to manage our inventories well and conserve cash. In fact, our -- if you exclude the VIA cash position, our -- the rest of the businesses have a cash of $155 million, which is higher than December, where we were at $145 million. I guess the other thing to note is, if you look at the stock price and the book value at the stock price, I think currently, we're about 1.08x book value. So strong balance sheet, debt-to-equity is around 0.48, and we have a net cash position. Next page. On CapEx, we're starting to see more normalization as the business continue to expand. So our Q1 CapEx is $9 million compared to last year. Last year was about $1 million, $1.5 million level. So we're still seeing our CapEx on track to reach about close to $40 million this year. And then next page, please. I guess, on the key highlights, again, the recovery continues. But it's muted by the global component shortage, approximately $20 million of our revenue was delayed in Q1 because of this issue that we have. It also creates a lot of inefficiencies in our manufacturing process to increase over time and rate expenses impacting our margins. And we continue to work with both customers and suppliers with customers to agree to alternate suppliers to use and with our suppliers to get that much allocation as we can, and pull in a lot more of the expected demand that we have for the next few quarters. We expect the situation to resolve more towards Q3 to Q4. We continue to see very strong pipeline growth in the first quarter. We expect that to continue. And I guess the other challenge that we have continued watching is the U.S.-China trade tension, how that would impact more on the -- I guess, the disruption there would be more on the raw material supply chain challenges, especially for our China-based customers. And then I think as the -- most of our sites are following the government vaccine rollout. In China, we had high percent of our IMI population has been vaccinated and the challenges that we see is in the Philippines, where it's still very low vaccination rate. But at the same time, the Ayala Group is looking at ways to bring in the vaccines to be able to give vaccination towards the Ayala Group employees and partners, and that's expected to begin in some time in June. I think with that, we close the presentation portion, and we can open up the floor for Q&A.

Thank you, Art. Thank you, Jerome. We have an open chat box for your questions or you can either click or raise hand and we'll recognize you. Maybe I'll start the question. The MECQ just got extended for another 2 weeks. What's going to be the impact of this to the Philippine operations of IMI?

Jerome -- I'll let Jerome answer that one.

Sorry. I think this time around the MECQ is slightly different because I think the government also realized that it's important to keep the economy going. So at the moment, we do not see a significant impact as we've been operating in this type of environment already since last year. So I think it should not have any disruption on our operations.

Yes. And to add to that. During the MECQ, we were already allowed to operate -- the critical one for us during these different lockdowns was the amount of occupancy that was allowed for our shuttle services. And even during the MECQ period, we were able to operate at 100%. So there was only about a 1-week period, I think that we were required to drop down to a 50% utilization. And then right after that, we're back to 100%. And then as a contingency measure, we've already outfitted our factory actually to be able to house and provide dormitory services to our employees in an event that we actually have a full lockdown. So we've already put in those contingencies in place. And so far, we don't have to execute on any of them. We're running our shuttle services at 100%, and that's what Jerome mentioned. The confirmed cases that we have inside from IMI has been very, very minimal. Very, very low single digits. And all of them have been managed properly. So I think we're not affected too much. What this extended MECQ may affect is the movement of goods and services, which I am hoping that the government will then provide priority and allow it to move unencumbered while we're having this MECQ.

[indiscernible] from Bernice. [indiscernible] Go ahead Bernice.

Thank you for the call and congratulations. I just have 2 questions. Number 1, you mentioned that the component shortage is expected to get better towards the end of 2021. May I ask if is this the worst of what, do you think this is the worst already? Or will things get worse before they get better? And my second question is for the new wins, could you compare it to the new wins obtained in the fourth quarter of 2020? Is there a slowdown on that end as well that's expected to be to catch up later in the year? And when are these revenues expected to materialize?

That's true. Okay. Yes. Let me just take a step. So the first point was again, sorry, I was already focusing on the second part, 2 different things. Yes. The first one was on which one, sorry?

The first one was basically on the component shortage.

Yes. Okay. Let me take a stab on the component shortage, and then I'll let Jerome cap off on the wins, and then I will just try to embellish it, if any. So on the component shortage, so what the dynamic here is that you will notice that there is -- there are certain markets and components that seem to be not affected, and yet there are those, which is in the auto space that are being affected. And so what we're seeing is that because of the capacity that was reallocated during the time of the pandemic, when the auto industry started sending signals down the supply chain that they will start dropping their capacity and not building cars at that point. And therefore, all the supply chain then reallocated primarily in the chip manufacturing basis. So as the whole market is transitioning and putting more allocation back into the mobility space, therefore, you're going to start seeing some constraints in some other parts, such as in the server market or in the handset market, or in other parts, which is currently has not been affected, as you noticed, because the numbers still continue to outperform on that side, on the consumer side as well as on the communications segment. Once the capacity for that is also reallocated back into the mobility, you'll see enough surge back on to the mobility part of it, and they will start recovering into that space, but you're going to see some lead time changes and some type witness in the supply chain for the other markets that has not seen it in the past. Then just purely because of reallocation of the chip services. And that's going to happen for the next 2 quarters in my mind. And then it is going to start normalizing as the demand normalizes. But if the projected demand continues clear to 2022, then there will still be a constraint in the supply chain because the total capacity actually, there is still challenge as compared to the entire market supply for all the needs of both on the communication side, on the infrastructure side. The mobility side and on the energy side, right? So that's really what's going to happen. So there's going to be some rightsizing. On the mobility side, for the auto side, we're seeing that -- we feel that there's going to be at least some upside to ours because they're going to start reallocating some of that capacity back into the automotive side. So we're not heavy on the handset market side, for example. And therefore, if the handset market capacity starts dropping, I'm not going to see any of that. However, somebody else will, right, because they're in the handset market, and I'm not. So I'm going to take some of that benefit, but the others are going to feel some of the brunt, which has happened now where I'm feeling the brunt because I'm more in the mobility side, and I'm not in the handset market, and they're having a field day, right? So there's going to be some allocation normalization that's going to happen across the different industries. So depending on which ones you're tracking and which company is exposed to which market you're going to see this movement that's going to happen as the supply chain gets reallocated. So that's my view on the reallocation side. On the -- just a touch a little bit and finish off on the new project wins. I guess the new project wins for us is a good indicator. First of all, it's significantly more than what it is in the past. So everybody in the space that we're working with has restarted order development work because new project wins means that these are, especially in our space, these are not -- the life cycles of these products are not like 10 months or 12 months or 18 months. The life cycle of these products are well within the 5-year to 10-year period. And delivery for the start of production for this is along the 2- to 5-year time frame, right? And so that's a good indicator that a lot of these companies have now reinvested their R&D and their development once again for the next-generation platform. What does that indicate to us? What that indicates to us because of what we're seeing as an influx of new project is that finally, the OEMs or the end markets have decided to put a stake on the ground on the platforms that they're going to go to bed with for the future. Because in the past, it was kind of half- hearted. And we all believe that it's going to be EV. We all believe that it's going to be self-driving but I don't want to let go of the combustion engine. And then low and behold climate change. The pandemic happened. They had to make that call. And what we've seen is now everybody has decided, okay, I'm going to let go of the internal combustion engine, and I'm going to embrace the electric vehicle platform. And so what we're seeing now that proliferation and then the faster adoption into start-up production for all of these different platforms that is EV and self-driving base. Okay. That's my view on that one. Jerome, you might want to add more details into that.

May be just to add some data. So if you look at the new wins in Q4, I was just taking the number. Q4, new win is about $80 million. Automotive for mobility is about $50 million. So if you just look at the mobility, it's actually growth actually grew from $50 million to $118 million in Q1 this year. So that's in terms of more of the data on the new, so significantly increase versus Q4.

Understood. Thank you.

We have another question from the chat box from Daniel. Who is -- I think this is related to the shortage. Who is absorbing most of the cost increase as the revenue today is based on orders 1, 2, 3 years ago? And nobody has predicted a component shortage issue happening now.

So I guess, maybe I can start and a pick in on. So on the thing that's different this time is for the component shortage, a lot of the shortages are more on the chip set. So these are customer nominated suppliers. So in terms of increases in raw material prices, these are passed on to the customers because these are the customer-nominated suppliers. What is still being discussed at the moment and negotiated are the inefficiencies because of the difficulty to plan the production. So over time, additional freight. But in certain cases, we are successful in being able to claim that, and we will continue to work with the customers to claim back those expedited shipment related to the component shortage. So in terms of production and efficiency, it looks like, I think a bigger part of that will have to be absorbed by IMI.

No more question in the chat box. Maybe Art, you could just say a few words before we wind up the briefing. Thank you.

All right. Well, again, I'd like to thank everyone for finding time and looking at this. So the view is that it's still cautious on our part, but we're very, very optimistic because a couple of things that I use as an indicator myself would be when we have this revenue misses and everything else because of timing issues. I always constantly ask the team to tell me whether this timing issue, because of delays of either the components or the projects or the programs and then highlight those that are actually cancellations. I'm happy to brief that the cancellations are nonexistent. So everybody is still looking forward that it's just a matter of timing more than the market itself. So the market is strong. It's happening. We're realizing a lot of the projects, and there's this demand cycle that's actually being driven by the larger economies, who has the financial capacity to absorb the inflationary things that are happening in order to buy the goods, and we're seeing that. And then everybody is scrambling to do that. On the cost basis, it's actually a matter that the -- even though we have projects that we've actually signed and there's multiyear agreement that's already been done that had not control and the supply engine is actually the one that controls it. So when they start attributing lead times that are longer than what the booking rate is, then the customer has to decide whether they're willing to wait until we're able to get the product at the price that we originally negotiated with but in a different time range or paid the differential to be able to bring the product in at an earlier period. And as you know, in business, the market is always the one that you want to serve, rather than putting it into a warehouse sometimes make thinking that the future that there will be a demand. So that's actually what we're very bullish about that we're seeing right now.

And I think, Anthony, there's a question that came up.

If you could -- yes, there's another question unless you want me to read it out. This is on the effect of the Renesas fire with IMI.

Yes. I think the Renesas fire, there is an impact. We don't -- I don't have the detail specifically. But I do recall that there was a discussion with our procurement team on the impact of that Renesas fire to our supply chain. Although we don't see -- I don't think it's a significant amount impact for us, but there is an impact. And then the second question is...

VIA on mass production?

Yes. On the mass production. We actually have a number of projects and VIA, we have discussed earlier, they're shifting more towards automotive and industrial project. So they have 1 major project that is expected to start mass production in Q2 -- actually, Q1. So I think that one is slightly delayed, expected to start mass production in Q2, so very soon. And then they have other projects that will take a bit longer, which will go into start production in, I think, 2022. But then in between, of course, there are other customers that were going to start of production. So these 2, in particular, are major projects that VIA has won recently. That's why they're investing a lot also on the R&D capabilities to be able to execute on the new product introduction.

Thank you, Art. Thank you, Jerome. That's it for our first quarter financial highlights. For the presentation, we'll upload it in our website at www.global-imi.com, and thank you for joining us this afternoon. Have a safe day.

Thank you, everyone.

Thank you, everyone. Yes. Appreciate it. Thank you. Stay safe.

Thank you.