Japan Display Inc. (6740) Earnings Call Transcript & Summary

Good day, and welcome to Japan Display's Fiscal Year March 2023 Earnings Video Conference. My name is Kumi Higuchi, Investor Relations Manager at JDI. With me today is Scott Callon, Chairman and Chief Executive Officer; and Haruhiko Sakaguchi, Chief Financial Officer. After the speakers' presentation, there will be a question-and-answer session. Now Scott will start the presentation with an overview of ended fiscal year.

Hi, everybody. Thanks so much for joining us today. We know you have other things to do. We're incredibly grateful for the time you spend with us. So let's jump into it. Speaking against the FY '23, so the fiscal year ended in March full year corporate presentation. It feels appropriate at this point to quote Charles Dickens. It was the best of times, it was worse at times. Let's start with the worst part. A terrible market environment. The entire display industry, hemorrhage, triple punch of increased costs, lower demand, lower capacity utilization. So really, really tough to operate into. I apologize to all of you and to all of our stakeholders. We made huge progress over the last couple of years, and that progress has continued. But financially, we turned to black on an EBITDA basis. We thought we were going to get profitable this year. That didn't happen. Really difficult operating environment. So that's kind of where we are with the worst times. With the best of times, it was actually in many ways an extraordinary powerful and positive year. We are changing who we are in the most fundamental way. We're changing our technology set. We're changing the business model. We're taking costs and capital out of it. We're adding rich and deep technology. We are literally trying to recreate a global display ecosystem based on our global no.1 technology set. So a total overhaul of the business model is necessary. It's well underway. METAGROWTH 2026, which I'll speak to in some detail with the strategy we announced last year to deliver on JDI tech that truly drives revolutionary transformation to customer and therefore, shareholder value. We cannot make significant amount of money for you, and that is our goal without having kind of better technology in the sense of, look, it's not very interesting to have 6 companies, including JDI, with very strong tech capabilities, delivering kind of value to major gap from customers. We want to be truly unique. And we think very strongly this year, demonstrating that we are well on the way in doing so. Let me turn to kind of some of the breakdown of the numbers across the business segments. Mobile, we're exiting full stop. This is not an area where our technology set is particularly relevant. There are a lot of good competitors out there, smartphone. Apple brought it to bear in 2007. It's now at this point 16 years old. It's become a commoditized product line. It's really not an interesting place for us to spend our engineering resources. We're literally inventing the future of JDI, and this is not a place to do it. So down 36% year-on-year. That's a good thing. We're taking resources out of this business. Automotive, on the other hand, up 26% year-on-year, really good business. We are overwhelming #1 in the middle and high end of automotive displays across the world. We have rich and very relevant technical capabilities in this area. One of the great things about autos is not only is it growing. There are more cars. There are more displays per car. There are bigger displays in cars. And as we move towards automated driving, it's quite possibly the case that cars are going to become like living rooms. And so having to do something in cars with displays will become even more powerful. There's no question because we have deep relationships with the major OEMs all over the world that there is much more intensity going in to deliver a customer experience inside the car using displays, and that's really, really good for us. It is also a business that is characterized by long-term supply contracts. So nice thing about it as you lock in business for 6 years, 7 years, 8 years, it's a really good business and 1 we expect to grow. Customer engagements are going very well. We won't talk in much detail about our new technology set because we've talked about it at great length elsewhere. I encourage you to go to our website or to contact us directly if you want to hear more about, for example, eLEAP. But to speak directly to eLEAP, which is our next-gen OLED technology and is emphatically a revolutionary breakthrough. It changes the ability to put OLED in cars. So the great thing about OLED is it's bright. It's high performance. You don't need a backlight. Therefore, it's low energy. In terms of consumption, it's lighter. It's flexible. It's not like LCD. You could put it onto flexible plastic. It has enormously powerful characteristics and has 1 fatal flaw, which is at the OLED pixels. They're organic. They burn out over time. And we solve for that with our new eLEAP technology, and it extends OLED lifetime by 3x. And so one of the reasons why smartphones, half the smartphones of the world have OLED because of the best display out there. Only 1% of cars do is because it's okay to have OLED displays, which really only work at maximum brightness for a couple of years and then begin to fade badly in the smartphones, where people turn over a smartphone every 3 or 4 years. That is unacceptable for cars. So I'm going with is we're trying to create brand-new tech which is unique and responsible needs of the world, bringing OLED to automobiles is something that eLEAP is going to do. Non-mobile, down this year. This, however, is a growth driver, And we are in the midst of ramping up production for important customers. And so we have visibility on how this ramp-up is going to occur. In the past year, however, we had a sales decline on kind of both lower VR and variable shipments linked to both the global economic slowdown and some customer strategy decisions. But that repairs itself very rapidly over the next year. Number of strategic initiatives and outcomes. I'm looking at this, and I've realized we used present tense in this, and we probably should have used past tense in certain ways. But these are things that we worked on and delivered in the past year. So we're well on our way to building a new global display ecosystem based on our tech, and that's a way of saying that we have shifted our technology road map towards things that really change the world, as to post to minor improvements. Because we have that set of capabilities. And if we really want to move the world forward, we do. Displays are foundational technology for modern life. And to getting it right with displays as a way of improving the quality of life for literally hundreds of millions of billions of people across the planet is important. So we've gone -- if I can use a baseball analogy because I'm an American. I'm in Japan. And both countries are big on baseball. We're going for home runs rather than singles and bunts. And fortunately, we've had some really important breakthroughs. And the strategy, and this is what we mean by a global display ecosystem, is not for us to keep this to ourselves. One, that's not a good way of moving the world forward because the amount -- because these technologies are so powerful that it should be used by everybody, not just by JDI in our production processes. And two, if really they want to have a very powerful business model. You don't build a multibillion-dollar fabs yourself. You build technology that's really powerful and allows these multibillion-dollar fabs to be more productive and then license out that technology to what used to be competitors and become -- now becoming our customers. So well on the way on that. I'll talk to the second point. We have dramatically strengthened our competitiveness by fab optimization, which is a way of saying we had heavy cost, old-generation fabs that needed to be shut, and we have been shutting them. The big progress on developing and commercializing our technology set. I'll talk to that a little bit more on that later. We made significant changes in our capital structure, very powerful. I'll Also discuss later. And we announced a strategic alliance with the Global #3 display maker, HKC. If you're going to build an ecosystem, you want to have powerful partners, and then we think HKC is an example of a very powerful partner. This is what we've done with our fabs over the last couple of years. And as you can see, we're taking capital out of the business. This is not a productive business model for everybody in the industry who seems to have the same business model, which is put a bunch of CapEx into fabs and the same source of technology, the same timing and experience the same outcomes. Like right now, we're all bleeding. We have emphatically decided to move away from that model, and we're shifting towards providing technology. And the best analogy is arm in the CPU space, which is an R&D house for the global semiconductor CPU industry. And we are providing our technology and our capabilities to others, starting with HKC, and there will be more announcements. The advantage of this strategy is it takes out cost, it takes out volatility in the business. Fixed cost reductions from this are JPY 33 billion a year, so about USD 300 million, a little less than that. Will include us pushing down capacity at 1 of our fabs in Nevada. In Tokyo right now, this is more like JPY 43 billion a year. So we've done a lot of work to take cost out the business. That's another way of saying is that it gives us significant operating leverage. When things turn up, we've got a lower cost base and we make a lot more money. This is what we did in terms of the capital increase. I'll run forward. Sorry, there are 48 slides. I don't need you to be with me for the next 6 hours. My apologies. Look, we have a very aggressive growth strategy. We're currently burning cash to build out something that's enormously powerful. You need to have the right capital structure for that. And so we made -- it was on the previous slide, but we made a couple of changes in the capital structure. It gives a very solid balance sheet in order to execute on our METAGROWTH growth strategy. We are debt free. I mean, arguably, we have the strongest balance sheet of any company in the global display industry at this point. You can see shareholders' equity has surged. It's a very solid balance sheet in order to execute on the strategy of growth that we have. This has been announced doing a very powerful combination with HKC. We bring our world-class technology to the alliance. They bring their cost competitiveness, their massive production capacity and their salesforce. So it's a powerful combination. We expect to be global #1 in a bunch of areas. We're already global #1 actually in automotive and VR. And so a number of these things, we're just going to expect to expand our lead. But it's a strong combination. I'll now turn it over to Haruhiko Sakaguchi, but everyone calls him Hiko in English, to talk about earnings.

Once again, thank you, everyone, for joining us on the call today. My name is Hiko Sakaguchi. I'm the new CFO here at Japan Display. I'll be talking about the earnings results for our March '23 year as well as presenting our earnings forecast for the March '24 year. So with that, let's move on to Slide 18. So if you take a look at this slide, earnings are extremely weak, extremely poor. And before I get into any explanation about the details behind these earnings, I think I and we just owe you nothing less of an apology for these results. And again, they're just horribly weak. If you take a look at the slide in the table, we -- a lot of our strategic efforts paid off and manifested in some significant earnings improvements between March '20 and March '22, but the market really turned against us last year, turned against the entire industry. As Scott mentioned earlier, just the global economic slowdown, significant increases in cost and energy inflation across the globe, everything just worked against us. And despite our ongoing efforts, it simply was not enough to counter a lot of these changes in the market environment. And so once again, terribly apologetic from all of us for these horrible results. I'm going to go to Slide 19 and talk a little bit about the breakdown of our sales by product area. Part of this is actually strategic and that specifically is our mobile business. Scott mentioned earlier that we have decided strategically to shrink and ultimately to exit our mobile business. So the reduction, the decrease in our sales for mobile is planned. It's intended. It is strategic. So that's not all bad news there. But everything else needs explanation. Non-mobile and automotive are designated as growth areas for Japan Display. And so we're not proud of the decrease in sales that we've experienced in the non-mobile area. Again, just the general economic slowdown has really resulted in weakened consumer demand. Part of our customers hiked sales prices on their products, which also added to a weakened consumer demand. And on the back of that, we really experienced a decrease in sales there. The automotive business, which is also designated as a growth area for us actually did quite well. Part of it was just the sort of the tailwind from the currency and the yen depreciation. But it wasn't just that. We actually made some headway in terms of capturing a lot of the strong demand out of the OEM makers. So that sort of set the tone for the increase in that particular product area. I want to skip Slide 20 and jump to Slide 21. So if you can look at Slide 21 together with me. This slide attempts to capture the change in operating profit from fiscal '22, March '22 to March '23, and it kind of attempts to capture as a waterfall chart. As I explained, we had the JPY, the yen depreciation are back as a tailwind. So we also made a little bit of progress in terms of our relentless efforts, ongoing efforts in terms of reducing our fixed costs, which were just not enough to counter all of the sort of the market ties working against us. So what you see here is the slowdown, the general economic slowdown across the globe resulted in a significant volume declines for us. And the general increase in material costs, energy costs really worked against us in terms of profitability, as you can see here, which really resulted in our operating losses expanding to unacceptable levels. I'm going to turn now to our forecast for the March '24 year. So if you can look at Page -- Slide 23 together with me. In terms of the operating environment, we are still looking at a very difficult operating environment. We don't necessarily see any immediate improvement in the sort of the global economic slowdown. We expect ongoing high prices and input cost for us in terms of energy and materials. And so the operating environment, we expect to remain significantly difficult. With that, we're looking at sales coming down further to JPY 240 billion for the March '24 year. And despite a slight improvement in the profit line, it still is deeply in the red, unacceptably into the red. I think one important point I'd like to highlight on this slide is that if you look at the combined sum of sales for the 2 mobile lines, a line that says mobile, U.S. euro and Mobile China, what you see is that sales go from roughly JPY 76 billion in the March '23 year down to around JPY 19 billion in the March '24 year. And once again, this is strategic. This is us taking down a sort of a nonprofitable, low profitable smartphone business towards exit with the general plan of trying to really boost the overall profitability of our business portfolio. You see the same thing happening actually in the line for automotive as well. Just slightly less smaller decrease in terms of magnitude. You see about a roughly JPY 10 billion decrease from JPY 135 million to JPY 126 million. This, too, is us sort of either shrinking or withdrawing from specific products that have low profitability. So part of this decrease in sales is strategic. It's not great to have this short-term sort of shrinkage in sales ahead of us. But the plan here, again, is the intent is to significantly and structurally improve the profitability of our portfolio, which will hopefully make segue into a much better looking March '25 and beyond. I'm going to turn now to Slide 24. This sort of the same type of waterfall chart that attempts to capture the annual change in operating profit going from March -- the March '23 year to our forecast for the March '24 year. And again, it's the same picture. But what it tries to show you is that it expresses our ongoing view about the difficult operating environment. You see that in the volume declines, you see that in the negative effect and impact from the material cost and energy costs. But what the improvement in mix is trying to capture is, as I mentioned earlier, as we exit, as we shrink out of low profitability businesses and as we generally improve the profitability mix of our portfolio, we're hoping that the portfolio in general have a boosting effect from an overall profitability. As well as, as Scott mentioned earlier, we are really sort of reconfiguring and trying to take out fixed cost out of our manufacturing base and just in general across the entire firm. And what you see there in terms of the fixed cost boost is just sort of a manifestation of that ongoing effort. The last slide I'm going to be talking about is Slide 25. And this is basically the same waterfall chart, but which basically tries to capture just the second half of the March '24 year. What I'm trying to highlight here is that the sort of the trajectory of improvement in our earnings really sort of accelerates in the second half. And what I'd like to do is if you kind of compare the numbers, the annual change in Slide 24 here versus just the second half change in Slide 25. What you'll notice, for example, is that you take the difference of it. You look at volume, for example. We're forecasting a JPY 10 billion sort of negative impact on earnings in the first half, which then turns to JPY 4.4 billion positive contribution in the second half. And likewise, with mix, we're getting a slight 4, call it, JPY 4 billion to JPY 5 billion boost in the first half, which then accelerates to a nearly JPY 11 billion boost in the second half. So again, all of the efforts that we're sort of trying to make upfront in the earlier part of the year in terms of exiting and withdrawing and shrinking our unprofitable businesses will hopefully play into the second half with a much stronger portfolio, much better profitability mix and hopefully driving some of the numbers you see here, but also structurally into the years that follow this as well. That's all for me. Thank you.

So we go in through the numbers. Appropriate as the CFO, pointing out how grim they are. And as I started, look, this is the best of times, the worst times. Bleeding all across the global display business. It's not super encouraging for us to have much lower losses than everybody else. It's unacceptable for us to have losses. So it reinforces how important our strategy is to get -- to be done with this. We're done with this. So METAGROWTH 2026, we announced last year, May 13. It's about building global #1 technology leadership to serve our customers. It's also about taking, as I said, capital out of the business. So there's both a technology revolution and a business model revolution that absolutely has to happen. This whole point of kind of putting $5 billion into CapEx a year really makes no sense as a business. And there are far more powerful ways to build value for the world, and we're executing against that. So I will jump through the METAGROWTH slides here just kind of remind you what the approach is and move to kind of the deliverables from this year. It was a very good year from a technological perspective. So we announced eLEAP a year ago. It offers -- I mean just to take you a little bit in the weeds, if I could. It's a maskless deposition process. So every OLED display in the world is currently made with fine mental mass. There is -- they have tiny holes in them. You put the RGB materials through them. You stick them the glass substrates. It's a very kludgy, cumbersome process using molecular position using metal plates. The metal plates get clogged. You have to take down your lines constantly. It's a terrible production process. That's why OLED is so expensive. We literally get 40% higher production by getting rid of the mask because we're using a semiconductor for lithographic process. It is just fundamentally better. Shipped our first samples last year. First customer order in February 2023. They expect this to be strategic and roll it out to the entire product line. Will be mass production next year. Lots of ongoing discussions with people and HKC has signed on to this because it's just sort of powerful technology. HMO, another fundamental breakthrough. This one takes 40% energy consumption out of displays. Just to step back, again, I hope it's okay. This is what we do. We're a technology company. Oxide is a very robust, inexpensive, uses low-cost production process because it uses fewer masks building layering of a display. The problem is it's kind of slow and stupid. We give it high mobility, some that you have. And then the great element of oxide is not only that it's cheap, it's very low power consumption. You bring together low power consumption and high performance, it's the single best back plane on the planet at this point. And every display has a back plane, which is something like oxide or LTPO, LTPS, or mofosilicon has a front plane, which will be like LCD and OLED. So anyway, we take out 40% energy consumption with a low-cost process. And that's fundamental to what we're delivering, which is kind of effectively Moore's law in the display business. eLEAP is not only better, it's cheaper. HMO is not only better, it's cheaper. It's bringing those 2 together in a very powerful way, that is what's revolutionary here. So we will be in mass reduction with HMO also for next year. And in the metaverse space, it will be interesting to see if it's a whole bunch of stuff has happened the last year. And a certain amount of stuff has been pushed out. We continue to be #1 in the world in this. If the metaverse comes into life, that will be very, very good for JDI. And we're well underway for creating 2,000 PPI displays from glass substrates. A high-end smartphone at this point is 400 to 500 PPI. This high resolution is really, really hard. And the reason why you need very high resolution is because VR headsets, they use lenses to give you magnification. So like a 10x lens even if you're shipping, which is the best in the world right now, 1,200 PPI on a 10x lens. The user is experiencing only 120 PPI. So there's massive demand for high resolution. High resolution is really hard. It's particularly hard on glass, and that's what JDI is the best in the world at. You can actually do silicon substrates, 2,000 PPI. It's really not -- I mean, it's actually pretty hard. But it's a lot easier to do than glass. No one has done this in glass, and we're going to be the first in the world to do it. And glass is literally 5x cheaper. You really want to deliver a great product to 1 billion to consumers all over the world. It not only has to be fantastic, it needs to be inexpensive. And JDI, again, as I say, is the best in the world at this. There's a one-off drop in demand in the last year. We have visibility on what next-generation production looks like. We're in production for next-generation customer activity. And so we understand that the sales is going up in this area for us. In AutoTech, the biggest element of this year is we are, as I touched on earlier, bringing eLEAP to automobile applications. It is incredibly powerful. It is a low environment impact technology. I told you about the mask. We get rid of the mask. It means you get rid of all these toxic chemicals that you need to use to constantly clean your mask. You actually have a streamlined production process, so you have less energy consumption in the process itself, lower CO2 generation. This is a very, very powerful technology. It's -- OLED is going to win in the world, and eLEAP is going to win in OLED. That is kind of the conviction we're developing based on conversations with customers about how they want to introduce our technology set to solve their customer problems. Real Clear is the world's highest transparent interface. It's something that -- it is the only technology in the world that is 2-way transparent. So there are other companies out there that have been doing less transparent displays that are kind of foggy from one side and visible from the other side. It is truly a unique technology. We have some ambitions there for doing something really, really big. We'll let you know if we get there. But customer conversations are ongoing with respect to this. And finally, we've got new tech products and businesses that are coming out. Some of which we've already announced, but this is a long presentation, so I will move forward. But you will see more from us in this space. The one thing we haven't talked about is our fab strategy, and this is the first time we'll do so with respect to India. So we have a significant presence in China. The world is getting tricky geopolitically, and there's a ton of growth in India, and we have ambitions to do something fairly substantial there. You should know that we have had conversations with very, what should I say, super high-quality Indian companies for 3 years now. about doing something in terms of our fabs in India, bringing our technology to India. And the truth matter is that these are super attractive conversations. We're incredibly grateful for them, to the companies, to the Indian government, which has played a very positive role in helping intermediate conversations. But there's been a mismatch between what we think our capabilities are and what we can deliver and how we can support India, which is to say there've been conversations about LCD fabs, which is the earlier generation technology. We have the world's best OLED tech. We're shifting our capabilities towards OLED. We're exiting smartphones that use LCD technology. So there wasn't just a really good fit there. And also a desire to do kind of TVs and things like that when we have these very specialized capabilities in smaller scale displays. So there wasn't a good fit there. Where we're now involved in is concrete discussions on bringing eLEAP. So our current kind of next-gen technology sets to India, and that's really interesting. Really interesting for India, really interesting for us because it's something we can do that no one else can do. India is kind of just at the very beginning of building out a super sophisticated display ecosystem. So this is going to be a multiyear project. But I just want to let you know, for the first time, because there are some driving fundamental sense to it and value creation from it, that you should expect us to be in India, when we get there. I mean we'll see these are conversations that we could complete this year. We could complete over the next couple of years. But India, we expect to become a substantial part of our ongoing future manufacturing presence at the highest level. We actually expected to give you updated KPIs for METAGROWTH. We announced the first KPIs for the strategy last year. We literally announced eLEAP that day, HMO at the end of March, so that we're very in at the very beginning of customer conversations about these technologies. We're now a year into it. We have a lot better visibility as to how our customers are going to implement JDI's technology set in their product lines. And so we thought we're going to announce today the updated KPIs. But as you know, we announced a deal with HKC, and we're going to finalize it with -- it's MOU at this point. We're going to finalize that by June. That's a very important strategic transaction. It involves a lot of production capacity that they're going to bring to bear on our technology set. It seems the right thing to do is to announce the updated KPIs in August with Q1 after we signed our final deal with HKC and which we expect to be at the end of next month. Having said that, we thought we should let you know where we are. And so this is the current view on current estimate of where we are on the KPIs, what the profitability looks like going forward. Kind of the good news and the bad news. Starting with the bad news, super difficult operating environment, as Hiko just pointed to, in terms of financials. Effectively, profitability has been pushed out 1 year. We're burning cash right now. We are continuing to invest in the business. We actually were hiring kind of 100 engineers in one shot from JOLED. Significant capability didn't take on the business, took on their engineers and took on their IP. And so as we invest in the business, it is going to drive kind of the success of our technology developments and our technology road map. So the result of that is the near term looks worse. But now that we've had significant conversations with customers, we understand we have a better sense of what's happening over the long term and revenues and profitability are going to go up. In particular, you can see sales are up substantially compared to what we thought for last year. We've given a new number for the first time we show what things look like in March for 2028. There is a significant amount of both automobile sales growth embedded in eLEAP and that technology. We see significant activity in the IT space. So just to remind you all, half of the smartphones in the world are OLED. It's only about 1% of auto, auto displays, something like 3% of IT devices, so notebooks, monitors, things like that. TVs can't even do RGB OLED. They're wide OLED even then it's only a couple of percent of the market. So there's a significant amount of growth available if you can come in OLED that is cost competitiveness and enables you to scale. And so the other problem with masks. I told you is the existing OLED technology is they don't do very well for very big sizes. So the ability to take -- we can actually take our eLEAP technology into TVs in a way that you can't do a true RGB OLED. So I'm going to take you into with the weeds a little bit. But the current OLED that's out there in TVs is white OLED, requires a color filter, higher energy throughput in order to -- because of the problems of the RGBs kind of colors bleeding into each other, requires higher energy throughput to push through the color filter. It's a reduced version of OLED. We're going to be able to deliver full RGB OLED in TV sizes for eLEAP. To give you some more sense of what next year looks like. So this is 2025. You'll see a significant ramp-up in sales primarily in the nonmobile space, and that's really, really visible. This is new products. They're coming out. We are already at mass production on some of them. I'm not going to speak to exact customer and consumer devices because they will make their announcements when they're ready for it. But we are already in ramp up. And so [ 2023 ] is much bigger in the nonmobile space. As you can see, we completely get rid of mobile. This is the last year of it, from next year the business is nonmobile, which is primarily wearables, smartwatch and VR and then growth in the automotive space. And the visibility in the nonmobile is very high. Again, we have customer orders and ramp-ups that are going on. So we expect these numbers to be very, very solid. And the result of that is it doesn't get us where we need to be. And to go back, the end point is not to get to negative JPY 5 billion of OP next year. We turn EBITDA profitable, but that's not super interesting at all. It's to drive significant ramp-up in the business, in revenues. And again, we're taking capital out of it. So our ROIC, ROEs are going to go through the roof. And this is going to become an asset-light, very productive kind of engineering and technology business. But as you can see, we'll get volume increases that are visible. EV mask production start and the VAR and wearable increase. We pushed down automotive this year to get rid of unprofitable products. And so that is a growth business and comes back. By the way, the mobile shutdown on the automotive, kind of unprofitable product shutdown was a multiyear process. Our customers did not want us to leave the business. So we have to work very hard in kind of working through how we were going to -- how are we going to exit, how we're going to build inventory for them for their existing product lines, who we're going to shift to supply to so we could devote our engineering resources to more productive businesses. But that is finally going to -- is done this year. And so from next year, we get a volume increase as we're done with that and the massive increase in profitability that comes from shifting from low profitability mobile to VR and wearables and automotive mix improvement. We are putting more talent in the business. So you get some production cost increase. But it's a way of saying our OP is going to look very, very different just even 1 year from now. And we will be EBITDA profitable. We'll return free cash flow profitable. So JDI needs to deliver for all of you, and we'll deliver all for you on this. And so finally, I mean, this is -- there are some things that we're doing. We'll continue to do them. We're going to deliver structural profitability for me from next year. The business model itself fundamentally needs to be transformed from a heavy CapEx business to a super light CapEx business. We're increasingly an R&D house that builds technology for the entire global display ecosystem. We're going to finalize our deal with HKC. We expect to be mass production in their fabs, our technology, our tech, their fabs, from FY '23. We will announce a finalized revised METAGROWTH KPIs in August, and we're going to keep on running forward on building out, as I say, our technology set. Those are our prepared remarks. Thank you, everybody, so much for your patient listening, and Hiko and I are happy to take any questions.