Nanya Technology Corporation (2408) Earnings Call Transcript & Summary

[Foreign Language] Welcome to Nanya Technology's 2025 Second Quarter Earnings Conference Call. [Operator Instructions] The conference will be held only in English for investors around the world. Today's conference will be approximately 60 minutes. Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the second quarter of 2025, followed by our guidance for next quarter and key messages. Then Nanya Technology's Executive Vice President, Dr. Lin-Chin Su; Vice President, Mr. Joseph Wu; and Financial Executive, Philip Jao, will join us as we open our question-and-answer sessions. Today's presentation materials are available for download at Nanya Technology's website at www.nanya.com. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our presentation slides. I will now turn the call over to Nanya Technology's President, Dr. Pei-Ing Lee, for the summary of operations and current quarter guidance. Dr. Lee, please begin.

Ladies and gentlemen, welcome to Nanya Technology investor conference. I'm Pei-Ing Lee. Before I start today's agenda, let me make a brief comment. For DRAM, it's cyclic in nature. Therefore, the market is always up and down. For AI market, it's been recovering since mid last year, 2024. And for non-AI business, which represents almost 90% or more of the bit shipment, still majority of the DRAM market continue to remain in downturn until recently until the end of Q2. For April and May, the market remained very bad until the end of June, the market start to recover for non-AI-related market. So our Q2 result pretty much represent what I described as the market situation. Today, in my report, we'll start with Q2 2025 revenue and result and followed by CapEx and bit shipment and then market outlook and conclude by business review and outlook. First, revenue and result. Our Q2 '25 result on the net sales comes to TWD 10.526 billion. Compared to Q1 TWD 7.188 billion, it's an improvement of 46.4% in revenue. However, the gross profit comes to minus TWD 2.165 billion versus minus TWD 1.075 billion, and operating income comes to minus TWD 4.5 billion compared to Q1 of minus TWD 3.155 billion. And EBITDA also comes to minus TWD 743 million compared to TWD 797 million positive in Q1. Nonoperating income, minus TWD 606 million, mostly due to exchange rate reason, compared to Q1 plus TWD 732 million, with income tax benefit slightly favoring in Q2. The net income comes to minus TWD 4.109 billion versus Q1 of minus TWD 1.941 billion, and the earnings per share comes to minus TWD 1.32 versus Q1 of minus TWD 0.63. And the book value per share comes to TWD 49.91. For summary of quarterly results, first of all, revenue improved by 46.4% Q-to-Q, and year-to-year also improved by 6.1%. For the shipment, Q-to-Q improved by approximately 70% compared to Q-to-Q, and then Y-to-Y also improved approximately 30%. ASP Q-to-Q decreased by mid-single digit, as I explained in the very beginning of the comment, and year-to-year decreased by mid-teens. Exchange rate decreased by mid-single digit and year-to-year decreased by mid-single digit as well. For the Q-to-Q result comparison with discussion and explanation. Net sales, TWD 10.526 billion versus Q1 of TWD 7.11 billion (sic) [ TWD 7.18 billion ] and improvement of Q-to-Q 46.4%, mostly due to bit shipment increase by approximately 70%. ASP decreased by mid-single digit and exchange rate also unfavorable by mid-single digit. And the reason why ASP decreased by mid-single digit is explained, that April and May, the ASP continued to slide down until June start to recover. And gross profit comes to minus TWD 2.165 billion versus Q1 of minus TWD 1.07 billion, and the gross loss increased by TWD 1.09 billion, mainly due to the lower ASP mid-single digit and unfavorable exchange rate. Operating expense, TWD 2.336 billion versus TWD 2.081 billion in Q1, an increase of TWD 256 million, mainly due to higher R&D expense. Our operating income comes to minus TWD 4.5 billion versus Q1 of TWD 3.155 billion. Operation loss increased by TWD 1.346 billion due to lower ASP, unfavorable exchange rate and increase in R&D expense. Net income comes to minus TWD 4.109 billion versus Q1 of minus TWD 1.941 billion. The net loss increased by TWD 2.168 billion, exchange rate accountable for TWD 1.124 billion unfavorable with income tax favorable by TWD 516 million. For operating expense, on the left-hand side, SG&A, TWD 625 million, it is pretty much in normal range. And R&D expense at TWD 1.711 billion is also in the normal range. However, compared to Q1, which is relatively low, increased by TWD 256 million. For cash flow situation, the beginning balance for Q2 is TWD 62.603 billion and the end balance comes to TWD 52.545 billion with free cash flow of minus TWD 3.7 billion. The cash from operating activity is minus TWD 899 million and capital expenditure is minus TWD 2.84 billion and financial activities and others, minus TWD 6.318 billion. Please pay attention to the bottom note. In bottom note, 1 star, we have unfavorable exchange rate on cash and cash equivalent of up to TWD 5.2 billion, and this is as a result of the Taiwanese dollars being affected. And the net cash and equivalent comes to TWD 19.1 billion. This is the net cash minus net debt. Short-term debt and long-term debt comes to net cash of TWD 19.1 billion. For CapEx and bit shipment. In 2025, we targeted CapEx for the whole year, TWD 19.6 billion. And what is already spent is TWD 9.3 billion. And on the right-hand side, bit shipment, our Q2 bit shipment has increased by nearly 70% Q-to-Q. And we are expecting the whole year to increase by over 40% year-to-year. For market outlook. First of all, AI adoption in cloud data centers, which is mostly HBM, continue to drive demand in 2025. And as I explained to you that non-AI market continued to decline until bottom of Q2. Basically, non-AI application bottomed out at the end of Q2. Overall DRAM market is expected to maintain relatively stable in second half 2025. From the supplier side, the major DRAM suppliers accelerate their advanced node and enhanced HBM and DDR5 and low-power DDR5 positioning. So currently, there's a transition of DDR4 and low-power DDR4 to DDR5 and low-power DDR5. As a result, DDR4 and low-power DDR4 supply has been reduced. From demand side, for server, AI servers continue to drive HBM and high-end RDIMM to support our DRAM growth. From the mobile side, AI smartphone upgrades boost demand for high-density low-power DRAM. For PC, initial AI PC demand primarily coming from enterprise, while conventional PC demand remains conservative. For consumer side, DDR4 and low-power DDR4 usage declined in PC and smartphone and increasing adoption in consumer application. For business review and outlook. For Nanya's 1B node 16 gigabit DDR5 at speed of 5600 and 8 gigabit DDR4 is already in volume production. Our 16 gigabit DDR5 at 6400 speed is in engineering sample, and our development for 3D IC in TSV and DDP process is verified. And we are optimizing our DDR4 and low-power DDR4 supply to meet our customer demand. We continued to improve and expect, across operation and shipment and inventory, an improvement in the second half of this year. We also received ESG recognition: top 5% in corporate governance among Taiwan listed companies. With that, I conclude my presentation. Now we may move to Q&A section.

[Operator Instructions] Firstly, we'll take Charlie Chan, Morgan Stanley for questions.

So I think the first question is about the DDR4 kind of shortage issue. So how bad is the situation? And do you think it's going to be eased in third quarter? And also, I wanted to know how much can Nanya Tech benefit, right? Because Dr. Lee just said that price was down in April and May until June, it started to pick up, right? But it seems like spot price -- or your industry peers in Taiwan are saying that sort of price is essentially going up like every month into third quarter. So I just wanted to get a sense of what could be the discrepancy between your price trend and your Taiwan industry peers.

Okay. Charlie, thank you for your question. Regarding the DDR4 and also low-power DDR4, as I explained, it's in transition from DDR4 to DDR5. And this has happened historically for every generation. That's including previously DDR3 to DDR4, DDR2 to DDR3 and low power as well. So that's a natural transition of the market. And as I explained to you that the non-AI market is still accountable for more than 90% of the overall market, in a bit shipment point of view. So still quite important for all the supplier. And as a result, therefore, there must be some adjustment in terms of the future product, et cetera, HBM, low-power DDR5, DDR5 to position in the marketplace. So DDR4 and low-power DDR4 end-of-life or gradually reducing its supply in certain markets is happening naturally. And it may prolong for 1 quarter or more, et cetera. However, eventually, this is going to be naturally happen. And for Nanya point of view, Nanya has been a longevity supplier for all the product market. That's including DDR4, DDR3 and even DDR2. We are currently still supplying DDR2, low-power DDR2 and low-power DDR3, et cetera. So Nanya will continue to provide our customer wherever there's a need for DDR4 and low-power DDR4. And currently, our customers are quite enthusiastic. And for those customers who may be looking for even longer supply, we will do our best to meet our customers' demand. I don't know if that specifically answers your question, but DDR4 and low-power DDR4 recovery is making a big help to the overall market. The non-AI related market, including DDR5, DDR3, low power, they all have some degree of recovery as well.

I see. Yes, so maybe a quick follow-up is, do you think there's going to be a shortage in third quarter as well? And do you think it's because customers, they're double booking, triple booking? Or is the real demand bigger than supply?

For DDR4 and low-power DDR4, what we see is that the demand is real demand for Q3, Q4, confidently.

Okay. Got you. And next question is more financial related. So maybe Joseph or Philip, if you can help us. Because from your financial results, right, the 2Q EBITDA margin is negative 11%. And compared to 1Q, it was a positive 7%. So if I try to break down the potential impact, currency maybe 5 percentage point impact; and ASP, 5 percentage impact. But that still cannot explain why your EBITDA margin is down so much. Especially, as demand recovers, fab utilization should also improve, right, that should be passed through to your gross margin or EBITDA margin. So can you help us to understand why EBITDA margin would decline so much in 2Q?

EBITDA margin. I think 2 reasons. One is our cash from operation activity. It's not as good. And also very importantly, the exchange rate also make a pretty big impact.

Charlie, this is Philip. I think the main reason is, if you look at our operating income, it's negative TWD 4.5 billion. And if you add back the depreciation, it's still negative in the second quarter.

Okay. I understand. But how about fab utilization? So usually, when you have idle capacity, you have some penalty to your gross margin. But how about 2Q? I would assume fab utilization should be getting full given customers' rush orders.

Yes. In terms of the capacity cut in Q2, actually, it was gradually reduced. In June, we are resuming full production. And in April and May, we have some minor reduction.

I see. Okay. And so just one very quick one. I think people will care about your third quarter financial outlook. Would you be confident that third quarter EPS can turn positive?

I would say the EPS will make a very significant improvement and gross margin-wise, confidently, will be turning positive. Net margin-wise, we still have some room to work on. We need to make our effort. So for Q3, the situation is that we will see very substantial improvement in gross margin. In terms of net margin, more likely in Q4, that could be more possible, more confidence in Q4. But Q3 is totally without possibility, Q3, but still some room to make improvement for, still a lot of effort needed.

Yes. So gross margin to turn positive, meaning 20 percentage points improvement. And in 3Q, FX will continue to impact gross margin still. Does that mean that your ASP can grow like 30%, 40% in the fourth quarter -- third quarter, sorry?

At this point, if you look at the market price trend, that's not totally impossible. However, I cannot give you a specific number for those forecasts.

Okay. But that the inference is like directionally, it's right, that you have FX kind of swing...

So as I said, gross margin turning positive is very confident. And beyond that, there's a lot of effort that we need to make.

[Operator Instructions] Next question, Jay Kwon, JPMorgan.

Dr. Lee, I have 2 questions. Just first one is just relating to the initial discussion point. Can we split the specific impact from the FX headwind? So NT dollar has definitely appreciated against USD, especially into June when your ASP started to pick up. So I do think it impacted June quite a bit. So can we have a separate FX impact instead of just a mid-single-digit down remark, possibly, just to help us understand the gross margin impact better? That's my first question.

Okay. The impact by the exchange rate comes from different areas. That's including revenue, but also including the asset, and also including the cash. So from the cash side, we try to minimize the impact of the exchange rate by having most of our cash in U.S. dollars. There is some impact, but the cash impact has been minimized. It's mostly in the net value, and that is shown in our cash flow situation. And as I explained, our cash flow, due to the exchange rate impact, is up to TWD 5.2 billion. That's the reason why the exchange rate impact is big in all areas that I described, first of all, in revenue; second in asset; and third in cash. So what you see, the 5%, is mostly just in the revenue side. And then it comes to the bottom, on the net value, on the net margin point, I mentioned that from the quarter-to-quarter, the exchange rate is actually hurting us by TWD 1.124 billion. I don't know if the explanation is good enough for you.

No, it's fairly reasonable, sir. My second question is you used to share us DDR5 wafer input and also the bit shipment mix regular in the past. So could you please share what was the result in second quarter and also possibly probably recap the first half result? And also, could you please share your year-end plan or full year plan? Given your bit growth has been revised up from 30% or more to 40% or more, I just wonder if this also includes a higher output from DDR5? Or does it mean you're selling out more DDR4 and DDR3 from your inventories? I want to know a little bit more details on this.

Yes. We now have a portion of our capacity shift from 20-nanometer to our second generation of process node we call 1B, and that capacity on 1B is currently producing both DDR5 and DDR4, and we'll be producing low-power DDR4 and low-power DDR5. So that capacity for our second generation is going to be multiple products. Overall speaking, we're still expecting our 1B node, the new technology, will be accountable for more than 30% of our output by the end of this year. We're still going to -- we are still expecting that. And the DDR5-wise and DDR4 ratio in our new generation of product is adjustable, which means that we have a flexibility of making adjustment according to our customers' demand. At this moment, likely, the customer, maybe more demand on DDR4 delivery than DDR5. So we will make certain adjustment according to what our customer demand is. That is a new technology, process node technology. On the existing technology node, the 20-nanometer, we still have a number of DDR4 8 gigabit and 4-gigabit DDR4 as well as some DDR3, some low-power DDR4, some low-power DDR3 accountable for the rest of 20-nanometer. And again, those capacity also adjust according to customer demand and the market situation.

Just 2 more follow-up. May I ask then the first half output of the 1B nanometer in terms of your bit shipment -- bit production or bit shipment output. That's my first question. And second is, you said customers may demand for more DDR4 over DDR5 in light of this tight situation. So does it necessarily mean that Nanya Tech may be prioritizing DDR4 instead of DDR5? And when it comes to that decision, would you be willing to take that decision even if DDR4 gross margin is low? Or does it mean that you are guaranteed with somewhat similar margin by the customers to that of a DDR5 that you are producing DDR4 more? May I ask about just the opportunity cost and also your return metrics from your production selection?

At this moment, based on the market situation, the DDR4 looks slightly favorable than DDR5. However, DDR5 is still a growing market. And so we have certain commitments to our DDR5 customer, also we have certain commitments to our DDR4 customer. Therefore, as I said, for those we have committed, we will deliver. For those not committed, we are flexible to make adjustment.

Next, we'll have Simon Woo, Bank of America for questions.

Number one question is, your ASP still, maybe half, on a quarterly basis contract; the other half, maybe monthly. And then how about your maybe daily spot sales, spot market sales? Would you share a rough idea?

Okay. That's quite an interesting question, Simon. We have some quarterly as well as monthly and, of course, some spot as well, but not as much, so small quantity. The ratio of quarterly and monthly very much depends on the market situation. Normally, when the market is uptrend or downtrend, customers will come with a little bit different concept. For the downtrend, customers may want to have more opportunity of adjusting the price. So likely, the monthly will be more than the quarterly. But still, they are long-term customers. They require that we make a commitment in a quarter or in a half year. That's still there. So our Q2 result is also very much impacted by 2 factors. One factor is, as I explained in the very beginning, that in April and May, the market price continued to slide down for the non-AI market. That's including every product, DDR4, DDR3, DDR5, everything, even low power. And then that's one reason that April and May is still pretty bad and even worse than Q1. That's one reason. Second reason is that we still have some long-term customers, committed customers, they require quantities and long-term commitment in quarterly or even half year. Those we still have to make commitment and we still deliver on our commitment. And those also impact on our Q2 results. Basically, that was negotiated at a market downturn. So therefore, those pricing is not necessarily very, very good. And on the other hand, upcoming for Q3, because of market upturn, we were able to negotiate more long-term, more quarterly contract as a result because upturn customers want to fix their volume more than the downturn. So that's the current situation. And there's no clearcut on when quarter more than month or month more than quarter. It's mostly market related. I don't know if that answers your question or not.

Yes, very clear, sir. And then quickly, yes, 1B node can be used for DDR5 and DDR4, sounds good. But the 1B is still, what, as of July, only 10%, 20% and then 30% for the end of 2025 to your point.

In terms of capacity-wise, 1B, in terms of wafer capacity, is already over 30% of our production.

I see.

And it will produce more bits by the way, yes.

I was just saying 1B node currently is 40% of the wafer capacity. What about capacity, around the mid-50s, 55%?

Mid-55, yes. Maybe 55 to 60, depends on the product portfolio and technology portfolio.

Yes. That means -- I remember you don't have much 1A node. So after 1B, the majority is 20-nano node and above, right?

I'm sorry, I didn't understand your question. You mean -- the 1A node, we already phase out, end-of-life.

Yes, no more 1A node.

No more 1A, yes.

So that means about 7-0, 70%, of your capacity is 20-nano node of old one.

Yes. However, that did not account for 1B will produce more bits.

I see. So in terms of the bit, when do 1B node can reach more than 5-0, 50%, of the total bit production?

Likely, in Q4, the bit production will be about even.

I see. Very clear, sir. Meanwhile, your capacity is very fungible. So if a customer asks more DDR4, low-power DDR4, you can keep using 1B node, which can be more cost competitive versus 20-nano node.

Yes, there are some flexibility for us to make adjustment, both in 20-nanometer and 1B node.

1B means easily, what, 50% better cost versus 20-nano node?

I'm sorry, I didn't quite follow your question.

1B node must be very cost effective versus the 20-nano node. So per bit basis, 1B node should offer easily 5-0, 50%, lower cost per bit.

No. I think cost-wise, it's not that much. Cost-wise, it's only a slight advantage when it's in a mature situation. This is very similar. This is very similar in all suppliers because 1B node is produced more. However, it also has much longer process steps and cost is also higher. So as a result, you get some cost advantage, but not very much. And I would say this is very similar in the old supplier. However, 1B allows you to build higher density. For example, you can move into 16 gigabit. Also, you can build DDR5. And for DDR4, you also can build smaller die, which, in terms of the floor plan, they can fit into much smaller floor plan or PCB for customer requirement.

Yes. Very good. One last thing, sir. Second half outlook is good. DDR4 demand is getting stronger. So that means your overall bit basis production volume, the DDR4, including low-power DDR4, DDR4 can be higher than the 50%, 5-0. So second half...

If you include low-power DDR4, it's already way over 50%.

Yes. DDR4 and low-power DDR4 altogether more than 50%, 5-0, for second half of this year.

Yes, even in June, we already achieved that, yes.

No. Sorry, I think the opposite of that -- DDR5?

Yes, you are right. In the second half, the DDR4 and low-power DDR4 will be over 50%.

Yes. That means the DDR5 is still lower than 50%.

DDR5 will be much lower.

Yes, much lower. Okay. How about the second quarter results then? Roughly, DDR4 is around what, 70%, 80%? What's the percentage of the DDR4?

Over 40% -- over 50%, yes.

Sorry. DDR4, only 40%? Sorry, I didn't get it.

Over 50%.

Over 50%. So DDR5 means maybe, what, 30% range?

In the teens.

Teens, I see. And the rest, around 30%, 40% still DDR3 then.

DDR3 plus low power.

Yes, plus low power, around 30%.

Low power is around 15%.

15%. The DDR3 and low-power DDR3 together, mid-teens, 15%, 1-5.

15%. Basically low power and DDR3 are about same.

Okay. DDR3 plus low-power DDR3 together, altogether, 15% or 30%, sorry?

All the low power together around 15% and all the DDR3 together, DDR3, including 4-gig, 2-gig, 1-gig, et cetera, is about 15%. And Simon, that ratio may be adjusting also month by month.

Okay. Yes. Anyway, so as of the second quarter, the mainstream product is still DDR4, including low power.

Yes. And some DDR5. Some DDR3, we still maintain as a longevity supplier to customers who require DDR3 as well.

Yes. So it sounds that the DDR5, around the teens, and then DDR3 also mid-teens. So similar ratio, DDR5 versus DDR3.

Yes.

All clear, sir. Hopefully, you can deliver very strong Q3 results. Don't get stressed about it.

Thank you, Simon. And thank you for your nice comment. Appreciate it.

[Operator Instructions] Next question, Charlie Chan, Morgan Stanley.

And just like last quarter, Dr. Lee, can we ask on your wafer-on-wafer business development? And if yes, any sort of revenue contribution percentage in 2026 or 2027?

What do you mean wafer-to-wafer business? You mean for the AI-related business?

Yes, because it's a high-speed bandwidth, low-density type of wafers taking...

Okay. What we're targeting is not low density. What we're targeting is high density because, for whatever AI application, it will require a lot of data computation and data communication. So that requires very high density. For very low density, to do the AI function, it's going to be very limited. And as a matter of fact, it's not necessarily the full AI function we're talking about. Partial AI is possible. So your question is about when that's going to be happening. We are working on that. And we have our -- I mentioned at one point in my presentation that we already have 3D IC, DDP process verified. And that not necessarily is wafer-to-wafer bonding, it's chip-to-chip bonding, but that's the beginning process of us preparing, to get ourselves prepared, for the future, starting with chip-to-chip bonding and then gradually move into wafer-to-wafer bonding. And we are expecting that likely, we will start to have some business, likely and hopefully, by end of next year and into 2027.

Let's move on to the webcast questions. Dr. Lee, please begin.

Okay. I got the first web question coming from KGI Securities by Michael Shen. Michael has 2 questions. The first question is, what is the ratio of the company's pricing based on contract and spot? And for contract, how much is the monthly and quarterly? Actually, I explained this question in previous many questions by Simon and also mostly by Simon. The quarterly and monthly is basically what's mostly our sales. We also have some half year and yearly contracts as well. However, the spot, we only do very limited spot. And at this moment, we can see that more customers are demanding longer-term contract instead of short-term contract. And that is evolving, changing. And your second question is, is the company concerned that with the DDR4 pricing higher than DDR5, there could be a major shift in PC and server demand toward DDR5, leading to the sharp drop in DDR4 demand and a price collapse in 2026? I don't expect that to happen. At least confidently, Q3 and Q4, certainly, we won't be seeing that happening. And one thing I have to explain is that for PC and server, the customers are shifting to DDR5 and low-power DDR5 as well, mostly DDR5. That's already happening for a long time. However, still some remaining customers require DDR4 supply, mostly in server side as well in PC side as well. There will be some customers who'll continue to use DDR4 for the reason of their system. That will not go down to completely 0. And on top of that, I explained in my presentation that DDR4 and low-power DDR4, now they're becoming more adoption, becoming more mainstream usage in the consumer. One thing we have to notice is that when you use DDR4, it's 8 gigabit versus when you need to move to DDR5, you need to move to 16 gigabit. And 1 16 gigabit DDR5, even though with an 8-gigabit DDR4 pricing being going up, it's still higher than 8-gigabit DDR4. So from a bond cost point of view, there's still advantage with 8-gigabit DDR4. However, customers will continue to look for a solution as well. So there are some certain applications that will require 8-gigabit DDR4, 4-gigabit DDR4 as well. So I don't expect the DDR4 pricing to collapse. On top of that is that, as I said, DDR4 and DDR5 transition is happening. And this happened historically always from DDR3 to DDR4, DDR2 to DDR3. And those transition is not necessarily seeing the more legacy product collapse. It may adjust moderately, but not necessarily collapse. And the next question comes from Yuanta Securities by Michael Hsu. Four questions from Michael. Michael's first question is, could you elaborate further on COGS of 2Q '25? Why did GM go down Q-to-Q? And actually, I explained it very clearly just now, a couple of times already, the GM goes down for several reasons. One reason is price go down. Second reason is exchange rate not favoring. And the price go down, as I explained also in my previous explanation, discussion, because in Q2, April and May, price continue to go down further compared to Q1 and the trend only start to recover at June. So in average, Q2 average price still not as good as Q1. So the price marginally go down Q2 versus Q1. And that situation will be improved substantially. And the second reason for that is some of the Q2 ASP was negotiated in Q1. When in Q1, the market is pretty bad, downtrend, therefore, those long-term contract prices, quarterly prices, are also not good. And that situation will be improved in Q3. As I explained, the quarterly price negotiation, more customer demand, longer demand for longer supply, that's already happened. And we are expecting the gross margin confidently will be turning positive in Q3 and the net margin will require some hard work and some effort. The second question, what is the revenue contribution of DDR5 production in first half? In Q2, as we already discussed, the DDR5 contribution is in teens. And this is a result of more demand on DDR4 as well. And in 2025, again, the second half will very much depend on customer demand and customer commitment on either market, DDR4, low-power DDR4 or DDR5. And whatever commitment we meet, we will deliver. Your question three, what is the DDR5 verification progress of new customer? That's going on quite nicely. We are currently delivering our 16-gigabit DDR5 and we are sampling. And the current deliveries of DDR5 is at 5600 speed, and we are sampling DDR5 also in 6400 speed. And your question number four, CapEx and total capacity planning for 2026. We had CapEx on 2025 of TWD 19.6 billion. 2026, we're still working on it and still subject to our Board approval. How much wafer capacity is expected to increase in '25 and '26? Basically, wafer capacity will remain pretty much similar between '25 and '26. We have come to next question also from Yuanta Securities by Joyce Tang. You have one question. How does the company view the increase in the contract price in 3Q? Or what percentage of contract will the company negotiate in 3Q? As I described to you, the long-term contract has been increasing. However, unfortunately, I cannot disclose to you the detail of the percentage. Pardon me for that. Okay. That pretty much ends all the questions on the website. And thank you so much for attending today's investor conference, and thank you for your support to Nanya Technology. Bye-bye.

Thank you, Dr. Lee. And ladies and gentlemen, that concludes our conference call today. Please be advised that the replay of the conference will be accessible within 3 hours from now, which will be available through Nanya Technology's website at www.nanya.com. We hope you will join us again next quarter. Thank you for your participation, and have a wonderful day. You may disconnect your line at this time. Thank you, and goodbye.