Parade Technologies, Ltd. (4966) Earnings Call Transcript & Summary

Welcome, everyone, to Parade Technologies Ltd.'s 2021 Third Quarter Webcast Investor Conference. Investor Relations of Parade Technologies, Mr. Yo-Ming Chang, will present 2021 third quarter financial results first. [Operator Instructions] After the presentation, there will be a question-and-answer session in English by CEO, Dr. Jack Zhao; and CFO, Ms. Judy Wang. And we also will remain last 15 minutes for the attendees who would like to ask questions in Chinese. [Operator Instructions] [Foreign Language] And now I would like to introduce Mr. Yo-Ming Chang, the Investor Relations of Parade Technologies. Mr. Chang, please begin. [Foreign Language]

Thanks, Jason. Welcome, everyone, to Parade Technologies 2021 Q3 Webcast Investor Conference. Parade Technologies' third quarter 2021 consolidated revenue was USD 191.72 million, and the net income was USD 53.34 million. Both basic and fully diluted after-tax earnings per share were USD 0.67 and USD 0.66, respectively. These results compared to consolidated revenue USD 150.15 million and a net income of USD 36.75 million or USD 0.47 and USD 0.46 per basic and fully diluted share in the year ago quarter. In U.S. dollars, the third quarter revenue increased 9.39% sequentially and was up 27.96% (sic) [ 27.69% ] year-over-year. The gross profit in the third quarter of 2021 was USD 94.14 million, an increase of 12.76% from the previous quarter and an increase of 42.47% compared to the same quarter of last year. On August 19, 2021, Parade announced the PS188, a USB 3.2 Hub chip with integrated DisplayPort 1.4a to HDMI 2.0 converter and dual USB Power Delivery 3.0 controllers. The PS188 upstream facing port supports USB 3.2 and the DP Alternate Mode while downstream ports offer HDMI 2.0, two USB 3.2 ports as well as an additional USB 2.0-only port. The 2 integrated Power Delivery controllers provide full PD 3.0 functionality to the upstream port and one downstream USB Type-C port. The PS188 represents the first fruits from Parade's 2020 acquisition of Fresco Logic and combines Parade's video expertise with Fresco's USB Hub and the Power Delivery technologies. PS188 joins Parade's lineup alongside the PS186 DP to HDMI protocol converter, the FL5500 USB 3.2 hub and the FL7112 USB Type-C PD 3.0 controller. On September 29, 2021, Parade announced the DP818/DP816 timing controllers with integrated touch controller, TC2200 source drivers with integrated touch analog front ends and the TC2201, a Gate-on-Array level shifter for required display and touch voltage generation. This family of complementary device target high-resolution notebook platforms supporting eDP 1.4b with features such as high dynamic range and the Panel Self-Refresh. The DP818 Tcon supports TrueTouch in-cell capacitive touch and active stylus functionality for commercial notebook applications, while the DP818 (sic) [ DP816 ] provide a robust TrueTouch touch-only solution for mainstream notebooks. The touch integrated Tcon, source driver and level shifter combines Parade's broad portfolio of patented display and touchscreen technology as well as proven display processing and high-speed signal technology to provide a low-power, highly integrated display and a touchscreen solution for premium notebook in-cell amorphous or Oxide TFT LCD displays. On October 12, 2021, Parade announced the availability of the PS5196 (sic) [ PS5169 ] and PS5170 USB-C linear redrivers optimized for both smartphones and ultra-mobile device. The PS51xx family improves signal integrity for USB 3.2 and the DisplayPort 1.4a signaling over the USB-C interconnect and consumes very low power. The PS5169 and the PS5170 linear redrivers are fully compliant with the USB-IF USB 3.2 specification supporting up to the Gen 2x2 or 2 lanes operating at a 10 gigabits per second signaling rate. For DP Alt Mode support, they comply with VESA DP 1.4a with up to 4 lanes at HBR3 or 8.1 gigabits per second link rate and comply with VESA DisplayPort Alt Mode 2.0. The PS5170 integrates an AUX switch for SBU signals. On October 19, 2021, Parade announced the availability of the PS8830 USB4 retimer for commercial and consumer PCs, host systems and peripherals. The PS8830 features full capabilities of USB4, DisplayPort 2.0 and Thunderbolt 3.0. This allows OEMs to offer a wide range of product offering with a future-proof platform longevity. The PS8830 is fully compliant with USB-IF's USB4 specification supporting up to Gen 3x2 or 40 gigabits per second. It supports USB4 tunneling of DP 1.4a and the USB 3.2 as well as alternate modes, including DP 2.0 up to UHBR20 and Thunderbolt 3.0 up to 41.25 gigabits per second. PS8830 will fall back to USB 3.2 mode when USB4 mode is not supported. Based on the current business outlook, Parade is providing the following guidance for the fourth quarter of 2021. Revenue is between USD 176.5 million to USD 194.5 million. Gross margin is between 44.5% to 48.5%. Operating expense is between USD 32.5 million to USD 35.5 million. [Foreign Language] It is my presentation for the 2021 Q3 financial results. Now I transfer to CEO, Dr. Jack Zhao, to answer your questions. Jason, you may begin.

And ladies and gentlemen, we will now begin our English question-and-answer session. [Operator Instructions] And the first question is from Jerry Su of Credit Suisse.

And congratulations on the pretty good results. I want to ask Dr. Zhao about the outlook for the fourth quarter, particularly that your revenue guidance and gross margin guidance were pretty similar to the third quarter. But currently, your third quarter gross margin is 40 -- above 49%. But compared with your guidance on 4Q, it seems like that you're expecting some sort of margin contraction. So can you give us some color about what is happening there and also about the growth momentum for each of your product segments? That's the first question. The second question is regarding the product that you have just launched in October, the linear redriver for smartphone devices. Can you give us some idea about how should we think about the total addressable market for this product, especially that I think Parade used to be more exposed to a notebook or PC related. But this redriver product seems like you can open other market into the smartphone.

Okay. Thanks. Good afternoon. I think the first question is what is the growth momentum in Q4. I think in Q4, we're pretty positive for Q4. Actually, as we have guided the Q4 in the range are similar to the Q3. And Q3 having outperformed than where we had expected when we provided guidance. And certainly, in terms of gross margin, we got a Q4 gross margin range actually better than the guidance we had for Q3. And -- however, the mix of Q3 results that came out is in favor of our gross margin. So I would think that -- I don't read it that much because we are into the Q4 and with -- the company's commitment is we call that and we try to do our best for the gross margin. But that's what we can see in the range. Depending on the product mix, that may change. So I would think that it's pretty difficult to use the actual Q3 number to compare our guidance number. So that's as much as I would like to say. Your second question is about our new product, PS -- the redriver product for smartphone and for mobile device, right? And it has been our kind of direction that as the interface speed goes high, as the USB Type-C goes to smartphones, the smartphones will come up more to use higher speed. And they will also need those redriver, retimer device. So this is our first USB 10 gigabit per second redriver announcement. And in fact, we have been shipping in volume this redriver device on one of the leading tablet solutions and it's in the high volume. And we continue to see the design-in to the high-end smartphone, which require USB -- require Type-C 10-gig solutions. And so we have a few models. And in fact, some of them will come to the market zone, so we are kind of happy to see the trend smartphone taking the similar path as the PC to adopt high-speed wave for Type-C and so on and so forth. So that's what we see. And I think in terms of that market, it just started and we believe it will have more to come. And our 5169 or 5170 have been qualified for multiple application process platform, right, the common one called MediaTek and the Samsung all been qualified. So happy to see those trends will continue to evolve and that device will continue to be welcomed in the marketplace.

Okay. Just to follow up on the TAM for this. You mentioned that you have some design in for high-end smartphones. But in the mid- to long term, should we -- does this proliferate into mid-end or even the entry-level product?

So far, that's what I said. We see a few of our models on the smartphone play already designing our device. Those devices are in the high-end segment. And they are using the 5G and are using the most advanced application processor because, otherwise, those application processor will not be able to support USB Type-C in the 10 gig, right? So it's all our [ social ways ] are high end this moment. But in a few years, you may expect it will go to the more -- the middle end or to those segment as people need to use those device to play games, to -- using this for the line up the monitor, so on and so forth, right? So that's what we expect to see. And I think really our vision is this one goal with application processor, right? Once people adopt those application processors and would like to use those 10 gig for their advantage, and most likely, they'll need to use this kind of redriver. And then we -- hopefully we'll be very sensitive on the cost side for smartphone. That's why we're using the redriver to address that market.

Okay. And then coming back to your guidance for the sale. Can you give us some color about which segment is seeing a stronger or softer momentum in the fourth quarter? And then regarding the foundry cost -- foundries' wafer ASP increase, how will Parade manage your cost structure and also your margin?

Yes. Thank you. Coming to the Q4, we still see many of our parts are in the shortage situation mainly driven by commercial notebook, gaming notebook and so on and so forth. And we also see continued strong demand on the panel side for our advanced Tcon and source driver bundled sales together. And those are the -- we clearly see the Q4 demand pretty strong on those areas. And then in terms of price foundry and probably has been reported many place and the foundry are raised the price, and they will impact us as well. And previously, we report to the investment community we did do some price adjustment in the early Q3 and our view is we look at the whole thing. We will do dynamically to observe what is the cost increase and how much impact to us and so on and so forth to price adjustment accordingly. And that's the current dynamic in the semiconductor space and the shortage and the current demand drive the fab and costs going up and -- however, in some segment, as we reported previously, we're going to do very long-term agreement with our foundries. So on certain nodes, it has already been managed because we reach very long-term agreement there.

The next question is coming from Aaron Jeng of Nomura Securities.

This is great result. I just wanted to follow up on one of the previous question of the gross margin. So 4Q -- you just said that 4Q gross margin cannot be compared with third quarter, which was pricing is strong, it's like 49%, because you said there was kinds of strong, surprisingly good mix enhancement, right? Is that -- I just want to clarify this. Yes. So I just wanted to follow up, what kind of mix change was surprising to you versus 3 months ago?

Okay. So what I tried to say is it will be proper compared with guidance to guidance and -- right? And within the quarter, we have a favorable mix for our product demand, right? And that's what came out, the stronger. The particular area we see the strong demand are a surprise to us. Some of our retimer chip for commercial notebook and for gaming notebook are much stronger than what we have expected. And we also see the gaming platform had a good run. So as our -- the TED Tcon and those are the upside and provide better gross margin for us.

I see, I see. And sorry -- okay. I thought you are going to say something. My second question is about -- actually also a follow-up question to what you said earlier. Foundry are raising price and you beat the price adjustment earlier in the quarter, and you are now signing some long-term agreement with foundries. So the big question from me is that how should we be thinking about the so-called profitability of Parade operate into maybe like next 1 year if foundry continue to be tight, if the price continue to be going up, how -- are you going to be negatively affected? Or are you going to stay at current level for -- which might be a new norm? How should we be thinking about it?

I think we are focused on our gross margin guidance. And at this moment, our -- we guided the gross margin the range and we continue try to guide the gross margin in that range. And that's what we -- modeling based on. And certainly, if things go quite extreme as you described next year, continue very tight and the foundry continue to raise price, and we'll really have to go to our customer and tell to choose and to work together to make sure we are able to deliver the product on time. If we have to increase price, I think our customer will be able to understand this. However, I would not think of the things will go forever, right? So it has been the industry extraordinarily thing happened in the 2020 and 2021. And I think our customer has been quite adaptive for price increase. I'm not that sure how long this thing will continue to last. And we still kind of to observe and try to understand, try to negotiation, try to keep a long-term agreement with our partner, both foundry and as well as our customers to manage the costs and manage the business. I think the view as a partnership rather than just we're going to the shop and we're going to the gas station to try to pick up the lower the price of so on and so forth. That's not our business attitude. We look at the business as a long term relationship with our foundries as a partnership, so as our customers.

And next, we'll have Carol Juan of HSBC for questions.

My first question is quick. Could you provide your revenue breakdown for 3Q? And -- that's my first question.

Okay. Thank you. And in the Q3 and our DP segment and the percentage is below -- slightly below 45%. Our peers is above 30%. Our TC source driver is above 20%, and our TT is above -- it's about 5%.

Okay. So which segments do you think that will have stronger growth into this quarter? And any segment that you are expecting a decline or a flattish performance in this quarter?

I would think the -- our panel solution continues will be stronger in Q4. The reason being is the panel industry is still hungry for the -- they have a very strong demand. And our product are clearly gaining market share and the share is very efficient and effective to serve our customers. So that we believe that the panel solution, which include our source driver; our bundled sale Tcon; our TD device; our AMOLED, the Tcon, all were going up as much as currently we can see. And our PS product will continue growth in the area to support the commercial notebook and for gaming platform. Certainly, in the PS products, you would have -- some of them are the device used in the Chromebook and we have a tremendous run last year. However, the Chromebook market is softening. And I think that's as much as what we see in today's market.

Very clear. And my follow-up question is do you think that you're going to continue to gain shares in your panel bundled solution in 2022? And is there any migration in eDP 1.4 or even 2.0 going forward? And what do you think about the adoption rate in the market?

I think the panel industry is pretty dynamic, right? And they continue to have a new innovation and new opportunity. And our panel solutions are very broad. And for example, we have a solution to support the AMOLED Tcon and we have been shipping for quite large volume. We have integrated solution called TED, right, and also shipping quite good volume. And then we have a more high end support of gaming platform, which will support the refresh rate over 240 hertz. And there, we have a more general bundled solution there. As to what you had mentioned, the eDP speed standard will migrate to eDP 1.5, right? And those will create a new opportunity for us and -- for us to gaining market share. And importantly, I think from a long-term perspective, the display in the automotive segment will be a new opportunity for Parade to gain more opportunity, to gain more business. And we are quite excited for those areas.

Okay. And my last question is about high speed interface. You have mentioned in the last earnings conference call that you have PCIe Gen 5 products under development. And just wondering what is the status and progress of PCIe Gen 5 for now? And are we going to have more design wins in PCIe Gen 4 in your turn or maybe 2022 as well?

Yes. I think at the PCIe Gen 4, let's talk about PCIe Gen 4 retirement, we are shipping in the good volume and we'll continue design with the new models. And it's not a surprise in 2022 we will do more for those kind of case. And we are, as reported in the quarterly conference call, we are designing the -- or developing the PCIe Gen 5. I would think we are getting to the -- pretty soon to wrap up development and to tape out the chip and then we will start to engage with our customers. As the confidence for PCIe Gen 5 retimer is a lot more better than the PCIe Gen 4 because that literally, in the larger side is similar, only change the end on the high-speed side, right, so we are pretty positive for PCIe Gen 5. And 2022 will allow us to engage with customers and that's one of the area actually we put a lot of attention there.

The next question comes from [ Shi Yon ] of [ United Global Investment ].

This is [ Shi Yon ] and congrats on a great result. And facing, as mentioned, strong demand of panel solution that we're seeing -- continuing to see the strong momentum into 4Q, can you provide us a little bit more outlook for other business like going into next year? Which one do you see the biggest growth driver into next year and which one you see is the slower one?

As we said, the panel will continue to grow. And I think in the panel is our advanced solution and also we gain market share continuously. And we also have a new technology we call the tTED, which integrated touch with source driver with Tcon together. And we also have the so-called [ TTD ] solution and integrate the touch front in the source driver and touch -- larger portion in our Tcon. And those solutions are gaining market traction and -- because the integration will add on the new component into our device. So the dollar wise and/or content can increase. So very sure, 2022, we'll continue to see the panel solution will increase. And the high-speed side, as we announced our newer device, one of them is PS8830, that's our USB4 retimer. And that one of the device we view as significant and the 2022 give us opportunity to wrap kind of high revenue there. The USB4, we expect, will take off in a big way in some CPU platform. We're also positive for our PCIe Gen 4 devices and our mobile device as we discussed on the redriver side. So overall, we think 2022 will remain a growth year compared with 2021.

All right. Got it. And my next question is because the markets are seeing the PC market might decline next year. And I'm wondering if there is any impact if the overall PC margin declined next year to our revenue -- or to our gross margin.

Certainly, we'd like to see the PC unit will continue to grow in 2022. But in the -- we also read many research reports saying that next year, the PC unit might stay at the same level of this year or may drop slightly, right? We read those research reports. However, as many investment community and as a new Parade, we are really based on our new technology, and particularly in the high speed, to designing, to new application new area in the PC, which in particular in that case, is the high speed, right? So once you get high-speed in those device, ASP is higher than the device in the similar place, but the price is much lower, right, because of the complexity associated with the high speed. And so what kind of positive thinking the -- yes, even unit wise, if we drop, we still will be able to make us to grow. So the comment we had -- that I had before, we are kind of taking into consideration of the market the research report and take into consideration of that. And look at our product portfolio, look at our -- what we will offer, look at our design-in momentum, that's kind of we come out what do we see, what do we feel for the 2022.

And the next question is coming from Martina Huang of Fubon.

My first question is could you give us some updates on auto market?

Yes. It's very exciting, I would think. And will be our first year, we will be very much focused as a management to define our new product and really targeted to auto application. And what do we see our device in today's automotive segment really is a high-speed device, the converter, the USB device, right, that start to be adopt into the automotive and some of our devices already in the car on the street. And we are seeing more those devices into the automotive into the quickly into the -- on the street. Secondary, we are excited as we've got a lot more inquiry for newer automotive display, on dashboard, on the backside, on the heads-up -- on the heads-up display. The reason being -- is the automotive display start to demand the high resolution as the PC had or tablet had 8 or 9 years ago. Now leading car vendor start main planning on eDP or display -- port-based display. Those have become a great opportunity for us. So we are in the discussion with several panel guy and OEM automotive guy, we may end up doing the ASIC chip for their application and so on and so forth. So it's pretty exciting. It's like, I would say, 8, 9 years ago, we started the display port for PC. Now certainly, those things are into the automotive and the automotive guys are talking about how do they do to make sure even their inside car design they can be expensive as the other car providers. One example by leading to the future car is the example you look at the Mercedes-Benz announced the S-class, the EV car called the EQS, and then you look at the inside of that dashboard, just literally high resolution on the panels, right? So those are the real opportunity for us, and we think there will be -- our long-term growth momentum and we are steering the company to have a more focus on those areas.

My second question is who are our competitors in auto market?

Who are the -- I would think they are the traditional ones and that they are new solution provider, right? So you always have this because today's automotive panel is like the 800x600 resolution that was for notebook like 10, 12 years ago, right? We kind of -- those are the LVDS solutions, and we intend to not to compete in those existing markets. We are looking for the future automotive display. And in this one, I'm not sure, we just start to discuss -- intensive discussion and start to design the Tcon device to support those areas. In terms of high-speed PS device, you can imagine who are the one, people like TI, people like NXP, people like on semi, those are our competitors.

[Operator Instructions] And now we'll have Mike Yang of Bank of America for questions.

Jack, congratulations on the very good results and...

Excuse me, Mike, we cannot hear you very clearly.

Sorry, can you hear me?

It's better. Thank you.

Okay, okay. Congratulations on the results. My first question is regarding to the gross margin. I think overnight -- yesterday, Texas Instrument posted their result and it says that the inventory level remains quite low for the company, and there is still some supply constraints by the company. And you just mentioned that third quarter your gross margin is better on stronger-than-expected retimer demand. And I just noticed that you raised your fourth quarter gross margin guidance once again. So I just want to ask and figure out, is there any linkage in between this that you're a beneficiary of the demand outflow from those U.S. and European IDM guys so that your product mix will be better and that will be lasting into the next few quarters?

Interesting. Well, I think we -- in the market, we know the big shortage of TI and the other IDM guys and because of customer screaming using our device to replace them. Yes, that's pretty true. And we have been in the Q3, continue Q4. And my reading is, and I could be wrong here, it's those IDM supplier or semiconductor company are probably very busy to support automotive using their capacity. They may very much lack of capacity to support PC and notebook space, that's why it created a lot of the opportunity for us and we obviously see the customers screaming for the parts who can replace them as that happens. I think that -- it is kind of opportunity to push our -- the revenue high. Gross margin may also increase because those devices tend to be our high gross margin device, the high-speed device. Yes, I think your observation definitely is correct. But I'm not sure how significant it is and the market has a lot of rumor, a lot of saying that TI is quite shortage to supply in those PC notebook customers. Yes.

Okay. So just to follow up, I think you just mentioned that you have signed a long-term agreement with a foundry partner. So is this to say that we're quite certain that for 2022, our foundry support will be relatively solid versus those peers, including the IDM guys?

Depending on how much or what will be the demand and what will be the growth rate we will run to in 2022. And if we use our model, the growth model and we think we probably can support our growth rate. However, if growth is like 2021, then I would think we will still facing a great shortage and we still have to scream in our head to find the place to manufacture those parts. So it's really dependent on the -- how the market demand is. For us and based on what we see today, we think we have a good capacity to support that, right? And -- but I think it may change, and so far, we still see we are behind a quite a bit of customer demand.

Okay. And my second question is regarding to your outlook on 2022 and also the PCIe Gen 5 retimer. Do you have an initial outlook on the growth rate or the addressable market size?

I used to use that words that we will grow better than the industry and that's how we continue the way to look at this. And the second one we add are the 2022 will grow from the 2021 as well. In terms of exact ratio, now we're -- to sharpen the pencil and to look at our customer more, and I guess, probably will be better and when they talk to me to figure out. And that will be probably a better way to look at it. And but 2 things we will say. One is we'll continue to grow from the top of 2021 even we knew we had a tremendous growth in 2020 and 2021, but we think 2022 will continue our growth. And we also think we'll grow better than the industry as well, okay?

And then we'll take Evelyn Yu from Goldman Sachs for questions.

My first question is regards to the foundry price hike, where you mentioned earlier, but I just wanted to follow up that. I recall that in your last analyst meeting that you mentioned that you will not be too aggressive to raise your ASP in order to gain market share. So may I know what kind of price adjustment magnitude this time that we are looking forward into Q4 on a quarterly basis? Or you will alternatively partially share the cost hike with your customers?

Other -- we did the Q3 -- early Q3 price adjustment. And we did not -- or we would not expect at this moment we would do significant price adjustment in Q4. I think we are whatever the guidance we provide is the price already announced to the customer, and most of the price are already fixed. The only thing impact our Q4 gross margin is really what are the product we ship more, what are the product we ship less, those kind of thing, right? So that's -- we make sure that's what we -- in the Q4. Moving forward, as we had discussed before that foundry in the 2022 may increase. Also about May for sure, they will increase there. And we captured this and put this into our -- the model for projection. And we also had said that we're working based on the model the gross margin guidance today we provide based on that foundry there to do our planning work. And we work with the foundry as a partner so as we work with our customer as a partner, right? So I'm not sure that -- how would we reach the balance to grow our market share, grow our business. And at the same time, we can provide more innovation solution and we can also provide good returns, investment return to our investment community -- to our shareholders, we have to reach that kind of balance there.

Okay. Got it. So my second one is on PCIe Gen 5 again. Do you have any revenue target for 2022 that you can share with us?

I think the 2022 for the PCIe Gen 5 is under the development effort and the PCIe Gen 4 we were shipping, quite stable at the moment, I would think the PCIe Gen 4 retimer. Yes, that's the PCIe Gen 5 is -- we have a [ cap ], we engage with customers and expect later in the end of the period may have to ship some of PCIe Gen 5 retimer. And many analysts in today's conference all understand the PCIe Gen 5 also has to rely based on the takeoff of the marketplace, which means Intel has to have it, AMD has to have it and the fabric switch as to have it. So that is entire industry related, right?

And ladies and gentlemen, we will now move on to our Chinese question-and-answer session at this moment. [Foreign Language] [ Fung Hu ], [ Mike Chin ].

[Foreign Language]

[Foreign Language] We made the example, large volume samples to the OEM customer. Production period, it got very close within 1 or 2 quarters. But we also [Foreign Language] of Intel platform, outside Intel platform, we had a customer, a major OEM customer, the [Foreign Language] so very interested for partner-selling per chip. Yes, we have a target those guys, very busy designing those. [Foreign Language] Most important platform or CPU vendor to have a -- finish all the testing and so on and so forth. [Foreign Language] very intensive and almost to the end of testing.

[Foreign Language]

[Foreign Language] Now we had ship volume -- start to ship volume [Foreign Language] the capacity to support, so on and so forth [Foreign Language]

[Foreign Language] USB4 retimer, USB4 [Foreign Language] the next month.

[Foreign Language] We are industry, a big problem, availability of PDs, right? [Foreign Language] integrate that PD solution. Now we may strongly invited to the device. Now the source side of device, the PD the support. Now we decide not to -- to focus on integrated. [Foreign Language] resource on the high-speed side and the PD so that you can integrate the solution towards which may or should take a stand-alone PD device. That's first of all, the strategy. [Foreign Language] PD integrate together. Try to avoid the [Foreign Language] PD stand-alone device. [Foreign Language] interest [Foreign Language] the focus remains the high-speed side.

Okay. Got it. Understood. [Foreign Language]

[Foreign Language] you both saw OEM -- global OEM figure. [Foreign Language] to adopt the share advanced panel. Now [Foreign Language] the AMOLED adoption rate is relatively high. [Foreign Language] based on consistent demand going up. Now I wouldn't be surprised mainly [Foreign Language] AMOLED based on the solution. Between AMOLED like consumer space [Foreign Language] video also play game [Foreign Language] big dynamic range [Foreign Language] Now [Foreign Language] will continue to support advanced solution. [Foreign Language] relatively high [Foreign Language] line up to support [Foreign Language] advanced nodes, I mean, the capacity to support the share will be challenging.

[Foreign Language] standard plus customer [Foreign Language] focus on mini [Foreign Language] standard plus customer [Foreign Language]

[Foreign Language] make sure we must support standard plus customer [Foreign Language], right? [Foreign Language] achieve that this year goal. And then in next 3 years, regardless of which technology will be now [Foreign Language] continue the socket -- continue well [Foreign Language] continue our support.

[Foreign Language]

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[Foreign Language] PCIe Gen 4 still at [Foreign Language] meaning the gross margin is relatively very high.

[Foreign Language] We thank you for all your questions. That concludes our conference for today. We thank you very much for your participation in Parade Technologies 2021 Third Quarter Webcast Investor Conference. You may now disconnect. Goodbye.

Okay. Thank you, everyone.

Thank you. Bye-bye.

Goodbye.

[Foreign Language]