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

Welcome, everyone, to Parade Technologies Limited's 2021 Fourth Quarter Webcast Investor Conference. Investor Relations of Parade Technologies, Mr. Yo-Ming Chang, will present 2021 Fourth Quarter and Fiscal Year 2021 Financial results first. During the presentation, all lines will be placed on mute to prevent background noise. 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 reserve the last 15 minutes for the attendees, who would like to ask questions in Chinese. Please follow the instructions given at that time, if you would like to ask a question. [Foreign Language] And now I would like to introduce Mr. Yo-Ming Chang, Investor Relations of Parade Technologies. Mr. Chang, please begin. [Foreign Language]

Thanks Jason. Welcome, everyone, to Parade Technologies 2021 Q4 Webcast Investor Conference. Parade Technologies' fourth quarter 2021 consolidated revenue was USD 194.26 million, and the net income was USD 52.6 million. And both basic and fully diluted after-tax earnings per share were USD 0.66 and USD 0.65 respectively. These results compare to consolidated revenue USD 148.29 million and a net income of USD 33.29 million or USD 0.42 and USD 0.41 per basic and fully diluted share in the year ago quarter. In U.S. dollars, the fourth quarter revenue increased 1.32% sequentially, and was up 31% year-over-year. The gross profit in the fourth quarter of 2021 was USD 93.98 million, a decrease of 0.17% from the previous quarter and an increase of 45.56% compared to the same quarter of last year. For the fiscal year 2021, the consolidated revenue was USD 714.33 million, representing an increase of 37.81% from USD 518.34 million in the prior year. Gross profit was USD 340.60 million and the operating income was USD 208.37 million. Net income was USD 187.44 million or USD 2.37 per basic share, and USD 2.32 per fully diluted share. These results compared with the net income of USD 118.95 million or USD 1.52 per basic share and USD 1.48 per fully diluted share in the prior year. Based on the current business outlook, Parade is providing the following guidance for the first quarter of 2022. Revenue is between USD 193.5 million to USD 212.5 million. Gross margin is between 44.5% to 48.5%. Operating expense is between USD 33 million to USD 36 million. [Foreign Language] It is my presentation for the 2021 Q4 and the year 2021 financial results. Now I transfer to CEO, Dr. Jack Zhao, to answer your questions. Jason, you may begin.

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

Congratulations on the good results and also the outlook. I think my first question is regarding your guidance for the first quarter. Can Dr. Zhao give us some more color about which segment is driving this strength?

Okay. Yes. Good afternoon, everybody. And yes, for the current quarter, we are seeing pretty strong demand on the market segment from the commercial notebook, and those areas, and more relate to our high end -- the panel solution and also the high-speed solutions. And as – ourself, we start to gradually overcome the capacity limit on our high speed side. So those will gain some more momentum to serve our customers. And so traditionally, Q1 is the -- sort of a slow quarter, but we have demonstrated a strong -- we see a strong demand. And the -- yes, that represents the current -- the commercial sort of notebook tablet demand.

Okay. So you mean that the growth is mainly related to the display solution, and also the -- overcoming some supply bottlenecks for the high speed?

Yes. Yes. I think that's fair. And also, the commercial notebook moved to the Intel Alder Lake platform and demand -- a lot of our more advanced high-speed device, which we said at 10 gigabit per second and that's USB 3.2 and HDMI 2.0 device, and we are shipping [ quieter parts ] in Q1.

Okay. Got it. And then the follow-up on the display-related business, this is including both timing controller and also the Driver IC, still majority of over half of the revenue. I'm just wondering how -- why is Parade experiencing such good momentum in the past couple years, and especially into 2022, what are you expecting for the Display Solutions business? How can we continue to grow the revenue? Is there any change on the competitive landscape, or are there some spec upgrades that is supporting this momentum?

We have been presenting to the investment community on our panel related solutions, right? And one of the very important concept we have been communicated, is our bundled solution and which -- we have a unique interface called CP to connect high speed internet -- called CP to connect our advanced TCON with unique our source driver there. So it's unlike it used to, TCON can work with any source driver in the P2P or point-to-point connection and we have a unique set to do this, and that's what we call bundled sales. And we provide a unique -- the application in the more high refresh rate, high-resolution type of panel in the gaming, in the commercial notebook side. And our solution is also ready for customers to use. So adoption rate in the marketplace are very quickly. The -- another growth side of it, we have been prepared and see those -- the growth to come, and we have sufficient capacity to support our growth in the second half -- sort of our second half of 2021 and move -- gradually move to the current quarter and might be more. Having said that, we have our -- another leg of panel -- sort of more newer solutions, we call TTD, which integrate the touch. So as TTD and those kind of solutions. Certainly, the -- those will push our market share higher.

Okay. Got it. Maybe just one last question on the overall foundry supply situation. You have touched a bit that you're able to get more capacity this year. But how about the impact to your margin? Because apparently, you continue to guide the margin within the same range? And how should we think about the increasing foundry costs, versus your pricing strategy for this year?

Yes. It becomes norm, and I think many IC [indiscernible] all experienced. We continue to see the increase of manufacturing costs from wafer, from the [ memory ] side. It's quite annoying, frankly speaking, because that does the -- getting more our attention. I think our solutions are unique, and we are still able to kind of communicate with our customers, to share that our customer would increase and ask customers to share with us, on the increase of the manufacturing side. And so far, we have managed this side reasonably well, I would think. And however, we really did not take that advantage of those manufacturing cost increase, to [indiscernible] another side of it to increase the price. But we did not do that. We just passed whatever the manufacturing increase we see and communicated with our customers, with our partners. And I think, so far, our customers are reasonable, understand the situation, and actually, in many ways, they appreciate it. We are -- support them to support their growth. So that's how we view the partnership and how would we make stable -- the business and stable gross margin.

[Operator Instructions] And now we'll have Daniel Yen of Morgan Stanley for questions.

My first question, I would say still regarding your 4Q numbers. Could you give us your mix for your revenue for 4Q?

Yes, thank you. On the Q4, our DP product line and percentage is about 40%. And our PS product line has more than 25%. Our [ fourth driver ] TC product line is close to the 30%. Our TT, which is TrueTouch is about 5%.

I see. So because I notice that your gross margin actually hit the high of your guidance, but sequentially, there is some decline. And for the product mix, it looks like you have higher contribution coming from the TC. Is it the major reason why the gross margin is a little bit sequential decline?

I actually don't think the -- that was really the reason, because the current TC share similar gross margin, as our other product lines. I think the previous -- I had explained it for the Q3, the gross margin higher than what we had expected to exceed our -- the guidance high at that time, it has a lot more favorable -- the shipment on the same parts, and that result our gross margin high. Thirdly, in the Q4, we did experience the shortage of our capacity to support our high-speed product lines. And we suffered quite a bit in Q4, and that's not helpful for gross margin either. But I wouldn't think that, that [ flattish ] change of gross margin is due to the TC, no. TC does not share similar gross margin as our other productline.

I see. That's very clear. So also following up, I noticed that your inventory days also going up in 4Q, right now about 60 days, slightly higher than your historical norm. So could you also share whether or not -- what's the reason behind, and also, would you expect the inventory continue to go up in the following quarters or it will go down?

Yes, I think the inventory getting to slightly healthier compared with our previous quarters, because we used to have very lean inventory, and we cannot supply -- support our customers. I think that our inventory level will in the -- that level, or may slightly down in the coming quarters. And in the Q4 or coming to the close -- late Q4, our view of new pouring fab, which we had a huge shortage of our high-speed side, and we spend our time to put it to the other fabs. On the later Q4, there are 2 fabs, and start to coming alive to support our high-speed product line, and that's helpful. But overall, the inventory, we don't think the inventory will go in terms of the sales -- shipments will go high, but was slightly lower. And we still experienced of a shortage in some case, it's a pretty bad shortage in some process nodes. For example, 65-nanometer or 40-nanometer. We experienced the very -- the big shortage and we'll continue seeking for the capacity support and -- in the wafer side and the memory side. And yes, that's the current situation.

I see. Jack, so to just follow up on the capacity side. You mentioned that you have secured more capacity for your high-speed products. Could I ask more detail, because your high-speed products, there's a wide range of product portfolio using different geometries. So when you say you secure more capacity, is it mainly coming from 8-inch or 12-inch, at which node? Could I get more detail?

If you look at 2020 or early 2021, and we have been using quite a lot of age for high-speed side. And moving to the second half order, current one -- as previously, I already said, the Intel Alder Lake platform and [indiscernible] and they are associated with a lot of the higher-speed product, which -- 10-gig type of product. And they demand more on the [ 12-inch ] wafers. And that's where the shortage now concentrated on. And we have been tried to find other -- the fab to support this, and porting to other fabs for our product line. And we had -- we had a pretty flash shortage in the Q4, and hopefully, in our new fab start to qualify by our customers -- in part, qualified by our customers, and start to get better in Q1 and moving forward. But even with these 2 fabs joining us to supply, we're still pretty short on the 55 nanometer and the 40-nanometer. Those are the [ 12 inch ] capacity. I know we still try to -- gain even more, if we could to support our customers. However, whatever the number we present our guidance, those we already have the sufficient manufacturing capacity support. But we still do have a lot of the POs, and we have not been able to cover, and we still kind of scratch our head, trying to get more capacity, if we could.

I see. So just for clarification. Right now, in total, you have 3 foundry partners, right, for 40 nanometer?.

I think let's say. No, we have more than 3. Now we probably would have 4 to 6 now.

I see. Okay. If I may, just last question. Overall, because I recall that back in 2020, you were -- I think you were probably the earliest company to come on that. You see -- what if our demand actually could be sustained heading to the end of 2020 and also you already booked a lot of capacity for 2021. So now we are in very early of 2022, I would like to get your opinion or your view, how would you see the PC demand going forward? How sustainable on the commercial demand? And especially for your standard plus customers, how would you compare their momentum versus the overall market?

Let's see the standard plus. I think the report or quarterly report was often reported, right? And that we see very strong demand on their financial report, and we experience the same thing. And we continue to see the demand quite strong, and those you consider with the high end, more commercial related and so on and so forth. And in some case, we are behind, especially the last Q4, we have [ embedded ] behind their demands and -- on the overall the notebook, I think demand is strong, healthy, especially on the commercial notebook side. And also on the gaming notebook side. And you would ask us, as in my view, I still think the notebook, is transitioned to become more individualized needs, rather than before pandemic, it's more like -- it's shared by the family members and those kind of things. Now it has become a de facto, the people need it, even the family member individually have to have it. So that's the change on the pandemic side. And so far, we feel it's pretty strong, pretty healthy and -- yes.

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

I have one follow-up question on PCIe Retimer. AMD will launch new server CPUs with PCIe Gen 5 very soon. How about the progress of our PCIe Gen 5 retimer? And do you see any new competitors in Gen 5? That's my first question.

We're still working with Gen 5 for the product development. And we think with -- maybe in a couple of quarters, we will have a chip to test with the customers, so on and so forth. And yes, we are pretty positive on the PCIe Gen 5 and moving forward.

My second follow-up question is our high speed. We are talking about, if we can get more foundry capacity support this year. Could you give us more color, which applications will be the main growth drivers for high speed this year?

Okay. If we are talking about the massive shipment, which every notebook were needed, is the majority is on the -- as we said, is on the 10 gig USB 3.2, HDMI 2.0 and DRAM 55-nanometer and a 40-nanometer type of capacity. And those -- we have worked very hard to try to meet the strong demand. There's another level of the higher speed, for example, USB 4.0, which is 20 gigabit per second retimer, and PCIe Gen 4 and those kind of range. And as those sort of move to the even higher process node, and as we said, we work with major CPU guys for the PCIe Gen 4 retimer, and we hope in the -- likely in the later second, the quarter, we have start to massive shipment, because we have pretty much completed a lot of the testing with them and those are the good things, and those are the incremental increase of our high-speed device. And yes, we're pretty positive on those segments. Of course, we are gaining back some of our business or our customer. In the Q4, we were not able to serve them. We were not able to provide that part because of shortages. Now in the Q1 and Q2, we try to correct that, and we try to support them with more parts. And of course, in the second half, you will see another strong part will come online, which is our third generation of [ converged ] parts and to the HDMI 2.1 with DP 2.0 and we have a strong shipment as well. So that's what an overall view, we've seen the high-speed part on the PC-related area and the overall picture.

[Operator Instructions] And the next question is coming from Aaron Jeng from Nomura Securities.

Number one, okay, I would like to have a question on gross margin. You delivered another pretty strong gross margin in 4Q. And actually, your 1Q looks to be as good as the 4Q. So margins have been sustained quite well. How should we be thinking about the dynamic into 1Q, for 2Q and the rest of this year? It can be a tough question, but I just want to know, should be thinking that your gross margin is a function of contingent net debt, who is a function of say, essentially more supply that you can get? How should we be thinking about gross margin profile or maybe [indiscernible]. That's my first question.

Okay. The -- I think I'll share with you, the investment community, quite a bit on the gross margin, that we think the gross margin is a function of the quality of your product, and a function of where did you -- where the product you sell to the segment. And also the speed of your products, okay? And those areas, for example, if you sell or market our products to the service space, to the automotive, to the industrial use, naturally, those gross margin is higher. And with market where the device speed is over 20 gigabit per second, gross margin is high, because the demand -- a lot of more advanced people to develop those and spend a longer time, R&D time to develop those. And since our products are moving to the -- those kind of trends, and we view our gross margin to increase along the way, as we penetrate to the more advanced area. And that's the -- overall, we view this. But we are not, as we share with our customers, our partners, we don't take advantage of a shortage, to give people high gross margin. That's not us. That's not what we are doing. What we are doing is, if our manufacturing cost increase or we hear with our -- the customer, and they understand that and we pass our -- the increase to them, and that's about it. We're not into that to take advantage, to make our gross margin even higher. No we do not do this. But as we move to the more advanced products, advance the product segment, and our gross margin goes up. That's along the year, that's what we view it as.

One quick follow-up.

Yes, go ahead.

Assuming that -- actually just assumption, because probably no one knows, assuming that semiconductor supply into year 2023, for a majority of your product lines, do you think [indiscernible] gross margins [ you are working ] -- because of this situation?

Say it again, I missed your point. When you move to 2023.

Yes, yes. I will make sure it is pretty simple. I was asking that -- let's say, if we move into 2023 with easing foundry supply, i.e., you are able to get most of the supply you wish to have. In this situation, would you be worried about maybe like the rising competition, or maybe pricing pressure, et cetera, which can beat your gross margin. Other things being equal, is that a concern for you?

We have been in this market for a long time, and I don't think that we are afraid of our competition. And the parts we have, in many cases, are very unique. For example, in the panel, and we're using the bundle sales with our source driver and the TCON together, and we use the unique CP -- the high-speed interface, right? So you don't have exactly same thing kind of replace us or so on so forth. Similar thing, our TTD, those newer parts, it's -- once your design is unique, right? So -- and what do we view on the -- into the 2023, would really present us to move into the different segments to improve our gross margin and -- for example, you move to automotive display and those kind of things, move to the server, right. We are now doing quite a bit, our high-speed product to present to the automotive segment, and try to present those [indiscernible] to gain the high-margin products to support our growth. So yes, we're not afraid of competition and we think to address the competition is the uniqueness of your product, differentiation of your product, rather than me-too product, we don't do those me-too products.

That's clear. Just another question. 1Q very strong quarter, up further from 4Q. And so how should we be thinking about seasonality in the rest of the year?

I think that 2022 will be still a pretty good year for Parade business. As -- the visibility we can see as a pure present to us, and we think at least the -- we have a good sort of visibility to many months to come. As I had said, we have many peers, who will not be able to fulfilling and quite a big number there. So yes, I think 2022, we will have a good year. And again, you should foresee as a PC seasonality, which typical second half is better than the first half.

Would you think that you are expecting PC seasonality in second half to be better than first half?

I have no reason to doubt this.

I see. I see. So theoretically, you are going to see sequentially improving maybe quarterly revenue into 2Q, 3Q, I suppose, following your [ coming up ]. I'm not sure if that's the right...

That's a pretty typical for PC. But Q4 a little bit lower than Q3 and Q1, Q2 and the kind of [indiscernible]. Historically is doing this, and I don't have a reason to doubt this.

And the next question is coming from Julie Tsai of UBS.

Just curious on the guidance, you mentioned that Q1 is seeing strong demand coming from the commercial notebook and tablet. Just trying to get a better perspective. Maybe you could share with us what kind of market share do you have in the notebook space? Perhaps we could have a better ratio to the overall industry, or is this just a company specific that you are seeing very strong demand? That's my first question.

I think our part has certain uniqueness there, and a lot of our social, there is kind of only one provider. So associated with the platform -- the generation of platform to go, a lot of the -- where we see the increase associated with the Alder Lake, the platform growth, and some of our parts, the market share is very high. I would say that on the display side and [ IPS ] high-speed side are very high. But I wouldn't say the general or high -- particular parts, we're doing very well, and that's the reason. And we are still behind the demand, and that's as much as I can say. We may also have kind of Q4, as we said, we are not able to support customer and leftover in the Q as well. So -- but this is what behind and Q2 still will be behind. So we are not [indiscernible] investing and how much impact from Q4 to Q1. But overall, we see the strong demand on the high speed side and also on the panel side.

So is it fair to say that, what you are seeing is not company specific, but industry overall is actually still quite strong?

I think the industry definitely is quite healthy and on the commercial side, definitely quite strong. And we may have a specific theme there, because we are focused on the high speed, and newer platform side has more high speed needs than used to. So it would become -- maybe benefit on this trend.

I see. That's very good news. Also, I wanted to ask a bit more on the margin space. I think a few of our colleagues in the industry also asked about the gross margin level, right? So in the guidance, your midpoint is around 46.5%. This versus Q4 is actually a little bit weaker versus Q3, it is also a little bit weaker. But it has stood very decent. Do you see this level could be -- maybe fair for Parade and that analysts should probably take this as a pretty good number for the full year?

I think the Q3 -- Q4, the guidance is the -- the rent is the same as Q1. And I think I suggest people are using the guidance range to compare, rather than use a midpoint to compare. That's the first thing I would say. And I had explained to Daniel previously. Q3 is unique, and we exceed our guidance range. We're not changing the guidance range. So in the Q1, I don't see the gross margin -- I don't see any reason the Q1 gross margin will be different from the Q4. I have no reason to see it -- to say it. So that's the -- I think that's what I will try to say. There should be Q1 -- or Q4 should be very similar and not much big difference there.

And the next question is coming from [ Jamie Yang ] of KGI.

Jack, can you hear me? I am [ Jamie Yang ]. Congratulations for the result and very good first quarter. I have 2 questions to follow up. First one is, in terms of how good this year will be, because this year, I think for your existing products or applications, I should say, I think people worry about picking -- I mean the growth rate may decelerate this year. But on the other hand, we have new products and new hiring segments and, of course, more countries to support or to fulfill the new demand. I'm wondering if you think the growth rate can be close to the past 2 years, which was 30% overall?

Good question. I think in the last 2 years, we had a phenomenal growth for 30% or almost 30%, right? I think I always try to be conservative and deliver the thing above our guidance and right -- so probably you follow us quite bit knows. I would think that 2022 -- so far, what we see should be a pretty good year. And coupling with our newer products, in the high speed, in the panel side, and we are pretty exciting with the new product and growth, and we have a series of our panel solution, integrated solution into the market. And along with our capacity support. So we should do quite good, and I wouldn't give the number, but to the kind of 30%, but I would think we will do quite good in 2022.

Okay. And the other one...

What do people think about notebook number or whatever, we think it should be pretty good.

Okay. I see. And for the second one, because Intel recently quite aggressive in terms of relaunching their foundry business, and in current condition, I think foundries, especially some of the nodes are still quite tight. Would you consider enabling that? I don't know how to look at this, will that be benefit to you as we know that your, I think, Parade is also quite close to Intel in terms of setting up industry centers and product centers. But I don't know if foundry side, we can see new -- I mean, another way of cooperation?

Yes, we're pretty close with Intel in the standard and the product team used to -- and that is -- with it being approved by the Intel for foundry service as well. However, as we understood and the majority in the capacity are on the leading [indiscernible], which is 16-nanometers below, and we are not into that range yet, and we are moving to that range, that kind of [ fab ]. And of course, Intel will take time to become a sort of foundry service as the TSMC, UMC or SMIC. There are sort of service, the infrastructure there, and include the design case and the design environment, and since Intel used to in-house design environment. So it wouldn't be any time short, because we're not matched that well, and we still feel the desired methodology approval, is not a mainstream people like TSMC, UMC or SMIC and our mainstream [indiscernible] and that's very different. So we'll wait to see if anything come out very competitive and attractive, it makes sense. But at this moment, we don't see the attractiveness at this moment.

Okay. I think of another questions that, you mentioned about 5 Gen or Gen 5 retimer. I'm wondering if we can assume like 5% to 10%, that kind of contribution in coming 1 to 2 years. Does that make sense? I mean [indiscernible].

Yes. I think we wish for better -- we hope and wish for better. Our [ growth ] very quickly and used to -- few years ago, we are in the $300 million now in the $700 million, right? So that 10% become a very big number. So that -- Gen 4, as with 2021, did a contribution to our net income nicely, okay. And because the gross margin is good and we ship quite many parts and then gross -- and then contributing our net income, operating income nice there, and so we hope to continue doing this in 2022, and moving forward. And those are significant. And I want to emphasize on this, we put a lot of effort for automotive side, for our high-speed parts, for our display side, especially integrated solutions. So we hope in the 2020 to 2023 moving forward, and we will have more attention into the automotive, and those are pretty nice on the -- contribute to the net income and operating income.

Jack, congratulations again.

Yes. Thank you.

And the next question is coming from Carol Juan of HSBC.

And my question is that, regarding to the spec upgrade of notebooks in this year, have you seen -- how do you expect the adoption rate of the Alder Lake or USB 4 in notebooks? And also, do you think the OLED display will have the rising adoption rate in notebooks as well in this year? That is my first 2 questions.

Okay. I will go reverse and answer you. AMOLED, the display, we have been powered AMOLED TCON for Tier 1 AMOLED supply, for few months already in the mass production, and with quite good volume. And if you go out to see, whether -- has been introduce to the market and those AMOLED [indiscernible] TCON there. So we continue to see AMOLED working some momentum in the tablet, maybe in the notebook and the tablet as well. However, probably you will know, there's a competing -- the solution which many LED are also doing very, very well in the color, in the display quality side. Yes, we're in those spaces, and we are doing well, and I think AMOLED will become an advanced notebook -- part of advanced notebook, but still expensive and still has its own little weakness there, and it will take time to be adopted by the OEM, and that's the first question. The second question, PCIe Gen 4 on the notebook. I'm not sure the notebook will have those solutions in 2022, but maybe in 2023, we'll start to see those ones. It will require redriver or retimer there, and I think it might be because the retimer is too expensive, we are developing different solutions to address for notebook applications, and maybe it's not commonly people use. However, it is a solution which might fit into the notebook application. And so we have been [ cooking ] for a while. And yes, hopefully, we will introduce those in 2022 and catch up for notebook trend to use the PCIe Gen 4. Yes, I think the PCIe Gen 4 may not be -- if you do, will be later 2022 or 2023 story.

Got it. So for -- back to USB. So for notebook, you have got some more color, on the usage of retimers or redriver for notebook supporting USB 4. Like, for example, is the retimer necessary or still optional at the data rate of like 20 or 40G under USB environment? Is that a necessary IC for the notebook?

I think USB 4 -- retimer for USB 4 is a must. I think the leading CPU already told the OEM, you must have, right? So that's the [indiscernible]. And whatever with USB 4, you must have retimer there. And it's so complicated, because USB has [ standard board ], the DP and has the USB 3.2. And I think the USB 3.2 and also have to use the retimer there for notebook application. The only place on the USB 3.1 or 3.2 10 gig on the tablet, smartphone, they may use the linear redriver. In fact, we're already designing and shipping quite a bit of redriver -- linear redriver device to the mobile space, and this is a one-off part. Demand is so high, we have to move to another fab to meet the unit demand there. Yes, I think we are lined up pretty unique for our high-speed solution to cover every angle for the high-speed device and the current battle of -- we foresee will have volume shipment is the newer one is the USB 4 retimer and as I shared in the later Q2, we will start to have volume shipment.

Okay. Got it. Very clear. And my last question is that last time, you have mentioned that there is potential opportunities in automotive industry, that many competitors, they're still focusing on LCD solution, while you said that Parade has been discussing with vendors for better display solution. So just curious about what is the latest status? And when do you think that the supply chain will confer this back for auto display solutions?

Yes. I think it's no brainer, that automotive display will move to the integrated MIPI or eDP solutions. Just like what happened in the -- 7 or 8 years ago on notebook side, right? And we are designing with a leading automotive customer for integrated solutions on such display, and both parties are very exciting, and it is a very rational choice, it is a very rational advance to support a high resolution, high dynamic range of display, which automotive demand the most and also automotive able to afford those kind of displays, right? In the notebook, you have a concern, people may not be able to afford for those advanced display, and automotive has no issue to afford those displays. Yes, we're working with that, and we are excited on this and we think, in a couple of years, you will see -- yes, but our display will be powering those automotive -- in automotive costs. We're pretty much sure, that will happen.

Okay. Sorry, just a quick follow-up. So despite of LVDS, is there any potential trends for it like, maybe [ MIPI ] instead of the EDP? Do you think that maybe [ latter ] competitors for automotive industry in the next few years?

I don't think for the display, I don't think a display probably has [indiscernible]. The MIPI and those things will become converged or linked for the image sensor, camera and so on and so forth, right? The display side, you already built the infrastructure in EP and EDP, it's very hard to make changes, because your helped by the CPU and -- they are already there. They cannot move in the whole display stack, including software to the MIPI. So that's not likely to happen. So yes, the leading customer already see this, already moving to that direction and I don't have any reason to see, MIPI will come in for the automotive industry.

And ladies and gentlemen, there will be the end of our English session. We'll now begin our Chinese question-and-answer session. [Foreign Language]

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

Okay. Thank you very much, and bye.

Thank you. [Foreign Language]