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

Welcome, everyone, to Parade Technologies Limited's 2025 Second Quarter Webcast Investor Conference. Investor Relations of Parade Technologies, Mr. Yo-Ming Chang, will present 2025 second quarter financial results first. [Operator Instructions] And after the presentation, there will be a question-and-answer session in English by CEO, Dr. Jack Zhao; and VP of Finance, Mr. Kuowei Wu. 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, Investor Relations of Parade Technologies. Mr. Chang, please begin. [Foreign Language]

Thanks, Jason. Welcome, everyone, to Parade Technologies 2025 Q2 Webcast Investor Conference. Parade Technologies' second quarter 2025 consolidated revenue was USD 133.5 million and the net income was USD 22.79 million. It's both basic and fully diluted after-tax earnings per share were USD 0.29 and USD 0.29, respectively. These results compared to consolidated revenue USD 120.87 million and net income of USD 17.58 million or USD 0.22 and USD 0.22 per basic and fully diluted share in the year-ago quarter. In U.S. dollars, the second quarter revenue increased 5.76% sequentially and was up 10.45% year-over-year. The gross profit in the second quarter of 2025 was USD 57.55 million, an increase of 7.12% from the previous quarter and an increase of 12.22% compared to the same quarter of last year. Parade completed the acquisition of assets from Spectra7 on April 23, 2025. Parade anticipates that the technology it has purchased will provide valuable support for Parade's efforts to expand into high-growth markets such as data centers, AI-powered computing and the next-generation consumer device electronics. Based on the current business outlook, Parade is providing the following guidance for the third quarter of 2025. Revenue is between USD 140 million to USD 154 million. Gross margin is between 42% to 46%. Operating expense is between USD 32 million to USD 35 million. [Foreign Language] It is my presentation for the 2025 Q2 financial results. Now I transfer to CEO, Dr. Jack Zhao, to answer your questions. Jason, you may begin.

Yes. Thank you, Yo-Ming. [Operator Instructions] And our first question will be coming from Carol Juan, HSBC.

Congrats on the results. And yes, my first question would be, could you help us understand the gross margin improvement this quarter? And is it mainly from the product mix or any improvement in product lines on the profitability? That will be my first question.

I think the -- it's mainly because of the product mix and the Q2 did slightly better than the Q1, I think mainly due to the product mix and...

Okay. So may I follow up on the product mix as well.

Yes, please go ahead.

Sorry, may I follow up the product mix?

Okay. For the Q2, what we had on the DP is lower than -- it's on the middle of 35%. The -- our PS or high-speed product line is above 50%. Our TT is about 5% -- above 5%, TT is above 5%. TC, which is source driver is lower than 10%.

So I think the second quarter gross margin improvement was basically because of the increase in high-speed interface [indiscernible]

Yes. It's possible is because of we ship more on the high-speed product. However, the high-speed product increase Q2 versus Q1 is quite significant. It was above 15%. Yes, it could be due to the high-speed, the shipment more than increase the gross margin. But as I said, mainly it's because due to the product mix.

Okay. And do you still think there is a competitive -- pricing competition in the display solution right now? Did that...

Yes, the display solution, especially on the source driver side, you continue to see the price pressure there. And however, as we said during this conference call, we have successfully introduced our tTED, which is a Touch Driver Tcon integrated device. And now has gained significant traction in the marketplace. And so those areas, the price pressure is not as high as traditional architecture that Tcon source driver. And both we are aggressive marketing both the TED and the tTED solution to the notebook customer.

Sorry, my last question will be the outlook the third quarter. So I think that the revenue guidance you provided is around the double-digit growth at the midpoint. And we're just wondering where the strength is from? And do you see the growth across the board or is just for the high-speed interface product line?

High-speed product line is continue growing, and we are happy to see that, especially our USB4 retimer and our USB hub, so on and so forth. Our display device start to have a recover and because we had a kind of last year or we lost quite some market share, now it start to recover with our new device. Those -- and also our TT touch device also gain some of the newer design wins. So those together make the Q3 kind of within the traditional -- the -- our seasonality.

Okay. So with that -- with the growing base on the [indiscernible] into second half, would you suggest that the gross margin can grow on the quarterly basis?

Okay. Gross margin, as we said, is multiple components. One is the product mix, the high -- more high-speed product probably favorable. And another side of it is your operation, the environment, right, which is the operating cost. And as well as you still may have a little bit the -- written off the older device. So those are the components together. So yes, I'm not exactly sure. It's a little bit early for Q3. Not sure the -- what will be the exact gross margin because we're talking about a couple of points there. So I still would like to guide the investors to look at our -- the gross margin guidance.

And the next one is Anthony Lau, Yuanta Securities.

Yes. This is Anthony Lau from Yuanta. So first of all, congratulations on the impressive results and the strong guidance. So I have following 4 questions. So first of all, I will just ask about the overall environment. So have we observed any behavior changes from PC clients in the second half of this year compared to earlier maybe this year or maybe last year?

We have been in the kind of complicated environment, which we normally did not experience and namely is due to the tariff. During the early of Q2, and because the Liberation Day and the customer try to avoid a high tariff and had some [ pulling ]. But we do not see a significant amount [ pulling ] in the Q2 and late Q2. From our experience, it's really the real demand there. And I think the Q3 from our own -- the experience, we think we are in the normal type of PC seasonality. We do read, as you guys reading that -- the DIGITIMES or other research report talking about the PC notebook may have a 50-50 kind of this year, which is the sort of out of the normal seasonality. So, so far, from our book building on the orders and we feel on at least Q3 and as much as we see the Q4, so far it's pretty normal as to what we -- the other years. So I don't have -- I just read the DIGITIMES report and kind of get a surprise. And from our standpoint, we actually kind of feel pretty reasonable on the normal seasonality.

I see. So like do we expect like the standard power customers to deliver a better [indiscernible] performance in the second half of this year compared to other PC vendors?

I would think they are doing better, but I'm not saying they're dramatically better. So hard to give more comments. I would think the order demand, the people from [ DHL ] showing certain healthy demand in the Q3, so as the early time of Q4 as we -- the book building as we see it.

I see this, very clear. So after talking about the notebook behavior condition by the customer side, I want to ask about the USB4 penetration. So what is our latest view on -- or our latest forecast for the USB4 penetration in 2025? And have we identified any signs of acceleration or slowdown of this penetration? Because it seems like in the second quarter, our high-speed product line have a better than fair performance, like can you give us any color about that?

I think the USB4 retimer or USB4 has been accept -- accepted well in the -- in our industry for notebook and certain desktop. It provides a lot of unique value there. In terms of us and this -- in addition, except to the Intel platform, and we are doing almost all of others, whether the AMD, Qualcomm or upcoming NVIDIA and MediaTek together, and we are all out there. And we believe we occupy a pretty good market share there. We do observe compared with -- the difference compared with the last year, notebook at that time would only have 1 USB4 port. Now because Microsoft, the -- force, if you have one, you should have all of them, the USB4. So then you do see the notebook has the 2 or 3 USB4 port on 1 notebook, which end up with you need multiple USB4 retimer there. I think that might be the one of the reason you see the unit shipment increase and market share expansion there. We are moving to the several front to build a total solution for USB4, the entire environment end-to-end, that's what I say. So we now provide a USB4 hub, and we soon will provide a USB4 for that to the host controller and so on and so forth. And we do view in the long run, USB4 might be the dominant connector or high-speed connection for notebook, for gaming platform, so on and so forth. So that's the -- what we view and the USB4 become a very critical interface for many years to come.

I see. So it seems like normally now our design in notebooks like 3 ports per unit is...

I think now this year, you see 2 ports.

2 ports. Okay.

Some of it -- then you can see 3, but you see more of 2 ports there. And you also start to see monitor will have a USB4 there, right? So we are getting more and more.

I see. So you're just talking about the USB 4.2 that will also have some traction in next year. So my first question is a little bit stupid, but do we have any kind of -- because you just talked about host controller, so is this a new product line for you to -- like maybe you haven't done before because I remember that we mainly produce the retimer or hub, this kind of products? Yes.

That actually, if you remember, we acquired Fresco Logic. At that time, they had a USB4 host controller at that time, right? That was USB 3. So we are taking that architecture to change high-speed port and we're doing very well on the high-speed, then we can do the host controller and so on and so forth, right? So it's not difficult for us in terms of IP-wise. So yes, we are working on those, the platform and new device. So simply the -- all of the USB4-related device, the end-to-end, we all have a device, including we provide a redriver for the cable for the USB4, USB 4.2 cable. And yes, in a whole, the domain, we will provide a solution there. That's what you see the hub on the monitor, we're doing the design pretty actively, USB4 hub design with the monitor, with dock and so on and so forth.

I see. It's very clear. So like Jack, do you think in next year, how many percent of the notebook will be adopting like the USB 4.2? Or maybe it's too early to say about USB 4.2 to be adopted in notebook? And also, do you think if we are traveling to this USB 4.2 like 3 ports per 1 PC is -- will be the common spec in design?

USB 4.2 for the -- some of the customers already has with the Intel platform, right? And you will start to see the gaming platform may well equip those things and gradually other platform, whether the Qualcomm, whether future AMD or NVIDIA will all start to adopt. And I think in general, probably you will have a 2 port per notebook. And for those the high-end or content creation type of or gaming type of notebook, you might need 4 or 3, but the majority might be 2. And the interesting thing, the Microsoft has the sort of setup of Window policy, once you have a USB4, all the port has to be USB4.

I see. It's very clear. And my last question is related to the PCIe retimer driver, so this repeater side. Can you share any kind of like colors about the design changes or like clients now they are more favorable to what kind of designs, like looking to maybe '26 or '27 like this PCIe Gen 6 products. What do you think your design, like their favor? And also what is our opportunity in this area, maybe -- because we also acquired like Spectra7 and it also integrated a lot of sources. So what is our strategy and our outlook for this market?

Okay, good. And yes, we are shipping PCIe Gen 4, Gen 5 retimer to the server customer, data center customer, continue shipping in the volume. We are developing PCIe Gen 6 retimer. However, along the way, the strategy or the -- has some change. And due to what we observed, the PCIe retimer really consume a lot of power. And if you don't go down to like 5-nanometer or 3-nanometer, otherwise, the power is like very hungry. On the other hand and we did observe the data center require a lot of high-speed cable and what do we call ACC or AES cable. So tremendous, the cable opportunity there. So that made us to a decision to acquire the Spectra7 and they are the provider or IP -- the technology provider for the ACC cable. So now we are working on why we provide the retimer solution IPs and we also put a pretty good focus on the data center ACC cables. And the Spectra7, as we acquired, we are currently shipping the ACC redriver solution for cable. With Spectra7 acquisition, we know many high-speed cable customers. So we have 112 gig redriver solution now engaged with customers over the cable side. And we have a 224 gig redriver for cable in our lab, and we'll continue moving in that direction. And we also have a PCIe 6 and engage with the customer for PCIe 7 cable solutions. So it's -- we are adjusting our own strategy, and we're excited to see the huge investment into the data center, whether in the U.S., whether in the China. And the data center becomes a sort of utility and high-speed cable, whether the ACC or AEC or optical become very much necessary [indiscernible] a good growth market. So we would like to participate with our own IPs and hopefully, with Spectra7, the established base to us to engage with the customer. So that's the -- we -- I think that's our strategy now.

And next one, Daniel Yen, Morgan Stanley.

My first question regarding more like near-term. Jack, you just mentioned that into third quarter, we are seeing the high-speed interface is still growing very strongly. I think display is recovering, tTED also gained some new order win. Can I ask on the display side, in terms of the growth rate for standard and versus standard-plus customer, which one do you think is growing faster? And I'm also wondering because you are always very -- you have a longer visibility versus some of other your peers and you have your view. So do you have any sense on 4Q? How the 4Q PC demand will be look like for both standard and standard-plus customers? So I'm focusing more on the display solution in the near-term.

It's a story a little bit different. And if you compare with the display solution, our standard-plus customer is pretty steady, which means they are behaving very well in terms of seasonality and those kind of things, right? So that's -- we have been working with them many, many years. So I don't have a more specific to say. They are just experienced pretty much as previous years. For the other display customer, our story is recovery, as I said, right, recovery. So those recovery in the Q3 and towards Q4, especially our tTED device gain momentum and shipment [ bit ] the revenue. And it's just a different story there. And our own -- the stand -- not stand just normal panel, it's not really the market. Overall, the demand is our own recovery with new device, the tTED device, start to shipping. So it grows reasonable better. That's what I will say. And in terms of Q4, I cannot -- I don't know more than other people do. And I will think the DIGITIMES probably pass the industry view. I can only comment based on what we feel receiving our own -- the PO build so far, so good. That's the most I can say.

Got it. If I can follow up, I want to ask about the standard-plus customer, the future projects because we are seeing, I think, for standard-plus customer, they continue to migrate their core chips, and they also have different form factors on their tablets or notebook in the next 2 years. So I'm just wondering from your observation, is there any, let's say, new projects or content increase opportunity from this standard-plus customer? And how should we think about the growth rate for the standard-plus customer in the next 2 years?

Yes. The standard-plus customer, and we are continue working with them. And in the past Q, we just won a pretty big display project and which goes to very [ deep micron ] for traditional Tcon device. And we are discus a few more there for the Tcon device. And in addition, and we also engaged with them for the high-speed device, it's like a custom design with them, a pretty complicated device. As well as we present our Spectra7 data to them, and they are pretty interested. In terms of next 2 years, I would think the -- we should be very stable -- quite stable with them in terms of revenue. And hopefully, the newer device into the market, we will see the revenue growing because the ASP device for those [ deep micron ] is getting pretty high. And in addition, we may open up the other area on the high-speed device as we -- the standard-plus customer realized we operate in the very unique to provide those interface solutions. And so they are pretty happy, and we are in the early time to engage with them on those kind of devices. So yes, I think I don't see the much of a change as the relationship and hopefully, the revenue will grow.

I see. If I may, can I follow up with -- you just mentioned about the high-speed interface projects with a standard-plus customer. What kind of interface do you think you can -- yes, what kind of interface do you think you are engaging with the customer? Is it still USB or PCIe or any other kind of interfaces? Could you share more?

I think the high-speed and any other interface, that's probably the best way to describe. And we demonstrated to them, we are very good on the high-speed side, with the USB, PCIe and the other standard display port and they recognize we are a proven experienced supplier to them -- to the many industry. Actually, they observe we have quite devices -- quite many devices there, yes.

Sure. Got it. So for my second question, just move to the high-speed interface side. Yes, so as you mentioned, I think Parade has a lot of high-speed IP. We also can leverage our acquisition from Spectra7 to penetrate with -- into some of the data center space. And I'm just wondering because previously we -- I think, Jack, you talked about there could be some opportunities on some customized interface chips. So I also want to follow up on this side. Do you think we can leverage our IP and do more, not only for the standard customer, but also from the standard customers, maybe we can also have some new projects in the future. So my question is just, do you still view the customized high-speed interface chips as a opportunity? And when do you think this will materialize? And do you think what kind of interface it will be? So that's more on the customized projects.

I think we have many IPs and on the high-speed side, and we are push ahead to take those customized high-speed device opportunity and try to attract Tier 1 customer to do some customer projects with us and to fully utilize our high-speed know-how, high-speed IPs. And as we said, we already moved to the 6-nanometer on the high-speed side. Yes, we are aggressive search for those opportunities. And hopefully, we can report to you soon and we recognize those are the area Parade can provide a unique value to the customers. And will also provide to grow our business. That's why we continue very much focused on the high-speed side. I think we have a traction, we have opportunity and hopefully will become a sizable business for us.

I see. Jack, so if I can follow up on this, do you think -- you mentioned about the 6-nanometer project or the customized opportunity?

I said we validated our high-speed IPs on both 12, 6-nanometer there. So it's no longer any issue for us to do those kind of projects, right? And we develop -- continue to develop those PCIe retimer on the 6-nanometer in the view that we would like to maturing our high-speed IP and for us to do more. I hope that makes sense to you guys.

I see. So just one follow-up. What kind of application for this 6- or 12-nanometer IP do you think? Is it desktop? Is it notebook or is it server?

So far, it's -- I don't want to say more. Okay. I don't want to misleading there. I think I just stay here at this moment.

Sure. Okay. Yes. So maybe my last question is on -- still I think maybe focusing more on the PCIe, you talked about -- you are now developing the Gen 6 retimer. And can I know more detail on the schedule? When will you do the sampling? And when do you expect this will pick up? Just...

I think in the early next year, we will have sampling there. And as I said, the -- we are doing those, a lot of try to for -- utilize -- develop IP for us on the high-speed side. And on the data center strategy, we have a quite focus on the ACC cable in the short-term.

Next one, Mike Yang, Bank of America.

So #1, I want to go straight into the data center business. Could you update your revenue or maybe revenue target to us regarding to the data center-related revenue?

I think the data center revenue at this moment is still quite small. I think this year, probably more than [ 10 million ]. That's the -- that's kind of number we'll look at it.

Okay. And my #2 question is regarding to the -- on the cost side associated with maybe tariff and also the potential move into U.S. production. I just want to know that if you are incurring a higher cost at the wafer side or even like package, how should we think about your overall gross margin profile in the longer term? And then is there any discussion yet regarding to how to share the burden from tariffs?

So as the interest as it could be, and I think the -- for -- so far for wafer side, the price pressure certainly cannot compare with a few years ago during the shortage, right? I think wafer side still is the buyer's market. And on the -- however, on the other side, the substrate, the BGA substrate has become obvious, as many people report, has become a shortage and take a longer lead time to get a BGA substrate. And that's the -- and also the -- some of the substrate vendor increased the -- quite the price there. And we are communicated with this to our customer and for BGA parts as the lead time increased significantly. And yes, the cost also increased. And the -- we -- the impact for us is not that big because many of our parts or majority of our parts is QFM-based. And on the display side, as I communicated, we move traditional Tcon architecture to those -- the tTED or TED device, which just like source driver, just a piece of silicon, that's the -- not -- really don't have the substrate or those kind of things there. So it does not impact us that much, but the industry is facing the shortage of substrate, okay? You have a second question on the tariff side. We have not have any specific talk about the tariff cost, the price pressure. We do have quite a lot of talk for the non-China, non-Taiwan and move the manufacturing to the other place or you have a second source. Those does increase our multiple reinvestment for the manufacturing. So it's kind of a cost increase as well. So yes, we deal with more on those side rather than the tariff. It seems the tariff is still in the domain of ODM distributor and the side rather than our side. But I don't know because today, there's a new semiconductor tariff, what impact to us remain unclear. And -- so yes, I expect that we may have to have a certain manufacturing side move to the U.S. and so on and so forth.

Next one, Lucas Liu, KGI.

My first question is about the data center cabling technology and related products. As we have seen that Spectra7's products are now listed on Parade's website such as linear equalizers and redrives. And could management elaborate more about your forthcoming strategy for like data center cabling technologies such as DAC, AEC and maybe further linear equalizer products, redrivers products such as -- how much -- how many channels will you provide and what's in -- at what speed?

Yes. At this moment, we are doing the so-called ACC, the redriver, right? We have a 2-channel, 4-channel and a device for the cable [indiscernible] side, right? In the beginning, we already said we are in the quite good volume shipment on the 56 gig per second device for the -- what people call the 400 gig systems. We are engaged with customers with 112 gig 4-channel device for people who called 600 gig, I believe, systems on the [indiscernible] on the cable. Those are the 2-meter, 3-meter length of cable. And we have a lab has 224 gig 4-channel device -- 2- or 4-channel device. So people made the cable, we are doing the measurement. And moving forward, as what you said, the -- we have the retimer technology, and we certainly were thinking about how would we move our value chain high to provide the other type of device. But for us, at this moment, it's a lot of learning, especially for play ourself because we didn't have too much experience with working on the cable. Spectra7 leading us to the -- those cable customers, new to us. And the -- every cable, the test system, the [spec ] system are very different from the -- what have we done before. So we just started almost like 3 or 4 months. So we'll hopefully, as we settle down, we may have more to offer. And I think we're getting excited actually the PCIe Gen 6, Gen 7, and so a lot of customers ask us. And so those are the -- and PCIe Gen 6, Gen 7 is a little bit different because there have are certain logics there. And traditional cable provider, they don't know. And for us, those logic is relatively very simple. So it's very convenient for us to using the Spectra7 technology, integrate some logics there to do the PCIe 6, 7, those cables. So yes, that's where we are. And hopefully, this will become built up as a business to contribute to our revenue. And we're excited, Spectra7 technology are pretty good. And if you ask the industry, probably people know their financial was very poor. And Parade has well established or very healthy financial. And I think their customer used to -- don't want to use their device, not because of their technology because they don't have a good financial, the -- support them. So that becomes not issue anymore. Let's see how that goes. And we are -- we all know that data center is one of highest growth rate. And I also personally believe next couple of years, among that much investment in the data center is one of the area, and we want to find a way to participate. I think special segment of cable is one way for us to participate.

Got it. My follow-up question is, could you comment on the typical number of like linear equalizer or redriver that is used in a single DAC or ACC cable? And what -- how -- like how much value could each cable or each device that can contribute to our rates -- revenue?

You mean the content device price, right?

Yes, the content value.

Yes, it's very pretty big. My understanding is about [ $5 -- or $5 to $10 ], kind of range.

Sure. Thanks for sharing.

Yes, depending on your speed. But when you do the AEC and it's much more expensive.

Got it. It's very clear.

Yes, it's very different. 2 or 3 meter, you could do the ACC and when you go to 5, 6 meter, you have to do the AEC and even longer, you have to do the optical, right? So that's what we understand. And yes, hopefully, we can build a business. It's like we acquired the Fresco Logic. Now we had a quite good -- the IP and engage with customers and create a good business. And I hope the Spectra7 few years later, we have established such kind of business, yes.

Okay. So for a longer term, would it be possible to extend our business to like -- further to like [ AOC ] products for Parade?

We just started, as I said, the -- we just started. And I don't know. I think we focus on those cable to make a customer, to make a name recognition there, and then we can continue to expand. I think the system customer know us provide a retimer. They start to know we provide a cable. And how would we combine those together and to make the good business, it's -- you have to work with your customer. And the good thing is the -- those customers are Tier 1 customers, more or less know us pretty well.

Very clear. My second question is regarding to the OLED Tcon. Panel makers are planning 8.6 generation expansions further. And how does your -- what is your view on that, Parade's competitive position in like OLED Tcon, both for standard-plus and nonstandard-plus customers? And I want to -- also want to know what pace of OLED adoption in IT application do you think that will be in the next year or in 2027, '28?

At this moment, it's then the AMOLED remain as a niche for the IT panel. And AMOLED, the panel technology for IT progress very quickly, right? So you had previous -- the POLED and later on, you got the [ LT ] and then you got a double layer of the AMOLED, right? So it's progressed very fast. And I think that at this moment, the AMOLED technology, especially from leading panel supply, people like [ SDC ], are had a good IT type of AMOLED panel, which they are double layers and solve the power problem, also solve the lifetime problem. So it's good. We have been shipping to the [ SDC ] quite a long time for the AMOLED Tcons, right? And we are working with our standard-plus customer for multiple generation of AMOLED Tcon. And we're also working with the so-called now the Tier 1 customer to do the AMOLED, especially like a [ TD ] type of AMOLED, the solutions. The outside of those -- the Tier 1 AMOLED remain -- it's kind of expensive. So I do believe AMOLED will grow in the IT business but may take a longer time. It's pure [indiscernible] true because of sometimes it's very hard to ask your customer in the very competitive market, why would you have to have the AMOLED there? So that's the thing. I do think the Tier 1 customer, their high-end notebook will move to the AMOLED. And yes, but for business type of general, it's very hard to convince them to do this and purely because of cost, it's still expensive.

Next one, Bruce Lu, Goldman Sachs.

So I want to ask you about how do we calculate the addressable market for ACC? And how does that grow in the server market because it's actually very complicated for the investor [indiscernible] it's very complicated. So can you walk us through like how you do the [indiscernible] because if you look at the share price performance in the U.S., right, AEC's related spend outperformed meaningfully to ACC. It seems to me that the addressable market for AEC is a lot bigger, at least when we refer to the share price performance, right?

Right, right, right. Very Correct. I think very correct.

But the company was -- yes, but the company was focusing on the ACC at the current stage, right? So I wonder -- I'm wondering whether we misunderstood the potential market for ACC or...

Yes. Okay. I think the -- this thing is evolving, right? And AEC, if you -- in terms of company performance and market variation, it's very different from the ACC provider, right? However, your Tier 1 customer has previously are chasing the performance. And now they also start to aware of cost or whether you must to have AEC, right? So then you get in the room for ACC. And we see more people start to -- Tier 1 data center guys start wondering or start to try ACC solution. That's definitely true, and you can ask those -- the data center guy from the U.S. to China and probably -- especially for the short cable, 1-meter, 2-meter cables, right? So, yes, it's very hard to quantify because previous year or even this year, dominant theme is the AEC type of solution, okay? As things moving, I think things will change. But the interesting thing is that most of AEC, the company also doing ACC. You realize this, right? A lot of them -- they don't say it. They actually do it, right? We hope we are from the other angle to look at this thing. And we are new to this market, but we are hungry for this market as well.

Do we expect to have like competitive AEC product in [indiscernible]?

At this moment, we are not planning for this purpose. And because we are new, as we said, but we for sure, we have ACC solution as an acquisition, right, as an acquisition. And we have those devices already in the lab, and we're going to market aggressively there. And that's the first stage. Once we know and engage with customers, we will think about develop our road map and so on and so forth there. But one thing is the cable demand on the data center could be quite high.

But I'm still a little bit confused. Sorry, I just didn't get a little bit either. But...

No, no, I think -- not only you confused, a lot of us are also confused.

That's why I'm asking you. On one hand, NVIDIA ASIC chips are pushing for higher speed. So the data transmission is getting higher every year nowadays. So we are dealing with a lot of higher speed products every year, and it got a lot faster every year. So the point for [ CSP ] is to pursue a better solution, supposedly has higher priority than lowering the cost moving to ACC, right? So I wonder what's their mind -- why lower cost becomes a priority for them at the current stage?

You -- I don't know exactly, but I do see the customer has to run existing data center, right? And that become their issues. You have a different -- you have IT teams to run the future, set of people who run the daily business. That's another set of people. That's what I can imagine. And I certainly understand what you had said, the speed become dominant factor for the system performance. That's no doubt. We just try to find a way how do we can cutting to make our business out of it.

I see. I see. Okay. Then just focus on like coupled by anchor customer, make sure ACC can be deployed with [indiscernible]

Yes. That we are looking for few of anchor customer, they need to use it, right? That's the thing. You're -- yes, you need a Tier 1 anchor customer to support you to move this.

Thank you. And ladies and gentlemen, we will now move to the Chinese question and answer session. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] Okay. Thank you, everyone.

Thank you.