Qisda Corporation (2352) Earnings Call Transcript & Summary

Good afternoon, investors and member of the media. I'm Joshua Tzeng, GM of the Business Solution Group. As we showed in June under the theme, AI in action, BSG has made action its strategic core, actively driving AI technology into real-world deployment, facing the global upgrade in computing power and the wave of enterprise digital transformation. Qisda Group is advancing 3 key areas through its united fleet of companies, AI data center and AI infrastructure, edge AI and smart vertical applications such as smart manufacturing. In AI data centers, Qisda, together with AEWIN, has begun developing to the L6 and L10 product line and has already received customer orders, with small volume shipment targeted for the fourth quarter. To address the heat generated by high-performance computing, AEWIN is focusing on 2-phase cooling technologies and solutions for the next generation of high-wattage chipset and is developing 2-phase cooling CDU rack solutions. We have already secured our first customer engagement. Meanwhile, orders in networking and cybersecurity have benefited from firm demand in Europe and the United States, and our visibility now extend all the way to the first quarter of 2027. In edge AI and smart vertical application, the market is shifting from point products toward platform-based, systemic and scalable complete solutions. Within the group, DFI is positioned as BSG's AI computing platform hub, combining rugged design with global manufacturing and local service and focusing on factory automation, robotics, smart transportation and smart healthcare in vertical application. In retail, Partner Tech has widened the wave of unmanned checkout and self-checkout kiosk in Europe and the United States, and shipments have have been smooth. Ace Pillar, meanwhile, is capturing the smart manufacturing upgrade opportunities created by the advanced process equipment such as CoWoS and CPU. In robotic, Ace Pillar's AI control module for robotic arms have also started in European market, while demand from Taiwan enterprise for on-premises deployment continues to rise. MetaAge has benefited from growing enterprise demand for AI servers and storage, and its shipment maintained strong momentum this quarter. For smart enterprises in the AI era, MetaAge also draws on international partners such as AWS, Microsoft and Google Cloud to promote the adoption of AI agents in Taiwan, which in turn is driving cloud-based AI business opportunities. Looking to the second half, BSG will continue to deepen resource integration across these 3 pillars and contribute growth momentum to the group's overall AI positioning. Thank you.

Thank you, Joshua. Next, we will invite Larry Lee, GM of Qisda's Networking and Communication Business Group, to share NCG's business scope and outlook. This is also the very first time of Larry's participation in our investor conference. Thank you.

Hello, Hello everyone. I'm Larry Lee, responsible for the NCG Business Group. Qisda's AI infrastructure business is built around two dimensions: AI data center and networking positions across AI servers; 1.6-terabyte high-speed switches; uninterruptible power systems; and the high-speed transmission that strengthens computing power. Within that, NCG focuses primarily on AI data center and enterprise networking applications. In high-speed switches, we have had 400-gigabyte and 800-gigabyte products, and we expect to complete delivery of 1.6-terabyte engineering samples by the end of this August. We're also accelerating completion of the 1.6-terabyte manufacturing facility with the goal of small volume commercial shipment by the end of this year. At the same time, our R&D is fully aligned with Qisda Group's AI data center effort, particularly on completing servers, including liquid cooling and CPO integration. To support these products, NCG is strengthening its 3.2-terabyte and silicon photonics products, making the investments and integration of our server road map. In broadband and wireless, alongside continued shipment of Wi-Fi 6 and Wi-Fi 7, we have combined GPON and EPON solutions, and we expect to ship to a Tier 1 North American customer in the fourth quarter of this year. This is a modest achievement for us this year, and it opens up a carrier direct business model for the whole [ Alpha Group ]. It not only brings us closer to our customers, but also gives us greater confidence in future profitability. Now let me update you on our progress in 5G and 6G. We have completed the signing of the A+ program with the MOEA. This is a massive MIMO radio unit project. And as it proceeds, we will update you further on our investment in AI RU. In short, NCG will continue to focus on AI data center and enterprise networking application this year. And in the second half, we will complete small volume shipment of the 1.6-terabyte liquid cooling high-speed switch. We will also bring forward solutions drawing on the group's AI data center resources, and we will begin investing heavily in silicon photonics products in support of the group's AI infrastructure effort. That concludes my report. Thank you.

Thank you. Next, let's invite Harry Yang, GM of the Medical Business Group, to introduce the group's current business scope and future outlook.

Good afternoon, investors and friends from the media. I am Harry Yang, GM of the Medical Business Group. I am very glad to have this opportunity to present our operating results and future directions. In the second quarter, Medical Business Group revenue reached NTD 8.3 billion, up 8% Y-o-Y and 10% Q-o-Q. Faced with global population aging, rapidly rising medical demand and digital transformation, we have consistently placed AI at the core, building the complete AI hospital and wellness ecosystem. Let me share our key positioning and results achieved so far in five highlights. The first highlight is BenQ Hospital. AI has now been fully deployed across three areas in our own hospital, AI online patient service to be the first. Second, AI-assisted clinical diagnosis and treatment. Third, AI-assisted generation of electronic medical record. These applications improve the patient's experience and also meaningfully raise both care quality and hospital operating efficiency. The second highlight is the AI smart operating room. Our solution integrates operating room equipment, medical imaging, demonstration and teaching and the HIS/PACS, hospital information system, allowing clinical team to complete surgical workflow more efficiently while maintaining safety and quality. The third highlight is AI-assisted precision imaging diagnosis, covering chest X-rays, osteoporosis and AI-assisted ultrasound imaging. Automatic image recognition simplifies complex clinical workflows and helps physicians read images faster and more accurately. The fourth highlight is our IQMR AI-powered rehabilitation system, Taiwan's first closed loop rehabilitation system combining wearable sensing with an AI decision core. It reduced reinjury among patients by 65% and delivers up to a tenfold gain in clinic time efficiency, showing strong commercial potential. The fifth is smart medical retail and logistics. By combining Ding Ding Drugstore with the physical retail networks of other group companies, we are making the smart pharmacy the last mile of telemedicine services. We are also investing heavily in drone delivery of medicines to address the needs of remote and outlying island communities. These services are already in actual use between Donggang and Xiaoliuqiu. Looking ahead, our AI hospital and wellness business has moved from proof-of-concept to a high-performance, replicable commercial model. As for the third quarter, given our current growth momentum, we hope to sustain the overall growth trend. And as things stand, the third quarter has a good chance of being better than the second. That conclude my report. Thank you.

Thank you, Harry. Hello again, everyone. I am Cally Ko. I would like to share Qisda's recent business updates, starting with IT. We have developed integrated multiplay (sic) [multi-display] solution and work with Intel on Thunderbolt 5 version, demonstrating high-speed connectivity. So whether you are a developer, a gamer, a designer or a Mac enthusiast, the integrated multi-display solutions Qisda offers can meet your different needs. As Daniel mentioned earlier, for marine and extreme climate outdoor displays, we offer IP66 protection together with resistance to water, dust, salt-spray, corrosion and tolerance from minus 30 degrees to 80 degrees Celsius. Our rugged displays remain clearly readable outdoors, whatever data or solution you want to display. Next, our AI display for unmanned vehicles. What matters with drones is that we support not only swarm flight and swarm control, but also local dimming on our rugged ground control stations, balancing outdoor visibility with low power consumption. Next, in CIG, our direct view LED display has completed its first demonstration site, and a second display solution is due for deployment. This also marks Qisda's entry into large-format 360-inch DVLED display solutions. Let me also mention our smart fish finder. Qisda is known for its ultrasound technology, and we have begun working with AWS and Anthropic on our AI fish finder solution. Beyond helping you locate the fish quicker, whether in icy condition or at sea, what matters is that we also work with LLM to identify commercially valuable species. Combining the ultrasound solution with an LLM solution adds far more AI functionality to our fish finders. Next, smart automotive. Our projection application platform for smart transportation and automotive headlights is complete, and we have begun working with global carmakers. As you know, in Europe, the United States and many Southeast Asian countries, at night, whether on highway or rural roads, lane markings may simply not be there. Our automotive headlights can project lane guidance for those drivers while the vehicle is moving and visibility is poor. We have begun collaboration with multiple global carmakers. Next, on the second row, the AI servers, as I mentioned, as Joshua noted, demand for AI servers is currently strong, and we have orders to be fulfilled at the fourth quarter. Next is 2-phased direct liquid cooling, DLC, the thermal solutions. We demonstrated these at COMPUTEX, and we have some sample orders to deliver. Next, 1.6 terabyte. As Larry mentioned, we mentioned both air cooling and liquid cooling versions, especially our liquid cooling technology is particularly notable at 1.6 terabyte. Testing with our Tier 1 North American customer began in the third quarter. And in the week of August 20, the customer will visit Alpha's U.S. subsidiary to conduct testing with us and to carry out sample acceptance. Next, as Larry mentioned, our Wi-Fi 7 fixed wireless assets and passive optical networking. We have, in fact, already received orders from a North American telecom operator, with shipment required by the end of this year. Then 6G. As mentioned, the RU, the radio unit, we have again, the MOEA 6+ program (sic) [A+ Program], which has now been approved, and we will need to deliver and deploy accordingly. Finally, our DFI, AI computing solutions and edge AI, which serve industry, robotic, transportation and healthcare together with our edge AI IPC products. If you have such requirements, such needs, you are welcome to contact DFI and Qisda. Finally, our AI solutions. As mentioned by Joshua, MetaAge offers a range of enterprise-grade AI agent platforms. On one platform, you can simply load in a prompt, and it will generate an AI agent for you. And there is also a platform for managing multiple AI agents. So if you or your organization are interested in these solutions, you are very welcome to contact Qisda. As I mentioned earlier, in smart retail and unmanned store, we have solutions from Partner Tech and WiXtar. And for NCG, as Lawrence mentioned, our AMR, AGV, our outdoor robots, including lawnmowers, have entered mass production phase. I would also like to share that we have received a new order in this area for firefighting AMR and AGV because sending people in to carry out rescues is genuinely dangerous. If there is a fire, we can send AMR and AGV in first to make an initial response that substantially reduce the risk in firefighting and allow our firefighters, men and women alike, to go in at the second stage with better protection for their lives. Next, on Qisda Group. Focusing on robotic joint modules, Ace Pillar has integrated DD motor, direct drive motor and harmonic reducer and rotary platform into one unit, the robotic joint module you can see on screen. The module is shown enlarged here. In reality, it is the joint used in humanoid and other robots and rather more compact than the image suggests. Our breakthrough is a 40% reduction in volume with a substantial gain in efficiency and particularly strong rotational performance. If you have such requirement, you can reach out to us. We are, of course, also engaged in semiconductor equipment and communication integration solutions, including inspection and metrology equipment and factory automation equipment. Qisda has a great deal of involvement in semiconductor. As Harry mentioned, he mentioned that IQMR AI-powered rehabilitation system. What matters here is that what we provide is not ordinary gym equipment, which is simply exercise apparatus. This is an AI rehabilitation system with AI functions built in, which assesses your injury and the area you need to rehabilitate or strengthen. The AI also control the IQMR equipment, quantifying force and speed in real time. As Harry shared with me in rehabilitation, there also needs to be a degree of resistance as you push so that the rehabilitation is done better and more precisely. In this area, we are working more closely with AI solution provider and CSP, cloud service providers. Next, pet cancer. For many people, a pet is not just a pet, but family. So for pet cancer, we can now perform liquid biopsy. For earlier screening, targeting the precision veterinary medicine market, Qisda has a range of solutions in pet care. I am also pleased to share that BenQ Qflow TFF is Taiwan's only medical-grade hollow-fiber membrane potting technology, and that marks our first entry into bioprocessing. Applications are growing, including for dialysis patients, and we hope this solution will allow us to care for more people. Next, AI hospital and senior care centers. At BenQ Hospital in Nanjing, we are building an oncology center, including precision medicine using proton therapy and boron neutron capture therapy, and we are also establishing senior care centers in Suzhou and Nanjing. In both cases, we hope the self-pay segment, alongside national and public health insurance, will lift hospital revenue. On the next slide, our new products. As mentioned, working with Intel, Thunderbolt provides high-speed connectivity and supports multiple displays. So whether you are in a meeting or doing software development or enjoying entertainment, we can deliver a seamless, immersive and intelligent new visual experience. As mentioned, our AI smart ultrasound solution supports image enhancement, workflow automation and mobile applications. Most importantly, we have now signed an MOU with one of Taiwan's three major telecom operators. Equipments for rural healthcare and for ambulance will adopt Qisda's AI smart ultrasound solutions. This allows ultrasound to be used first in rural care and in ambulances so that when the patient reaches the hospital, they can be taken directly to the right departments, letting the emergency team anticipate the problem faster and address the patient's pain points. Next, the fish finder. As I mentioned, what matters is that our display remains readable in extreme conditions from minus 30 to 80 degrees Celsius. And because you wear gloves outdoors, our screen is a 10-inch high brightness touchscreen that supports gloved operation. It also supports real-time sauna and multiple fish finding modes. More importantly, working with LLMs with Anthropic and with AWS, it lets you detect fish and crucially know what kind of fish they are, whether they are commercially valuable and worth casting your net for. It is, of course, also waterproof and shock-resistant for outdoor use. On the final slide, alongside our monitors, we have ScreenBar. And we have now launched a new iScreenBar designed specifically for the iMac. As everyone knows, Apple's designs language, and the iScreenBar brings minimalist craftmanship that complements the aesthetic Apple fans love. A macOS application supports lighting control so you can control the ScreenBar directly from your Mac. More importantly, we deliver glare-free and reflection-free illumination with auto-dimming and presence detection. When you sit down in front of your iMac, automatically adjust back to your presetting lighting. As many of you may have seen at COMPUTEX, I would like to share it here as well. We have a soccer projector and golf projector that's world's first sports simulation projector with a built-in APU, which realistically recreate the terrain, turf, lighting and shadows of famous golf courses. We have also partnered with Le Blé d'Or on soccer projection, and you can experience our soccer projector at three of their restaurants. This turns the projector into an all-in-one entertainment hub with one touch, switching among movies, gaming and live sports. Finally, our ZOWIE, our XQ series professional gaming displays equipped with the all-new DyAc 3 technology and a new color mode designed specifically for battle royale games with one-click synchronization of your personal settings. Our G-sensor, magnetic chilling hood and S switch lets you complete setup quickly. We can fairly say that we are the most professional solution provider and manufacturer of gaming displays. I have been glad to introduce our new product launches today following the sharing from each of our business groups' general manager. I will now hand the time back to our Chairman, Peter Chen.

Thank you, President Ko and to our five business group general managers for their presentations. You can sense that our investor conference now feels comprehensively different, thanks to President Ko joining us. One aspect is that we have gone fully AI-enabled, which simply means bringing AI applications and AI software into our products and into our applications. With fish finders, it is not about seeing that there are fishes, but about seeing what kind of fish they are, whether they have commercial value or whether they are big enough with no guesswork, that is what AI adds. At previous investor conference, a number of you suggested we talk more about product and technology. All the more so now that we are fully AI-enabled, and I hope you can sense the difference.

There are several questions in the Q&A, and let me answer them briefly. The first is the ranking of the growth rates by business group in the second half of this year. As our CFO reported, in the first half, BSG grew the most in both revenue and profit, and it will remain a strong source of growth momentum in the second half. Beyond bringing AI into real-world use, which you have seen many examples of today, AI infrastructure will also play a substantially more important role within the business group, including servers and server-related data center product lines. Therefore, BSG will have the highest growth rate. Second, of course, is medical, which grows steadily each year. The third one is NCG. As GM Larry has reported, we are moving actively into the data center market. In the past, we had relatively little presence there and had not reached the data center. Now our direction is clear to break into the data center market and ride the substantial growth in AI infrastructure, along with silicon photonics and switch after all, integrate the transmission that sits between high-speed sending and receiving of information. A switch receives, sends and transmits, and that is where the greatest growth momentum lies ahead. So the third is NCG. Lastly come the many AI-enabled IT products and devices we have discussed. Our traditional displays, monitors, projectors and so on are gradually being replaced in the market by new AI displays. And as the share of these older products declines, this category ranks last. That is roughly the distribution. As for the second half outlook, as I said at the opening, the second half will certainly be better than the first. This returns to the familiar industry pattern. The first half comes in a little below the 40-something percent range, and the second half at 50-something percent. In other words, we expect the third quarter to be better than the second and the fourth quarter, better than the third. So the second half overall will be better than the first. That is our second half outlook. As for our four AI strategic pillars, we have already explained earlier, I hope you can sense that AI will ultimately shape every application around us. We have already done great deal of work in BSG, which drove the growth you have seen this year, and particularly in the first half, but it does not stop there. In data center applications, AI infrastructure and computing power, we will certainly not be absent. This is the fastest-growing lane today. As the saying goes, preparation comes before execution. And this is the preparation we're talking about, the preparation for AI. Cloud equipment has to be faster and ready before we can meet the growing demands AI will place on us from every direction. I believe that is clear enough, so I will not further escalate. Next quarter, we will have more opportunities to report to you again on the many AI products we are bringing to market as we keep pace with the time. In the interest of time, it is now 3:03 p.m., and having answered the main questions, let me address that our product technology and our AI-oriented strategic directions are all being actively rolled out. As I mentioned, we continue to adjust our organization, including at the NCG. And Larry is joining our investor conference for the very first time. There are reinforcements and arrangements to our resources made to ensure that everything we plan can be executed and realized. Thank you again to all our investors and members of the media for joining us today.

Thank you. All questions submitted online have been consolidated and answered. This concludes today's conference. Thank you for joining Qisda Corporation's online Investor Conference for the second quarter of 2026. A recording will be uploaded after the event. Thank you again for your participation. You may now disconnect. [Statements in English on this transcript were spoken by an interpreter present on the live call.]