Sunny Optical Technology (Group) Company Limited (2382) Earnings Call Transcript & Summary

Dear investors and analysts good afternoon. I am the Head of IR Department, Liu Yanfeng; and the host of today's event. Our Annual Investor Day creates a platform for a candid and sincere communication with the cap market. Your presence makes this event or the more valuable. On behalf of Sunny Optical Technology, I would like to extend a warm welcome and sincere gratitude to all of you. We hope through this event, we can jointly analyze industry trends discuss the company's growth from a new perspective and witness brand new opportunities for the optical industry in the AI era. Today's agenda consists of 2 sessions. Session 1 is the corporate presentation, where our core business leaders will share market opportunities and the business layout with all presentation materials available on our official website. Section 2 is the Q&A, during which senior management and the business heads will address all your concerns 1 by one. After the meeting, we have prepared a dinner for everyone, offering you more chances to interact with the management team over dinner. Now please allow me to introduce the company representatives attending today's event. They are Executive Director and Chairman, Mr. Wang Tan Jiong; Executive Director and CEO, Mr. Wang Wenjie; Vice President and CTO, Mr. Gu Bo. Vice President and the joint Company Secretary, Mr. Ma Jianfeng. Vice President and the General Manager of [indiscernible] Sunny Optical Intelligence Technologies and [indiscernible] instruments, [ Mr. Wang Jongwe. ] Co-President of Ningbo Sunny Smart Autotech Company Limited Mr. [indiscernible]. Deputy General Manager of [indiscernible] Sunny Optics, Mr. [indiscernible]. Senior IR Director and the Joint Company Secretary, Ms. Wong Pui Ling. So first, let's invite Mr. Wang Tan Jiong, Chairman to deliver the opening remarks. Welcome.

Dear investors, analysts and distinguished partners from all sectors. Good afternoon. Thank you for taking time out of your busy schedule to visit Sunny Optical Technology and join our Annual Investor Day on behalf of Board of Director of Sunny Optical Technology to extend the warmest welcome and a sincerest gratitude to all of you. It has been less than 3 months since year 2025 full year result briefing. Frankly speaking, the external macro environment has not seen fundamental improvement yet a series of internal transformation at Sunny merit or close attention. First, following the renewal of our management team, the outcomes of organization reform are emerging and our platform business metrics management model has greatly optimized resource allocation and utilization efficiency, which will ultimately be reflected in our operating performance. Second, we have entered a new strategic phase driven by dual engines. They are product value and the capital value. We have set up a brand-new investment performing Hong Kong sending capital to systematically build our capital market ecosystem. This platform helps us assist in industrial high ground to secure supply chain stability and incubate new growth drivers. Third, we have further ramped up R&D investment and build a global innovation network. We have established a diverse research institute franchise in domestic innovation labs including Shentel and an import as well as Europe, the first place of modern optics, we have formally appointed fellow of the Canadian Academy of Engineering. [ Mr. Kupo ] as Group Vice President and CTO. This will remarkably excel to the commercialization of Sunny Optical's cutting-edge technologies and elevate our core competitiveness. Later, our management team will walk you through the latest progress of each core business segment. at [ Felloupu ] will deliver a sematic presentation, focusing on how the company leverages core optical capabilities to impress the era of AI computing power. We sincerely appreciate the longstanding attention and the support from all investors and analysts. We hope today's communication will help you gain a clearer picture of our strategic planning for navigating industrial shifts, our latest business progress and our layout plans for the future. We look forward to hearing your valuable insights to help us refine our development direction and optimize our strategies as we enter the AI era constant emergence of new scenarios and demand across the optical industry bring both challenges and far broader room for growth. We firmly believe that with our long-established optical expertise and open collaborative development mindset, Sunny Optical will seize the historic opportunities brought by the AI computing revolution and share the dividends of this era with all our investors. Thank you all.

Thank you, Chairman for your wonderful speech. And next up is our core foundational business, the headset products serve as a cornerstone for Sunny Optical's anchor business and it is an incubation hub for technological innovation and made headwinds from rising memory chip prices and weigh on the overall mobile market, high-end factor for keep expanding market share through iteration and let's welcome Mr. Charl to give us the updates of the headset business. [indiscernible].

Dear investors, analysts and industry partners. Good afternoon. Welcome to our Investor Day. And I am [indiscernible] Sunny Optical and Sunny Optical has cultivated the optical industry for years. We consolidate our long-term development foundation through a profound technological accumulation, abundant customer sources and a differentiated product capabilities. While consolidating our core headset imaging business, we fully deploy various emerging imaging trucks to capture the incremental growth opportunities. Today seemed with master light expand boundaries, intelligent imaging for all scenarios. I would like to talk about the cooperate strategically out to combine the industry trends, and I will comprehensively analyze Sunny as a full-scale layout intelligent imaging from 4 dimensions: the Intelligent Imaging Trends, product upgrading trends, core platform technologies and premium intelligent manufacturing and thoroughly interpret our core competitiveness. First, let's analyze the underlying development logic of the current intelligent imaging industry as the core carrier for perceiving the physical world, imaging delivers 2 key values to AI. First, it acts as a visual perception media to help AI interpret the real physical world. Second, deep integration of imaging hardware and AI algorithms really optimize shooting performance across both scenarios. On this basis, carriers of user interaction motors keep iterating, the industry has gone through areas dominated by TVs, PCs and smartphones as mainstream interaction portals and is now entering a diversified new stage, featuring smartphones paired with wearable devices. We believe the competitive landscape of terminal handset makers will shift in the future with AI manufacturers accelerating in the ecosystems and further promote the development of this industry and the mobile phone images right now, we have a Phase 2 pressures and is front we have seen the balance of the supply chain and the cost has been high and there have been more and more companies coming into the game and the competition has been more ferocious and this had required the industry to accelerate its differentiated innovation and in terms of the market scale. The shipments have been dropped. However, the structure of the product has been more and more premium. And it has effectively offset the slowdown of the shipments especially its reduction of the revenues from '26 to '30. And the premium cameras percentage will be increased from 45. 8% To 55%. And at the same time, for the mobile phone companies with the accumulation of the imaging. Technologies would accelerate their deployment in handset extended lens and smart glasses and some other smart hardware. So in terms of the industry growth data, we expect that from '26 to '30 in the new tracks of the smart imaging, and it will have a cargo of 35%. It is a very strong momentum. So generally speaking, we believe that in that in the handset industry, we still have greater room for expansion for smart imaging, and we are very optimistic about the fundamentals of the company and we have formed a dual competitiveness. They effectively offset the pressure on the cost in the industry. So on the 1 hand, based on our optical technologies, we can build a moat. And on the other hand, with an AI empowered manufacturing, we are able to improve the quality and increase efficiency. And the next based upon the demand of the smart imaging technologies in a market to analyze our flow scenario solutions, technologies and manufacturing capabilities. So combined with the variations and changes of the market, right now, we have seen 4 different development trends. And on the left-hand side, you can see the extreme [indiscernible] seeing handset as well as the folding handset is pushing the imaging modules into thinner, smaller and stronger. And at the same time, we need to expand the battery capacities and there are more numbers of the components so that xy dimensions need to be further small. And it's not an option is that both of them are necessary. The second trend is professional imaging. There's [indiscernible] handset is a bench marketing against the professional cameras. So we have multiple functions such as the multiple identification. And in terms of the videos, we have the video symbolization capabilities will increase the speed and precision and combined with the wider dynamic range and the low noise point, we are able to produce the cinematic portrait video. And third will be our overhaul full focal length experience, so from the mobile imaging has now involved from single telephoto to dual telephoto and steps continue optical zoom and now even the external attachable lenses, expandable lenses, it's also demoed outside our venue today. And it enabling the similar switching between portrait and ultra telephoto shots across the full focal range. Large image sensor and large effort to telephoto lenses enhance the texture of our telephoto portrait shots while telephoto macro capabilities filled the gaps in the professional macro photography. Full focal range imaging is moving from functional enough premium user friendly. And then fourth, it's the high integration. Our modules footprint has continuous to with integrated motor lenses, design and lens bonding solutions, accelerating mass adoptions to incent the integration, deliver more fortunately within less space. So for all these market trends, we have now a full solution provided by Sunny Optical tech. And now I would like to expand more to address our 4 industry trends are outlined above to talk about our solutions and technology. So first is our main camera business segment. In 2026, the ASP of our main camera product has a notable year-on-year increase alongside of sharp expansions in shipments of large image sensor main camera modules. So that has bring us a lot of contribution. So as we can see, our main camera business, therefore, achieving both rising shipment volume and higher unit prices driven by product mix optimization. We offer 3 core upgrade main camera solution. One is variable aputure plus quad ultra miniaturized lens module. So this product's core value lies in the drastically shrinking in XY dimensions without compromising optical performance. technologically, our self-developed quad-cod edge technology is combined with our hybrid lens solution has now entered a mass production at KK volume scale, supported by high-precision AOA assembly technology Sunny Flow-Tech has mastered integrated assembly of wearable apertures, motors and lenses. The second one is -- the second 1 is our wide large dynamic gimbal OIS module, and that can help us to achieve a flagship image level. The OIS stability has multiple features such as big angle, low noise, it has suppresses our mainstream performance in the OIS systems major in the market. And the next 1 is the non-gold linear system. So that can shrink the XY sizes. Our self MOV ultra low size architecture with the molding technology, packaging balance, stability and cost effectiveness. And then next one is the Teroscope telephoto product. Another driver of lifting our overall ASP served as the growth engine of Sunny imaging business. So we're going to talk about 3 of this segment. The last 1 is the large sensor, large aputure cemented prism Periscope Module. It used the cemented Prism module with large aperture, large image size. It accelerates the incoming of the light accepting. And for large periscope miniaturized has been accomplished by this module and also we also achieved KK production to ensure that at the same size of the product, we can receive the most of the light. The second solution is the integrated module multi-reflection periscope module. So this solution overcomes the challenges in complex optical path design. And so we have fully stacked own R&D actuator, Prism and system. So we can have an ultra high Zoom optical system. And by our own universal capabilities SPIM packaging and SEF system, we have optimized the precision control of our actuator so we can shrink the height of the actuator. And the next is ultra high pixel continuous zooming periscope module. This realized the high resolution of the overall focal length. And comparing to the double periscope solutions in the industry, we have lower power consumption with smaller size comparing with the double periscope system, we deducted 40% of the size takes inside the handset modules. And besides that, we have our extended product solutions as well. We have 2 main solutions which gives us a new growing point. On the left-hand right, we can see the long focal length expanded lens sets on the left-hand side, 400-millimeter focal length, it reaches 17.4x of the Zoom. We use GMs G solutions. So it can connect it to the handset camera sets. It can reach a DSLR level solution. And on the right-hand side, we can see the 200-millimeter focal length 1 is the lightweight extended lense set. It's light, but without compromising its quality. So in this product solution, this is the new growing point in our handset long focal length solutions portfolio. So this is a new foundation for our new growing point and contribute a structural momentum to our business. On the right-hand side, we can see the integrated component product. So here, we have offered the Opto mechatronic integrated solution, which helps our customer to iterate the product rapidly. So now we have already have the AA technology for G plus P projects, and this optical design lenses is set with multiple group plus variable aperture plus large image size main camera. On that basis, we have made our own deployment in this new technology and with layout multiple group control zoom and variable aperture with all of these cannot leave our own pipeline of R&D in sunny Opto tech. First of all is our R&D capability for high-end optical material Phase II is faced with increasingly stringent imaging requirements. Together with our partners, we codevelop high-end optical resins with our own material suppliers, which are fully applied to our premium main and telephoto lenses. Many of these materials have breakthroughs in technical bottlenecks, including low stress reflective index, high temperature resistance and low disruptions laying foundation for higher resolution and manufacturing yield of high-end lenses. So meanwhile, driven by the growth of [indiscernible] lenses and communications business, we have entered strategic cooperations with CDG and for core glass raw materials to consolidate our material supply chain and support our -- the R&D and mass production of our new materials. And second is our in-house R&D capabilities for co prism components. Here, we're talking about 3 cutting-edge Prism Technologies. One is the single slot multi-slot Prism technology we have realized the world's first mass production in the industry. It further shrinks our module size for folded optical paths to realize outline miniaturization and is compatible with lens wise to enable larger aperture with Deco achieved. And number 2 is our optical paraprism technology. So we mastered the full core process, including cementing, grinding and molding to boot system, light efficiency and optimize image quality. On the right-hand side, we can see the flight reflection, cemented Prism Technology, the industry first fivefold optical path architecture for extended optical path length, combined the low reflection, low transmission aperture and air layer aperture to straight light can be suppressed at multiple levels. The third is precision glass molding capability. On 1 hand, we have -- we own the industry-first non-hedging multicavity molding technology enabling one-stop forming of multiple structural lenses to cut production costs and improve the [indiscernible] position. On the other hand, we master special molding technology pair with glass thermal folding and exclusive release film processes to realize mass production of full spectrum optical lenses, including free form surface and micro arrays. These capabilities as empowers our upto communication business across sectors with 2 unique strength. First, leveraging our profound optical system design and simulation expertise. We effectively miniaturize the lightweight optical modules. And second, with sub-micron high precision assembly technology, it improves our processing accuracy and mass production efficiency simultaneously, delivering a solid support for skilled expansion of optical communication business. So beyond underlying the material and component capabilities, comprehensive in-house requirement R&D forms, the core foundation of our differentiation. So we provide one-stop solutions covering optical imaging, precision, mechanical design, AI technology platform, high speed, high precision motion control and equipment control enabling equipment to support process design. So our equipment is now features the core including realization product data monitoring process and fully quality traceability for the improving product efficiency and yield of multistage lists. Sunny is now fully building a premium intelligent manufacturing systems entering the AI impairment Digital Twin, business foundation across delivery and quality AI intelligent platform and lean production, we independently build the playing an AI platform to coordinate and optimize optical design, manufacturing process, quality control and equipment management to lift the yield and production efficiency. Next 1 is our agile and customization. Rapid response supported by parametric design and flexible production lines. We implemented a personalized product model with tailored solutions for each customer. Three, is full change traceability, quality assurance, Unico run through the full product life cycle through a visual quality, guarantee stability delivery and consistent high quality. The persistent pursuit of ultimate optical performance is the permanent underlying theme of industry development. So aimed at intensified industry component AI will further empower the imaging industry driving comprehensive progress in both R&D and manufacturing as a core pillar for complementing employment. Master light expansion voluntaries, intelligent imaging for AI scenarios based on our major industry trends, Sunny will keep advancing optical innovation while stabilizing our core mobile imaging business, we will accelerate market penetration of new imaging products, including handheld gimbals, action cameras and auxiliary lenses, deploy diversified synergy tracks for revenue growth and these long-term dividends for image industry. Thank you.

Thank you Mr. Zhao for your insightful sharing. We now have a clear understanding that Optical imaging acts as a critical medium for AI to perceive the physical world. Optical applications still bolster remarkable growth even in mature markets, yet Sunny Optical vision stretches far beyond the handset screens. Let's turn our attention to broader tracks. AI has penetrated all scenarios of talent driving, smart cabins and smart automotive lighting, bringing force abundant new opportunities. Next, let's welcome Mr. Xi to present under the same global leader in automotive optics. Let's welcome.

Dear investors and analysts, good afternoon. I am [indiscernible] from the Sunny Auto Tech and we are preparing for the IPO, and we had handed in the A1 filing and due to the compliance issues, I cannot share with you a lot of the key indicators, including our product and technology trajectories or road maps. So I would like to share with you more about the macro technology development, including the industry trends. So first of all, I would like to talk about 3 aspects. The first is the intelligent driving systems especially the upgrade of the perception system. And the second 1 is intelligent cockpit with the HMI, the human machine interaction. And also the AI lighting systems that connect with the perception and the manifestation of the light and shadows. So let me start with the intelligent driving the perception layer, and 2026 is the first year of the L3 and L4 commercialization. And in '26, globally, the L3 legislation has been in the forming. And in China, some of the OEMs have gradually laid out the L3 vehicles for mass production. And '26 is also the L4 commercialization around the world, there are over 20 cities with the approval for the robotaxi commercial operation. For example, the top company in North America in 2026 has been operating and mass produced in the robotaxi. And number three, the algorithm platforms had been switched from the hundreds tops to thousands of tops. So this kind of upgrade also brought us with opportunities in the upgrade of the smart hardware, such as the pixel upgrade. So before -- we could not increase the performance of the hardware because it is limited by the computing power. But now once we have addressed the computing power issue, now the perception hardware, such as the LiDAR we will be able to quickly upgrade the pixels. Well, first, in the vehicle cameras, there have been more numbers. So it's increased to 12 to 15 units per vehicle. And previously in the L2 plus level, we have the 3 MAG to 8 MAG combinations, but at the L3 levels, it's more about 8 MAG for coverage and even to over 17 MAG. So in terms of LiDAR and the previous standardized pack is 1 main LiDAR and in the L3 level, we will have 3 to 6 LiDAR and with 1 main LiDAR and some other black spot or short-range LiDAR and in terms of the harness. So previously, we have 1 and 2 lines, gradually, we would upgrade to 896 units. So these are some of the upgrade in pixels. And another part is about the diversification of the features or the upgrade of the features. So at the L3 and L4 level, -- the intelligent driving system needs to work all the time. So you may have a sense that when you are driving at high speed in the express ways, there might be some bugs hitting the surface of the LiDAR auto cameras, which will affect their performance. So how can we get rid of those sustains and the bugs in real time and at optical systems in some extreme environment may have a folks. So with the fogs and dust on the surface of the camera, how can we get rid of it. So for both the camera and LiDAR, we would have a lot of self-cleaning systems and the active heating functions to make sure the smart driving system can work properly all the time. And this is adding the value to the smart driving hardwares. And next, I'd like to talk about -- another important part of the perception layer, it is LiDAR. And right now, the industry trend is OEM self-development. So this is the key I would talk about today in LIDAR. So if it is developed independently by the OEMs, then we would have the satellite cluster of the LiDAR. That means we will have the restructure of the division of the work in the industry. So on the left hand side, you can see some traditional types of the LIDAR, some short ranges on long-range LiDAR and the hardware and the computing units, the controlling unit are all integrated is the LiDAR manufacturers would be responsible for everything, including the hardware, the control and the computing. But going forward, the trend is that the OEM will have to self-developed LiDAR and the hardware and some core units such as computing and controlling parts would be integrated in the central processor. So what they need is an integrated hardware system. And then for companies who are specialized in module and optical technologies, there will be more opportunities. And then the second part is some technological pathways. So with multiyear development and iteration, the technology as it being more and more homogeneous. So LiDAR have been developing towards the modulized solutions. So the traditional way is -- as you can see on the slide, we have the integration of the camera and the LiDAR. So previously, we have 1 camera and one LiDAR and we mostly have the mechanical integration and the calibration. But with the new solutions in 2026, we could have this shared optical pathway with LiDAR and camera and the receiving for LIDAR as well as the chip of the camera are separated. So with the shared optical pathway, we can extremely simplify extreme calibration as well as the accuracy of the system. So we have put together more factors about optical technologies and module capabilities. And another trend for LiDAR in the future is called the RGDB chip integration that means there is a sense and a camera lens. So LiDAR solution would develop towards the modularized way. So next, the big part is about the cabin perception. The development of the cabin perception is more about vision upgrades, the pixel upgrade and the margin model fusion. So with this trend, you could see that the demand is coming from the compliance requirement for legislation in China and abroad. For example, we need to have the DMS, OM as -- that means the monitoring systems for the driver and the passenger. So with this rigid demand the in-cabin camera need to be upgraded. And we would have the combination with the milliwave LiDAR and the thermal forming cameras and some microphones. So it's not like the simple integration of the 2D image information. Instead, we would have a more diversified information to be integrated so that we can monitor whether the driver is driving in the status, and we can monitor the fatigue-ness and a healthy level of the driver we would also have some other perceptions and sensations of the driver and the passenger. And another about the in-cabin technology, which we have been worked on is the HUD. And the current evolution of the HUD is more and more from WHUD to AR HUD. So the WHUD is composed of a traditional LED screen and on the lighting systems. So the massly produced HUD usually have a problem that is a small FOV, and the short range of the projection. Therefore, it could not have the integration of the AI technologies. So going forward, if we wanted to develop the AR HUD, then we need to switch from the liquid crystal technologies to DOP and all costs. So it includes a lot of lighting and imaging and turning systems into some freeform surfaces. So it includes a lot of the optical components. So HUD upgrading towards the AR HUD were -- ask answer to further increase added value of the optical components and technologies. And next, I have to talk about the smart headlights. And traditionally, the headlight is mainly used for illumination, but step by step, a lot of the domestic and overseas automobile manufacturers, especially the EV companies have been using some smart petalights, which is used for projecting some signals and signs so that the vehicle can interact with the pedestrians. For example, we have gradually switched from the multi-kilo Pixel to million level pixels, so just answer the HUD's development trends, the headlights would also include a lot of the projection and lighting and optical systems so that we can further increase the added value. The last part to talk about is called AI lighting. And this concept well, we just covered the intelligent perception and the in-cabin interaction. So we need to think about how to take advantage of these external perceptions and with the internal cloud computing and some algorithms with the empowerment of AI to allow the HUD smart lighting, headlight and in cabin systems, the output some execution level information. With that, we are able to have a close loop in the system. So for perception, including the LiDAR and camera, we are able to obtain some external information. And then we have the for vehicle computing platforms, including the cloud computing platform, and we're able to do the computation and operation and then connected to HUD smart lighting and cabin interaction. So we are able to increase the contact level and the safety for the driver. So this is about the AI lighting system, we can do more in these aspects. So I had to share with you the latest development and the trends of smart perception AR HUD and cabin interaction involving some product upgrades. It can bring more development opportunities for Sunny. Thank you very much.

Thank you, [ Mr. Shi ] for your in-depth analysis. Beyond Automotive Solutions, Sunny Optical has built a full layout cover AI glasses, humanoid robots and a wide range of AI hardware as we explore the physical AI world. And next, let's welcome Mr. Wang Zhongwei to deliver his presentation team to optics as the foundation, AI expanding the frontier advancing toward boundless opportunities. Let's welcome Mr. Wang Zhongwei.

Dear investors and analysts, good afternoon. Next, I would like to share with you our pan IoT business. So these are very popular content. And the 1 is the optical module, and there are 3 bridges and the other is the physical AI. So for these 3 bridges here in Sunny, we think that the optical module is the bridge between the computing power and signal. So I'd probably not go too deep in that because [ Dr. Kubo ] is going to talk about that later on. And the second bridge is that we think that the perception modules bridge of AI computing and physical AI. This is the perception in interconnection modules. So for AI glasses, we think that the AI glass bridge the human cognition in the fiscal AI. So as you can see, this is the embodied AI technology framework and our ECO stand map. So if we talk about AI we cannot neglect this triangle. One is data and then its computing power and then it's the body itself. So the 3 bridges we see, as we can see, those 3 bridges. One is that if we want to get data, we need to have interaction with the environment or the surroundings. So that we need to have the perceptions of real-world data include the real world data or the embodiment free data. So some of the public companies there pretending these states as we can see the companies listed multi-spectrum listed companies and so on. So in terms of AI glasses, is between the embodiment and human means. So embodiment and the humans. So how can we use the physical AI after this technology mature and AI glasses has become an important tool for that. So for optic modules is solving between the cloud and edge -- transmission of data. So here, I would like to talk about more about that. So why is data collection is now becoming more important. The logic is really similar to the automotive industry. Why the cars, the vehicles they don't need to collect? Well, actually, they're collecting the data as well. It's just do it in kind of like in the back end. So for robots and automotive or the auto vehicles, you can actually compare them. But -- in terms of the robots, we cannot put men's in robots, but we can put people or men's inside the vehicle. For instance, you're driving the vehicle and the data has been collected by the vehicle. And later on, we just need to process it to target for the big data and AI to train the models and so on because we have really high level autopilot rate. So from L0 to L5, we can align them with the different stages of human plus robot. But we cannot just send a man inside a robot. So we now have an industry of data collections and companies. So currently speaking, we can see that can probably differentiate into 3 different stages. One, is the basic vision plus IMU or the era of stand-alone data capture device. Second is rapid adoption of UMI plus EcoSolutions, and third 1 will be the mature stage of fully integrated [ Multimedata ] acquisition. So the differences between them is the dimensions of data collections and the way of collecting it. It's becoming more diverse. In terms of simulation, the simulated ability of the real world is becoming more competitive. So what we are seeing today, the data acquisition device have very fast growth opportunities. The data is provided by a company. So as we can see, the cost of this device is pretty high. It depends on the complexity of data acquisition. Normal connection is not that expensive. You just need a normal camera. But if you need more 3D remote control, remote data collections is going to be more costly something between 100,000 to 200,000 for 1 unit. That's about data acquisition device. And this will probably be a continuous developing industry. So the data after acquired depends on its complexity. The data is actually pretty worthy as well from lower tier data to higher tier data to only a few bucks to a few hundred bucks per hour especially some vertical -- some data in some vertical areas it's going to cost you more. So you need all these data to run the robot. So from Sunny's perspective, why do we want to expand ourselves into this industry? So for all these years for data acquisition and the visual systems of robot is really a like from hand tracking, head tracking to all different sensors inside a robot. If we put it into all these hardwares, the platform technology actually is pretty similar. We have already put ourselves into our industry quite a long while in terms of wearable solutions. We have now a Eagle. This is actually an Eagle data collection device. And second, I would like to talk about the humanoid robot. We think that it's going to be the ultimate form of physical AI because after collecting the data, we have all these different scenarios, all these different data for different scenarios, and humanoid robots can then be landed and commercialized. So in this part, I think we have this different through a few stages. In Stage 1, we have the basic for industry repetitive task in Stage 2, maybe commercial usage like retail services and so on. This is the intermediate level. And then Stage 3 after it becomes an advanced intelligent, it probably is going to be really versatile and flexible to provide different services, nonrepetitive services. So for the data I have collected from Goldman Sachs. As you can see in 2035, you probably will have a very, very strong growth. Maybe in 2 million units, maybe more. So for Sunny. We have really put ourselves inside this domain for quite a long time. From 2015, we started to invest in this industry. So it has been more than 11 years. So from the head tracking system, the localization and perception system to the waste and chest safety perception systems, the manipulation reception systems on hand to like the obstacle avoidance perception systems, we're all making ourselves in these parts as well. So for humanoid robots -- we don't have a really large scale shipments, special for last years. We have talked about this as well. In some typical vertical industries, we have some leading samples. In VGAs, in warehouses and so on, all these navigation, obstacle avoidance modules already being placed in use in a relatively large scale. So in terms of AI glasses, we think that it's going to take up swiftly, and we have already put ourselves in this industry for quite a long term as well and probably is going to launch a new growth cycle in consumer electronics. So we think that in 2035 is going to hit 100,000. So currently seeing this trend. VR is in a relatively stable application like gaming, entertainment, -- that is a relatively stable scenario from merging from smart glasses to AR, you can see that train because smart glasses is actually taking some volumes off as well. So the next step we'll be taking our augmented reality into the smart glasses. And the next step we'll probably have more features inside like gestures, brain waves and so on. So in the next step, the smart glasses will be equipped with the wave guide display system. So as we can see, we have -- in our own capabilities, have been cultivating ourselves. How can we put on this glass without any feeling it's not going to be too heavy and so on? -- what our technologies launches on, including lightweight prisms, including the high precision micro packaging, the Ultrathin VID lens and also the extreme miniaturization packaging. So we can see that the market will probably grow Swift. So besides the physical sensing or the physical perception and the AI glasses in the or we have our own portfolio as well including the trending intelligent imaging. We have some of our KAs in this industry including for our microscope line, we will now upgrade this to AIs optics, microscopic vision agents. It's called an agent. So we'll have sensing logic execution and all the other domains, not just a simple operation like it before. And also for industrial visions, we have our deployment as well. So after empowered by AI, we think that it's a good news for optical industry. In the future, in these domains, we see the market size and the AI glasses in the 5 years, we'll see a very high speed growth. Maybe even 2 to 3 years, we'll see that high-speed growth. That's pretty obvious to see. And for the we can see for JDs and other companies, listed companies, they are taking their steps in as well. And also, we have some optic plus AI niche. And also for the embodied AI, it's going to rely heavily on optics because it's going to be a vision intensive and it's going to be a trillion level market. And finally, I would like to say that in the past, we think that Sunny is a company making hardwares typically. And for a manufacturing industry, we're probably a leading role in that. So for these years, I'm using the penalty products. We are limited by the software, the algorithms. We're professional enough but the commercialization takes longer time because our own genes does not -- is not strong enough in that same. And after being empowered by AI like Codex Cloud, all these tools and trade after being empowered by these tools. I think we have kind of compensate all these elements that we lack of before even we are surfacing in some domains as well. In terms of our own advantages in our optical technologies can become a strong guard for us because for the growth of algorithm, it takes shorter time. But if you want to have our hardware capability for many companies, it's pretty challenging. And that is nice in our gene. So -- that's about all I'd like to share with you. Thank you.

Thank you Mr. Wang, I'm feeling the unlimited potential for AI hardware. So aimed at explosive surge in demand of AI computing power, optical technology tagged as the core perception can way for smart terminals to sense physical world against this backdrop. What new business scenarios can we explore? Now ladies and gentlemen, please welcome our CTO and fellow of the Canadian Academy of Engineering. [ Dr. Guo ] for his keynote speech leveraging core optic capability to impress the AI computing era of new strategies, new tracks, new future. Ladies and gentlemen, welcome, [ Dr. Go. ]

Dear investors, analysts good afternoon, I am Gu Bo. And I am the newly elected Vice President and CTO of Sunny Optical Technology. And today, I'd like to share with you the strategic direction in the AI era and the logic behind it as our mission, that is to embrace the era of AI computing power with the core optical capabilities, new strategy, new track, new future. So first, why AI plus optics. And before I talk about the strategic direction, to introduce you the background of our 4 decades development. So what we have accumulated in 1984, we started as a [indiscernible] company with a loan of 60,000 and 8 senior school students have now expanded the company of a great company with high revenues per year and listed will listed on the Hong Kong Stock Exchange. So supporting it is the end-to-end outer position laser manufacturing and processing capability. And last year, the company had proposed the idea of expanding from Image Sensing to optics strategic direction. And the logic is actually quite straightforward. That is, we have seen the exploding demand for AI computing and optic technology is not only the core entry point for intelligent terminals but also is helping us to collecting data, storing data and processing data. So we have seen the exploded development of AI computing power. There is a strong demand for. So the industry background is quite clear, and we have been developed being from the 12 kilo to 100 kilo to megapixels. So we have 3 bottlenecks that scale up, scale out and scale across. So in the era of connectivity, the bandwidth, power consumption, transmission, range, all of these physical bottlenecks has been restricting our development. And when the single GPU is a computing capability is not enough. We need to put together dozens of GPU and even hundreds of thousands of the GPUs. And then we have a great demand for the GPU data and interchange. Therefore, we have seen a clear trend of further development of optical technologies, replacing the copper physical materials. So Mr. Wang also had mentioned about it as well. And optic is the core entry point for intelligent terminal to perceive the physical world and ranging from smart wearables, smart transportation, manufacturing to smart home, everything will rely on the optical technologies. So is an inevitable path to AGI. That is towards the physical world. And over the past decade, the prosperity of AI has been built on a vast amount of tax and image data in the digital world. And in the next decade, AI will transcend the virtual boundaries and interact deeply with the real physical environment in physical forms, have the in-cap exchanges with the physical world. So in a coming decade with the new CMOS sensors as well as edge AI the optical sensing plus AI will break free from the conventional restrictions of camera and image perception and the processing instead, we would have the machine centric reasoning about the 3D world. So it's not hereabout the restoration of the images. So it's allowing the human eyes to see instead we're allowing AI to see, and we don't necessarily need the images, and we need to allow of machines to understand the 3D physical world. So what we need to do is to expand the human eyes entirement space, enabling machines to see visible and invisible information. Therefore, every camera will be more useful, and we need to increase the number of the cameras, and we need to switch a from see clearly to understand clearly and the materials, the formation and the state recognition by actual MU and tactile calibration would be possible and we need to transfer from the passive imaging to the active perception. And the edge level reasoning and the chip will also be important. So we not only have more numbers of these cameras and components, but also higher value. So for us, it means 3 things. The first is that every terminal would not only have 1, but also maybe 5 or even 10 cameras. So for Precision, we can secretly and then understand the delay. So in terms of the edge computing, we are evolving from a passive imaging to active perception. So I take today's opportunity to prevent in my personal background. And in optical and LIDAR technology, I have 40 years of R&D experiences. So the reason for me to join us on optical is that I have identified the strong core optical perception strands of the company. And we also boast a very clear strategic vision. So my mission is to work together with the other colleagues at Sunny to lead a cutting edge technological planning and the execution to accelerate the strategic transformation from the image perception to AI plus optics. And let's talk about the core assets. That is our core competitiveness. Why we are able to win -- we have mentioned that in 1984, we have evolved from a small township company in [indiscernible] to over $40 billion revenue global company listed on the Hong Kong Stock Exchange. And what's supporting this kind of evolution is a complete end-to-end optical capabilities from ultra precision manufacturing with the module tolerance of 0.0 millimeters and even at nano levels to the systematic design and the development and the bagging of the systems. So this is unreplicable and a big differentiation. And in '24 and '25, our R&D expenditure had accounted for almost 8%, respectively, and accumulated [indiscernible] patents is close to 8,000. And in terms of the market model, we insisted 721 model. That means 70% are invested in the product that will give us the return. And 20% is for the development of the shared platform technology. And 10% is for the forward and the prospective layout, and this is not only down to earth and pragmatic but also very forward looking. So it helps us to develop in a steady way, but also aim high. And in terms of the market position, you are very familiar with the situation. So we're #1 in headset, lance sets and the #1 in headset camera modules and in 2025, our vehicle lance set is 34%. So we also ranked #1 in its track. This is not the adding point instead of is a starting point for our further development and expansion into the new tracks. So from an imaging perception to optics plus AI, we had been seizing the opportunities brought about by the great demand in the AI computing area. So we would leverage our existing AI core capabilities and expand it into the new business scenarios and is the optic connectivity and optic perception. Let's start with the optical connection. So this is a highly interested area in the market. I have already talked about to the market background that is the scaling up of the computing clusters and the connectivity between the GPUs has been very important, and we need to address the limitation of the data exchanges. So previously, we used the copper wires, but now with the physical restraints, we have to use alternative of the objects. So this is the obvious trend optics replacing the copper wires. So we have seen the explosive development of the data interaction and the connectivity requirements, we have a bigger demand for the precision optical technologies. So optical connectivity is the technology cores is not quite decent yet. But 1 thing we are sure is that the base layer, that is the high precision optic components as well as the high precision coupling -- it is always needed in every technology call trajectory. So in terms of the optical interconnectivity, especially the CPOs, what are the opportunities and why we are able to do it because the most challenging part is the collaboration and coupling of optical pass. If there is a difference of several nanometers, it will be failed. So we have the millimeter and the nanometer level does design and yield management capability. So we are able to migrate to this kind of capabilities into the new scenario that is the transmitter of the optical connectivity components. And right now, the targeted application scenario is the short range, high-speed interconnectivity in the AI computing cluster and another scenario for application is the optic sensing so that means we are upgrading into the chip level sensing. So vehicle and AI vision has a very high demand for dedicated optical chips. So other thing we need to cover is the synergy across emerging sectors, including the vehicle optics which is about a LiDAR, heads-up display, HUD, smart lighting, just to ask what she had introduced. And in terms of the second part, AI glasses, just the names that 1 had introduced with upgrades. And the shipment has exceeded 10 million and we expected that within 5 years, it would exceed 50 million. So Sunny Technology -- Sunny Optical Technology with our 4 decades of development, we are able to provide the fortune optic products for AI glasses and even the ODM capability, original manufacturing capability. So in terms of the robotics from the structured light to tough to slam and from mechanical arms to the dexterous hands and to the hand eye brain system. We are now working on the establishment of the visual perception to the full machine and to the co-development capabilities. So in order to execute this strategy, what we need is not only technology but also talent. Therefore, this is our dual engine technology talent strategy. Now first, let's take a look at the milestones of technologies in optical interconnectivity and optical perception. So at the very beginning in the year of 1966, Charles Co had proposed a series of optical fiber communication which won him the Nobel prize and in 1970, Corning had verified his theory. And then in 2016, Intel introduced the 100G silicon photonics transceivers. And this is a 5 decades spend. And year-by-year, we have multiple waves of technological evolution and recently Media had launched the silicon photo. Next switches and for the optical perception, it's the same chart, and it started in the year 1666 and the new [indiscernible] conducted a prism experiments, which had became the foundation of a spectral perception. And then now in 2025, we have the silicon photonic integrated perception and transceiver trip. So for dozens of the years, we have many generations of the development. And in our Research Institute, we have our own 2 application scenarios and the road maps. And in 2026, we already have 1.60 optical module commercialization and CPO prototype deployment. This is the first year for this road map. Going forward, we believe that in around 2028. -- maybe CPO would become a standard is backup for supercomputing clusters. And by 2030, we will have 6.4 to 12.8 of optical modules. And by then, copper well will no longer be useful. So everything will be replaced by optics. And then by 2034, we expect that the CPO would impact the optical engines into the computer chips. So beyond 2034, we can imagine that silicon trips SOC the photonic SoC is able to integrate computing storage, memory and inter connectivity. So it's a very bright future. So it's the same for the optical perception and for us. We really need to adopt a 3-tier road map for technology commercialization, that is first, the mass production and then R&D and then make predictions for the future. So this is following the of technological development. And this year, for optical connectivity, we are being verified by the customer. And by '27, we will have the small amount of production. So for optical computing, we will have a longer period of technological development. So for talent, it's actually really important for our company. So from our own role from only manufacturing to R&D sensor solution providers, that is we need a systematic solutions. And also we need talent in all these domains we mentioned above. So for that, our strategy is really clear as well that is we need our very clear strategy to tell us where we go through a good platform so that people can do real things through good returns to get people to keep people here. And also need to attract talent from all over the world and also we need industry education integration to cultivate interdisciplinary talent through university partnerships. So my role is here to drive all cutting-edge technology together and lend them. And next, I would like to talk about investment value and outlook because it is a day for investors. So as we can see that the AI compute demand growth is a certainty and that opens the expansion of optical interconnections and perception market. So we can see that the physical AI perception and the domains, we are trying to become a supplier to all these 3 domains. So in terms of application layer, so the volume and the quality you need to improve together. And it's not just about the volume of the sensors, but we need higher precisions. And also the volumes, including the mobility home industry and wearables in terms of the model layer, just like Mr. Wang mentioned, is actually a multi-model data driving our world models evolution. So there's a high possibility that our business will expand from hardware delivery to data services. In terms of the infra there, just like the optical over copper we mentioned that is the coupling between our optical hardwares and the optical coupling. So as you can see, the application layer volume growth, the model layer data value added and the infrastructure layer computer scaling. So it forms a very close loop. And finally, why Sunny Optical? On the left-hand side, we can see the free growth. Just like our foundations you mentioned, the business leaders mentioned, we have high certainties in all these foundation business. So for robot AI glasses, they are going to have very swift growth -- and for the data business and the optical connections that can be a new momentum for our future. And our own core compatibilities. We have our own experience in our optical solutions, our solutions. We have our own custom TKAs and new strategies and new tracks for the future, just like our management mentioned, we have capital plus industry tools. And as more importantly, we have clear strategy. So all these forms, our own competitiveness of Sunny Optical. So this is something unique to Sunny Optical. So in the past, we want to -- in the past, we want to shoot more clear pictures for the handset to make our vehicles see clear the roads. But for the future, we want to help I understand the world and also make the computing capabilities being able to pace down to the world. So for the future, 60 years, should be able to be empowered by optics. And I would like to say something I know it's a little over time. First, the past 40 years, we focused on optics. And that is not a single not, but is a coordination of a whole technology line that is something cannot be duplicated by the newcomers. And second, optic plus AI is not changing it to a new track. But we are putting the old capabilities that we have into -- put that into a more valuable pool from only sensing to computing. And third, from large-scale manufacturing migrating to manufacturing plus system solution. So AI empowerment is something that is certain. And in the optic coupling in the optic transformation has been proven by our own customers and trials. So this is not just a new track, but also a fundamentally new valuation logic. The sun optical core value is co-creation. So here, we would like to invite everyone to communicate more, we'll have our transparent disclosure and share long-term value. So as you can see, for the past 4 decades, we've enabled phones and cars to see the world for the decades ahead, we will empower AI to see the world. Thank you.

Okay. Thank you, Dr. Gu for sharing a transformative strategic vision. Next, please join me to welcome CEO, Mr. Wenjie to deliver a comprehensive summary of all proceeding presentations, a big round of applause, Mr. Wang.

Hello, everyone. So [indiscernible] Gu Bo has just delivered his presentation as the group's first Chief Technical Officer. So -- and I would like to take this opportunity to elaborate on why we established the CTO role at this time period. Some of them may be mentioned already, but maybe I would like to repeat it again. Or finally, I would like to make a clear statement. So over the past few years, we have witnessed the rise of emerging tech giants such as OpenAI and SpaceX. They share 1 defined trait. So as you can see from day 1, they zeroed in on fundamental long-term challenges and the entirely aligned research insights, engineered systems, organizational capabilities and long-term objective for foreclosed loop spend technological visions all the way to commercial value. So these firms have offered powerful proof that the structural productivity has transformed researchers, computing power and data are now directly for value-generating systems. So this inspires -- well, we continue to meet and create customer demands. And now we must proactively orient ourselves towards the development of needs of future society -- so together, these 2 pillars will steer our corporate strategy and product development. So that is to say our future roads or future path will not rely on direct consumer demands, but also we need to take future society development and human development into consideration. We need to combine those 2 things together. And guided by this conviction, -- so we have created a group CTO position led by [indiscernible] Go Bo. So we will collaborate with [indiscernible] University, Research Labs and industrial partners to forge tighter integrations between cutting-edge research, engineering, powers and customer requirements. So this is sure that Sunny Optical maintains leading agent sites and delivers robust real-world implementation aimed the AI-driven paradigm shift in optics. So -- that is from all the way a manufacturing industry developed in [indiscernible] Actually, we don't need an active mission to become our CTO in the past, but now it's not that we need an [indiscernible] to become our CTO to lead because the way that we think changes our own cognition actually changed. So our closed-loop strategy centers on 2 core pillars, both elaborate on detailed by [indiscernible]. One is the optical sensing as physical gateway to AI. And second is optical interconnection as the backbone of AI infrastructure we just mentioned and also a deep introduction was made. So we can see that light serves as the critical link it enables perception of the physical world. And in other hands, it connects the computing power of the digital realm. So this is the new paradigm we aim to build for the AI era. So moving forward on [indiscernible] advance along for strategic trajectories. This is very important. This is very important for your own decisions. One, we all know, but I would like to say it again, that is depend on our 2 core foundation business smartphones and amount of optics that our 2 foundations, and these segments underpins our customer base, nice production expertise and engineering capabilities. So we want to put all these elements together. We want to do more. Smartphones hold structure opportunities via high-end upgrading well automotive growth like intelligent mobility. We will keep advancing towards high complexity products, high-value modules and end-to-end system solutions. Second, we will accelerate the development of optical infrastructure for AI computing power. So we will steadily industrialize our capabilities covering precision optical components, coupling assemblies, packaging and testing for optical interconnection that is what we mentioned. With the -- where we mentioned the optic infrastructure. And third is to empower new physical AI terminals with our optical expertise, industry, including wearable glasses, in Australia, IoT and body robots are at testing stages of evolution and Sunny Optical will expand our market and product footprint at a pace tailored to each sector, starting with our core optical components. So as you can see, these 3 structures have different targets. But the carrier distinct strategy priorities based on unified underlying capabilities changed by ultra position, machine optical components, lenses and modules, all the way to complete device and system-level solutions. -- at present, all key strategic projects are progressing smoothly as scheduled. And the group maintains a solid overall operational performance. As AI reshapes the structure of productivity, we will build upon this foundation and that our profile forward-looking insights will set -- the benchmark for applied research and industrialization. While genuine customer needs will continuously guide our technological exploration. So we will drive parallel advancements for our 2 core pillars, optical sensing and optical interconnections. So that is Sunny Optical's strategic choice to route it in optics, we grow into the AI era. Thank you all.

Thank you, Mr. Wong and that concludes all the presentations in our first agenda. So we trust you now have a fully clear picture of Sunny Optical. We will take a short break and be back at 4.45 for start of Q&A session. Thank you.

Dear guests on-site and online. Welcome back to Sunny Optical Technology 2026 Investor Day. We now officially kick off the session 2. The Q&A with management Onsite attendees who wish to ask your questions, please raise your hand first. [Operator Instructions] and before we start the Q&A, I'd like to emphasize that today's discussion will focus on nonfinancial information mainly covering the market opportunities and the technological trends in core optical tracks as well as Sunny Optical's competitive strength, innovations and strategically out. And let's invite our first questioner.

Thank you, management. And I'm [indiscernible] from Citibank. And I have 2 questions about the strategies of the new track. And just now, Mr. Wang had introduced that we're talking about it a coupling and the bundling packaging capabilities. And my question is that in the handset lens set and the vehicle lens set, will you have some migrated capabilities, for example, the handset lens and the modules would be both on your radar and in optical inter-connectivities would you focus on prism and some other connectivity components. And for example, components that can be connected with the optics. And then the packaging capabilities of the modules. So you also have the technological preparation for the module inspection and test. So I'd like to know more about what you're going to do to hear more details. And the second question is for Dr. Gu. So you talked about the future outlook about the optical co-communications, and you didn't talk about the 3.2T membranes, but you talked about 1.6T and 12.8T. But you also mentioned that CPO will be standardized aspect for the future. So 6.4 and 12.8T, is it optical engine or something else. I had to ask about this question for Dr. Gu. Can you shed some light on some of the breakthroughs in the optical development for the future. Maybe we and you can talk more about the development pathways for the 6.4T optical modules.

Thank you. Well you are still asking about the deployment or layout of the optical communication business, right? Well, you also talked about the 6.4, 12.8 optical modules, and I will ask Dr. Gu to answer this question. So for your first question, in our business expansion, we would definitely start with the core components. And when we are developing those core components business, we are also working on the integration at a systematic and the theoretical level and why we need to adopt to this way as we own now if you only focus on optical coupling or certain optical components and lack of understanding for the future mega trends, then there might be some problems. So you're not comprehensive, holistic or systematic enough. And for us, we start with the fundamental theories logic of the optical communication. And on the 1 hand, we focus on the core components and the other hand, to focus on integration. So this is a two-pronged way going forward simultaneously. But first, you will see some results of the core components because we have every capability through the migration. And for the integration, it involves a lot of other factors, for example, the architecture of the communication network and the understanding across the protocols and some tests equipment, and we are advancing those work in a very ordered way. And consol we believe that it's going on very smoothly, meeting our expectations. So this is my answer to the first question. And the next question over to Dr. Gu. Okay.

Thank you very much for your question. And in my slide, well, we have the Central Research Institute, based on a lot of the source of information, we have made such a prediction and it's not necessarily 100% accurate. And what we wanted to illustrate is that when there is a very high computing speed, especially in the short range, we need to scale up because we have so many different GPUs altogether, and it's useless. If you cannot coordinate them well even when you are computing in a very high speed. So the role is just like the channel and the vehicle starts like the chip. So you need to, first of all, have the good role to allow the vehicle to drive smoothly. So contrary in terms of the cost, we don't necessarily have to use the CPO. And we are just making a prediction based on existing information. So even if it is not a CPO, maybe it's NPO there are still -- there are high requirements for the optics. So for us, an opportunity is always there. So this is my answer to your question.

Hello, Chairman, hello President and management. I am from Everbright. Security. My name is [indiscernible] and had been attending the Investor Day of Sunny Optical Technology for many years, and we have seen a lot of the old friends of the capital markets and have seen some new faces of the senior management. So we have witnessed the development of Sunny from the consumer electronics to the top company in the vehicle and sets and the module market, and you have navigated through multiple cycles, and now you are entering into the optical communication sector, and we have a lot of expectations. So I have 2 questions for you. The first is that just now Dr. Gu said that verification of optic communication, there had been some substantial breakthroughs, but you will start the mass production in 2027, but still limited volumes, are you very precautious or conservative or you're just talking about the progress of 1 project with 1 customer? And the second question is that we have seen some other companies that quickly enter into the optical communication sectors and they may focus on some similar product ranges as well. So my question is that what is your competitive moat or barrier and long-term competitiveness in optical communication.

So I would like to answer your first question. Well, it's not that when you have an order backlog, then you are able to deliver. Today, we talk about the year 2027 to deliver, I think it's a reasonable time line. How hard to purchase the chip. Do you know how difficult it is Well, -- we had just to get started. And fortunately, we still have a lot of connectivities in the market and because of our friends in the supply chain, we are able to get the chips. But whether we are able to deliver this year or next year or the year after, it is heavily dependent on the supply. So we have Marvell and Broadcom as our friends. So I think it's quite understandable for you as well because a lot of components are in short supply. A lot of the companies couldn't produce because their vendors could not give them a lead time specifically. So it's a very special period. And I believe that by next year, we are able to gradually solve this problem Eve. By next year, we still don't know when to deliver then I think the world becomes quite unrecognizable for all of us and how should it be unknown to us for such a long time. And we have to admit that this is reedited right now. So whether we are able to deliver this year or next year, this is still a question mark. And I feel the same would like you. And I also hope that we're able to deliver this year. But still, there are a lot of restraints, but we will try our best to arrange the delivery as soon as possible. About your second question, about the technological pathway run. Well, this is a complicated issue. We believe that CPO will not be adopted so quickly and maybe we will have an LPO or NPO, which are more pragmatic at the moment, but we will not discontinue our exploration and collaboration with the chip and packaging companies. And at the same time, for the modules packaging and bonding is very important. And we do have part of the capability, and we will try to do some pilot level processing and to combine our capabilities with the need of the optical packaging capabilities. This is the long-term development. And right now, we had been conducting R&D on multiple aspects. And for the Research Institute, we will be more forward-looking and get ready for the future. Let me give you a simple example. And I'm not sure whether you have heard about the optical router or not. Well, when we transmit the light, there are multiple beams of the light. And this is a basic technology and optical router is a very interesting technology and I think it is having a lot of promising applications and it's a very useful engineering method for optical transmission. So we will do a lot of R&D on that as well. And due to some special reasons, we cannot disclose the information the forward technology is more mature. So please forgive us. So what I can tell you is that we do have multiple technologies under development.

I'm [indiscernible] I have 2 questions. One is that last year, we were here because no actually tell us a lot of organizational changes. We use the tree map. It's called [indiscernible] that graph. That's tree graph, I think. And 1 is about the organizational change what it has come to effect, how is the performance for last year? And also, you've told us the 3-stage development range, mobile, automotive, optical interconnections and AI glasses. So it's going to cope with the organizational structure. Is that we're going to start a new BU or a branch?

Thank you, [ Leping ] for your concerns about our organizational structure. Actually, it is. We use the Sky land tree that graph to explore our organizational structure. So our molding platform, our resource platform or -- and all of these has been strongly constructed and we invest a lot on all these perspectives. So in that domain speaking, it is actually quite effective. So I'm not going to talk about the exact number. But after we have the resource platforms. In terms of our own vendor management and optimization of the supply chain is really effective. Our own equipment platform is empowering our different BUs. Actually, we are supplying them pretty strongly. For molding, we can now empower them to different BUs as well. So as you can see, our overall competitiveness has been boosted and you mentioned about in the future, will there be a optic communication, optic interconnection BUs. I think it's certainly in the future. But in terms of when we'll start the construction, it really depends on our own development situation. In our current structure, some of the optical path can already be covered by our current organizational structure. If we need more technological integrations more BUs to be integrated and then new branch will be formed because if we emerge new brands right now comparing to the past, it will be easier because we have a centralized organization that's been established and then BUs are just like branches, and we are not that challenging in terms of resources coming into the past. And by initiating new strategy, talent is the key. So we are going to introduce more high-end talent, all types of talents and also we're going to cooperate universities, higher education organizations as well. You're probably going to ask that. So I can just elaborate that. I have our second question is for Mr. Wang. In your opening remarks, you mentioned 3 points. One is about renewing the management team. Second is establishing a branch in Hong Kong. And third is R&D network. In the past decades, we're covering Sunny optics. You are growing internally. That's what we saw. And the future, what's your thoughts about internal growth and outreaching growth? How do you balance that? Because I can see that the company is investing some investments in Hong Kong. I don't know what your strategy is on that?

In the past, in our capital markets, we don't have a lot of voice. Now we have our new strategy is that we want to make friends in the capital market to use our own influence to expand our own friend circle, that is part of our growth. Thank you.

I'm [indiscernible]. I have 2 questions for the management. First is activation [indiscernible] Gu Bo, you mentioned that we can actually have landed 1 generation, mass production, 1 generation and pre-research 1 generation. We talk about optical perception optical storage and so on. We have different products in there. Are there any products you can share with us their lending situations and the pace of it? That's the first question for [indiscernible]. And second question, I would like to direct to Mr. Wang. You mentioned our data business that is our data collection equipment. According to your words, that collecting in 1 multi-dimensions and these different scenarios, these different types of products. What's our layout today? What kind of portfolios do we have now? And in the future, what's our commercialization path to these products and also mass production. What it's going to be like what's the pace of it? That's my 2 questions.

So let me answer the data collection. One, in terms of -- from the hardware perspective, you'll know that Sunny is really good at the hardware, right? In terms of our systematic capabilities, we have quite -- we're quite good at that part. And our team in Hangzhou, we have 11 years of investments. So in terms of hardware, in terms of these products, I think we can complete the task easily but in terms of single collections, it's quite easy. You can just type your phone on your head and you can do that job as well. But if you want to do a UMI plus Eagle that the format of the data, what type of content of the data do you need, and we need to define. We're going to need to have a very deep or clear definition in terms of hardware. It's not just a simple hardware. So we are making collaborations with a few data collection companies making discussions with them and cooperations with them. And another thing is that from Sunny's perspective, because our self Ningbo is a city famous for manufacturing industry. So nowadays, we have a lot of job positions to be optimized and cost optimizations for data collection positions. So we ourselves is a large data generation factory. And we have cooperations with other manufacturing industries in Ningbo as well. We're talking with them to how do we collect the data. So we have got 2 paths. One is it will all be completed by Sunny. That's a way. And the second way is to have cooperations with our external players. We're taking considerations. So that echoes what [indiscernible] Gu Bo mentioned that from hardware collections to data processing, and we're probably going to do it together, both data itself and the hardware will develop together. In terms of hardware, with top KAs, we're talking to them pure hardware for -- with data companies, just like I mentioned, 1 is cooperation. And the second way is that we can do it independently. So both of them are possible. Thank you for your question. So this is actually quite -- this is actually -- the way we mentioned is quite generalized. For instance, like from imaging, is just pure imaging. But in the future, we need to analyze that image. For instance, we need to see its own light spectrum. And we're not just detecting its position, but also we maybe need to know it MIs and so on. So the product you have right now under mass production and the next generation of the product, will under R&D. And then if you look to the future, maybe it's about integration of chips and other things. So that's all the way speaking. In terms of optical interconnections, just like we mentioned, in the past question the last question. In China, we have a lot of users. They're still under 1 team. They're still in 800 gig. Now as you can see the trend, you can try to analyze the trend. The CPOs, they probably -- if you're not going to use it, but in the future, they probably will need to use it, right? LPOs and all these different solutions. But that doesn't mean that you don't need to prepare the next generation of product. So you need to have things in your arsenals to keep it ready for the next generation. right? For instance, in terms of the light source, we -- people have different views. People have different technological paths, some mature, some immature in the U.S. is the same. But no matter what, -- we need to find our own possibilities of Sunny. Thank you.

I'll have 2 more questions. One is that with -- you've mentioned -- the external environment is still the same but we've seen 3 months ago, we've seen the first quarters is actually pretty good. And if we're seeing the second quarter, the change within the -- in this quarter do you remain the same perspective towards the market, including your handset business in your automotive business? And second is that I know that I cannot mention exact numbers. But I would like to add some issues. One is that for the growth of RMB in terms of overseas clients do you have more opportunities because of that influence? Is it a good effect to you?

It's about the exchange rate, right? One is about the data the data of the industry from 3 months ago, you probably know quite know quite well about the data of the industry rate 3 months later, is going to remain the same. Probably the -- the handset if we need to have another few folds of growth, we don't have that high possibility. In the beginning of the year, we thought that the price increase in memory is just temporary. But now I don't think it's temporary. It's going to be a long term. So I was actually thinking that the the cell phone should have a change, right? Do we really need memories to have in cell phones? Can't we have AI and the handsets if it does -- and then you will have new demands. The situation will change then. But within the industry, there's a same -- from the current formation of the handsets is actually -- we've actually finished the high-speed growth period. So really, we need to have AI phones, AI handsets. I think maybe next year or the year after next year, we'll probably have this new formation of handsets been released that requires the GSM companies and the cellphone companies or the handset companies to work together and that's not profitable enough for themselves, if they work at singly. So they are still holding the line because the hardware of handsets is not making money, but it's earning money via apps applications. So if AI can take the profit of the applications. And then probably these handset companies will have different ways of different ideas, maybe. But I think it's going to a parallel situation, both APP will be there, the apps will be there and the AI will be there. I think that's a higher possibility for the future or maybe let me put this way. In the past, smart phones, the functionalities of the smartphones, we only use partially of them. That is because it's actually quite difficult or complicated to operate. But maybe for the future, it's going to become easier if that day comes, our smartphone will then again be rising. But there's 2 things compared to the things we mentioned in the beginning of the year. In the beginning of the year, we mentioned about -- what we mentioned is about the memory, and it still remains the same. But for the handset or phones itself, -- is it going to have another new directions of event or new possibilities? I think it is. I think the possibilities there. So every time when the crisis comes, there's crisis and there's opportunities. So we do think that the industry is a lot of -- is still optimistic and with a lot of imagination. So dear friends to your investors or analysts, you know that we actually are acquiring many chips, no matter phones, all vehicles [indiscernible], we are increasing the procurement of chips, but our overseas income is growing as well. So as you can see, the exchange rate of incoming and outgoing is actually -- the gap is not that large. So we don't have that huge influence of exchange rate.

Thank you, management. I'm Andy from Morgan sterling. My question is that I've just read the news that is online affiliated to Sunny and it just started production of its Shanghai Lingang factory. And with this factory, we do have the capability of producing semiconductors and for us, when we are switching into the optical communication sectors, will it be helpful, for example, whether we are able to adopt those semiconductor equipment for the optical components and in CPO MPO, regarding the precision of processing will be increased. So I'm wondering whether this factor will become -- will contribute to our competitive edges in the future. This is the first question. And the second question is that when we are developing the potential customers, do we focus more on the domestic bonds or more on overseas bonds? And to be more specific, in CPO sectors, we noticed that in Taiwan, China, some customers when we are developing those technologies, they may have some of the vintages. And when we are developing and researching those components of the CPOs, will we consider collaborating together with those Taiwan companies.

For your first question about [indiscernible]. And the second question is about the customers of CPO. Well, I believe that this factory in Shanghai will definitely contribute to the processing of some special components in optical communication because we know that the semiconductor optics we have the macro and the nanometer processing and a lot of the components in optical communication requires the specific technologies. And I definitely believe there is value here. But as for what specific product will contribute to. I don't have the information for you right now because it's quite complicated. And to be honest with you, the Sunny [indiscernible] production line. The capacity might not be enough when we have the item out, but the technology can be shared at least to say the equipment we have there. And the capabilities we have there will be useful for us where we run some test experiments, et cetera. And as for the customers the optical communication sectors, we will develop both the domestic and overseas customers. And Taiwan is part of China, right, you can count it as part of China. So we did not have a set along plan for it. So we would develop both the domestic and overseas customers. Please rest assured. And given the structure of the customer base, we would definitely push both domestically and internationally, and we will not limit ourselves to certain regions.

I am [indiscernible] investment, and I have noticed that not long ago, you have invested in [indiscernible] Optoelectronic, which specialize in the optical modules. Can you share with us the reason of making this investment and does it mean that you will also pay more attention to the optical modules in the future? And just now Mr. Wang also mentioned that for other sectors, the upstream material is in shorter supply, such as DSP. And if you focus on some other -- it's not related to DSP. So I'm wondering whether these 2 things can be correlated to Canada doesn't mean that you're going to pay more attention to the optical module. So the second question is that can you give us more information about sample delivery in the second half of the year? And what will be the product involved. And also for next year, you said that you will have the small-scale mass production in next year and will be the involved because we have such a wide range of the products. So I would like to hear you -- hear from you about more details.

So we don't have any quantitative guy, we do not share any financial information on this event. So for you, the question cannot be specifically answered. Even if I know the answer, I cannot tell you right now. So we will promote the development of the core modules and optical modules. At the same time, just as I had mentioned before, and the investment of the Aishang Optoelectronics technology. Well, it's just an investment as simple as said. But whether -- it's a signal for us to focusing more on optical modules. That's definitely true because we have a big investment here. Usually the investment only accounts for a small percentage of the revenue but this 1 is relatively quite big investment. So what we will do is to accelerate the development of optical communication. And we used some capital market operations to help us to do that. And just as our Chairman had mentioned, we didn't do many of the capital market operation before. But this is a one-off it them. So we will also have the integration between AI and optical communication and you may no later about more details. And we have made some important investments in this aspect as well, such as data collection and handset and module manufacturers, robotics, et cetera, if they are able to contribute to the integration between AI optical perception and conducive for the industry development, and our own business development, we may make some investments. So all of these are laying solid foundations for our strategic layout going forward.

Thank you. management giving me this opportunity to ask I have 3 questions. The first, because Sunny Optical had evolved not only from handset lens sets and the vehicle lens sets but also had expanded to other sectors. And for these core businesses, you are always #1. So for the investors, the most reported question may be what kind of track -- would you like to access. And to be more specific in AI plus optics. I'm not asking for the near-term guidance. I'm wondering in what aspects would be potential market? Or what is the market potential? And in my understanding, the first step is to develop some components. And the second is that is to develop the second generation CPO coupling. So could you share with us more details? How large is the pie in this market? And what are specific are going to do first question. And my second question. You also mentioned that we're going to have some investment to use some capital market tools. So I wonder, apart from making investment from the operations perspective, what capabilities do you think are possible to be included through the means of M&A? Or in other words, what kind of capabilities do we want to acquire through M&A. And the third question is related to the online factory. And I wanted to know that it seems that there is an equity switch swap between [indiscernible]. If you wanted to access the optical communication industry online is very important. But why do you want it to have as well we go and our handset and vehicle business is mostly to C business. But now in the optical communications business, I think it's meaning about 2B customers such as cloud companies. So when you complete such as switch what kind of switch of capabilities would occur because we sell them and they see companies that focus both on 2C and 2B market. So you have asked the 3 questions, right? Well, I'm sorry. Well, the moderator said that you should limit your questions into 1 or 2 -- you have asked the question. So I have already forgotten your first question. Can be more straightforward. What are your 2 questions? Okay. Let me simplify. The first question, can you share with us how big the market is and what are the specific areas you're going to focus on? So you're talking about the planning of the optical communication, right? Okay. This is our first question. Okay. And then the second question is what kind of abilities do you wanted to obtain by making the investment in the capital market, for example, for the optical communications business, you may realize that you like and you can acquire those kind of capabilities to investment. So can you share with us about that as well.

Okay. It's still about the strategic planning. It's about resource matching. Now let me try to answer your question. You talked about planning and how promising the market is. And I think all of you understand it clearly. And we will definitely trust the bigger scale of the market. And if it is not tens of billions of scale, we won't access it. And the second is that I have already told you that we will focus on both the component modules and the products and what kind of capabilities do we still lack? Well, honestly, we do lack multiple capabilities, but how to fill those gaps. We're still having a discussion and consideration right now. It's a long-term thing. And the main reason is that for optical communication and optical interconnectivity the development the trajectory is of high uncertainty. So I am being very frank underpinned here. Maybe year-by-year, there will be very big changes. So generally speaking, using Optic technologies for connectivity and phasing out copper wires with optics and the development of optical computing and storage would definitely be the trend. And in the end, we need to fully utilize the core features of optical communication. So what we lack right now to be honest. So previously, we have the image perception or the geometric optics. This was our strength. But now what we like is the physical objects and wanted to accumulate more capabilities in this aspect. So this is a focus as for what specific technologies in physical objects, it's quite complicated because it's such a big range. But centering around optical communication, we do believe that we will have a very thorough plan. So the latest version of the plan will be completed by the end of October this year. And this is also why we invited Mr. Gu to join us -- and -- in the past few years, the company mainly focused on the optical imaging and what we need to do now is to switch more to the optical communication and interconnectivity. The underlying logic is the same, but in terms of the application, there is some inconsistency here. And I would like to mention, by the way, about the online factory. Well, Together with a Gu, we can enable the company to develop a better and that is the simple reason. So this time, you have seen that we have respectively added another 500 million as the equity, but there is no big change of the share of percentage of the share. So this means we are determined to have long-term environment. So together with the core optics, we made the investment. So -- it's not a simple swap, and we will not leave it along, and we will follow up with the future development and conductor there across cooperation with the core optics the post development of [indiscernible]. Well, due to the interest of the time, we'll have the last question. If you want to ask a question, please raise your hand.

Dear management of Sunny, I'm very honored to be the bring up the last questions. My name is [indiscernible]. And so I would like to pick up the topic to ask that is in terms of handsets. Just like [ Mr. Gu ] mentioned that the storage situation may be a long-term impact. And in terms of the scale of the impact, was it for Sunny. And where can the turning point be? And in this period of time, how do you take on that issue? And in terms of the fully auto vehicles. And we can see that since this year to the second half of the year, maybe the growth market will change as well. So what's your perspective towards the market? And how do you take on that situation?

So probably I'll answer the handset. In terms of the handset business, just like I mentioned last time in the road show, we have [ 2Ks ] growing for other clients, it's not very ideal for them. We don't have a big change since our last road show. There was a news that is for the login, they don't want to manufacture the Apple's lens. And the reason is not that. But our market share is growing. It's just like what's being seen outside. So what we rely on is our clients inside China and overseas clients. So in this business domain, comparing to our competitors, we're doing relatively good, I think. But the overall industry is going down. That's also a fact. So we don't have a significant change since our road show during the end of March. It's just a little bit more challenging. For the automotive industry because for the automotive industry, we can see that the selling figures of these vehicles is still there. But in terms of the sensors on the auto vehicles, that's what we're majorly doing, right? The sensors onboard these vehicles, SUG, LiDAR, beams and so on. These vehicle sensors, the amount of them is actually increasing, especially inside China. We are doing L2+ applications. And by the end of this year, a lot of these players will launch L3 autopilot systems. So there are cameras, there are LiDARs, camera modules, a lot of them needs to be upgraded. So if we're talking about cameras or camera modules in L2+ for the front view, we have a few 8-megapixel cameras, but the surroundings and the rear view is just 3 megapixel. So if you want to go to L3 level, all needs will be upgraded to 8 megapixel. So the pixels is improving. And for L2+, including L3 autopilot, all these players in the market, a lot of players in this market last year, these new players, including BYD and the Geely, they are making their moves in this stage. And a lot of major players inside China will migrating themselves from L2 to L3. So overseas market are high level autopilot. The speed of onboarding these sensors is not as fast as the markets in China. But for overseas, a lot of these car brands, L2, L3, they are now going into mass production as well, especially for the European players since 2026. Although there are pressure in terms of the sales figures of the vehicles, auto vehicles, but the amount of cameras or the sensors required on these vehicles is actually increasing, especially for the North American player, as you know, because they have more than 20 cities approved -- approval to do their auto pilot trial. So L4 levels will be adopted as well. So for the North American brand, they are using 70 megapixel cameras and a few LiDAR. We heard that it's 70 megapixel has been onboard the vehicle. The upgrade of the resolution and also the amount has been increased. So all these are value-added for these car brands. For the new players, the new energy vehicles players, AIHUD is making their moves as well and also the high beams intelligent lighting. For the onboarding rate is not that high in the market. After being onboarded by the new players of the new energy car brand in China, I think this will gradually pick up or becoming standards in the market. And also the overseas players will follow up, especially for the high-end OEM players in overseas, including AIHUD, smart beams and so on. So these new products will give us growth as well. That will be all.

All right. So due to limitation of time, we know that there are a lot of unanswered questions. But at the banquet, we welcome our investors to have exchange with our management. So that will conclude our main venues agenda, and we sincerely thank you for your trust and support and also wishing you smooth work and every success. Thank you. So on webcast, you are invited to proceed to area A of the conference center and please take a seat at the table number indicated on your guest badge. The management team will join you shortly for the dinner, and we look forward for further exchanges with all of you. Thank you.