Sino-American Silicon Products Inc. (5483) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Sino-American Silicon Products Second Quarter FY '22 Earnings Call. My name is Patrick Chen, CLSA Head of Research, and I will be your moderator today. It is our great honor to have Ms. Doris Hsu, Chairperson and CEO; Mr. C.W. Lee, VP and Spokesperson; and Ms. Jennifer Chen, VP and Deputy Spokesperson of Sino-American Silicon Products here with us today to discuss about the company's second quarter financial results and share some views on the industry outlook. The management team will give some executive comments and prepared presentation, and then we will have a Q&A session. So now without further ado, let me pass this call over to Mr. C.W. Lee. C.W., Please go ahead.

Okay. Thank you, Patrick. Hello, everyone. Welcome for joining SAS first half 2022 earnings conference call. I'm C.W. Lee, SAS Vice President as well as company's Spokesman. We also have Doris Hsu, Chairperson and CEO; and Jennifer Chen, Vice President and the Deputy Spokesperson in this call. First of all, Doris will give us the executive comments and then Jennifer will present industry overview, first half financial performance and the ESG highlights. The final Q&A session will be hosted by Doris and me later. For today's presentation file, we have uploaded onto our website. If you do not have the file on hand, please access our website for the most updated version. As usual, please note that some information during our discussion today will consist of forward-looking statements, which are applied throughout the call and this presentation. These are subject to significant risks and uncertainties. Actual results or trends could differ materially from our forecast. Please refer to the safe harbor notice in our presentation, Page 1 disclaimer. Now I would like to turn the call over to Doris for Page 2 to Page 17, executive comments and the company overview. Doris, please.

Thank you very much, C.W. Good afternoon, ladies and gentlemen. Thank you very much for joining us today. We will present our Q2 and also the first half 2022 overall performance to our share of the material with all of you. First of all, let me share some comments of our overall financial results and update of our operation status. If you have our material, could you please move to Page 2. Let's start from -- start with our financial highlights. SAS has achieved many best efforts in -- basically in 3 fronts: revenue, gross margin, and operating profit. Revenue-wise, our June revenue totaled TWD 7.3 billion with 16.5% Y-o-Y. In Q2, the whole Q2 this year, our revenue totaled TWD 20.3 billion with 18% Y-o-Y. This trend, this has been increasing sequentially from Q3 2020, so already 8 quarters in a row. So it's a very good performance on our revenue growth. And then for the whole first half 2022, our revenue totaled TWD 39 billion with 17.5% Y-o-Y. All of these records. Revenues are our record high -- new record high. And next point is gross margin. In the first half, our gross margin and operating margin, both of these 2 index exceeded 40% and 30% -- 33%, respectively. So yes, I think our overall gross margin and operating profit margin, both of these 2 are doing pretty good in Q2 and also for the whole first half 2022. Then move to EPS. I think our EPS for Q2 and first half were 3.11% and 5.26%, respectively. Although we -- our overall performance was quite strong, and we have a lot of -- we set a lot of new record highs in the first half of this year. But our SAS EPS was not as good as previous several quarters, mainly due to the mark-to-market valuation loss on Siltronic shares, GWC GlobalWafers' holding. That is a main reason of the -- of our weak EPS performance, which eroded around TWD 6 per share in the first half this year. If -- excluding these factors, our SAS first half 2022 EPS would have amounted to another record high, which would be as high as TWD 11.3 per share for the first half of this year. Page 4, please. Page 4, I would like to share some information of the solar energy industry outlook. I think Europe is -- the whole Europe is facing new energy reality. Russia's aggression and soaring energy prices have underlined the urgency to build a self-sustaining, resilient energy system to withstand and adapt to the turbulence and instability of climate and macroeconomics. Most of European countries are drastically accelerating their clean energy transition in the effort to increase energy independence, and shift from their traditional fossil fuels to renewables. Domestic also -- domestic demand are underpinned by government -- Taiwan government 2050 carbon neutrality resolution, coupled with hiking power rate for large-scale industrial users. In Taiwan, we anticipate that this will -- this new power rate will stimulate enterprises and household solar installation. Policy and demand fronts will power solar industry with structural support. So I think the overall solar industry demand will be -- remain very strong in the next several years. I will share some key numbers with everyone. There are some key numbers from Global's viewpoint. From Global's viewpoint, I think despite an unprecedented pandemic, global solar capacity doubled in 3 years from 2018. Now worldwide solar capacity has already reached 1 terawatt capacity in April 2022. 3 years ago, it was just half of this, but right now, in April this year, 2022, worldwide solar capacity has already reached 1 terawatt. And next, very important number I would like to share with everyone is that, I think it took about a decade for worldwide solar capacity to reach 1 terawatt from 100 gigawatt in 2012. In 2012, worldwide capacity was from around 100 gigawatt. But 10 years in 2022, April this year, it already reached 1 terawatt. So it's -- right now, it's 1 terawatt. But now the market is expecting to hit around 2 terawatt mark within the next only 3 years by 2025. I think this shows very strong demand for solar and very quick growth of solar market. So in 2012, market worldwide capacity 100 gigawatt, 2022 is 1 terawatt. In 2025, we are expecting that the worldwide market will reach to 2 terawatts. That's a huge growth. And the third item is that I think solar PV claim that in 2021, last year, solar PV installation is 50 -- 168 gigawatt last year, worldwide. This stands for 56% of the worldwide net renewable power generating capacity installed in 2021. The second largest is wind power. Wind power accounts for 31% of the total renewable power in the whole world. So that's very -- these numbers are very interesting and very important and very meaningful for renewable energy. And also, I would like to share some information about the EU -- some overall cost performance in EU. EU renewable energy prices helped bring the whole PV cost down by 82% over the past 10 years. In the past 10 years, renewable energy costs have been -- in Europe already dropped by 82%, and turning it into one of the -- turning the solar into one of the most competitive sources of electricity in Europe. In European region, 39 gigawatt new solar power will be installed in this year. So this will be replacing 4.57 billion cubic metrics of Russian gas. So this is from this geopolitical tensions from Russia-Ukraine war to force the growth of the whole EU -- the whole European region's solar installation. So around 39 gigawatt of the solar system will be installed this year. That's a big number. And in order to reach 2030 target for renewable is proposed by REPowerEU plan in EU, renewable energy power EU plan. In order to reach the goal in 2030, EU will need to install on an average approximately 45 gigawatt per year from now on. So I think these numbers -- I found that these numbers are very meaningful and very helpful for us to understand the potential growth of the solar industry in the world. Page 5, please. Page 5, I want to make a quick update on our dividend payout. SAS will distribute a cash dividend of TWD 4.5 per share with a total amount of TWD 2.6 billion for our second half 2021 performance next Friday or August 12. We will pay out this dividend, TWD 4.5 per share next Friday. And then Page 7. Page 7 and 8, I'm going to make a very quick update of GlobalWafers' overall performance. I think, as you know very well that GlobalWafers accounts for a big part, around some 90% of SAS overall financial results. So I would like to make a quick update of GlobalWafers' financial results on Page 7 and 8. GlobalWafers also achieved a quite remarkable first half 2022, considering all the headwinds like the pandemic, lockdown, rising commodity and transportation costs, and geopolitical tensions. I think GlobalWafers is doing pretty well in the first half. Its revenue -- GlobalWafers' revenue, gross margin, operating profit margin and prepayment amount are all best ever in the first half 2022. In first half 2022, GlobalWafers' revenue hit TWD 33.8 billion. This has been growing for 10 quarters continuously. So this is a very good performance. And GlobalWafers' gross margin percentage hit 43.1% in the first half. Operating profit margin amounted to over 36%. Both of these 2 are very good for GlobalWafers overall performance as well. As regarding to the EPS of GlobalWafers for the first half this year, GlobalWafers EPS was TWD 10.25 per share. Again, this is mainly affected by the Siltronic shares hold by GlobalWafers now. They're -- according to IFRS accounting rules, we have to do the mark-to-market valuation every quarter end. So this quarter, same as Q1, we recognized a big loss because of Siltronic's stock price. So that was a big impact. So if we exclude Siltronic share valuation loss, GlobalWafers' first half 2022 EPS would have amounted to record-breaking TWD 26.2 per share -- TWD 26.2 per share. We could reach this number if there was no Siltronic shares, mark-to-market valuation loss. Okay. Then next is prepayment. I would like to highlight the prepayment as well. As of end of June 2022, GlobalWafers' prepayment totaled TWD 36 billion or USD 1.2 billion. This is increasing by 9% in Q2 or TWD 3 billion in Q2. So that's a big increase in Q2 as well. Page 9, semiconducting industry overview -- overall overview. Regarding semiconductor industry overview, although the pandemic and the macro uncertainties have magnified the slowdown in the consumer demand, semiconductor industry remains pretty resilient. In addition, technology advancement in end applications like automotive, industrial and cloud services are a structural support for long-term momentum. So I'll move to Page 13 for SAS overall group business and reinvestment. Page 13, SAS Group is composed of 2 business sectors. One is solar and another big pillar is semiconductor. In solar front, vertically integrated supply chain spanning across SPW, module, power plant and renewable energy solution like SCS -- SAS' -- one of the SAS' new business. This contributes SAS as a real green energy total solution provider. In semiconductor front, SAS forms a strategic alliance with Actron, AWSC, TSC and CWT and also Transphorm. And these strategic alliance empowering SAS to assess expansive and advanced end applications that targets the megatrends like 5G, EV and compound semiconductor. I will explain more details later on. Page 14. Page 14 that this page show -- this page is a snapshot of the end application of the reinvestment of the SAS Group. Each one has its intrinsic value. Apart from GlobalWafers, the silicon wafer maker, we have -- GlobalWafers is a pure silicon wafer maker plus some compound material like silicon carbide and gallium nitride. So GlobalWafers is a pure material supplier. And for the other semiconductor reinvestments, like Advanced Wireless Semiconductor Company or we call it AWSC. AWSC is the professional gallium arsenide foundry service company. It's actively engaging in manufacturing process development of gallium nitride in recent years. So their forecast majority of the business still gallium arsenide, but quite a lot of new applications are under development and mainly for using gallium nitride or silicon and some other compound material. The second reinvestment company, I would like to introduce is Transphorm. Transphorm manufactures high-performance and high-reliability gallium nitride semiconductors for high-voltage power conversion applications. And now it's listed in NASDAQ. And the third one is Actron, ATC Actron. Actron is a world top 1 automotive diode supply and with very solid partnership with Tier 1 and some major big 6 automotive makers. Through investment in Actron, SAS seize the EV trend very well. And the third one is -- the next one is Crystalwise, CWT. Crystalwise is known for its expertise in hard and brittle substrates process, including sapphire, gallium arsenide, LT and LN. Those are the key core competency of Crystalwise. And TSC, the last one on we share is TSC. TSC is one of the major specialty gas vendor in semiconductor industry, not only in Taiwan, but also worldwide. With proximity to serving local semiconductor ecosystem, TSC is beneficial for customers' business continuity plan and local supply also mitigates quite a lot of macro uncertainties. So TSC so far is doing okay. Page 15. The picture on Page 15 demonstrate the application fields of SAS Group, including charging station, EV, inverter, satellite, mobile and large-scale base stations for 5G infrastructures. All of these technologies embody the world's need for connectivity, both physically and mentally, the keyword for human society. And that's a key development for SAS' direction as well, connectivity. Page 16 and 17, we will update a little bit about our rationale for the strategic partnership. I think the rationale of the strategic partnership is based on the following thought. The first one is diversified investment to strengthen the deployment and reduce reliance on single business to mitigate risk. In the past 30 years, SAS Group was 100% relying on silicon wafer and silicon-related product. But in the past decades, we grow silicon, but also we reinvest some other industry -- related industry mainly for power, solar related and semiconductor. So by doing so, we diversify our investments. Also, we strengthened our overall deployment and also we reduced our reliance on silicon only. So that mitigate a lot of risk for SAS. And the second reason for choosing this reinvestment is that we want to expand our territory into high potential business like gallium arsenide. We were not in the gallium arsenide, but by investing in AWSC now we have much better understanding and we are much closer with the Wi-Fi and other 5G or even more advanced connectivity business. And the last reason is because that we want to enlarge SAS market value through the revenue growth and also continuous improvement on our overall profitability. That's the reason why we established this strategic partnership. The last page I want to share is that is our group revenue by business segment. So if we break down SAS Group revenue first half 2022, GWC weighs around 90%, while the rest 10% is contributed by solar and TSC. Solar percentage increased by 2% to around 13% compared to 11% in 2021, reflecting the demand for renewable energy becomes more burgeoning and we think that this will -- this revenue scale will enlarge in the near future as well with AWSC formally become a subsidiary of SAS Groups. So its revenue will be recognized from July. The above are what I wanted to share with all the -- all of you today, and thank you very much for your attention. The above are my comments. So I will pass to Jennifer. And Jennifer will share more on our industry trend and also our ESG highlights with all of you. Thank you very much. And Jennifer, please.

Thank you, Doris. Let's turn to industry overview. Starting from Page 19. By the impact of Ukraine-Russian war, EU had been exposing under the risk of food and energy supply. In order to reach EU energy independence, the renewable energy deployment becomes urgent and crucial. So May 18, EU released REPowerEU plan to remove Russian fossil fuel impact. With this, EU set up solar target to add, as you can see here, the 320 gigawatt by 2025. So this is almost double from previous years and around 600 gigawatt by 2030. Move to Page 20. EU countries accelerate energy transition. There are 19 governments speed up the decarbonization for renewable energy plan. The original plan for 2030 was 55%. But now you can see that it increased to 63%. The fossil fuel further cut to -- cut 31% in comparing to its original plan set in 2019. For Page 21, you can see that on the right-hand side, the renewable energy original target was 1,818 terawatt-hour and now increased to 2,066. The left-hand side shows previous fossil fuel set up in 2019 was 876 terawatt-hour and now remain at 595 terawatt-hour with the new plan. Moving to Page 22. This page shows the plan for renewable energy. The right-hand side is the renewable energy. And recently, they also add the nuclear and to replace the fossil fuel in each nation. So it is already in place in every nation, in most of the EU nations. Page 23. We would like to share with you the worldwide trend for the decarbonization for global sustainability. There are more than 17 countries announced for net-zero plans. Taiwan also announced it earlier this year. So you can see that U.S., China said in -- even China said in 2060 and even India said in 2070. But most of the countries are before 2050 as the target. Next page. Starting from Page 24, I would like to share with you that Taiwan government pledged a net-zero emissions in 2050, and the government will have nearly TWD 900 billion budget by 2030 and 50% focus in renewable, grid and storage for '25. Page 25. Taiwan net-zero transition for electricity. Electricity is the single largest source of CO2 emission. The renewable is anticipated to weight up to 70% by 2050. Next, I would also share with you that Taiwan's determination is to support by policy like mandatory rooftop PV system installation and hiking power rate, which will reduce the gap between gray and green power, making renewable energy more attractive for enterprise and house users. The installation for 2025 is 20 gigawatt. So -- and also will expand to 30 gigawatt in 2030. So this is the local support and promote for solar energy. Page 27. Taiwan is isolated island and energy rely on import. In order to improve energy independence, renewable energy is the solution. So solar becomes the key of energy transformation in Taiwan. Taking actual output of July 23, what you see is the actual data we lock out. And the electricity of -- let 16.9% output from renewable energy and amounted that already weigh 89%, which is 15.1% is from solar. So it is already almost 90% from -- of the total renewable energy. Page 29. I think this slide shows the current installation of Taiwan solar capacity is around 8.4 gigawatt. Next page. The global push to phase out coal and fossil fuel has been boosting the demand for clean energy. This is the global solar installation plan. So this is expected to grow at 8% CAGR and estimate reached 250 gigawatt in 2025. As previously explained by Doris that the jump is big. That for this year, it reached only 1,000 gigawatt. But the total installation in within a decade, which is 2031, it will reach up to 3.5 terawatt. So this is a huge jump. And so we anticipate a very strong growth in the future years. Next slide. Okay. So for the financial statement, SAS achieved outstanding results with double-digit annual growth in the revenue, gross profit and operating profit. But I think as previously explained that the net profit were eroded due to the Siltronic evaluation and so this has impacted a little bit. Next slide. Regarding the first half of 2022 consolidated financial results, SAS generated revenue total TWD 39 billion with 17.5% Y-on-Y. Operating profit of TWD 13 billion with 57.2% Y-o-Y. EPS is 5.26% and the gross profit margin reached 40.3%, with 6.4% Y-o-Y. Operating profit also achieved 33.3%. So this is our first half results. Page 33, the revenue performance. Page 34, the gross profit of first half reached TWD 15.7 billion, and the gross profit and gross margin keep increasing from year 2016, we keep improving it. For Page 35, operating profit of first half, we reached TWD 13 billion, and the profit margin is increasing from year 2016. Page 36. The first half net profit result is TWD 5.35 billion. Excluding noncash valuation loss of Siltronic, the net profit would have amounted to TWD 12.16 billion. Moving to our EPS performance. The first half is -- performance is 5.26%. Excluding all impact SAS first half EPS would have amounted to 11.35%. Next, I would like to present the key ESG achievement in the past years. Please turn to Page 41. SAS Group committed renewable energy usage of group's global operations by 2050. And for solar accumulative power plant capacity, we reached 145 megawatt and that is equivalent to 5.1 million trees CO2 emission reduction. Next page. For SAS Green Factory performance, by means of process improvement and energy-saving measures, we reduced the CO2 emission at 412 metric tons. For water consumption, we reduced 38.8% usage, and the electricity also reduced in 44.9%, and these are under the certified ISO 50001 Energy Management System. Next page. In here, I would like to share with you about what we've done for the water savings in year 2021 last year. Taiwan experienced the worst drought in over 50 years. Therefore, to reduce water intake and also implement water recycling are important. Our recycled water usage increased year-by-year, and we reached 61% last year, which means we don't take the fresh water, and we are recycling it and this is a big achievement in our plant. For Page 45 -- 46, lastly, about governance. SAS has been awarded top 5% corporate governance among all Taiwan listed companies for 8 consecutive years. Now I will hand the call over to Doris and C.W. for Q&A section. Thank you. Doris and C.W., please.

Yes. Thank you, Jennifer. I think before we open the Q&A section, I will quickly answer 2, 3 questions we received just the last couple of days. The first one is that U.S. has suspended import tariffs on solar panels produced in 4 Southeast Asian nations -- Asian countries, including Thailand, Vietnam, Malaysia and Cambodia for 2 years to rebuild the solar installation in the U.S. So what's the impact to SAS?. Okay, here is our answer. We see this policy is basically beneficial for Taiwan solar makers. Previously, we are facing price challenges of the products dumped into Taiwan from those countries. Now U.S. decision reveals its determination to build a domestic solar manufacturing industry to balance these climate plans. In fact, Europe is also doing so to escalate its climate goals and upscale renewable energy. Actually, I think that energy security is national security. This is fully demonstrated in recent world events like Russia cut natural gas supply to so many countries. So thus energy, energy solution or energy policy actually it should be as important as the country's overall policy, a national policy as well. So locating in global solar belt, I think Taiwan has geographical advantage, which makes solar energy, a very ideal option to build energy resilience in Taiwan. So I believe that renewable energy is led by solar is the right solution for Taiwan as well. So we have no impact, but some positive result from this U.S. new tariff-free decision for those 4 countries. That's the first question. And the second quick question is that 2022 will be a very good year for SAS solar business, which is very likely to break TWD 10 billion milestone again this year. For your information, last year's revenue was -- SAS' solar revenue was TWD 7.7 billion. But a couple -- several weeks ago, I answered to a media -- in a media interview, I told them that it's very likely that SAS solar revenue will be over TWD 10 billion this year. That means around 30% growth. So the question is asking me that, please tell us what is the main driver for such increment? Is that quantity price or any special reason for the grow -- for this revenue growth around 30% Y-o-Y. And our answer is that there are 4 main reasons for this big growth this year for SAS solar BU revenue. The first one is, of course, due to strong demand, I think our shipment quantity increased a lot this year. And the second reason is that because the material price increased such as polysilicon price increased and some other material price increased. So polysilicon price increased, mono wafer also increased a lot, because of this price increase. So overall, the whole solar industry this year, sale price, module price, all of these prices are going up as well. So the high price that's high ASP, that's another reason that's why our revenue is much higher than last year. And the third reason is currency, that foreign exchange rate, a weak TWD made quite a lot of our revenue in U.S. dollars. So weak TWD definitely that help us to increase our revenue as well. And the last reason is because of expansion and upgrade of our products. Starting from January this year, we have no more small diameter, smaller scale sale anymore. Starting from this year, we upgrade everything to M6 and M10. From Q4 this year, we will have even much bigger M10 or G12, that kind of big size sales. So those new CapEx, new upgrade of our production, that is one of the main reasons of our revenue growth this year. So these 2 are the questions I would like to share with everyone. The last question was a quick, quick one. In Taiwan, the power rate, electricity price -- unit price increased by 15% starting from July 1. So the rate increase as big as 15%. That's definitely a big impact for a lot of industry in Taiwan. So we were asked by some analysts and said, what is your -- what is the -- how is the impact and what's the weight? How much percent of your electricity cost versus SAS' solar, COGS -- COGS total costs, so what's the percentage of our electricity cost been for from the total of COGS. So a quick answer for this is that, electricity cost accounts for slightly lower than 5% of our overall total COGS. This time, 15% price up, that's definitely very big for us, but we are working very aggressively on overall power consumption reduction. That's what all of our engineers and production manager -- management are working on right now. So we hope to minimize, mitigate the impact a little bit. I think the impact to our overall gross margin will be -- we'll try to make it lower than 1%. Okay. That's all I want to share with everyone. So next I would like to open the Q&A section. If you have any questions, please raise your question and C.W. will answer the question. If any further supplement answer needed, then I will support as well. Okay. Thank you very much. Let's open the Q&A session now. Thank you.

Thank you very much, Doris. Let's now move on to the Q&A session. If you wish to ask a question, please use the raised hand feature in your control bar or you can type your question in the Q&A window and I'll raise it for you. Before we receive the first question, if I may ask a high-level question regarding the -- your revenue composition. So given the many very strong demand for the solar industry and the demand outlook for solar, it does seem to be less cyclical than the semiconductor. So do you have like any idea or like a level of contribution coming from the solar business versus the semiconductor and how do you balance these different businesses within your solar side of the business to avoid the cyclicality and make the earnings outlook more say, I would say, stable or sustainable?

Patrick, this is C.W. Thanks for your question. I think you're asking the solar performance. Is that right?

Yes.

The financial result? Actually, in the past, SAS do many work to transform the overall solar business. So solar business itself already contribute the profit already and it's now double-digit. If you check our financial report in the -- before the final page, there is a separate, between semiconductor and the solar business. And solar business contribute a lot of profit now already. We have several different products like a sale or module and thanks to the strong demand of green energy, the demand become very strong. And recently, because of the polysilicon price increasing, so we are forced to also increase the ASP as well and we also reflect -- some partially reflect to our end customer to raise the price. So currently, the solar business is very good. And going forward, as Doris mentioned, the demand also the perspective is very good. So we are very positive for the solar business itself for the contribution. I'm not sure if I answer your question.

Yes. Thank you. That's very clear. Thank you, C.W. [Operator Instructions] Can we take the last call? Yes, I suppose the team has covered most of the -- well, areas that investors may -- oh, yes, we do have one from Jennifer now. Jennifer, could you unmute yourself and ask the question?

I just have a question regarding the solar business. Doris mentioned that you probably benefit from the U.S. probe of China imports. I just realized that Sino-American has a subsidiary called Silfab. And I was just wondering, because I saw Silfab seems to have some operation in U.S. Just wondering if you can update us the Silfab's current status and how is the management's view on the inflation Reduction Act of 2022 that's just been released last week? Thank you.

Thanks for your question, Jennifer, I think you are asking for the mono cell products. Is that right?

The Silfab that they acquired many years ago. I wonder it's the same Silfab solar in the states -- in the United States?

Yes. Maybe C.W., let me answer this question. Yes. We…

Okay.

Yes. Silfab was -- at the very beginning was Italian company. We owned only 15% of the company from day 1. But now the Silfab U.S.A., yes, it's still doing quite okay. They have 2 operations that's the module business in -- Silfab now is focusing on module business in the U.S., one, production site is in U.S. and another in Washington and other location is in Canada. So they have 2 production locations. But SAS' ownership over the slab is lower than -- it's close to 5% or slightly lower than 5% now. So it's very minor. So we don't confide to anything. For us it's just one of the -- one of our reinvestment. And of course, Silfab is a very good customer for us as well, we supply them quite a lot of sales. We work very closely with them to develop some new sales, new products together. So that's the relation. But our ownership is pretty low.

Okay. And to follow up on solar, can you update us on your solar capacity and whether you have -- what kind of expansion plan you have to seize the market opportunities?

Yes. Our sale -- I think if we're talking about -- I think you know that Jennifer, I think you know that we have a cell operation in Taiwan, and we also have module operation in Germany, Prenzlau, that's Aleo. So our total capacity is lower than 1 gigawatt. But we don't really increase our total capacity, I mean, for cell -- both cell and module. That's not what we are doing. What we are doing now is to improve, to change the product from middle-level output to a bigger -- most advanced stuff to make high output material. But if you are talking about the total capacity actually we replaced because we phased out all lines in-store new high-efficiency stuff. So total capacity is still lower than 1 gigawatt per year right now in Taiwan.

Got it. So we -- currently, we don't -- we just like to transform the current production line to bring up more outputs, but we don't have like adding production line plan?

We do add capacity -- we do add production line. But that's not -- but we do add production, but we phase out old production line as well. So total capacity is closed. It's, of course, increased, but it's not a big leapfrog jump, that's not like -- not that big. So it increased, but what's more meaningful for us is that the products are totally different. Those are kind of there for semiconductor you convert, you migrate from the mature design jump to advance note that kind of concept. So for solar also, we phase out this year -- starting from this year, we phased out all of our old products like G1 or more mature products. So starting from this year, we convert, migrate our production line to most of advanced one, and we are going to have 500 watt output per module, that kind of product will be launched next year. So it's kind of like we phase out some lines and we added some new lines and total capacity to increase, but it's still slightly lower than 1 gigawatt.

Thank you very much for your question, Jennifer. Let me may take the last question, if there's any. Okay. If not, before we go, Doris, do you have any like closing remarks or key message that you want the group to take away with?

Yes. Thank you very much for everyone joining the team. I would like to say -- share one thing, especially for SAS is that, I'm very confident that this year will be another big growth year for SAS for -- this growth will be coming from both solar and semiconductor. So we are doing very, very okay. And although right now, there are some uncertainties, but in general, we'll be -- our production lines are almost still fully loaded right now. Thank you very much.

Thanks again, Doris and management team for your time and valuable insight, and thank you all for your participation. That concludes the call for today. You all have a lovely evening.

Thank you very much, everyone. Thank you. Have a good day. Thank you.

Thank you.