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spk02: Revenues from large display drivers came in at $30.7 million, reflecting a sequential decrease of 21.2%. The decrease was primarily attributed to weaker monitor and TVIC sales due to customers' defunct and challenging market conditions, following substantial Q2 replenishment for shopping festivals. In contrast, local IC sales increased notably, resulting from rush orders for legacy products from leading panel customers. Sales of large panel driver IC accounted for .8% of total revenue for the quarter, compared to .3% last quarter and .3% a year ago. Revenue from the small and medium-sized display driver segment totaled $155.4 million, a decline of .2% sequentially, but significantly better than our guidance of a low-tinged supply, thanks to -than-expected sales in the automotive and tablet markets. In Q3, automotive driver sales, which include both traditional TVIC and TVDI, experienced a mixed single digit decrease, yet largely outperformed our expectation of a high-tinged decline. This -than-expected result was primarily sealed by rush orders from our Chinese panel customers shortly after our last earnings call on the backdrop of the Chinese government's renewed trading stimulus announcement made in mid-August as part of their effort to further boost automobile consumption. Our automotive business, comprising drivers, T-com, and or late sales, remained the largest revenue contributor in third quarter, representing nearly half of total sales. Meanwhile, Q3 tablet IT sales also exceeded guidance of a sequential decline, with sales slightly up from last quarter, sealed by rush orders from leading end customers. Q3 smartphone IT sales increased a decent double digit sequentially, thanks to new product launches of leading phone makers. The small and medium-sized driver IT segment accounted for .9% of total sales for the compared to .3% in previous quarter and .6% a year ago. Third quarter non-driver sales reached $36.3 million, a decline of .1% from the previous quarter. The decrease was primarily driven by a double digit sequential decline in T-com sales, particularly for monitor applications, as customers pulled forward their inventory purchases the entire quarter, anticipating strong sales during the shopping festivals. However, automotive T-com sales saw an impressive sequential increase of over 30%, as our solutions, especially the market-leading local-dealing T-com, continued to be rapidly adopted by major panel manufacturers, tier-one suppliers, and automotive manufacturers worldwide. In the third quarter, our T-com business accounted for over 9% of total sales, with notable contributions from automotive T-com representing almost half of T-com sales, supported by steady growth with well over 100 secured design win projects. Non-driver products accounted for .3% of total revenues, as compared to .4% in the previous quarter and .1% a year ago. Third quarter operating expenses were $60.8 million, an increase of .4% from the previous quarter and a decline of .7% from a year ago. The sequential increase stemmed primarily from expenses for annual bonus compensation, which we award employees at the end of September each year, typically resulting in higher Q3 employee compensation expense compared to other quarters a year. The -over-year decrease was mainly due to a decline in employee bonus compensation, as the amortized portion of high-year bonuses for last year was higher than that for this year. As a reminder, we grant annual bonuses to employees at the end of September each year, including ISU and the cash award based on the expected profit of the four years. Our annual bonus compensation grant for 2024 was $12.5 million, in line with guidance out of which $11.2 million was immediately adopted and expanded in the third quarter. In comparison, the annual bonuses for 2023 and 2022 were $10.4 million and $39.6 million. The annual bonuses for 2020 and 2020 were $10.4 million respectively, of which $9.7 million and $18.5 million were invested and expanded immediately. To further elaborate, our Q3 bonus expenses include two portions. First, as I just mentioned, $11.2 million was the allocation for the immediately adopted and recognized portion of the current year's bonus grant. Second, $2.7 million was spent for the amortized trenches of high-year bonuses, compared to $2.8 million last quarter and $6.2 million a year ago. Amid ongoing macroeconomic challenges, we are strictly enforcing budget and expense controls, with four-year 2024 OPEC projected to decline mid-single digits compared to last year. Third quarter operating income was $5.9 million, or .6% of sales, compared to .2% last quarter and .6% of sales for the same period last year. The sequential employees, aside from lower sales and a contraction in gross margin, primarily reflected the difference in annual employee bonus compensation as mentioned earlier, totaling $11.2 million, or .1% of sales, the immediately adopted and expanded portion of this year's new grant. The -over-year decrease in operating margin was mainly driven by a decline in sales and lower sales. Third quarter after-tax profit was $13.7 million, or 7.4 cents per diluted ADS, compared to $29.6 million, or $16.9 cents per diluted ADS last quarter, and $11.2 million, or 6.4 cents in the same period last year. In calculating the Q3 after-tax profit, we made a favorable income tax adjustment to rectify over-estimated tax expenses for preceding quarters this year, hence the sequential increase in after-tax profits. Turning to the balance sheet, we had $206.5 million of cash, cash equivalents, and other financial assets at the end of September 2024, compared to $253.8 million a quarter ago, and $155.4 million at the same time last year. The sequential decrease in cash balance was mainly the result of $50.7 million payments of annual dividends. Operating cash outflow for the third quarter was approximately $3.1 million, compared to an inflow of $26.9 million in Q2. The outflow was primarily due to $30.1 million paid to employees for their bonuses, which included $10.8 million for the immediately-resulted portion of the year's award, and $19.3 million for the last-year award graded over the past three years. Operating cash flow, including employee bonus, was $27 million inflow during the quarter. We had $36 million of long-term unsecured loans at the end of the third quarter, of which $6 million was the current portion. Our quarter-end inventory of September 30, 2024, was $192.5 million, lower than $203.7 million last quarter and $269.6 million in the same period last year, indicating a well-managed and balanced inventory level from quarter to quarter. Accounts receivable at the end of September 2024 was $224.6 million, down from $242.4 million last quarter and $248.5 million a year ago. CSO was 92 days at the quarter end, compared to 99 days last quarter and 95 days a year ago. Third quarter capital expenditure was $2.6 million versus $4.6 million last quarter and $2.6 million a year ago. The third quarter capital was mainly for &D-related equipment for our IT design business. As of September 30, 2024, Timex had $175 million ADS outstanding. Little changed from last quarter. On a fully diluted basis, the total number of ADS outstanding for the third quarter was $175 million. Now turning to our fourth quarter 2024 guidance, we expect fourth quarter revenues to be flat to slightly down sequentially. Growth margin is expected to be flat to slightly up sequentially, depending on predominance. The fourth quarter profit attributable to shareholders is estimated to be in the range of $9.3 to $11 per fully diluted ADS. I will now turn the call over to Jordan to discuss our Q4 outlook. Jordan, the floor is yours.
spk06: Thank you,
spk01: Eric.
spk06: Looking ahead to Q4, the macro environment remains challenging. Panel customers are reducing production to stabilize panel prices in response to the market conditions. At the same time, end brands are also taking a cautious approach to panel procurement and maintaining low inventory levels. Taken together, these factors have suppressed IT demand, leading to our conservative outlook for the fourth quarter. Against this backdrop, we continue to strictly manage expenses and implement various cost optimization measures, including enhancing manufacturing and operational efficiency, as well as leveraging the diverse range of vendors in foundries and back end suppliers. Looking ahead, while the global economy still looks uncertain, we are committed in the business outlook of several key areas, namely automotive, AI, WL, and OLED, and expect these product lines to drive significant growth of our business. First, let me elaborate on the automotive sector, our primary revenue contributor. We remain optimistic in our long-term outlook as the automotive display market continues to expand through innovation and technological advancements. Our confidence also stems from our comprehensive offering and leading position in the market, particularly in the areas of your technology. These technologies are expected to see continued adoption, providing us with sustainable long-term growth opportunities. It is worth noting that there have been significant fluctuations in automotive market demand in recent quarters, particularly from the Chinese market, which accounts for over 30% of global vehicle sales. Government policies, subsidies, and aggressive discount campaigns by car manufacturers have made supply and demand less predictable, creating new challenges for automotive IC suppliers. Automotive ICs, like the treatment electronics products, feature rigorous safety and reliability standards, resulting in longer production lead time, which poses greater challenges in handling customers' rush orders. However, thanks to our dominant market share and substantial shipment volume in the automotive sector, we are well equipped to navigate these market fluctuations. In fact, our ability to respond to these classmates' demands for automotive ICs was instrumental in our better expected third quarter financial results, with final revenues exceeding the midpoint of our guidance by as much as 7%. The higher revenues were driven primarily by rush orders, but arose after our last earnings call tailed in the middle of the third quarter. Indeed, being able to quickly respond to changing customer needs has become the crucial competitive advantage in the automotive IC sector for us. In terms of our WL business, we are committed in our collaboration with 4Z on the WLPO-CPO business, where I am pleased to share that we are making decent progress in the initial small-scale production of the first generation solution. Demand for high-speed optical communication technology is surging, driven by advancements in high-performance computing and artificial intelligence. Moreover, High-Mass and 4Z, along with world-leading AI semiconductor companies and foundry partners, have begun new technology for future generation products. We believe this will create new revenue streams for High-Mass and make a significant contribution to our total revenue and profit in the coming years. We start, I will now begin, with an update on the large panel of driver IC business. In Q4, we anticipate a double digit sequential sales decrease for large display driver ICs due to soft quality shopping demand expectations. Ongoing customer stocking since Q2 has been enhanced by China local competition. As I just mentioned, panel manufacturers are digitally reducing production to safeguard panel prices, while end brands are enforcing strict procurement control in response to soft demand and maintaining low inventory levels. Looking ahead in the novel sector, the emergence of AITC is promptly displayed upgrades towards all the displays and displays equipped with touch features. Through strategic collaborations with leading panel manufacturers in Korea and China, High-Mass is well positioned to capitalize on this trend, offering a comprehensive range of novel IC products including DDI-C, T-Car and Touch controller for all the displays and TDI and T-Car for LCD display. First, on TDI for LCD, we are pioneering in-cell touch TDI for notebook LCD display. Our state of the art in-cell touch TDI solution features a proprietary architecture where the touch controller is embedded inside the TDI chip with the display portion of the TDI taking advantage of the conventional display driver configuration to convey T-Car data to drive the panel. This allows customers to maintain the existing T-Car adoption substantially reducing their product development effort and enhancing production flexibility. Additionally, the TDI features high integration multi-chip cascade and increased channel output enabling higher resolution of up to 4K and larger screen of up to 16 inches with complex PCD and narrow bezel designs making it suitable for post-mainstream and high-end LCD laptops. In the third quarter, our newly introduced in-cell touch TDI successfully entered mass production for prominent brands for the AIPC. Several projects are also in progress with other brands for the upcoming notebook models. The second area of focus is OLED which is seen in creative adoption in premium laptops. In addition to our OLED TDI CST resolutions, we are also pioneering in-cell touch control technology on notebook OLED display. Multiple projects with top panel and laptop leaders are underway. Finally, we are developing the next generation VDP 1.5 display interface for T-Car applicable to both LCD and OLED panels supporting high frame rates, low power panel replay, adaptive sync and high resolution. We aim to launch our EDP 1.5 T-Car in the second quarter of 2025. We are confident that with these new initiatives, Kinect will be the front runner of next-gen AIPCs and premium notebooks. With several projects slated for mass production starting in 2025, we believe our LCD and OLED notebook solutions will act as a growth catalyst for our notebook IC business for the coming years. Turning to the small and medium-sized Federal IC business, we anticipate fourth quarter revenue to be flat sequentially. Automotive IC revenue in Q4 is expected to resume growth and increase single-digit sequentially, mainly supported by ongoing China market promotional events and the Chinese government's renewed trading stimulus policies, as earlier mentioned. Notably, our automotive driver IC sales for the full year 2024 are projected to grow high teams year over year, significantly outperforming global automotive growth, primarily driven by continued expansion of TDDI adoption among all major end customers forward. In the automotive TDDI sector, we continue to strengthen our market dominance with cumulative shipments already exceeding 70 million units, far surpassing most of our competitors. With nearly five redesigned projects secured and only about 30% currently in mass production, we continue to see substantial growth potential ahead. Remarkably, our Q4 automotive TDDI sales are set to surpass TDDI sales for the first time, highlighting the widespread adoption of our solutions forward, along with growing demand for more intuitive, interactive, and cost competitive cost-benefit issues enabled by TDDI solutions. Prior to our full year 2024 traditional automotive DDI sales are expected to decline as they are partially replaced by TDDI. Our shipment quality for DDI is set to see a modest increase. This is indicative of the product's long life cycle, as many of our customers' legacy models will not be retired for years. And many displays, such as cluster display, SUV, or rear and side view mirrors do not require such features. We remain the leader of the automotive DDI market with approximately 40% global market share. Meanwhile, an emerging market trend shows more customers are opting for TimeS' TDDI or LTDI coupled with our logo-beaming TCAM, SDI standard development platform for new automotive displays across various sizes and applications. This growing platform adoption of more of our automotive I.C. offerings not only reflects strong customer loyalty to our technologies and services, but also signifies the increase in content value for TimeS on a per-panel basis. TimeS is widely recognized as the leader in the automotive display I.C. market. Operating industries broadest range of products with leading market share in each of the product areas. The diverse range of offerings allows us to address different customer needs and adapt to changing market trends, thereby strengthening our market presence and boosting potential revenue. Our newly introduced TED or TCAM embedded driver I.C. solution, which combines TDI with the whole team in TCAM into a single chip, exemplifies our commitment to providing customers with more competitive, flexible, and broader options. This solution is ideal for smaller panels that typically require only one to two .C.s for cost consideration, while still offering advanced, patched, and lower diminutions. Production is set to begin in early 2025 with several projects and engagements currently underway with major customers. Meanwhile, we are actively collaborating with automotive TOI partners to develop more advanced, innovative, and or cost-optimized solutions tailored to various market needs. These are not only other scores of customer competence in our technology leadership, but also reflect their commitment to engaging with us in future road map collaborations. Moving to smart-board I.C. sales. We anticipate U4 to slightly decline sequentially with our growing shipment to key customers. U4 tap the I.C. sales are projected to decline low teams sequentially. S&M customers are extending their replacement cycles due to challenging economic conditions. Next, for an update on our OLED business. In the automotive OLED market, we have formed strategic partnerships with leading panel manufacturers in Korea, China, and Japan. As OLED technology gains traction in your premium car models, Hi-MAC is well-positioned as the preferred partner, sent to our strong presence and proven track records in the LCD automotive display sector. Leveraging our first mobile advantage, we look to capitalize on the growing adoption of OLED in automotive displays by offering a comprehensive range of OLED solutions, including DDI-C, T-CAM, and On-Sale Touch Controller. We believe this positions us as the primary beneficiary of the growing adoption of OLED displays in automotive. For instance, our advanced OLED On-Sale Touch Controllers are set in new industry standards with an impressive touch -to-noise ratio of over 45 dB, ensuring reliable performance under challenging conditions such as glove wearing and wear-finger operations. Our OLED On-Sale Touch Controller for automotive applications and their production plus quarter adoption is expanded across the board. With additional projects starting mass production next year, we expect this segment's contribution to our revenue to increase starting in 2025. Beyond the automotive sector, we have made notable advances in the tech and automotive sectors with top-level panel manufacturing in Korea and China. Our comprehensive OLED product offerings, encompassing DDI-C, T-CAM, and Touch Controllers, have led to several new projects that are on track to mass production during Q4 and as we move into Q35. Regarding smartphone OLED, we expect mass production to commence next year. Currently, we are making good progress in collaborations with customers in Korea and China on several verification and partnership projects. Additionally, we are building strong long-term partnerships with the OLED players to enhance our market position. I would like to now turn to our Non-Driver IP business update, where we expect the fourth quarter revenue to increase, meeting sequentially. First, for an update on our T-CAM business, we anticipate Q4 T-CAM sales to increase meetings sequentially, triggered by automotive and a one-time ASIC T-CAM product shipment to a leading projector customer. Automotive T-CAM business is expected to achieve high teams growth sequentially, triggered by the shipment of secure design wings. For the full year, our automotive T-CAM business is projected to grow over 80% compared to last year, contributing to nearly 4% of our total sales. Moving forward, we are confident in the strong growth trajectory in the automotive T-CAM business, backed by our dominant global demand T-CAM market position with over 100 design wing projects, of which only a small portion are currently mass-produced, and new design units continue to expand. Many panel houses, K1 and OEM worldwide, have now expanded the adoption of our leading edge, the world-leading T-CAM solutions, from premium to mansion car models. We are well positioned for decent growth in automotive T-CAM over the next few years. Despite subdued market demand, we are actively developing next generation of T-CAM ICs for tablet, notebooks and automotive applications. This proactive approach now needs to broaden and diversify our product offerings, but also helps us navigate through industry shifts towards wider adoption of all displays across applications. Some of our new development T-CAM ICs for all their tablets and notebooks are already showing promising results. For automotive all their T-CAM, an area which with exciting growth potential, we began production in 2021 and anticipate new product launches with advanced feature enhancements in 2025. Switching gears to Wythe-Ine ultra-low power AI sensing solution, the cutting edge endpoint AI integration featuring industry-leading ultra-low power AI processor, -L-Thon CMOS sensor and advanced CNN-based AI algorithm. In the fast-changing AI landscape, Wythe-Ine AI technology stands out for its expertise in on-device tiny ML microcontroller solutions, characterized by remarkably low power consumption operating at just single digit milliwatts, making it possible to add AI functionalities to battery-powered endpoint devices. Our Wythe-Ine technology is unlocking new opportunities across various educations, particularly in endpoint devices for everyday life. The prime example is the smart door lock. Stemming from our collaboration with Desmond, the leading vendor in China's high-end smart door lock market, we are expanding use cases with other world-leading door lock makers across continents by integrating innovative AI features such as puzzle recognition, smart anti-pinch protection, and palm-van biometric access. This approach targets diverse home security markets that value Wythe-Ine ultra-low power consumption and on-device AI capabilities, which are crucial for battery-powered endpoint AI devices. Next, for an update on our Wythe-Ine module business, we continue to offer a diverse range of product-based modules, collaborating with ecosystem partners and third-party system integrators to develop, retrain, local and local AI solutions with the goal of lowering barriers and timelines for developers entering the AI space. Progress is being made across various domains, including smart parking, access control, power-van authentication, smart offices, smart homes, and more. Among these, HiMAC's Palm Van solution, which is part of our Wythe-Ine AI module business, has garnered significant attention and positive feedback from customers since its launch this year. It has already been adopted by a U.S. customer for smart access control systems and is on track to begin mass production by the end of the year. Extensive engineering activities on Wythe-Ine Palm Van are ongoing with world leading players across various industries, including smart door locks, access control, notebooks, and automotive, among others. The Wythe-Ine Palm Van solution integrates the HiMAC Wythe-Ine II AI processor, an AOS semi-limit sensor, and a proven Palm Van authentication algorithm. It features an actual low power compact module capable of authenticating an individual's identity in under 100 milliseconds while consuming only a few milliwatts of power, ideal for battery charge on device AI endpoint applications. Palm Van authentication utilizes unique internal van patterns that are difficult to replicate or spoof. In addition to exceptional low power consumption, Wythe-Ine Palm Van provides robust security and reliability with industry leading low rate of false acceptance and rejection, making it nearly impossible to bypass or misidentify. Equally important, Wythe-Ine Palm Van processes identification locally, eliminating privacy risk associated with cloud access required for solutions that perform authentication remotely. We anticipate increasing sales contribution from Wythe-Ine Palm Van across a diverse array of applications starting next year and are excited about the strong customer interest and opportunity for rapid growth in our Wythe-Ine module business. Now switching to a quick update on WLO. In June of this year, Hynix joined forces with Fossey, a global leader in silicon photonics connectors, to announce the launch of an industry-leading optical communication solution designed for the most advanced multi-chip modules. Hynix and Fossey are currently progressing through the small scale production phase of our first generation solution designed for the LTO architecture. In addition, Hynix in collaboration with Fossey, along with leading global AI, IT design companies and foundry partners, has commenced development for next generation technologies with the objective of incorporating these advancements into more sophisticated CPU architectures. Leveraging our years of WLO engineering expertise, Tyres has meticulously designed and developed nanoscale precision optical systems for LTO, CTO. In the LTO-CTO optical solution, our precision engineered optical design and manufacturing technologies ensure that the optical signals in each fiber couple precisely with the silicon-sphalonic integrated circuit, or TIC, in the LTO-CTO optical components. This achieves high precision, low loss, and high-speed transmission to meet the demands of silicon-photonic transmission in high-speed computing. In addition to the progress made in the LTO-CTO, we have seen an increase in engineer collaborations with global technology leaders who are leveraging our WLO expertise for AR, VR, and a range of other applications, underscoring the widespread recognition of our technology. We believe that WLO will make a significant contribution to our world-renowned project in the coming years. That concludes my report for the quarter. Thank you for the interest in HiMAC. We appreciate your joining today's call and are now ready to take questions.
spk04: Yes, thank you Jordan. Ladies and gentlemen, we will now begin our question and answer session. If you have a question for any of today's speakers, please press star 1 on your telephone keypad and you will enter the queue. And after you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star 2 to cancel the question. Thank you. In addition to submitting questions via phone, you are also welcome to submit questions through the webcast where the chat box is available on the right-hand side of the screen. Thank you. Now please press start key and number 1 on your keypad to ask the question or submit your questions through the webcast.
spk01: Thank you. Now we'll have our first question. Donnie Tan, Nomura,
spk03: go ahead please.
spk05: Oh, thank you Jordan and Eric for taking my question. My first question is regarding to your automotive business. So based on your guidance, automotive driver IC sales in fourth quarter will be growing like single digit sequentially. But when we look at some of Peter's announcements, like for example, like Novatec, like Radian, they all mentioned about that automotive driver IC sales in fourth quarter may decline a little bit sequentially. And also, I remember that back in past few months, it seems like the automotive business was pretty volatile. You know, customers adding orders and cut orders within a couple of months. So what makes this kind of volatility that big and how confident we are to outperform our peers in terms of automotive business in fourth quarter? Thank you.
spk06: Thank you for the question. I mean, as you know, we are always very confident and actually we are always on a somewhat conservative side when we provide our guidance. So when we say the Q4 automotive overall business is likely to, is projected to grow, I mean, we certainly mean business. And similar to the last quarter, we are seeing a lot of rush orders, which, you know, fortunately, we are able to fulfill because of the reasons I mentioned earlier in my prepared remarks. And I think the customers appreciate that the fact that Hymex, you know, has the leading market position and also is fulfilling our responsibility by, you know, fulfilling such rush orders for being the leading market share player. And I think that the main reason for the Q4 is really a continuation of the last minute Q3 rush orders. You know, China is renewing its stimulus plan and that is rushing the carmakers and to a great extent consumers to make their purchase before the incentive plan expires. And I think that is what we are seeing. Having said that, so again, we are very confident about our projection for Q4. We are, however, less confident on the prospect of Q1. So perhaps, you know, a more important question is what is our prospect for 2025? I know you didn't ask that question, but I think it's the Q4. So again, we are very confident about our continued market share leadership and close engagement with our customers across the global automotive supply chain. However, we don't have visibility, to be quite honest, for automotive business for 2025. And this is mainly because of the uncertainty relating to the macro environment, both politically and economically. I think I don't need to elaborate further on that. We all know what I'm talking about, about the uncertainty. Nevertheless, regardless of the macro environment, we are quite confident about further growing our automotive TDDI business next year, which surpassing DDIC is already our largest source of revenue right now, as you know. Our confidence stems from our large number of design projects which are yet to enter mass production, and the penetration of insidiously DF automotive, which is still projected to somehow growth further, although certainly not at the same kind of high growth rate that we enjoy over the last few years. Our confidence level is even higher for growing our logo as well as our TDDI business in 2025, for very similar reasons, i.e., large number of design projects already in hand and dominant market position. We are actually now projecting for the TCAN to grow a rather decent double digit next year, and for LTDI, starting from a relatively low base to grow triple digit actually next year. Again, we are fairly confident about this prospect. However, I can't say the same for traditional DDIC for next year. As you know, the overall DDIC volume of the market is projected to decline somehow, it is being partially replaced by TDDI, but it still has solid demands for applications that do not require touch features. So the business next year for our automotive DDIC will depend largely on the overall automotive shipment. We don't really expect our market share to decline, but we decline really with our 40% market share, which is already quite high. We can't really project our market share to grow much further either. If I try to complete the story, let me also look further ahead into 2026 and 2027. We are lucky to see our outlet business taking off for automotive. We are already collaborating very closely with leading customers in Korea, China, and Japan on new generation projects that are already in the design stage with tier 1s and ODMs involving all of our DDIC TCAN on sale touch solutions for OLED with our touch solution already in early stage of mass production, as we just mentioned. So while the automotive outlet will be the story of 2026 and beyond, we believe it will represent a major growth engine for HEMEX when it happens because what we are seeing right now, what we are experiencing right now is very, very busy design activities with not just panel makers and also tier 1s and ODMs for their high-end models. So I hope that addresses your question.
spk05: Thank you, Jordan. Yeah, but another follow-up on this is, as I mentioned, some of the peers mentioned about fourth quarter may sequentially decline a little bit. So other than the overall customer situation seems like getting better towards the end of this year, is there any specific company reason to drive our automotive sales to be outperforming our peers?
spk06: I certainly don't know what is happening with our peers, but we are seeing this rush order actually coming from not just one or two single customers. It's actually rather widespread from almost across the board, various panel makers and covering both DDIC and TDDI and TCAN actually. I recall very vividly with our automotive TCAN, which has actually very, very low production lead time, and we are scrambling to meet the customer's demand, which luckily we are able to achieve. However, in the meantime, we have complained to the customer that this should not happen anymore because partially by luck, we are able to make the delivery for TCAN, which is low production lead time. If it happens next time, we can't really guarantee it. But anyway, what I'm trying to say is the rush orders actually came from not just Chinese, but also other countries, panel makers, PO1s and automotives.
spk05: My second question is regarding the CPO progress. First, it looks like non-driver sales growth in fourth quarter, primarily driven by TCAN. Is CPO playing any role there in fourth quarter yet, or how should we look at the update progress there for CPO?
spk06: Thank you. The answer is no, not in Q4. In Q4, we do see some small amount of revenue from this, starting from Q4. These are very early, very small quantity shipments for customers' engineering verification and trial production purposes. So, for CPO, does that really contribute to our non-driver growth for Q4?
spk05: Do you have any update on the future progress? When exactly we will see more meaningful progress or sales contribution from CPO? Is there any update on the industry dynamics?
spk06: Good question. Our prepared remarks, we talked about working on next generation technologies and products. And so, you may wonder exactly what those are in this timeline, and therefore, your question about contribution potentially for next CEO the year after. So, the short answer is we are trying to squeeze more and more optical fiber lines into a very, very limited space. And that is a very tremendous engineering challenge. Now, as we all know, one of the main purposes of using OPO slash CPO technology is to substantially raise the data transmission rate or how you call bandwidth of the advanced multi-chip module, which, as you know, is essentially the bundling of multiple chiplets into a single module through so-called advanced packaging. The module, after such code and code bundling, can therefore process a very large amount of data. But to make the module useful, the module also needs to have sufficient bandwidth to transmit that data with the outside in both ways. And we all know optical fiber is being used to replace traditional metal wire for such a high bandwidth data transmission. However, the bandwidth of each optical fiber line is still fixed, is still limited, right? And therefore, to up the overall bandwidth of the whole multi-chip module, the single idea is to have multiple optical fiber lines working in parallel. And that is exactly what we're working on when we talk about technology roadmap. We are trying to squeeze more and more optical fiber lines into a very limited space. We are targeting some phenomenal increases over the next few years to cope with the projected increase of data amount that needs to be transmitted by the advanced multiple multi-chip module. So to achieve that, one of the things we need to push the boundary of optical design and manufacturing for better, for example, for better waveform integrity after transmission. And another example would be for more precise coupling of the optical fiber with the photonic IC that our device connected to. So in terms of timeline, I can't really speak on behalf of my customers. So all I can say is that we are being requested to accelerate the timeline from something already quite challenging for the migration from first generation LPO to more advanced CPO, as well as for the readiness of our next generation products, enabling a fast increasing number of optical fiber lines. So you and we also mentioned, it's part of our Q&A last quarter as well, some people wonder about whether we have the capacity to meet such demands when it really happens. And we certainly, we are around the mess internally several times, right? And we are certainly very excited about the prospect because if we look at our partners or customers' projected capacity expansion, as well as their projected growth of such high-end 2.5D modules or SPUs, even if we are to fully utilize our existing capacity, we can only meet a small fraction of their projected demand. Now, to be honest, we still don't have their long-term forecast, long-term projection for their demand for covering next few years yet, but we feel we are very prepared because all these generational products I just mentioned, whether this future generation of our products will be manufactured in our existing WLO FEP with existing capacity, which was built for the purpose of some earlier projects that we worked on several years back for consumer electronics products. Now, without specifics, we believe the same existing capacity will generate substantially more revenue and profit for us as the products for LPO, CPO, demand, much more sophisticated optical design manufacturing compared to those used for our earlier products, which as I mentioned is for consumer electronics. So I hope that addresses all your questions
spk03: regarding
spk06: this
spk03: WLO business.
spk05: Okay, thank you Jordan. I'll go back to Q.
spk04: Thank you. Thank you. If you would like to ask a question, please press star 1 on your keypad. Thank you. You may also submit your questions
spk01: through the webcast. Thank you. Ladies and gentlemen, we are now in
spk04: question and answer session. If you would like to ask a question, please press star 1 on your
spk01: telephone keypad. Thank you. As a reminder, please press star 1 on your keypad. Thank you. Okay, there are no further questions at
spk04: this moment. Thank
spk01: you.
spk06: Thank you, operator. As a final note, Eric Lee, our chief IRP officer, will maintain with the marketing activities and continue to attend investor conferences. We will announce details as they come about. Thank you and have a nice day.
spk04: Thank you, Jordan. Ladies and gentlemen, this concludes third quarter 2024 earnings conference. You may now disconnect. Thank you and goodbye.
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