Himax Technologies, Inc.

Hello, ladies and gentlemen, welcome to Himex Technologies Incorporation first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Karen Teo, head of IR, NPR, and Himex. Ms. Teo, please go ahead.

Welcome, everyone. My name is Karen Cha, head of IRPI IMEC. Joining me today are Jordan Wu, president and chief executive officer, and Jessica Pan, chief financial officer. After the company's prepared comments, we have allocated time for questions in a Q&A section. If you have not yet received a copy of today's result release, please email hx-ir at hymex.com.tw or at himx at mcgroup.us or download a copy from Hymex website. Before we begin the formal remarks, I would like to remind everyone that some of the statements in this conference call, including the statement regarding the expected future finance results and industry growth, are forward-looking statements that involve a number of risks and opportunities that could cause actual event or result to different material if or not described in the conference call. A list of risk factors can be found in the company's latest SEC filing, Form 20-F, in the section titled Risk Factors may be amended. Except for the company's four-year 2025 financials, which were provided in the company's 20S and filed with the SEC on March 27, 2026. The financial information included in this conference call is audited and consolidated and prepared in accordance with IFRS accounting. Such financial information is generated internally and has not been subjected to the same review and scrutiny and may vary materially from the audited consolidated financial information for the same period. On today's call, I will first review the high-end competitive financial performance for the first quarter of 2026, followed by our second quarter outlook. Jordan will give an update on the status of our business, and after which we will take questions. You can submit your questions online through the webcast or by phone. We will review our finances on an IFRS basis. Despite the fiscal sickness blowdown during the new annual year holiday, we are pleased to report that our Q1 profit exceeded the highest range announced on February 12, 2026, while both revenue and gross margin were at the high end of the predicted range. First quarter revenues reduced to $199.0 million, representing a slight sequential decline of 2.0%. are reaching the high end of our guidance range of a decline of 2.6% to 6.0%. Both margins were 30.4%, also at the high end of our guidance of flat to slightly down from 30.4% in the previous quarter. Q1 topics are diluted areas of a 4.6% to exceeding the guidance range of 2.0% to 4.0%. Revenue from large display burgers hanging at $24.2 million, representing an increase of 11.7% from the previous quarter, outperforming our guidance range of a single-digit increase sequentially. This was primarily driven by the battle and expected restocking of high-end TV ideas by leading panel makers. Sales of large single-driver ICs accounted for 12.2% of total revenues for the quarter, compared to 10.7% last quarter and 11.6% a year ago. Revenue from the small and medium-sized display driver segment totaled $135.8 million, reflecting slight decline of 2.4% sequentially and in the typical low season. In line with guidance, Q1 automotive driver sales, including both traditional DDIC and TTDI, declined double-digit sequentially, with $14 million a year seasonality, customers' inventory control falling two consecutive quarters of the way stocking, and the tapering of the automotive subsidy program in major markets, including China and the U.S. In contrast, revenue for smartphones, covering both LCD and OLED products, increased sequentially, primarily due to the new OLED solutions that began net production with the top tier panel makers for a leading smartphone brand's mainstream model. Q1 tablet IP cells also increased sequentially, driven by the renewed demand for mainstream models from leading customers following several quarters of software. as well as the commencement of IC shipment to a customer's new premium OA tablet. The small and medium-sized driver IC segment accounted for 68.2% of total sales for the quarter, compared to the 58.5% in the previous quarter and 17.0% a year ago. Q1 non-driver sales reached $39.0 million, a $7.7 a percent decrease from the previous quarter, reflecting a decline in A6T consumer to a leading projectile customer, along with the moderation in automotive T-Con consumers following several quarters of solid growth. However, underlying demand for automotive T-Con business remains low, supported by a strong pipeline of hundreds of design wing projects poised to enter inspection in the coming quarters. Non-driver products accounted for 19.6% of total revenue as compared to the 20.8% in the previous quarter and 18.4% a year ago. First quarter operating expenses were $15.3 million, a decrease of 8.4% from the previous quarter, but an increase of 9.9% compared to the same period last year. Both the quarter-over-quarter and year-over-year changes were primarily driven by differences in tech bond expenses, reflecting the timing of major project tech bonds. The year-over-year increase was also attributable to federal expenses and the appreciation of the NT dollar against the U.S. dollar against the vector of ongoing macroeconomic challenges. We continue to maintain trade costs and expenses of wind, while strategically investing in directed non-private IoT areas with compelling growth potential, some of which are poised to run by meaningful starting in 2027. First core operating profit was $10.2 million, representing an operating margin of 5.1%. compared to 3.4% in previous quarters and 9.2% over the same period last year. The sequential increase was the result of the lower operating expenses. The year-over-year decline reflected the lower sales and growth margins coupled with higher or higher operating expenses. First quarter after tax profit, was $8.0 million, or 4.6 cents per diluted ADA, compared to $6.3 million, or 3.6 cents per diluted ADA last quarter, and down from $70.0 million, or 11.4 cents in the same period last year. Turning to a balance sheet. We had $287.6 million of cash, cash equivalents, and other financial assets as of March 31, 2026. This compares to $281.0 million at the same time last year and $286.2 million a year ago. As of March 31, 2026, We have $27.0 million in loan-turned-unsecured loans, with $6.0 million being the current portion. Our quarter and inventory, as of March 31, 2026, were $151.7 million. Slightly lower than $152.7 million last quarter, but higher than $122.9 million the same period last year. Having maintained lean inventory levels in prior years, we met a strategically efficient about a year ago to selectively loosen inventory control in response to an industry-wide shift to a tight supply. Accounts receivable at the end of March 2026 was $190.9 million, down from $200.9 million last quarter and $217.5 million a year ago. DSO was 86 days, 80 quarter ends, as compared to 88 days last quarter and 91 days a year ago. First quarter capital expenditure was $2.9 million versus $4.0 million last quarter and $5.2 million a year ago. First quarter capital was mainly for R&D-related equipment for our IT design business. Prior to today's call, we announced an annual cash dividend of $0.252 per ADF. totaling $44 million and payable on July 10, 2026, with a payout ratio of 100% of the previous year's profits. The high payout ratio reflects our healthy balance sheet and positive outlook for cash flow generation over the next few years. For a business area where we have in-house manufacturing capacity, such as W.O. and L.C.O., Existing capacity is in place to support the strong growth anticipated for the next few years. Himex will continue to focus on maintaining a healthy balance sheet and driving sustainable long-term growth while delivering shareholder value through high evidence and theory purchases. As of March 31, 2026, Himex had a $174.4 million eight-year outstanding, unchanged from last quarter. On the fully diluted basis, the total number of ADA outstanding for the first quarter was $174.4 million. Now, turning to our second quarter 2026 guidance. We expect you to revenue to increase the 10.0% to 13.0% sequentially. Growth margin expected to be around 32%. Mainly reflecting a more variable product mix with the increase of sales from higher margin non-product products and reduced sales from the lower margin products. Q2 profit attributable to shareholder is estimated to be in the range of 8.6 cents to 10.3 cents per fully diluted area. I will now turn the call over to Jordan to discuss our Q2 onlooker. Jordan, the floor is yours. Thank you, Karen. The rapid rise in air demand is placing unprecedented strain on memory chip supply, impacting many non-air applications. This in turn accelerates capacity testing where we are anchored, putting up more pressure on our cost structure. Rising gold prices have further compounded these cost pressures.

With the cost pressure expected to persist, we are actively working with customers on prices adjustments to assure rising costs, with some price increases already taking effect in due Market conditions remain dynamic, compounded by ongoing geopolitical tensions, and the market's visibility remains limited on post-consumer electronics and automotive for the second half of the year. Last day, as indicated in our last-minute score, the full-quarter marked the trial with the second-quarter recovery tracking as anticipated. primarily triggered by customer inventory restarting. We expect upward momentum through the remainder of 2026, supported by a meaningful number of new automotive projects scheduled to enter mass production in the second half. The view consistent with our outlook from last quarter's call. The positive outlook is also supported by the anticipated growth in our long-drive IT businesses, particularly in car and Wi-Fi AI. In our display IT business for automotive, we remain confident in our long-term growth prospects, as automotive is an area relatively insulated from memory price impact compared to consumer electronics products, such as smartphones and notebooks. The long-term positive outlook is undertaken by our leading technology portfolio, brought a diversified customer base, strong design wind pipeline across DDI, BNC, DDI, and substantial lead over competitors. Our productive portfolio spans a comprehensive range of solutions, which enable novel and stylish automobile displays Such technologies include automotive T-Con with advanced local dimming functionality, their media and for Azure large displays, advanced T-Con solutions for state-of-the-art head-up displays, S-wares, automotive OLED, and micro-release technologies. Customer adoption of these advanced display technologies continues to accelerate the growth vehicle models, drawing higher content value per vehicle for us, and creating new growth momentum for IMAX's automotive display IT business in the years ahead. Despite ongoing macro uncertainty, IMAX continues to expand beyond its traditional display IT business, focusing on key growth areas including smart glasses, ultra-low-power AI, and CPL. These emerging technologies present significant growth opportunities that help diversify our revenue base into areas with attractive cross-market profiles and profitability, while also strengthening our overall competitiveness. Studying with smart glasses achieves traditional we are quite optimistic about. AMEX is uniquely positioned as one of the few companies with both the actual low-power AI capabilities and micro-display, all critical for smart glasses. One side provides actual power, always-on AI-affected capabilities, targeting a broad range of smart glasses, while our micro-display solution enable display functionality critical for AR glasses with see-through displays. We are pleased to share that a leading brand has adopted our Wi-Fi for its smart glasses with smart production expected later this year and additional prominent brands are expected to follow. In micro-displays for AR glasses, Due to the debut of our proprietary front-linear cross-level display in Display Week last year, Hynemax returned to Display Week 2026 with a new generation upgrade that significantly enhances contrast, dynamic range, and optical efficiency. These advances, driven by Hynemax's proprietary technologies, deliver a substantial increase in contrast performance. are effectively eliminating the postcard effect harmony seen for micro-displaced inductive environments. Primitives from the air flow solution offer an optimal balance among weight, size, resolution, image quality, power consumption, and cost. Positioning it as a competitive choice for air glasses. mobile, wide-eyed, and ultra-final display, supported by expanding customer engagements, the core technology heavyweights, and small and small glasses specialties globally. We are increasingly optimistic about the new space, even compared to just a few quarters ago. We expect revenue from AI and AR glasses applications to grow substantially over the next few years. Now I would like to provide a brief update on our progress in CTO. Together with Policy, our strategy partner, we continue to make steady progress on both the Gen1 and Gen2 products explained. Our Gen1 solution, the 14146T and 3.2T transmission bandwidth is now ready with start. small quantity shipment expected to commence in the second half of this year. Meanwhile, our Gen 2 solution targeting 6.4T values with significant quality potential is nearing completion of customer product validation for AI data center applications. Building on this momentum, Our main goal for 2026 is to achieve mass production resilience with non-initiative shipments expected during the year, followed by an accelerated evolving breadth starting in 2027. At the same time, in close partnership with FONSI, we continue to advance a multiple future generation high-speed network of low-change-based technologies and CTO architectures. in collaboration with leading global customers and partners, focusing on higher fiber channels, more advanced optical designs, and enhanced optical precision to meet the explosive bandwidth demands of the HPC and AI data center applications. In early March, Forti completed They are 3.16 billion NT dollars price issue to support R&D, equipment purchases, and preparations for CTO mass production. Hymex, already a shareholder through two earlier tranches of our share offerings in 2023 and 2024, participated in the price issue, which not only demonstrates our community support for our partners, and further strengthens collaboration between the two companies, but also underscores that advancing CTO technology requires highly integrated efforts through close cooperation and joint development. With an average acquisition cost of $420.6 per share, our equity stake than the 85.36% of holdings now totals $4.96 billion over $156 million as of May 7 when the market closed at $815 billion per share. As a reminder, our holding investment has been booked as a so-called financial asset measured at the fair value through other comprehensive income. All the balance sheets are day one of our investment. As such, based on the company rules, 40 share price fluctuations are recognized in our books as so-called accumulated other comprehensive income. The balance sheet is under honest equity and does not affect of profit and loss. Likewise, upon disposal, any resulting gain or loss will be recognized only on the finishes through change of return earnings and, again, will have no impact on the profit and loss. This accounting treatment we chose underscores our long-term commitment to the foreseeable future. We expect CTO to become a major revenue and profit contributor in the year ahead. With that, I will now begin with an update of the large-panel trial IT business. In June 2, large-scale trial IT sales are expected to yield to decrease by high tunes for the over quarter, attributable to customers pulling forward In contrast, both monitor and notebook IT products are polished for sequential increases into higher legacy product shipments to key customers. Looking ahead to the notebook market, our focus is on premium models featuring OLED displays and LCD displays with touch functionality. We offer a full spectrum of IC solutions for most LCD and OLED notebooks, including DDIC, TCAM, Touch Controller, and TVDI, enabling us to provide customers with a comprehensive one-stop solution while increasing our content per device. We continue to see strong design momentum, particularly in OLED for notebooks. where rising memory prices are depressing lower-end demand and accelerating the shift to premium segments. The gradual ramp-up of new Gen 8.5 OLED apps in this year and in 2017 in China adds another tailwind, further driving higher OLED adoption in nonprofits. small and medium-sized display driver IT business. In Q2, small and medium-sized display driver IT business is expected to increase high teams per last quarter. Q4, automotive driver IT sales, including TDIC and traditional TDIC, are set to increase by double digits quarter over quarter. Both TDIC and TDIC driven mainly by the broad-based replenishment from panel customers with the inventory, as well as the red-butt of NCDI DDIC projects for ADD panel customers. Despite global shortage in automotive sales, our long-term competitive position prevents shortage, supported by hundreds of design wins already secured across TDIC, T-Con, and an expanding OLED portfolio. In addition, Timex is equally its world established supply chain in Taiwan, while expanding across China, Singapore, Japan, Korea, and Malaysia. This ensures potential accessibility and cost competitiveness. We are also attracting customers due to political considerations. We continue to lead the global automotive display market with a 14% share in DDIC, more than half in TDDI, and an even higher market share in automotive T-Con. We also continue to lead in automotive display IT innovation, solutions across the wide range of panel types while addressing diverse design requirements and cost considerations. Written evidence of touch efforts is our LTE technology for Azure Lush touch displays where multiple projects have been in mass production in several car brands across different continents. After years of engagement with customers globally, we expect many more revenue contributions from DLTDI starting this year. Our integrated single chip solution, combined CDDI loading in T-Cart, represents another such innovation. Parking in smaller and lower resolution automotive car displays in deliverers a companion option for cost and space-constrained applications without compromising performance. Design activities continue to expand globally with multiple projects underway to promote leading panel customers, T1s and OEMs. Looking ahead, there are several introduction opportunities for analytics. Our ASIC-owned DDIC and TECON solutions have already been in mass production for several years with continued customer adoption. We now also offer new standard DDIC and TECON products to support scalable deployment. Interior collaborations are underway with leading panel makers on new custom ASICs. Position is asked where to address diverse customer requirements across the wide range of automotive display applications. Together, these efforts position IMAX to capture increasing semiconductor content as premium automotive displays evolve from LCD to OLED. In addition, Pimax's OLED Touch ICs are a key pillar of our automotive OLED portfolio, delivering industry-leading signal-to-noise performance and high-precision 100-meter touch capability, enabling reliable operation even when wearing single-eyes or with wet fingers. Our OLED Touch ICs started mass production in 2024. Since then, they have been increasingly adopted by the panel makers and their customers across Korea, China, and the U.S. and Europe. Multiple new projects are poised to enter mass production in the coming quarters. Moving to smartphone IT sales, we expect you to smartphone revenue covering both LCD and OLED products to decrease for the older quarter, following the initial wrap-up of an old-age IC for a leading smartphone brand's mainstream model in the prior quarter. For the family ICs, single sales are expected to increase sequentially, driven by customers early pulling demand against the backdrop of rising memory price sentiment in the market. with ongoing shipments for a customer's premium audit tactic also contributing to sequential growth. I would like to now turn to our non-driver IT business update, where we expect the revenue to increase by double digits sequentially. First, for an update of our TCAM business. We anticipate Q2 T-Con sales to increase by double digits for the auto porter. Our automotive T-Con business is expected to deliver decent double-digit growth in Q2, driven by shipments from higher design winds across the port. Despite automotive market deadlines, Hi-Lite continues to enjoy strong growth momentum. in automotive T-Cart, particularly in solutions featuring novelty new function letters. Backed by hundreds of secure design wins across the broad and diversified customer base, we are aware of the issue for suspense growth. In Q2, we expect T-Cart to account for over 12% of the lost sales. with small and hard, contributed by automobile T-Cart. Meanwhile, T-Cart displays are hoping to become a new grow part of the new generation smart car fix. From its demand, also this KC T-Cart has been launched, an area where IMAX holds a strong leadership position. Our modern functional T-Cart not only delivers excellent contrast, eliminating the so-called postcard effect often seen in HUDs. We also support full-area selectable level of DWAP to correct image distortion caused by windshield curvature and or projection angle. In addition, our integrated on-screen display function ensures that critical safety information remains visible even when the system is malfunctioning and or power down. Together, these features make our T-Con a compelling solution for customers' SUV applications. As evidenced by its fast, expensive design activities, we see it in panel makers and TOM players. This growing SUV pipeline conditions as were for broader deployment and meaningful revenue contribution, starting in 2017. Switching gears to the YSI product line, it has been aged, has low power, AI-sensitive low solution, targeted and more device markets, Wi-Fi stands out due to its industry-leading ultra-low power design, operating at nearly a few million watts. Combined with an extremely compact size of device AI inference and 24-7 always-on image and voice sensing, its combination enables advanced AI capabilities in 8 and 4 devices. that was constrained by power and certifications and has already been widely adopted across a wide range of applications, including notebooks, serverless systems, access control devices, power bank authentication, smart home solutions, and smart glasses, with further applications currently underway. on the Wi-Fi module's front. Design activities continue to expand, driven by their target-play architecture, combined with ultra-low power consumption and optimized AI capabilities. These features help developers accelerate innovation and scale their products from prototypes to commercial deployments. In the world, its broad applicability has led to adoption across a wide range of domains, including smart system control, space management, computer monitoring, automotive, and practical applications. In particular, our PowerLens module is rapidly securing design wins, offering a touchless high-security solution with high accuracy. and advanced gladness detection. Combined with 3DTR compliant architecture, one of the world's strictest data privacy laws, our RAN solution ensures robust data privacy and protection of user biometric information through privacy-centric on-device processing. We are seeing growing of hardware and module adoption across applications such as smart host control, or host management, and smart door locks, where multiple projects are progressing towards mass production in the coming quarters. As mentioned earlier, OS9 is gaining broad market recognition in smart glasses as a compact, ultra-low-power always on perpetual front end. Wi-Fi as opposed to those are more facing environmental sensing, mainly object classification and scheme understanding. And even more facing capabilities, including eyeball tracking and iris authentication, delivering environment-aware vision AI a responsive low-density human-machine interaction for smart glasses. This combination of capabilities makes OSI ideally suited for wearable devices requiring real-time responsiveness with minimal battery impact and the key factor of driving design momentum among smart glasses players. Moving on to our latest advancement, in the Air Force Final Displacement Knowledge. In this training, we took a look at the effects of this movement in Los Angeles. We showcased our actual luminous, high-contrast miniature UO-H from the Air Force Final Displacement. We were also invited to give deeper and in-depth presentations at the symposium, highlighting high-methods of recognizing expertise and leadership in Airco's micro-display technology. Our Airco's solution is a full-color micro-display that integrates illumination optics and Airco's panel into an exceptionally compact four-factor of just 0.09 cc and 0.2 grams. It varies up to 350,000 nits of brightness and one lumen output access to a huming one from a power consumption. It can also be configured for high correctness, low power, green on the mount, and a frictionless fit. A switch back upon command from the central process allows for improved power efficiency across different WDI conditions, while supporting customers' cost targets. In addition, its ultra-high luminance ensures excellent visibility in bright environments where our proprietary technology significantly enhances contrast, reducing the postcard effect frequently observed in low light conditions. China is currently working closely with one of our website partners across China, Europe, Israel, Japan, Taiwan, and the US to bundle these technologies into display systems for AR glasses, Australian system integration, and try future design opportunities. We will provide further updates in due course. That concludes my report for this quarter. Thank you for your interest in Timex. We appreciate you joining today's call, and we are now ready to take questions.

Yes, thank you, Mr. Wu. And ladies and gentlemen, we are now in question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, you may press Start To to cancel the question. And in addition to submitting questions via phone, you may also submit questions through the webcast where the checkbox is available on the right-hand side of the screen. Now please dial Start 1 on your telephone keypad if you would like to ask a question. Thank you. And you may also submit questions through the webcast page. Thank you. Now we'll have our first question, Donnie Tan Nomura. Go ahead, please.

Thank you, Jordan and Karen, for taking my question. I have two questions. The first question is regarding to automotive business. So I wonder if, Jordan, you can give us a four-year outlook regarding to automotive-related business growth. And also, what could be the possible quarterly revenue pattern into the second half this year? Because it looks like customers still maintain pretty low inventory. So I'm not sure whether it will be still like restocking, destocking, on and off for the coming quarters. And the second question is regarding to the CPO. So you have mentioned about the Gen 1 and Gen 2 products. Wondering if you can share with us regarding to the competition landscape for the Gen 1 product and Gen 2 product. Are you seeing different competitors? And also another thing is I'm curious is like the overall optical communication supply chain is facing supply tightness at the upstream, like Indian phosphide substrate for lasers, etc. Are you seeing other components are facing the short supply as well? For example, whether the micro-dense will be under shortage? Thank you.

Thank you, Donnie. I would address your second question first. on CP, on competition, or potential supply shortage of other components, etc. They are not really our major concern, to be honest, because for now, once the bus production gets started and is successful, what we're seeing is with the multiple customers we have, I'm talking about major customers that we really, really focus on. They are actually other customers. I mean, they are all very big names, but they are still, so to speak, priorities internally. So with their demand, actually, because their potential demand is much, much bigger than what we can supply for now. To be honest, we are not worried about competition. I'm not saying whether they are good or whether they exist. What I'm saying is we just need to focus on our completion, our validation, and that's mostly in the mass production. And once that happens, the customer has put in a right to us. That's their potential demand in the early stage and done actually much our ways. So we can supply. So I think competition, for now, is not really an issue. I can say the same to answer the question of the potential shortage of other components. I think I said in the prepared remarks earlier that you know, $2,237 is likely to see meaningful have a bottom line contribution for us. So, what I'd like to add is that even before the official mass production, early shipments for engineering runs were already a positive impact on our financials. And, as I said earlier, you know, the customer demands are much our way, so you know, once entrepreneurship gets started, the growth will likely be explosive because, you know, because of the demand that I believe there. And once market action begins, we believe CPO will deliver the strongest growth among all product lines. A growth that is likely to suspend for the years to come. So that is my automotive first for the whole full year outlook. I mean, very much we don't actually provide full year guidance, so I'm not going to give numerical projections. But we can say quite confidently, we are well positioned to see sales growth for the year. We've seen growth, of course, margin compared to last year, and that is primarily driven by automotive outlook. So the overall automotive industry outlook, as we all know, remains muted, which I think most market surveys project in for a sluggish economy or shipment year over year. However, I think we believe we will be able to outperform the market that we did last year. And And I did say in the previous remarks that we expect sales automotive to grow quarter by quarter this year. So that is a response to your question. Yes, the customer inventory level remains lean, but even that, they seem to historically have the pattern of automobile and then underfield and have this certain cycle. But I cannot predict whether this cycle will repeat this year in the second half. But our confidence level for the quarter growth comes mainly from a few major projects with our customers, which are spending for mass production in the second half. And there are 10 years of design efforts. So... So we are now also projecting some growth for this year's automotive sales. And again, I think our automotive business is well positioned to beat the market like last year in terms of growth.

Okay, understood. Thank you, Sheldon. And apart from CPO... Yes. Apart from CPO, it's like... Are you able to quantify the sales contribution for this year and next year, potentially? And I'm also curious, are you required to expand the capacity for the demand economy in 2027, or you will utilize the existing FAB first?

Thank you. We will utilize all existing FABs, which... actually is fully utilized for this application can already generate hundreds of millions of annual sales for us with a very decent profit. Our partner FONSI actually, I cannot comment on their behalf, but they did say in their prospectus issued a few months back in their recent rights issue that I mean, they do have a plan to continue to expand their capacity. You know, as we all know, part of their purpose for the rights issue recently was to build a capacity for this purpose for mass production. So, in the perspective, that is something in the line of, you know, given the right conditions, they would certainly continue to expand their capacity. and that is what they say is the prospectus and you know I mean certainly beyond that you know I cannot say anything more on their behalf but what I can say is our capacity actually outweighs their capacity so to be honest they have to expand first but given where they are at the moment I think we again feel confident that you know somehow a long line of mass production progressing, they will solve that issue as well. But yes, our existing capacity is more than sufficient. It's sufficient to support up to hundreds of millions of annual sales for us. And with that, I'm afraid I am not able to quantify sales contribution for this year or next or now. But this year is still small. There are primarily some, you know, sampling and, you know, engineering shipments. They are not, I mean, quarter over quarter, but they come from very small base. group perspective, they are still not meaningful. But next year, as I said, regardless of when mass production will commence, the likely, even before mass production, the engineering rounds will contribute meaningfully to our top-line and especially bottom-line growth.

Understood. Thank you, Jordan, and congrats on the good guidance.

Thank you, Tommy.

Thank you. And there are no questions at the moment. We thank you for all your questions. I'll pass the call back to Mr. Jordan Wu. Thank you.

As a final note, Karen Teo, our head of IRP, I will maintain Mr. Buckley's activities and continue to attend Mr. Carpenter's meetings. and the word on the details as they come about. Thank you, and have a nice day.

Thank you, Mr. Wu. And ladies and gentlemen, this concludes first quarter 2026 earnings conference. You may now disconnect. Thank you again. Goodbye.