Magnachip Semiconductor Corporation

Good day, and thank you for standing by. Welcome to the Magna CHIP Semiconductor Corporation fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Paleo, Investor Relations. Please go ahead.

Great. Thank you. Hello, everyone. Thank you for joining us to discuss MagaChip's financial results for the fourth quarter and full year ended December 31st, 2024. The fourth quarter earnings release that was issued today before the market opened can be found on the company's Investor Relations website. The webcast replay of today's call will be archived on our website shortly afterwards. Joining me today are Y.J. Kim, MagnaCHIP's Chief Executive Officer, and Shin Young Park, our Chief Financial Officer. Y.J. will discuss the company's recent operating performance and business overview, and Shin Young will review financial results for the quarter and provide guidance for the first quarter and full year of 2025. There will be a Q&A session following the prepared remarks. During the course of this conference call, we may make forward-looking statements about MagnaCHIP's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and are therefore subject to risk and uncertainty as described in the Safe Harbor Statement found in our SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements During the call, we will also discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of MagnaCHIP's operating performance that may be useful to investors. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth quarter earnings release in the investor relations section of our website. So with that, I'm now going to call over to YJ Kim. YJ?

Hello, everyone, and thank you for joining us today, and welcome to Magnet Chip's Q4 earnings call. In addition to sharing Q4 earnings results, Magnet Chip management and the board of directors today announced a new strategy to become a pure play power company. Focusing its investments on the power discrete and power IC businesses, to drive profitability and maximize shareholder value. We will host a separate sell-side analyst briefing later this morning to provide additional color on our strategy. As part of that strategy, we also announced today that MagnetShip is exploring all possible strategic options for the display business. This was an extremely difficult decision for me the management team, and the board of directors when considering both our valued customers and employees. While we have a rich and competitive portfolio of OLED display technology, after a careful review of our business outlook, we've determined that the greatest potential for profitable growth lies with our power solutions business, including PowerDiscrete and PowerIC. Achieving profitability is our highest priority and in the best interest of our shareholders and other stakeholders. As a sign of my own personal commitment to the long-term success of Magnitude's new strategy, I'm voluntarily cutting my current base salary by 20%. And Shin Young Park, our CFO, has also agreed to a 10% voluntary decrease of her current base salary, until such time as Magnetichip achieves positive GAAP operating income for two consecutive quarters. Unlike the display business, which primarily is served by a few panel customers, Magnetichip's power business caters to a broad array of industries and customers that we believe have more stable long-term growth prospects. We therefore have launched a strategic process for the display business. While our goal is to complete this process by end of Q2 2025, the display business will be classified as a discontinued operations beginning with our Q1 2025 financials. Xun Yang will explain this in greater detail later in the call. As mentioned previously, Our utmost short-term goal is a return to profitability. By focusing on the power business, our goal is that magnitude business from continuing operations will achieve quarterly adjusted EBITDA break-even by the end of Q4 2025, followed by positive adjusted operating income in 2026, and positive adjusted free cash flow in 2027. Each of these targets will act as milestones towards achieving a goal in three years to reach a $300 million annual revenue runway with a 30% gross margin target. We're calling this three-year objective our 3-3-3 strategy. Managed power business is now entering a new phase that we call phase three. During phase one was our initial market entry and foundation period between 2007 and 2012, and primary focus on mobile phones. Phase two was our market expansion into consumer home appliances, computing, smartphone, e-bike, solar, and lighting. Most of these efforts were aimed at a small portion of the performance segment serving up to 10 kilowatts. Many of our greatest success were in sub-1 kilowatt watt applications such as TV, smartphones, and eBuy. For phase three, we are expanding our addressable markets into larger and higher performance markets. These include additional industrial segments such as energy storage, automation and robotics, as well as automotive and AI data center opportunities up to 100,000 kilowatt and above. Our phase three strategy is under way now with today's launch of series of next generation power products, including Gen 5 and Gen 6 LGBT, Gen 6 super junction MOSFETs, and Gen 8 medium and low voltage MOSFETs. We expect to release over 40 new generation phase 3 power products in 2025, with 27 new generation products Launching in Q4 2025 with fully qualified commercial samples available. Launching in Q1. Q1 2025, sorry. Launching right now in Q1 2025. And with our current product pipeline, we expect to increase the number of phase three new generation power products to approximately 55 that we expect to introduce in 2026 versus 2025. We expect new generation power products to drive higher revenue per wafer at our Gumi fan. For example, our Gen 6 super junction power devices not only deliver superior performance compared to the previous generation, but will also offer 30% more die for wafer. Therefore, these new products, when fully ramped, will drive meaningfully higher gross margins compared to the previous generation. These innovative product families will open new high-value market opportunities for magnitude, such as automotive, industrial, and AI applications. We are targeting automotive, industrial, and AI to represent more than 60% of magnitude's future product mix, up from 30% in 2024. Notably... Up from 37%. Up from 37% in 2024. Notably, we already have ongoing engagement to penetrate automotive markets, which expect to reach over 10% of our revenue by 2027, from less than 5% of our revenue in 2024. To support this transition to high-performance new generation products, We will invest 65 to 70 million over the next three years to upgrade production equipment at our manufacturing facility in Gumi. When these new power products enter production, we anticipate top-line growth and meaningful bottom-line improvement. By the end of 2026, we expect almost half of our manufacturing capacity in the Gumi Fab will come from these new generation of products. We will discuss all of this in greater detail at today's analyst briefing. Now, let's step back and review Q4 and 2024 results. Q4 revenue was $63 million, up 24% year-over-year. and down 5.1% sequentially. Consolidated Q4 revenue was above the midpoint of our guidance range of 59.0 to 64.0 million. Consolidated Q4 gross profit margin of 25.2% was up 2.5 percentage points year-over-year and up 1.9 percentage points sequentially. The overall Gross margin results exceeded our guidance range of 21.5% to 23.5%. Xun Yang will provide more details in our section. Revenue in Q4 for our standard products business was $60.7 million, up 47.5% year-over-year and down 5.1% sequentially. Standard products business gross margin was 26.6%, up 2.2 percentage points sequentially. On a full year basis, consolidated revenue increased 0.7% in calendar 2024 versus 2023. Excluding transitional foundry services, our standard product business increased 13% year over year, with MSS up 22.5% and PAS up 10.2%. Both of these business line growth rates were in line with our guidance for double-digit growth provided at the beginning of 2024. Now, I provide more details by business slide. Record EPS revenue was 43.5 million, up 33.2% year-over-year, and down 8.7% quarter-over-quarter. The year-over-year increase was primarily driven by the expansion of high-end mobility and battery management systems in China, deeper penetration within Korean smartphones, as well as increased market share. The sequential decline was mostly due to seasonality in each of our market segments, except in communication, where we enjoyed meaningful quarter-on-quarter growth. Within standard products, PAS represented 71.5% of revenue in Q4. The industrial market remains stable to slide it down in 2024 and represented 39% of PAS revenue. A shift towards high-speed e-motors and battery management systems with higher bump content offset decline in e-bike demand. Similarly, growth in solar pumps offset weaker solar inverter sales. LED lighting remains steady, while power tools, including welders, expand strong growth. From a product perspective, we benefit from design wins for our Gen 5 and Gen 6 IGBT and super junction products in solar and motor drive applications. Despite modest year-over-year growth, our revenue in the industrial market outperformed competitors driven by our diversified end market strategy. In consumer, we achieved High single-digit growth driven by strengths in home appliances for broadening available products, including refrigerators, cooktops, and a new design win in Q4 for air purifiers. TVs were relatively flat year-over-year, with notable strengths in Korea upset by declines elsewhere. Overall, the consumer market accounted for 35% of PAS revenue in 2024. The communication market represented 15% of PS revenue in 2024 and increased more than 50% year-over-year, fueled by design wins for battery fat in mainstream and flagship portable and AI-enabled smartphones in Korea, along with expanding adoption in wearables, tablets, and AR glasses. Additionally, we gained traction with multiple brands in China and Japan, further strengthening our presence in smartphone, tablet, and wearable markets. While a relatively smaller contributor at 8% of PAS revenue, the computing market saw more than 25% growth in calendar 2024 driven by demand from China for PC and laptop power adapters. Finally, the automotive market was less than 5% of PAS revenue in 2024 and from the broad automotive market last year, declining less than 5%. We strengthened our position in Korea with new design wins, driving greater market penetration, while ramping up production for multiple automotive customers in Japan and China. Our applications span a wide range of vehicle subsystems, with a recent design win for heater application with a China OEM. This adds to previous wins in power outlets and either stop-go functionality announced last quarter. In summary, the sequential decline in Q4 for PAS was mostly in line with typical seasonal patterns, while the sequential strengths in communications were driven by preparation for new product launches for 2024 The double-digit growth was fairly broad-based driven by communications, consumer, and computing markets, while very slight declines in industrial and automotive relatively outperformed their respective markets. As we have mentioned before, we continue to execute on delivering a strong new product pipeline for power. We believe many of these new products will have similar performance to T1 suppliers, which will give us an opportunity to penetrate new markets and help fill idle capacity created by the failure of the transitional boundary service business. We will share more details on our power business in the analyst briefing later this morning. Turning to MSS, Q4 revenue was $17.3 million up 102 percent year-over-year and up 5.1 percent sequentially, including PowerIC. MSS represented 28.5 percent of standard products revenue and slightly exceeded the high end of our guidance range of $15 to $17 million. PowerIC revenue was relatively flat sequentially at 5.4 million and increased 62.4 percent year-over-year. On a full year basis, total MSS revenue increased 22.5% year-over-year. Now, I will turn the call over to Xinyu to give you more details of our financial performance in the fourth quarter and provide Q1 and full year 2025 guidance. Xinyu.

Thanks, YJ, and welcome everyone on the call. Let's start with the key financial metrics for Q4. Quarter revenue in Q4 was $63 million, which came above the midpoint of our guidance range of $69 to $64 million. This was up 24% year over year and down 5.1% sequentially. Revenue from MSS business was $17.3 million, slightly exceeding the high end of our guidance range of $15 to $17 million. This was up 102% year over year and up 5.1% sequentially. primarily due to relative strength in automotive. PA incidence revenue was $43.5 million and was in line with the midpoint of our guidance range of $42 to $45 million. This was up 33.2% year-over-year and down 8.7% sequentially, primarily reflecting seasonality. Revenue from transitional boundary services was down 5.9% sequentially at $2.3 million and down from $9.6 million in Q4 2023, as this business has been wound down, as we've explained previously. Consolidated risk margin in Q4 was 25.2%, exceeding the high end of our guidance range of 21.5% to 23.5%, up from 22.7% year-over-year and up from 23.3% sequentially. MSS gross profit margin in Q4 was 41.8%, above the high end of the guidance range of 37.5% to 40.5%, up from 41.3% in Q4 2023, and up from 38.7% in Q3 2024. The year-over-year improvement was primarily attributable to higher automotive and power IC revenue, and despite lower than expected mobile display revenue. KES gross profit margin in Q4 was 20.5%, above the guidance range of 17% to 19%, up from 18.1% in Q4 2023, and up from 19.4% in Q3 2024. The upside versus guidance, year-over-year and sequential improvement was mostly due to stronger than expected U.S. dollar against the Korean won. Turning now to operating expenses. Q4 SG&A was $12 million as compared to $12.1 million in Q3 2024 and $12.1 million in Q4 2023. Q4 R&D was $13 million as compared to $14.4 million in Q3 2024 and $15.4 million in Q4 last year. As a reminder, R&D expense fluctuates quarter over quarter due to the timing and number of products in development. Stock compensation charges including operating expenses were $2 million in Q4 compared to $1.8 million in Q3 and $1.7 million in Q4 last year. These charges fluctuate every quarter depending on the timing and the size of stock over a grant. Q4 operating loss was $15.7 million. This compares to an operating loss of $11 million in Q3 and an operating loss of $15.9 million in Q4 2023. In Q4 2024, $4.6 million loss was recorded as a one-time non-cash increment charge associated with the display business in accordance with U.S. GAAP. In the same period, $2 million was also recorded as other charges, which represents a one-time cumulative financial impact in connection with certain Korea-mandated employee benefits. On a non-GAAP basis, the Q4 adjusted operating loss was $7 million compared to an adjusted operating loss of $9 million in Q3 and an adjusted operating loss of $14.1 million in Q4 last year. Net loss in Q4 was $16.3 million as compared with a net loss of $9.6 million in Q3 and a net loss of $6 million in Q4 last year. A substantial portion of our net foreign currency gain or loss is associated with intercompany long-term loans, which are denominated in U.S. dollars and affected by changes in the exchange rate between the Korean won and the U.S. dollar. Therefore, the net loss in Q4 2024 on a gap basis had different compared with a year ago or a quarter ago as the Korean won depreciated relative to U.S. dollar in Q4 2024 whereas the Korean won appreciated during Q3 2024 and Q4 2023. However, this financial yardstick is not necessarily a relevant measure of our operating performance, as we cannot control the size of defects. And the aforementioned net foreign currency gain or loss is a non-cash item. Q4 just EBITDA was negative $2.6 million. This compares to a negative $4.9 million in Q3 and negative $10 million in Q4 last year. Our GAAP diluted loss pressure in Q4 was 44 cents as compared with diluted loss pressure of 26 cents in Q3 and diluted loss pressure of 16 cents in Q4 last year. Our non-GAAP diluted earnings per share in Q4 was 7 cents. This compares with a non-GAAP diluted loss pressure of 34 cents in Q3 and non-GAAP diluted loss pressure of 21 cents in Q4 last year. Our rated average non-GAAP diluted shares outstanding for the quarter were 37.7 million shares and 37.5 million shares in Q3 and 38.8 million shares in Q4 2023. Under our $15 million stock buyback program authorized in July 2023, we repurchased in Q4 2024 approximately 0.7 million shares for an aggregate purchase price of $2.9 million leaving about $24.6 million remaining authorization as of December 31, 2024. Moving to the balance sheet. We ended Q4 with cash of $138.6 million. At the end of Q3, we had a cash of $121.1 million and $30 million non-redeemable short-term financial investment, which was transitioned back to cash on November 5, 2024. The primary cash outflow during the quarter was approximately $7.4 million of capex and $2.9 million of stock buybacks. Net account receivable at the end of the quarter totaled $28.4 million and $28.7 million at the end of June 3, 2024. Our day sales outstanding for June 4 was 41 days and compares to 40 days in June 5. Our average days in inventory for Q4 was 60 days and compares to 65 days in Q3. Inventories net at the end of the quarter toward $30.5 million and $36.1 million at the end of Q3 2024. Lastly, Q4 CapEx was $7.4 million. As noted previously, our CapEx forecast for the full year 2024 was to spend at the higher end of $10 to $12 million range. We spent $11.6 million primarily for our PAS business and KumiFab. Now, let me provide financial-related comments regarding our strategy to become a pure-play power company. One, effective January 1, 2025, we transferred the power IC portion of MSS to Magnitude Semiconductor Limited, our existing Korean operating company, where the PAS business line already resides. Together, PAS, which is our power discrete business, and PowerIC comprise our power solutions business line, which represents Magnachips' going-forward continuing operations. Two, with our strategy to become a pure-play power company, we expect the display business to be classified as discontinued operations beginning in our Q1 2025 financials and reported separately from our continuing operations that will comprise PAS and PowerIC business lines. As a reminder, we had wound down transitional boundary services by the end of 2024 and do not expect to report such revenue separately beginning with Q1 2025 financial returns. Three, YJ mentioned earlier that we expect over time to achieve higher revenue per refer and improve product mix at our GumiFab. To achieve those goals, we currently expect to invest approximately $65 to $70 million over three years to upgrade at the GumiFab. In 2025, we expect total capex, including maintenance, to be in the range of $26 to $28 million, which includes approximately $14 to $15 million to upgrade the Gumi Fab. Total capex in 2024 is $11.6 million. The depreciation cost from the new investment in the Gumi facility won't begin to be fully reflected in our financial statements until 2027. At that time, we anticipate that a more robust portfolio of new generation power products will at least partially offset the impact. It is important to note that from a cash management standpoint, the CapEx investment GUMI will be partially funded through a previously announced $26.5 million of equipment financial credit agreement. This is tied specifically to equipment purchases or upgrades in our GUMI FAC. This new investment could be expected to drive development of the new generation power product portfolio and upgrade new tools to optimize product mix and improve gross profit margin. Four, as a result of the strategy changes we are making, we are now targeting quarterly adjusted EBITDA from continuing operations to be very even by the end of Q4 2025. To achieve this, we'll explore and execute all available cost reduction initiatives to align our spending level with a strategy to become a true-play power company, while enabling us to continue to make progress towards our 3-3-3 strategy. Now moving to our first quarter and full-year 2025 guidance. While actual results may vary, for Q1 2025, Magnature currently expects consolidated revenue from continuing operations, which includes power discrete and power IC businesses, and excludes our formal display business, to be in the range of $40 to $47 million, down 8.9% sequentially due primarily to seasonality, but up 11.5% year-over-year at the midpoint. This compares with equivalent revenue of $48.9 million in Q4 2024 and $39.9 million in Q1 2024. Consolidated response margin from continuing operations to be in the range of 18.5% to 20.5%. due to the seasonal sequester decline in revenue and the wind-down of transitional voluntary services impacting FAP utilization. This compares with the equivalent gross profit margin of 23.2% in June 4, 2024 and 17.6% in June 1, 2024. For the whole year 2025, which will set the stage to become a pure-play power company, we currently expect consolidated revenue from continuing operations to grow, lead to high symbol digitally year-over-year, as compared with equivalent revenue of $185.8 million in 2024. Consolidated gross profit margin for continuing operations between 19.5% to 21.5%, reflecting the fact that we have completed the wind-down of transitional monetary services, and new generation power products will just begin production in the second half of 2025. This equivalent gross profit margin The equivalent gross profit margin was 21.5% in 2024. Thank you, and now I turn the call back over to Y.J. for his final remarks. Y.J.?

The pure play power strategy we announced today focuses on shareholder value and prioritizes a return to profitability, supported by clearly articulated and transparent short and medium-term financial targets. We see a great market opportunity in power semiconductors, which is greater than 10 times larger than the OLED DDIC market. We have a proven track record in power with design, manufacturing, and shipping more than 23 billion units during the past 18 years. The primary goal of our 333 strategy is to reach a 300 million annual revenue run rate with 30% gross margin in the next three years. We are excited about the large rollout of our new generation products happening now through 2026. These products address higher-valued markets with better performance and low cost. We are upgrading our Gumi fab to manufacture more of these new generation products. Our plan is to convert the fab to serve 70% of the capacity with new products. These will help optimize our GUMI FAB for better profitability. As I've said in the past, we are focused on maximizing shareholder value, and we believe prioritizing a return to profitability by focusing on the power business offers our shareholders the greatest potential. In addition to our medium-term or three-year goals, we have set very specific short-term milestones after the display business even discontinued. These milestones, including achieving from continuing operations, one, quarterly adjusted EBITDA breakeven by the end of Q4 2025, followed by two, positive adjusted operating income in 2026, and three, positive adjusted free cash flow in 2027. I will turn the call back to Steven. Steven?

Thanks. That concludes our prepared remarks. Now let's open the call for any questions that you may have. Operator, please go ahead.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Our first question comes from the line of Suji De Silva with Roth Capital. Your line is now open.

Good morning, Y.J. and Shenyang. Best of luck on the strategic transition here. Maybe you could talk first, Y.J., about the power segment, the end markets you think will drive the mid-high single-digit year-over-year growth in 2025 as a starting point? Which end markets you think would be the best contributors there?

Yes, in 2025, I think it's evenly distributed to the strength. hold these in consumer communication computing, but with the new generation that we just launched, 27 new products, we think that will help us grow more into the AI computing area, as well as industrial and automotive.

Okay, that's helpful. And then the profitability targets, the gross margin, Xinyang, maybe what are the drivers of gross margin improvement Near term, just to understand from the power business, what are the key elements there of trending gross margin up towards the 30% long-term target?

For the near term, at least for 2025, we gave the annual outlook. That's going to be 100 basis points lower than 2024, and that's mainly because of the fact that we've wound down the transition of all your services. So that's impacting our utilizations. And also our new power generation product, we're going to just begin production in the second half of 2025. So that's the near-tomorrow look. But to achieve the 333 strategy, we're going to have the new power product coming out starting in the second half and more in 2026. And YJ said about half of our 2026 revenue we're going to come in from the new generation power product. So we're going to increase the portion of the new by the end of the next So we are going to increase a portion of that, and with that, the more new generation product contribution, and also utilizing our GumiFab, with that high-end market-targeted product, we can expand our gross margin in the long-term.

Okay, that's helpful, Shiyoung. Maybe one last question, YJ, on the cash balance on the balance sheet and the use of the proceeds. I know you're going to be using the cash and then potential proceeds from the restructuring. I know you're going to have CapEx needs the next few years, but are there any thoughts on the use of the cash, perhaps buybacks or other inorganic activity? Any color there would be helpful.

Yes, Susan, very good. So today we announced we're going to spend $65 million to $70 million upgrading our facility in Gumi, and that's where we're going to richly support quick transition to make the new products, and that's one of the key areas of our spending to improve the profitability and product base.

Suchi, that $65 to $70 million spending will be invested in over three years, not like everything in 2025. And also, as I mentioned, we actually have a $26.5 million 26.5 million of the credit line that we opened with a bank in Korea, which is actually the interest rate is less than 4% and 10-year maturity, so with a three-year interest only and the amortizing payment afterwards. So we can actually partially fund our intended investment in Kumisa, and that's what's going to manage our cash balance on the balance sheet.

Okay. All right. Thanks. Thank you.

As a reminder, to ask a question at this time, please press star one one on your touchstone telephone. Our next question comes from the line of Nicholas Doyle with Needham. Your line is now open.

Hey guys, thanks for letting me ask a question. I'm struggling a bit with the calendar 25 gross margin guide. Is the Gumi Fab headwind a bit stronger in 2Q or maybe even further into 2025 or is that you know, greater impacts from the underutilization, or is that the power IC business just operates lower margin versus display? I mean, I know you talked about these new products ramping and that impacts as well, but any more color would be helpful. Thanks.

We probably, like if you look at 2024, we still have 10.6 million of the voluntary services revenue, which we produce in our recruitment fast. So though that foundry service revenue, I mean the portion has negative margin, that was actually helping to share the fixed cost in our Rukumi FAB. Now we've wound down the business completely by the end of Q4 last year. That means about 20% of our Rukumi FAB, I mean the facility is actually idle. So that portion has to be converted, but as we explained previous, I mean during the call, we are going to do that not only to just increase the capacity we are going to upgrade the community facility to support the more to support the higher the new generation power product going forward so that i mean transition will take time and that's why we're going to invest in community for more three years so that under utilization from the phase out of transition volunteer services and also the new power product just begin the production in the second half of 2025, we're going to impact the 2025 gross margin for the whole company. So the first half, you're getting the bull's impact first half, obviously, because we're going to get the benefit from the new generation power product starting in the second half. So you're going to see a little improvement in the second half. But the first half, you're going to see bull's impact impacting the utilization rate adversely. So you're seeing that impact for the overall.

Okay, that makes sense. And what kind of OpEx level do you assume to get to that positive adjusted EBITDA by 2Q25? Thanks.

So for the OpEx, I mean, Nick, you know that we actually, the shared service and the overhead function supported both display and power together. So there's got to be some efficiency in there, too. But roughly speaking, I think probably 35% to 40% of our OPEX was tied to the display business.

And the other thing, Nick, you asked about PowerIC. PowerIC is not made in PumiceFab. It's a pure fabless. And PowerIC typically has around 40% gross margin, which is a much better gross margin product line.

Very helpful. Thank you.

Thank you. Our next question comes from the line of Martin Yang with Opco. Your line is now open.

Thank you for taking the question. My first question on power, especially when you look at your approach to high-value markets like industrial AI, can you maybe talk about does it require you to take a new go-to-market strategy? How do you go about attacking those higher-value customer base or segments?

Yeah, so, you know, as I explained, you know, initially when we came out, this power business 18 years ago, we addressed less than 100 watt application. And with the new generation, second generation, we went up to 10 kilowatt or mostly 1,000 watt where we became number one in our target accounts. Now with the new generation Super Junction and Gen 8 NB MOSFETs, the products are about 30 to 40 percent better performance than the previous generation, yet the cost is, you know, we can produce 30 percent more dye per wafer. So that drives higher dye per wafer or, you know, low cost and higher performance. With that, we will be able to penetrate into more high-value applications in the AI server to, you know, high-end industrial market like energy storage system to automotive inverter where you can get much better ASP and margin. So that's our strategy, and we just introduced 27 new products today. And full commercial quantified samples are available now. So our goal is to hit the production by the end of this year with those products.

Thanks, Rajeev. My next question is on your display business. You know, when you look at the different strategic alternatives, because this is different from a potential buyout of the company, does it open you to different sets of potential buyers or partners when you explore the display business alternative solutions?

So we are looking at every option possible. So as you said, the sale of the business or certain assets to joint venture, to partnership, to even wind down. So we're looking at all options, and we're going to do it, make sure that our customers are happy and they have smooth transition, as well as we abide with any regulation of Korean or U.S. regulations.

Got it. Last question from me is, can you maybe talk a little bit more about the timing of decision, any context you could give us, why now?

Well, as we said, it was a very extreme decision for me personally and also to the board and the management. But, you know, it is best that we hit the profitability. That's our number one goal. And that's the highest priority and the best interest of shareholders and stakeholders. The power business has a broader range of industry and customers and more stable. We already have more than 200 customers in Asia, whereas the display, as you know, it's really few panel makers are the customers. And depending on their situation, it's very hard to control the fate of your revenue ramp. So with that, we made a prudent decision to go with the Peel Play company, where we're going to restore the profitability path as soon as possible, as well as broad perspective to grow. And also, you saw, we announced $65 million to $70 million investment. So I think we cannot afford to invest that kind of into businesses. We're going to do that, and we'll... progress we see and where we're going to turn around more to quicker profitability is our business and more opportunities. Makes sense. Thank you. Thank you.

Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Stephen Paleo for closing remarks.

Great, thank you. This concludes our Q4 earnings conference call. Following today's earnings call, we are hosting an analyst briefing where Y.J. Shen-Yang and other members of management will share more details on today's announcement. On March 17th and 18th, we will be attending the 37th Annual Roth Conference in Dana Point, California for one-on-one investor meetings. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representative to register and schedule one-on-one meetings with the management team. That concludes our prepared remarks for our call today. Operator, you may now – pardon me. That concludes our remarks. That's it. We look forward to meeting with you for future events, and you can find details on those on Magnet's Investor Relations website. Thank you and take care.

This concludes today's conference call. Thank you for your participation. You may now disconnect.