Asustek Computer Inc Regs

Hello, welcome to the ASUS Q3 2023 Online Investor Conference. Today's conference will be held by ASUS Tech Computer Co-CEO, SY Xu, Samsung Hu, and CFO, Nick Wu. The conference will be divided into two parts. In the first part, the CFO will outline our Q3 financial results. Next, our two co-CEOs will go over our operational strategies and business outlooks. The second part will be a QA session. You are welcome to raise any questions you might have in the left-hand panel. Questions will be collected and answered. Let us start with the presentation from Mr. Wu. Thank you. So please refer to the fifth slide on the PowerPoint. On this slide, you see the ASUS Quarter 3 2023 Brand Income Statement. For quarter three, we achieved a net revenue of 126 billion, which is a quarter-over-quarter increment of 17%. We were able to achieve a significant growth margin percentage improvement from 12.5% in quarter two to 17.4% in quarter three. The main improvements came from our product mix, and we were able to cycle in new products. For the first half of this year, ASUS was able to complete its inventory adjustment back to normal levels. And so for quarter three, we expect to introduce more products into our product mix and to introduce more innovation into our product cycle. As a result, we were able to achieve a significant growth for our gross margin percentage. I would like to make special mention to our sales allowance, which went from negative 17.7% in quarter two to negative 15.4% for quarter three. Our inventory allowance also went from 2.6% for Q2 to 3.1% for Q3. These two factors have also contributed to our improvements in operating margin percentage. As we are able to make improvements, our operating profit came to 8.4 billion, six times improvement quarter over quarter or 1.7 times improvement year over year. Our pre-tax profit stands at 13 billion, while our net profit stands at 11 billion, while our EPS per share is 14.9 NT dollars. Let us next refer to the sixth slide, which has our non-operational items. Our primary non-op items came from exchange gains at $1.2 billion and $2.85 billion in dividend income. And so our net non-op item income came to $4.9 billion NT. For slide seven, this is our brand balance sheet. For slide seven, what you see here is that our stock has returned to normal compared to quarter two. we are able to return to much healthier percentages. And so for quarter three, our main operational targets are to introduce new products and to introduce a superior product mix to lead to improvements in operating margin percentage. Our inventory is valued at 12 billion, which is more or less the same as quarter two. other notable figures such as account receivable and account payable days have also more or less remained stable. Next, let's refer to slide 8. For slide 8, if we look at our income from a product mix perspective, our PC component Our PCE market accounted for 67%, components 32%, and phones 1% for Q3. The next slide is our income by region. Our region mix for Q3 stands at 31% from Europe, 22% from the Americas, and 48% from Asia. Let us move to the next slide. These are our business outlooks for Q4 2023. As we previously mentioned, for quarter three, ASUS was able to make a very significant operating margin percentage improvement. And that is to say, for a long-term perspective, we have returned to profit. And so after such significant improvements, we have certain expectations for quarter four. That is for regional markets such as Asia and the Americas, we anticipate that there will be adjustments in demand and less potent on-season. On the long term, we expect that the market will have fluctuations but still continue to grow. Especially going towards 2024, the potentials from AI PCs will have great potentials for us. And this is a driving factor that will last for several years. So currently, we are considering this to be in a state of transition for the market and the industry. which is why we believe that there will be significant fluctuations, though at the whole it remains positive. Which is why based on our anticipations for the market, we expect that for Q4 2023, the PC market will have a quarter-over-quarter shrink of 15%. Now that again, of course, corresponds to the fluctuations. While for the component market, we anticipate a quarter-over-quarter growth of 5%. On the whole, we do expect that the company will be able to maintain its profiting capabilities. We are confident in market visibility. We have previously reported in investment conferences that we hope to allow ASUS to come back to a 4% to 5% operating margin percentage. Now, based on the improvements we have currently made and the momentum that we have been able to achieve, we expect that we will be able to achieve those targets. We are confident in the capabilities of our team. So over the long term, we think ACES will be able to achieve its goals. That concludes my financial presentation. Now, I will hand the mic over to our two co-CEOs, SY Xu and Samsung Hu. They will go over our operational strategies and the business outlook. Dear investors and friends from the press, good afternoon. I am SY Xu. I will now take over the presentation. Now, this year, we have seen significant adjustments made to our company internally. We have attained a stable position in the market as we retain that leading position in spite of the fluctuations. ASUS has been able to hold on to its position thanks to its superior executive capabilities. Now for Q3, we have achieved a significant growth. So despite the anticipated fluctuations and lack of positive outlook for the global economy, We think that the long-term potentials of the market are positive despite the short-term setbacks. we think that we will be able to attend even potentially higher marginal percentages. Next year, we do expect that the PC market, particularly the AIPC market, will become a significant driving factor for the market. ASUS has always relied on its three main market on top of other multiple drivers to drive its growth, and that is something we're confident in. Next slide, please. As a total solutions provider, we are committed to providing total solutions that adapt to the constant changes in demand of the market. Asus has a very unique position in terms of the AI PC market. We have a presence in everything from infrastructure, service, edge computing, hardware and software integrations. We have a complete and total solution that is always ready to adapt to whatever challenges may arise in the future. Next slide, please. Asus is able to offer flexible end-to-end solutions from infrastructure like solar panels and energy storage devices to modular databases to even server designs And we always work closely with our strategic partners to even go into the supercomputing segment. So we are a very thorough player. We are able to help our clients promote products like smart manufacturing, smart medicine, attend ESG goals, smart cities, and various other targets. We have solutions in all these areas. Next slide, please. As for local solutions, ASUS also hopes to become a leading brand in this area as well. We will make use of our industry-leading R&D capabilities to work with industry partners to create the best AI experiences. AI PCs will become the most optimal solution for both entertainment and productivity purposes. AI PCs will bring about a revolutionary productivity and entertainment revolution But at the same time, we will ensure that the privacy and the security of the applications are not compromised. We believe that AI PCs will serve as an important turning point for the industry and that it will become a crucial crux for the long-term upgrade of the industry. The fact is, for the last 10 years, despite improvements in hardware and software, most of those improvements have been directed toward performance and does not make significant changes to the end-user experience. But the development of AIPC promises big changes to such end-user experiences. computers which are traditionally used as data processing devices may be upgraded into highly competent digital assistants. Just in the seventh this month, our chairman was able to unveil, along with ETL CEO Mr. Gelsinger, a very impressive feat, where ASUS demonstrated its internally trained large language model that was optimized and then successfully ran on a local device without the need to connect to the Internet, and the performance was fairly smooth. And so something like that really demonstrates the potential of value-adding applications for the AIPC. And ASUS will continue to work in this market to play an even more important role for this market. Next slide, please. For many years, ASUS has been committed to innovation and R&D and has retained that impressive R&D capability. using that capability we are able to introduce a series of new products like the EPC in 2008 or the Nexus 7 tablet we worked with Google to introduce or the Ultrabook that we worked with Intel to introduce we have constantly these impressive products that cemented our position. But coming back to the present, the AIPC is a quickly developing market that involves multi-model, multi-platform circumstances. And so with such a volatile environment, ACES will need to be able to constantly adapt and cater to end-user needs. We are therefore confident that our lead in R&D will help set us apart from our competitors. Next slide, please. ASUS has always been committed to its goal to become a long-term growth company. We are committed to our three main market segments alongside other driving factors to achieve our long-term growth. The year 2023 has been a very challenging year for PC markets. There are economical challenges, but we were nonetheless able to demonstrate our resilience and return to profit. Particularly in the gaming market, we are able to deliver performances that are better than the market average. For example, our introduction of the ROG Ally tapped into a previously unexplored market and become and became the market leader in that segment. That is why we remain excited about the capabilities, the potentials of the market. We believe that as the market continues to evolve, Asus will be able to catch on to the opportunities and remain a leader. Hello, I'm Samson Hu. I will be conducting an overview of our business units as well as our future outlooks for ACES. First, let's look at our system business group. For quarter three, despite the seasonal fluctuations, we were able to achieve a small amount of growth compared to quarter two. However, end user confidence remains low. However, enterprise expenditure is also low. So we're not expecting any significant rejuvenation. which is why for Q3, from a year-over-year perspective, we are experiencing a 10% to 15% shrink. However, ASUS remains a leader in the gaming PC market. For the past three years, our market share remains the highest and has continued to grow. For three consecutive quarters, we have achieved a 12% growth. And our market share is also largest at between 25% to 30% of the market. So for this segment, we will continue to optimize our product mix and fortify our brand position, improve our profit sharing and market sharing. In doing so, I think the AIPC market is one in which we anticipate closer collaboration with our partners. That compounded with our market-leading R&D capabilities, we should be able to release the most attractive AIPC solutions to our customers and thereby completely revolutionized end-user experiences for both productivity and entertainment. This is something that we are highly confident in. We will be able to become a leading brand for the AIPC segment. Next slide, please. As for the open platform business group, in quarter three, we were able to achieve a 15% to 20% growth year over year. Now this includes products like motherboards and graphic cards being our two main product lines. Both of those product lines achieved a double digit growth year over year. So for both volume and prices, they have grown positively. As a market leading brand, we are received favorably by the market. And in fact, I would like to make special mention of the fact that ASUS has won the European Hardware Association Reader Awards, the EHA Awards, in several categories. These categories include best motherboards, best graphic cards, best gaming monitors, as well as best routers. So our products have been rated as the best among competitive brands. And in fact, this is our ninth year in a row to be awarded the best motherboard award in Europe, while this is our seventh time winning our best graphics card award, and our sixth time winning our best laptop and best router award. Besides these acknowledgments, our server product segment will also serve to be an important profit driver going forward. In fact, for quarter three, we were able to achieve a 40% growth year over year. This demonstrates our commitment as well as the progress that we have attained. This shows that our teams and our product solutions are on track to reach our 5x growth in five years target. Next slide, please. For our AIoT business group, our first three quarters saw a 30% growth year over year. Furthermore, we have been able to make significant breakthroughs in Q3. The first is something that many of you may already know, that is we are taking over the Intel NUC mini PC business. the NUC business is now being integrated into a new NUC business unit inside ASUS. Now, with ASUS having its existing mini PC department augmented by the Intel NUCs, we anticipate wide deployment in industrial, commercial and manufacturing industries. We also anticipate that there will be possibilities in the smart medicine field, besides the AI medical information system that we previously shared. That's something that we've been working with hospitals to deliver on. Asus is actually also the leading provider of ultrasonic handheld scanner products in Taiwan with over 50% market share. As for smart manufacturing, Asus has also made progress. ACES was able to integrate solutions like AI demo smart factories and AI smart production lines to promote the smart upgrade of various manufacturing industries. Next slide, please. This slide is, as usual, our focus, which is our gaming brand and ecosystem. Once again, I would like to stress that ASUS has a presence across each gaming market. This is one of the major focuses of our company. For quarter three, the gaming segment accounts for 50% of our in-house share. And we were able to achieve that thanks to our commitment to our product image, to our commitment to total product solutions, as well as our community management practices to help garner favorability from the gaming segment. Specifically, we have also dedicated R&D innovations to optimize gaming experiences in our products. For example, our ROG Nebula gaming monitor is a very good example of our R&D capabilities. We've also deployed ROG intelligent cooling solutions into our products that are implemented into our products and have been received very favorably by the consumers. Again, this resonates with our ability to win the ESG Best Gaming Laptop awards. Next slide please. Sustainability is always a very important topic and as I previously mentioned in previous investor conferences, sustainability is something that has already been integrated to daily operations for ASUS. and I would like to take this opportunity to share some of our latest progress in order to accelerate our carbon emission reduction goals we are now or just last week we have been certified by the science based directive targets certification SPTI is a Paris Protocol-based emission control scheme that hopes to limit global warming to 1.5 degrees Celsius and to reach net zero by 2050. And so we were able to be accredited by SBTI, and that's something we're very proud of. In terms of our products, we are also continuing to offer low carbon emission and high energy efficiency products. Efforts in this field have allowed us to be acknowledged as EP climate plus champions. This, I think, highlights our dedication to climate change mitigation, especially in the electronics devices market. Lastly, I would like to once again thank investors and our friends at the press for covering ASUS. I think after the challenges that we have faced this year, we were able to make it past the worst of the times thanks to the efforts of our team. And in the future, we hope to continue to increase our competitiveness as we continue to invest into ourselves. And our core business units are going to be expanded as we continue to expand into market segments like IoT and AIPC. All of these driving factors will be important for maintaining long-term growth going towards 2024. Thank you. Thank you. Now we'll be entering the Q&A session. If you have any questions, please raise them on the left hand side of the web page. We will collect your questions and answer them. Thank you. Our first two questions come from China Times. The first question. ASUS has already been delivering its orders for AI server solutions like L40S and others. However, with the recent unveilment of American chip export policy restrictions, has that affected your orders deliveries at all? Let me start by addressing the export restrictions. Immediately after the restrictions were unveiled, we entered into a meeting with our partners. They said that they immediately started a meeting to discuss potential solutions to stay in compliance with the American regulations. Now, I'm sure as an American company, our partners will stay in compliance with American regulations, and ACES will, of course, also stay compliant with the new restrictions. Of course, the new regulations pose positive and negative externalities. For example, some of the demand that can no longer be fulfilled by Chinese companies will have those demands now be given over to ASUS, so that's a positive. However, as a negative, the new restrictions will limit some of the products that we can no longer sell in certain regions. We will always stay compliant with the regulations. Now again, talking about AI server solutions, I think that's a segment in which we've worked very closely with NVIDIA, and various countries like Vietnam, India, and Singapore have placed orders for those AI servers in not insignificant quantities. And so I think this correlates well with the five-year, 5X growth target for our AI server business units. I think that shows that we are still on track for reaching our growth target as we stay compliant with American regulations. Our second question once again comes from China Times. Generative AI makes use of various models. What are your implementation schedules for those models into phones and personal computers? Furthermore, what presence does ACES plan to adopt into the market for these AI solutions in each market segment? I'm aware that AI is a very popular topic for our friends at the media as well as our investors. Now, just last week, I had a conference in the southern regions of Taiwan and some media asked me about this, so I will give you the same explanation again. Now, basically, I think that for AI PCs, they can be divided into several parts. This is something that has been covered in various occasions as by various parties. The first part is that the AIPC has the hardware, which would be the neural processing unit that's added to the chips. So that's the hardware part. But on the software part, we also need AI software that will be able to make use of those NPUs. And what powers these AI softwares would, of course, be the large language models that support the functionalities of these AI software. it's going to come down to the readiness of the hardware and the software to decide how quickly we can put these solutions into implementation. And again, I would like to stress that there are different definitions for what a vendor may consider AI PC solution. On one hand, you have companies like Intel, where last week they held a major event in Taiwan, and this is something that's reported on by the media, so I'm sure some of you already know. For Intel, they think of AIPC as a CPU that is built with a neural processing unit and that their OpenVINO toolkit has enabled independent solution vendors to develop potential solutions. Now, for these ISVs, that includes providers of video streaming solutions as well as other solutions. And so all of these ISVs are now starting to integrate AI functions into the solutions by using the OpenVINO toolkit. And of course, those functionalities will be powered by the Intel hardware in order to bring about a revolutionary experience for the user. They will be able to deliver on things like an AI assistant. And so for Intel, they think that this sort of ecosystem is what they consider an AI PC deployment. However, we also, on the other hand, have a company like Microsoft they are more focused on whether the end user will be able to smoothly run these AI-based solutions using their local hardware. And so the expectation is that the user will be able to completely and smoothly run these Microsoft AI-based solutions. And that would be things like Windows Copilot or other Microsoft 365 related applications. And that would of course be things like Microsoft Teams, Microsoft Outlook, and Microsoft Office. All of these, Microsoft is in the expectation of Microsoft. is that they should be able to run very smoothly just using local hardware. And being able to do all that is what they consider to be the AIPC deployment they are looking for. Now, for ACES, I think no matter which definition or perspective you adopt, the AIPC takeoff will probably happen next year. If you adopt the Intel perspective, then we can expect that to happen early next year. But if you're looking at it from the Microsoft perspective, where Microsoft 365 applications can be run locally using neural processing unit hardware acceleration, then something like that will probably take all the way until June or July of next year. So it does depend on what definition and what vision you have for AIPC because the market right now is in a state of constant flux. But ultimately, I think the most important thing is whether the consumers will be sold on these AI solutions. For Asus, I think that we think that as a leading brand, we already have certain expectations on what AI-related solutions would look like. And so we're going to make use of our powerful in-house R&D capabilities as well as the AI solutions that we debuted last week. I'm referring to the Asus in-house AI large language model that was shown to run very smoothly on local hardware at the Intel event. because we were able to have a large language model be optimized to the point where they can actually be run on Asus ZenBook. So if you're able to do that, then you are probably also able to run the model on all the laptop hardware. And so being able to run all of that very smoothly is something that we're striving for. And in order to achieve that, we hope to work with ACES as a group throughout our various business units as our partners to introduce meaningful AI solutions. So that is our goal for this market. Thank you. Our next question comes from BOA Merrill Lynch. The question is, how large do you think the AIPC market will be for 2024 and 2025? Whether you think that market will mainly be focused on the enterprise and commercial markets? Also, we're curious about the ACES strategy for AIPC and whether the AIPCs will on average have a higher margin compared to traditional PCs. Okay, so I think this is the continuation of the previous question, so I'll answer this as well. Now, as I talked about previously, AIPCs require certain conditions to work. Because AI PCs is a completely new form of personal computing. And so I think users will need some time to get used to that new experience. This is something that will have to work with system integrators and the industry as a whole to continue to optimize and continue to improve. but this is a process that takes time. So given such circumstances, our ambitious estimate placed the penetration ratio of AIPC for 2024 at low single digits. by 2025, we're not certain whether that will become a double-digit penetration ratio. That will depend on whether the single-digit ratio penetration ratio we get for 2024 will be high or low. Of course, this will also be hinged on the maturity of the technology as a whole because if it's able to deliver meaningful change for the consumers, then maybe we will get a higher penetration ratio. So very simply, I think we are just aiming for low single digit penetration ratios for 2024 and as for the outlook for 2025, that remains to be seen. But of course, as a brand, we are active working with our upstream suppliers as well as partners like Microsoft to look for possibilities to collaborate and provide solutions and ultimately we hope to deliver a meaningfully different experience and that will be able to help us push AIPC the market into a state of rapid growth. As for the proportion of consumer to commercial PCs, I think that AI PCs will be rolled out to both consumer PCs and commercial PCs simultaneously. It's not going to be a staggered deployment situation. As for the strategy that ASUS is planning on using, I think, again, we have a thorough presence throughout the entire AI market. We have plans to help push our AI PCs and AI PCs solutions to deliver on a meaningfully different experience compared to our competitors. As for margins, I think this will be a bit technical. because AI PCs will need additional requirements both in terms of software and hardware and that's an opportunity for value-adding. For example, for the CPU, you're going to need to have an additional neural processing unit. And as for VRAM size, that is also something that would need to be expanded. When you're running a larger model, that model is going to require extra memory. And so, owing to that fact, AI PCs will have more memory compared to traditional PCs. So I think our expectation right now is that the MSRP for AI PCs will be higher than traditional PCs. And that is my response to the question. Thank you. This again is a question from BLA Merrill Lynch. Does ASUS still have its goal set on a long-term operational margin target of 4% to 5%? and I was also curious about the margins for the server and the AI server products. Okay, so I think when I gave the financial results, over the financial resource we're given, our internal goals are set to 4% to 5%. Now, of course, our business units will work their hardest to increase the value of our products to perhaps elevate that number a bit higher. As for the margins for the servers and AI servers, I think this is something that is already reported very heavily in the industry. Now, ACES, I think we are more or less on par with industry average in terms of our margin percentage. So that's something that you can reference. You can reference the market numbers for that. Thank you. Okay, our next question comes from the Financial Times. We would like to congratulate ACES on setting your five-year 5X goal. We're curious about your clients and their industries. At the same time, we're also curious about what concrete strategies you will take to reach your goal. At the same time, we want to ask about the revenue proportion of AI server to regular servers. Thank you. Now, I think that the person that asked the question did a lot of homework, so they knew very well how our products line up. Now, clearly, I think that we are mainly focused on a local CSP perspective. We have set certain price targets for our server business unit. That is to say, for traditional servers and AI servers, they will be given both a lot of attention Now, as ACES continue to work with our partners, we are confident that we'll be able to edge out our competitors when it comes to getting the parts required for those AI servers from our suppliers. Now, what is the regional percentage for 2024? I think there's a good chance that AI servers will account for 50% or even higher of our income. Thank you. The next question comes from KGI Securities. What do you think about the rejuvenation for the laptop market? For example, if you look at gaming, commercial and Chromebooks, looking at all these laptops, which type of market segment do you expect to recover the fastest? And what are your anticipations for each product segment? Okay, so let's start from a broad overall perspective for the fiscal year 2024. I think in the last investor conference, I talked about how for next year, we have certain expectations. Now, 2023 is, of course, we saw certain strengths compared to last year. Now, in the last investor conference, we mentioned that there's probably going to be, we're probably aiming for the high single digit numbers. Now again, as everyone probably knows, there has been certain fluctuations in the global economy as well as in geopolitical factors. Now, another driving factor, I think, is the fact that the pandemic in 2020 triggered a massive surge in demand for new hardware. Now, after four years, that is 2024, we are anticipating another wave of replacements. So that's going to be a positive driving factor for us. So that's probably a positive growth factor that we can look forward to. Yet another factor is that Microsoft is going to be updating their Windows operating system next year, so that is definitely also going to be a positive driving factor. And yet another driving factor, again, is the AI PC that we have talked a lot about. That is definitely something that has a lot of potential. Now, last time we did mention that we anticipated the global economy to become a positive driving factor because we were looking at the inflation of Europe and America and expecting those numbers to come under control next year. though that was then compounded by the Black Swan event, which I'm referring to the Israeli-Palestinian conflict that's taking place in Gaza. That is, of course, a negative factor. Now, I'm happy to report that there's signs that the conflict is contained, but that is, of course... a negative factor so right now just in terms of inflation we do not expect significant improvements to be made for at least the first half of next year now maybe inflation will come under control in the later half of next year but that of course remains to be seen so on the whole I think next year will be a year with low to middle single-digit growth year. Now as for the performance of each product segment, whether it is gaming, consumer, commercial, or Chromebooks, I think they are all very different products, so let me go through them. Now firstly, I think our gaming laptop consumer base and gaming ecosystem as a whole still has a lot of potential. So next year, we think that the gaming market will likely still have decent growth. As for the commercial laptop segment, I think there are positive and there are negative factors. The positive factor is, of course, the new Windows OS coming out and some old operating systems no longer being supported by Microsoft. That will definitely drive some replacements. However, IT expenditure for enterprises will likely still be limited by the high inflation. So that is something that's working against that. These two factors will work against each other to affect the growth possibilities of this segment. As for the consumer laptop segment, we are again generally quite optimistic. I think that's going to align with our expectations for the PC market as a whole. As for the Chromebook segment, I think there's likely no longer going to be a similar explosive growth that we saw during the pandemic. Because during the pandemic, there were a lot of new purchases for Chromebooks that may be going into next year. Some of those Chromebooks will need to be replaced. At the same time, the legal program for Japan may also drive some of these Chromebook demands. So that's my analysis as a whole. Thank you. Our next question comes from Morgan Stanley. We would like to congratulate ASUS on its exceptional performance for Q3. Our question is about how much AI servers account for your income compared to Q3 this year and Q4 this year, and also what expectations do you have for AI servers going into the financial year 2024? So right now, I think the AI Server product segment accounts for a low single percentage for the year 2023. Going into 2024, I think that might become a mid-single-digit situation. As for 2025, that's when we have the potential of reaching double digits. That's the most likely situation. Okay, now here's a second question, also from Morgan Stanley. Our question is, can you talk about your visibility for the 1QPC market? Do you think that the market is going to grow or shrink? Okay. Now, right now, we don't think there are very clear and concise numbers that we can reference, but per our estimations, it is possible that there is going to be a small-scale quarter-on-quarter shrink. Okay. Okay, thank you. Now, our next question comes from... Okay, our question is, can you talk about how much LG Ally accounts for your income and your expectations for this product going towards future quarters? Okay, I think as we talked about previously, the ROG ally accounts for about 5 to 10 billion NT per quarter. And so right now, given our results for quarter three and our expectations for quarter four, the number is still going to be in that region. Going into next year, I think as we make more improvements, as we possibly adopt these improvements and optimizations into the ally, there is going to be an even more optimized version of the ally coming out, and hopefully the ally will make similar contributions to our income in future quarters. Thank you. Okay, the next question comes from UBS. Right now, a lot of PC platforms are now introducing ARM-based solutions. So does ASUS have any plans or projects for this segment? Okay, so I think for the ARM-based solutions, which is really Qualcomm, they have been working hard, not just in the phone market, but also trying to deploy their solutions to the PC market. So, Qualcomm has been working closely with Microsoft for that, because I think in order to put ARM hardware into personal computer, you're going to need support from the operating system. So that, I think, makes sense. And Qualcomm is one of our partners in the phone market, and so as they try to push into the PC market and have products there, we will also work with them there. And furthermore, Qualcomm was among the first wave partners for Microsoft in deploying AIPC. And I think as Microsoft, so I think ACES will definitely take part in whatever plans that on-based PCs are going to do. Okay, thank you. Now, we believe that we have more or less covered all the questions and the issues that you have raised. If you have any other questions, you are welcome to contact our investor relations team. I'll be giving the mic back to our two co-CEOs. Once again, I would like to thank our institutional investor friends and our friends at the media for the coverage and the attention you've given us. Of course, I would also like to thank our team at ASUS for helping us make it through this very challenging year in 2023. That was how we were able to deliver on this relatively exceptional Q3 results. So I think looking at quarter four in 2024, I think again, our biggest asset is our research and development team and AIPCs will of course be very, very important for that. because we think that AI PCs will be an important turning point. It's going to give end users a very different experience in terms of how they use their computers. So we definitely want to capitalize on those possibilities as we work with R&D and work with our upstream suppliers to provide better hardware and software integration to give truly differentiated, truly value-added AI-based solutions to thank our shareholders. Okay, I am Samson Hu, and I would like to once again also thank our friends at the media and our investors for your continued support. I think for these past two years whether it is ACES or the industry as a whole we have experienced significant challenges and we have constantly made improvements and adapted to these new obstacles and so I think having encountered and overcome these obstacles we are more and more confident for the development of our new products and for the operational capabilities of our teams internally. And as we welcome the great possibilities offered by AI PCs, we are more and more confident. Now, there will of course still be challenges and unforeseen factors in the future, but thanks to our challenges, the challenges we've overcome, we are more and more confident. Thank you. This concludes our online investor conference.