Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WinSemi's Resolve Black Hat Conference for the first quarter of 2024. My name is Joe Chen, Postman and Associate Vice President of Finance in WinSemi. Joining me today on today's call is Steve Chen, the General Manager of Corporate Administration. Today's call, organized into three sections. First of all, Steve will comment on the company's results for Q1 and provide brief guidance for Q2. And secondly, I will go through the financials in detail. After that, we will open to the floor for Q&A. Please freely submit your questions in the input box on the webcast window throughout the conference. Before we begin, I would like to draw your attention to the State Harbor Notice on page 1 of the presentation slide. Please note that this presentation contains forward-looking statements. These statements are based on our current expectations. The actual results may differ materially from our expectations, and the company undertakes No obligation to update those forward-looking statements going forward. Now, let me hand over the call to Mr. Steve Chen, the General Manager of WinSemi.

Thank you, Joe. And welcome, everyone. In the first quarter of 2024, as it started, we entered the traditional of seasons. First quarter consolidated revenue was $4.4 billion. Down 8.7% quarter-on-quarter, but up 55% year-on-year, slightly ahead of our previous expectation. Due to a decline in capacity integration from 60% in the previous quarter to 55% and a less favorable product mix, coupled with the impact on the stock price volatility of a listed Chinese customer held by our consultative subsidiary. Our gross margin decreased from 39.4% in the previous quarter to 22.4% and operating margins also decreased from 13.1% in the previous quarter to 4.1%. Net profit after field growth to the parent company for the first quarter was $407 million, with an EPS of $0.96. Looking at the revenue change for each product in the first quarter, Wi-Fi delivered the highest growth after inventory has been depleted in the end margin making the first return to positive growth since the second quarter of last year cellular continuing its momentum from the second half of last year with revenue stays at the similar level to the previous quarter both Wi-Fi and cellular achieved above seasonality performance in the off-season For infrastructure, revenue has consistently been within a narrow range, but revenue from the first quarter was slightly lower than the previous quarter. That is the optical experience the most significant revenue decline in the quarter. This was mainly due to the peak season of the 3D sensing end product at best, together with the additional needs supplied by the end customer this year. The smartphone market has been undergoing a period for the inventory adjustment for the past year and a half. Supply chain also faced a price competition. According to a recently forecast by the research firm Counterpoint Research, the global smartphone shipment growth for the full year of 2024 has expanded to the third 3% with an annual shipment is turning to 1.2 billion units. The firm also believes that the segment with the highest growth rate will be the premium smartphone segment, with the project annual growth rate of 17%. Premium smartphones have always emphasized innovation, quality, and performance, in contrast to the mid-end range and low-end smartphones that typically Serotide price as a defense of the performance. Wind sailing has consistently held a high market share in the premium smartphone market. This is because we invest heavily in R&D research yearly and yearly to provide our customers with the most advanced and high performance technology and service. A system then to enter the premium Our strategy and business model was focused on providing customers with a higher value added and we dedicated to see the return of this trend, which may benefit our further revenue and profit. Looking ahead to the second quarter of 2024, driven by the demand of smartphone and Wi-Fi, we expect Revenue to grow by low fees, quarter on quarter, and a growth margin at around a mid-20 level. I will return the call back to Joe. Thank you.

Okay. It's our pleasure to present our financial results for the first quarter of 2024. Please refer to our presentation slide and remember to read it over the set profit notice. We're starting from the revenue and the margin trend. The Q124, the revenue was $4.4 billion. QOQ was down 8.7%, but the YOY was up 55%. The Q1 growth margin was 22.4%, which is QOQ down about 7 percentage points. the reason due to a couple of factors. First of all, the capacity utilization was declined from C21 compared to last quarter. And also, the last favorable product mix Also, the impact from the stock price volatility of a listed Chinese customer held by our consolidated subsidiary. For this item, there is a erosion for gross margin about 2.4. percentage point and so therefore the growth margin if we is true this item then the growth margin should go up to 24.8% and therefore the operating margin become 4.1% which is the QOQ also going down for 9 percentage points And please trip to next page for earning strength. And for our issue 124, driven by the non-up profit, which is recognized from the redemption of the remaining ECB, So the net profit attributable to the parent company was 407 million NT dollars and compared to 385 million in the last quarter and EPS for Q1 become 0.96 NT dollars and compared to 0.91 in Q4 of 23. And please switch to the next page. We can discuss about product mix. Well, in the page earlier, we have mentioned that in Q1, we have less favorable product mix. You can see that in our program for Q1. The salary is about between 45 and 50% of the total revenue. And the Wi-Fi is between 10 and 15%. And for the QOQ basis, actually the revenue for Q1 is very close to last quarter and it's kind of . But the Y5 revenue is increased about almost 20% compared to last Q4. And you can say that are better than this analogy for cellular and Wi-Fi. And for the infrastructure, normally up and down within a small range, I mean, for revenue-wise. And for this quarter, also the same range between 20 and 25% for the total revenue. However, Optical business significant lower than last quarter declined about more than 30% for revenue I think Steve also mentioned that that's because The fifth season for 3D sensing in Praga has passed and also the additional new suppliers by the end customer for this year in this separation. So this is the change in the status for the Prada Mix in Q1. And next page, to talk about the guidance for Q2. I think Steve also mentioned this and I'm gonna repeat again. We expect Q2 24 revenue to increase about raw teen QOQ. And also expect Q2 24 growth margin to be around the level of the mid 20s. Okay, then we can go through the financial statement quickly. First of all, the income statement for Q1. Before I begin, I would like to remind everybody this is on an orderly basis. And the actual results based on the The Q1 net revenue about 4,442 million NT. The QOQ was down about 9%, but YOY was up 55%. And the gross profit was 995 million NT. and the gross margin for Q1 was 22.4%. The operating expense was $811 million NT dollars and the operating OT ratio equivalent to 18%. The operating income was $184 million NT dollars So the OPE margin is about 4.1%. The non-op, there is a non-op income net about 125 million NT. And also, therefore the income before the income tax become 309 million. And because of the income tax expense was 42 million NT, so therefore the net income was $267 NT. The net margin was 6%. The profit, the net profit attributable to the parent company is 407 million NT, so therefore the EPS becomes 0.96 ng dollars compared to last quarter last quarter was 0.91 ng dollars for EPS and compared the same quarter a year ago the same quarter a year ago the EPS was a lot 0.95 ng dollars and The ROE return on R4P for this quarter of 5% is the same as the last quarter. The approximately utilization rate is 55%, which is lower than last quarter, which is 60%. And the depreciation expense it's a little bit lower than last quarter, become 1170 million NT. The top part for this quarter was 303 million NT dollars. So this is the income statement. And for next page, we can quickly take a look for the non-op items. It's majorly two items. One is, again, financial liability at the MLI's cost, which is what we mentioned earlier, that because of the The retention of the remaining ECB and then recognize the non-op profit. That's this one, $254 million. And the financial cost is actually interest expense. Okay, then the prescript to the next page will discuss about balance sheet. Things we have mentioned that we already fully redeemed our ECB, the remaining ECB, so we're starting from there. If we take a look at the December 31st, 2023, the current portion of the bond is payable. You can see that there is a $4.7 billion. That's exactly the ECB outstanding. But if you take a look on the right-hand side, on March 31st, it's gone. It's disappeared. And that's because this has been fully resumed. and because of that, you can also find out that the cash on hand also declined from, compared to last quarter, came up last quarter, become 5.6 billion NT cash on hand. And so, but because of the We pay out the early payout the ECB outstanding so the total liability also going down from 33.8 billion to 28.2 billion and therefore the debt ratio also are going down from 49% to 43% as much as 31st. and so therefore the total assets are also become 46 billion 745 million NT and but the network which is the total equity going up from 35.3 billion up to 36.6 billion NT and the full value per share or net worth per share also going up from $80.09 to $83.28 and the key index With that ratio going down, the current ratio going up from 135% to 139%. The both ratios in the index are going to the healthier label. So that's pretty much what I have. Okay then. Now we can begin the Q&A. Please submit your question in the info box on the webcast window now.