Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to Winsamish Resolve Webcast Conference for the fourth quarter of 2024. My name is Gilson, the Spokesman and Associate Vice President of Finance in Winsamish. Joining me on today's call are Dr. Y.T. Wang, Vice Chairman, and Kyle Chen, our CEO, and Steve Chen, our General Manager of Corporate Administration. Today's call is organized into three sections. First of all, our CEO Kyle will comment on the company's results for Q4 24 and provide brief guidance for the first quarter 2025. Secondly, I will go through the financials in detail and Dr. YC Wang will have the industry outlook to share with you. 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 one of the presentation slides. Please note that this presentation contains forward-looking statements. These statements are based on our current expectations. The actual result may differ materially from our expectations, and the company undertakes no obligation to update forward-looking statements going forward. Now, let me hand over the call to Mr. Kyle Chan, The CEO of Winsane.

Okay, thank you, Joe, and welcome everyone. So I give you our fourth quarter performance and the guidance of the Q1 2025. Okay, in the fourth quarter of the last year, 2024, Winsane's consolidated revenue was 3.706. Billion NT dollars which is down 50% quarter-on-quarter and down 24% year-on-year. The performance is in line with our previous expectation. But analyzing this quarter-on-quarter revenue decline, I think the main reason, the primary factor was Wi-Fi PA segment. which experienced a notable decline as the peak season of the inventory preparation for the new model has passed. The second factor was the cellular PA segment, which was mainly due to the weak demand in the China market. On the other hand, both the infrastructure and optics segment outperformed expectations. achieved double digital quarter-on-quarter growth. So although our capacity utilization declined from the 50% in the third quarter and down to the 35% in the last quarter, the fourth quarter of 2024. So also the sheer price of fluctuation of the listed Chinese customer held by our consolidation subsidiary negatively affect the growth margin by minus 1%. This impact was partially offset by a very, by a favorable product mix, as I mentioned, the infrastructure and the optic segment outperform. So, as a result, our growth margin for the fourth quarter was 20.4%. decreasing by only 1.2% versus the utilization down 15% of the quarter. Operation margin declined from the 2.9% in the previous quarter to minus 1.3%. The net loss attributable to the parent company for the fourth quarter was 350 million NT dollars, with an EPS minus 0.83 NT dollars. But for the full year of the 2024, we semi-officially moved past the downturn experience in 2023, with consolidated revenue reached $1,700 million. 0.455 billion NT dollars, marking a 10% year-on-year growth. The full-year EPS was 1.81 NT dollars. Look back in the 2024, the China smartphone market has finally moved past the prolonged inventory adjustment However, the market is not as we expected, but due to the weak consumable spending in the Android smartphone market, which was affected by the China's economic slowdown, and the trade area between China and the US. So overall end demand did not rebound as strongly as the market. initially expected. But fortunately, in the iOS smartphone supply chain, both cellular phone PA, cellular PA, and the Wi-Fi PA have benefited from the strict quality and the performance requirements set by end customer, which allows in-ring semi-customer to to remain the key customer with a very significant market share. As a result, they have maintained a stable growth in the last year, 2024, supporting with serial and Wi-Fi business to outperform the previous year. On the other hand, for the optical business, which is also primarily tied to the iOS supply chain, at the end, customers continue to diversify its suppliers. The business faces a continuous decline in smartphone 3D sensing contributions in 2024. As expected, however, the infrastructure business rebounded from the previous year downturn, achieving the double-digit year-on-year growth. Driven by strong demand for infrastructure and centralized communications, in particularly the getting-line tribe revenue, we deliver a very outperformed annual growth rate of over 30%. Looking ahead this year, I think everybody's talking about the AI. The AI application in optical communication and the data center are emerging as a key focal point in industrial growth. With companies across the supply chain actively positioning themselves to seize their new business opportunity, and the win is no exception. Whether in traditional optical transceivers or silicon photonic technology, optical communication transmission rely on compound semiconductor as the core material for both photodial and laser light sources. At the same time, time-of-flight laser technology is expanding beyond smartphones and automatic guide vehicles to human-nourished robots and the automotive collision-avoidance LiDAR. Compound semiconductors offer wavelength solutions ranging from short to long to accommodate various distance sensing requirements. As a member of the Taiwan Silicon Photon Industry Alliance, WinSemi is one of the few companies globally with mass production technology and experience in both optical communication and optical sensing with the foundry service. We are seeing a strong demand for optical customer to our source manufacturing. and we are now currently working closely with multiple clients to address this need. Additionally, WinSemi is optimistic about our technology development, the Wi-Fi 7, in particularly with the US-based flagship smartphones, fully upgrade the phone to Wi-Fi 7. in the second half of the 2024. This is expected to driven the broader adoption among Android devices or even upgrade the Wi-Fi routers. Presenting a promise outlook for the Wi-Fi PA demand. Lastly, I think the infrastructure business As I said, we moved down from the past, the downturn in previous year, and delivered a very outstanding satisfactory growth in 2024. We believe the optical electronic component for data centers, satellite communications, and the military and commercial radar applications will serve as primary growth driver for wind-saming infrastructure business in the post-5G era. Enter the traditional slow season, the Q1. Also, we have a, you know, less working day and three-fever is due to the annual maintenance. We expect the revenue of the first quarter of 2025 will be declined mid-single digital quarter-on-quarter with a growth margin around high-teens level. So that's my report, okay. So I will turn the call back to Ovidiu.

Okay, thank you, Carl. It's our pleasure to present our financial results for the fourth quarter of 2024. So, We're starting from the page one of the presentation slide. Remember, read it over the Seth Hopper notice. And then next page, just for your reference, which is our ESG achievement. And next page, we're starting from the revenue and the margin. The Q4-24's revenue was $3.71 billion. And the QOQ was down 15% and YOY also down 24%. And the Q4-24, the capacity utilization declined to 35% from 50%. At the same time, we also suffered The share price decline of a listed Chinese customer held by our consolidated subsidiary negatively affected the growth margin by a negative one percentage point. Although we have such a negative impact, but it's partially offset by the better apartments. So therefore, the growth margin becomes 20.4%, which is decreasing about 1.2 percentage points, which is better than our earlier expectations. And operating margin become negative 1.3%. which is declined about 4.2 percentage points if we compare to the previous quarter. And addition to that, if we take the loss on non-op items into consideration, in the Q424, the net loss, attributable to the parent company was $352 million NT dollars. And with the EPS for Q4 was negative 0.83 NT dollars. And the PPS for the full year of 2024 was $1.81 NT. This is for earnings. And please flip to the next page, talk about product mix. Okay, things we, I have mentioned that the better product mix have partially offset the negative impact on growth margin. Means we have Q4 product mix which is favorable to the growth margin. If we take a look at the major for items. First of all, in Q4, QOQ basis for cellular PAs, the percentage was from 35 to 40% last quarter to 25 to 30% this quarter, Q4. and which is, it went down. And then Wi-Fi also from 15 to 20% last quarter to 10 to 15% this quarter. Also, it went down. But the infrastructure is going up from 25 to 30% of range to become 35 to 40% of range, which is going up. and the majority is optical business. The others become 21%, which is also going up from 16% last quarter. And on the same time, I would like to give you more comment about the inside the optical business. We also have majority is a 3D sensing business. and then partially non-3D sensing. In the past, most of the time, the percentage compared 3D sensing to non-3D sensing is about 80 to 20. And then for two people in the whole year of 24, The 3D sensing went down to 70, and then 3D sensing going up to become 30, which is compared 70 to 30. That's the product mix for the Q4 of 24. And please flip to the next page. is the guidance for Q1-25. First of all, I would like to repeat again what our CEO already mentioned. We expect Q1-25 revenue to decline mid-single-digit QOQ. And that's because Q1 is a traditional low season with less working days. And on the same time, I also would like to share with you more about Q1's different product, the trend. We believe that the Q1, in Q125, our cellular business and Wi-Fi business will be slightly going up compared to the previous quarter. And the infrastructure business will be frantic compared to last quarter. And finally, the optical business, because of all of the inventory tools for any kind of new product including the free model of the precious smartphone is all over. So we expect that Q1, the optical business will be going down. That's some cover about Q1, each product. and then therefore we expect Q1 growth margin will be around the level of high change. Okay, this is our financials and the business. And then I'm gonna give you, we're gonna take a quick look about the financial statements First of all, the income statement for fuel flow in page 10. Before I begin, I still have to emphasize that all of the figures is on an audited basis. The actual results are based on the CPS report. For Q4-24, the net revenue was $3,706,000,000. And QOQ was down 15%, and YOY was down 24%. And the gross profit was $758,000,000, and the gross margin becomes 20.4%. And operating expense 806 million, although it's less than last quarter. But because the net revenue QOQ declined, so our OP ratio, it went up to 22% from 19% last quarter. Therefore, the operating income the operating loss became 48 million NT dollars. So the operating margin was negative 1.3 per cent. The none-op Python was lost about 630 million NT. We're going to have some explanations in page 12. The loss before income tax was 678 million, and the income tax was 148, so therefore the net loss becomes 530 million NT, and the net margin is negative 14.3%. So the net loss attributable to the parent company was $352 million, so the EPS was negative $0.83. The return on equity was negative 4%, and the approximately utilization rate went down to 35% from 50% last quarter. The depreciation expense for Q4 24 is pretty close to the last quarter. In the car park, it's much less than last quarter, 152 million. So this is the Q4 income statement. And please flip to the next page. I will show you the all year up 24 income statement. The net revenue was $17,458,000,000 and the YOY is up 10%. And growth margin for the all year was 23.2%. is higher, 1.3 percentage point higher than 23. And the OP ratio is 19%, which is three percentage points better than last year. and operating income was 762 million and operating margin become 4.4%. And the non-op item was lost 429 million NT and the net income was 340 million NT dollars. The net margin become 1.9%. and the net profit attributable to the parent company was $768 million and therefore the whole year of 24 EPS become $1.81. The return on equity for the whole year of 24 become 2.1%. and the accumulated utilization for the whole year 24 become 50%. The depreciation expense is 4,595 million NT slightly less than the last year, 2023. And this is the first time it trend down on the depreciation expense. And on the same time, we would like to share with you that the guidance for depreciation expense for 2025, we believe will be 10% less than 2024. But it's month over month gradually going down. And the car parts for the 2024 all year is 12% 1222 million NT, and then we also expect the whole year of 25, we expect the compact will be between one and two billion NT. Okay, this is 2024 whole year's income statement. And then three steps to the next page, we can discuss about an amount of items. I probably will pick around three items, the major three items for some explanations. First of all, the foreign exchange laws that the foreign currency debt on hand because suffer from the foreign currency up and down. and then suffered the foreign currency loss. And the impairment loss is the CPA based on our IFRS, based on IFRS to recognize impairment loss on the goodwill for the investment on our subsidiary in the past. And then, finally, the financial cost is exactly the interest expense for our debt with the bank. That's the non-op item for this page. And then, please switch to the next page. It's the balance sheet. Okay. First of all, the total assets, it's pretty, the total assets are pretty similar to, for the December 30th, it's very close to the September 30th. It pushes at $64,259,000,000. On the other hand, on the, The total liability, which is $25,121,000,000, the liability is going down significantly because the debt is also going down. CommonScar remains the same. The total equity actually is going up. It becomes $39,138,000,000. It's also significant going up. Therefore, the put value for sure becomes $89,091. It went up from $87,000,000,000 and the 29 cents. Although, the Q4, we suffered a lot. That's because we have financial outcomes, evaluation gain on the OCI, which is other comprehensive income. And then compared to the end of 23, it's even higher. The 23 is a December 30th, 2023, the full value per share was $80.19. Okay, then finally, the financial index. Our current, no matter the current ratio, which is 164%, or debt ratio, which is 39%, is all going to the have their direction compared to last quarter or even a year ago. Okay, that's pretty much what I have. And then, okay, thank you. I will hand over the call to Dr. YC Wang, our Vice Chairman.