Good morning and good afternoon and evening to those calling in from abroad. This is Park Sung hwan, the Head of IR at SK Hynix. Welcome to the SK Hynix 2021 Second Quarter Earnings Release Conference Call. Before starting the conference call, allow me to introduce the executives present here with me today. First, Kevin Oh, CFO and Head of Corporate Center Chang Hyok Joon, Head of Finance Chang Young Soo, in charge of DRAM Marketing and Park Chan Dong, in charge of NAND Marketing.
Let me issue a disclaimer that all outlooks presented by the company are subject to change depending on the macroeconomic and market circumstances. With that, we will now begin SK Hynix 2021 Second Quarter Earnings Release Conference Call. Kevin will first present the earnings for the Q2 and the company's plan. It will then be followed by a Q and A session with the executives present here today. Good morning, everyone.
This is Kevin Ngo, CFO and Head of Corporate Center. I will first brief you on the company's financial performance in the Q2 of 2021. Memory market in the 2nd quarter showed rapid improvement, thanks to solid demand for PC, graphics and consumer products as well as recovery in the demand for server products compared to the previous quarter. By mid single digit percent and low single digit percent for DRAM and NAND, respectively, slightly outperforming the guidance. ASP also grew by a high 10% and approximately 10% in DRAM and NAND respectively, rising across With DRAM sales growing significantly by high 20% Q o Q, MCP sales also grew on the back of stronger sales of high density products such as DRAM 8 gigabytes and NAND 256 gigabytes or higher, with higher specifications for mobile products in the Greater China region.
Revenue increased by 11% quarter on quarter. The portion out of sales fell slightly from the previous quarter. This brings the company's consolidated sales in the 2nd quarter to KRW 10,320,000,000,000, up 22% QoQ and up 20% Y o Y. This is meaningful in that Quarterly sales topped KRW10 1,000,000,000,000 again for the first time in 3 years since the second and third quarters of 20 when the memory market was in a super cycle. Cost of goods sold and SG and A went up by 4% 17%, respectively.
There were initial start up costs for the M16 fab, which opened early this year as well as the annual increase in payroll applied retrospectively and payout of the ESOP. Despite increase in expenses, there was still a slight reduction in unit cost QoQ for both DRAM and NAND, thanks to the growth in sales portion of DRAM 1Y Nano and 1Z Nano as well as the 128 stack NAND. Operating profit in the second quarter was KRW2.69 trillion, up 103% QoQ. Operating profit margin was 26%, higher by 11 percentage points QoQ. Depreciation and amortization in the 2nd quarter was KRW 2.62 trillion, slightly increased from the previous quarter.
EBITDA was KRW 5.31 trillion with EBITDA margin of 51%. There was a net non operating income of KRW 106,500,000,000. There was net interest expense of KRW 63,400,000,000 and net foreign currency related gain of KRW 42,200,000,000. There was also gain on equity method valuation of KRW125.5 billion from the building sell off by SK China, where the company has some equity ownership. Net profit before tax was KRW2.8 trillion and corporate tax expense was KRW 0.81 trillion.
Net profit was KRW 1.99 trillion with a net profit margin of 19%. Consolidated cash balance at the end of q2 was KRW 6.64 trillion, up by KRW0.65 trillion from the previous quarter. Interest bearing debt was KRW 13,850,000,000,000, increased by KRW 0.25 trillion QoQ. The company's debt to equity ratio and net debt to equity ratio stood at 25% 13%, respectively, slightly improved from the previous quarter. Next is the company's market outlook and plan.
The memory market in the first half improved more swiftly than expected. DRAM demand growth exceeded the projected 20% despite the shortage of some parts and is now expected to be in the low 20%. Demand growth was likewise robust for NAND, which was initially expected to improve in the second half of the year with prices turning around to a steep increase in the second quarter. Annual demand growth is also projected to be higher than initially thought to be in the mid to high 30%. Breaking down the demand environment by application.
The PC market is expected to see over 10% shipment growth for the 2nd year in a row. Following the PC demand for educational PCs, it will be enterprise PCs that will drive demand in the second half. The mobile market initially anticipated to recover quickly with the accelerated to 5 gs and high pent up demand was slow due to another surge in COVID-nineteen in some regions as well as some component shortages. But demand is likely to recover in the second half as COVID is coming under control in major markets, including India, and smartphone demand is recovering in the Greater China region. Plans for new product launches and seasonality will further drive demand.
As for the memory content per box, There is accelerated growth in demand for high memory density like 8 gigabyte DRAM and 256 gigabyte NAND, thanks to the ongoing penetration of 5 gs models and the growth in high end market, especially mobile phones that adopt 12 Gigabyte DRAM and 256 Gigabyte NAND are expected to be introduced in the market in the second half, which will further drive the mobile memory demand. In the server market, demand from hyperscale customers began to improve from the Q2 with growing investment in new data centers. Solid growth in demand is expected into the second half with the newly launched CPU driving replacement demand and corporate IT spending also picking up. And the improved performance by the new CPU will also drive up the memory content per box, likely to increase demand in the second half for high density server DRAM modules of 64 gigabytes or higher. Given such market environment, the memory market in the second half will continue to see favorable trends to be further aided by seasonality that will start in the Q3.
For NAND, in particular, improvement in the supply demand dynamics will accelerate, thanks to launch of new high density mobile products and strong demand for enterprise SSD. With the stronger than expected demand continuing this year, memory suppliers are utilizing their inventory as much as possible. In addition, DDR5 products are set to go into production next year. And with die size penalty versus DDR4 due to their on chip ECC feature, it is expected to affect DRAM supply thereafter. SK Hynix is planning for a low single digit bit shipment growth for DRAM and high 10% growth for NAND in the 3rd quarter.
For the year, we maintained the guidance given out in the Q1 that DRAM bit shipment is expected to be in line with market demand growth and NAND bit growth is planned to far outpace the market growth rate. The company's mainstream product for this year, DRAM 1Z Nano, went into full scale ramp up in the 2nd quarter, helping reduce unit cost. In the second half, the company will solidify its position in the DRAM market by actively addressing the 64 gigabyte or higher density server demand by expanding the production of 1z nanometer based 16 Gigabit Product. And 1a nanometer product, which applies EUV technology, recently started volume production for mobile application to be supplied to customers starting in the second half. DDR5, whose demand is expected to grow from next year, will also go into mass production in the second half of the year to ensure timely response to customers' needs and market's transition to DDR5.
For NAND, the company's mainstream product this year, the 128 layer, went over 50% in sales portion in the 2nd quarter, also contributing to unit cost reduction. The next generation, the 176 layer, will go into mass production by the end of this year, at which time the sales portion of 128 layer and 176 layer combined will be close to 80%. The company will aggressively expand a portion of the 128 layer, whose competitiveness is well recognized to respond to demand for new mobile products and e SSD that are expected to surge in the second half. This will help quicken the pace of improvement in non profitability to turn around to profit in the 3rd quarter and lay the basis for sustainable profit generation. Last is the company's ESG management activities and achievements in the previous quarter.
In April, the company received the highest rating from the Carbon Disclosure Project or CDP, a global project for information disclosure and environment. Of the approximately 9,000 participating global companies, SK Hynix earned top scores in climate change and water security in 2020 and was selected for the platinum club in climate change and awarded 1st prize for water security by CBP Korea. Particularly for the Platinum Club, the company has maintained its position for 8 years in a row since becoming the first member in Korea in 2013. We will keep up our efforts on climate change issues and water resource management to sustain the honor.
Sustainability Accounting Standards Board For the Hexunjagi Kishongwa, TCFD, Task Force on Climate Related Financial Disclosure,
In the Q2, we published the 2021 Sustainability Management Report faithfully reflecting the key standards of the SASB or the Sustainability Accounting Standards Board and the recommendations of the TCFD, Task Force on Climate Related Financial Disclosure. We also published the Human Rights Management Report for the first time, detailing the company's human rights related activities such as human rights management policy, risk management system, impact assessment and improvement activities. The company will keep up our effort to not only improve financial performance, but also ESG management and external communication to keep working towards sustainable growth. Thank you very much for your attention. And with that, we will now take your questions.
The first question will be presented by SK Kim from Daiwa Capital Markets. Please go ahead with your question.
First of all, congratulations on your performance. Now my question is pertaining to the DRAM market. Now in the Q2, we see that the DRAM prices up quite sharply. And then now in going into the Q3, of course, there is expectation that the prices will continue to rise. But at the same time, there appears some resistance against the price increase, especially for third products.
Now for the data centers as well, there are some concerns in the market regarding the inventory level among some of the data center customers. Now if in the second half, if the inventory continues to rise, Then there are some concerns among the investors that the prices might start to fall in the Q4 of the year. And also with the increased investment by the suppliers, there's also likelihood that supply will increase. So what is the company's view regarding the DRAM market in the second half? And also, if possible, what is your outlook Now first of all, let me state that your questions are quite complex and also includes very important points.
So Please understand that my response is going to be a bit longer winded than usual so that I will be able to fully respond to the questions. Now compared to looking back to the market early this year or even late last year, the most important question was the COVID situation or how we are going to recover the COVID situation. And then in response to that, how the suppliers were going to address the growing demand coming out of the COVID situation. So at that time, the thinking was that just utilizing the production capacity was not enough and that we had to tap into the inventory in order to fulfill the growing demand. Now looking at it from that perspective, then we see that demand starting this year was much stronger than expected and especially demand coming from the 5 gs based smartphones was stronger than expected as well as the demand for PCs.
So the demand in general was stronger than what we had initially expected at the early part of the year. And this, of course, resulted in, as is expected reduction in the inventory level on the supply side. Now looking at it from those big trends then, we see that in terms of the supply demand dynamics in the market, they are stronger than we had initially expected in the market, especially for the consumption demand. And then of course, there have been some corrections the demand because of the parts supply disruptions, but then not so much so that it would alter the fundamental course of the demand growth. So looking at the current trend, which are likely to continue into the end of this year and also all the way into next year, We believe that because of the demand both the demand and supply factors combined in the industry, we believe that for the industry overall, the inventory level will continue to decline.
Now also from the demand perspective, there are also a number of important factors that we have to watch out for in the second half and also into next year. Now in the second half, there are a number of commerce events that have been planned in various parts of the world. And Now into next year, we are likely to move further away from the COVID-nineteen situation, meaning that the demand recovery coming from the consumer sector will now then move on to the enterprise sector. So overall, we believe that the enterprise demand will be further stimulated moving into next year. And also after the COVID-nineteen, So in the post COVID era, we believe that there will be demand growth coming from the 5 gs stand alone clients.
So this will further stoke demand for the 5 gs smartphones as well, also combined with the growth in the 5 gs related infrastructure. So this means that compared to the pre COVID situation, the IT industry's time series, I would say, has pulled up by about 2 to 3 years. Now a bit more about the supply side. Now next year, looking at the market and the industry overall, Then we believe that continuous growth has to come from new and emerging technologies like the LPDDR or DDR5 or the EUV process. And this is likely to temporarily pull down the productivity, but also increase the product value.
So for the market in general, we believe that there is going to be continuous growth in the size of value.
The next question will be presented by Nicolas Gouda from UBS. Please go ahead with your question.
Good morning. Thanks for taking my questions. Going back to demand, I think what investors have been worried about is really any variations in demand into the second half of twenty twenty one. So maybe if you could broaden the spectrum beyond the ARM to NANDFASH as well And outline if you've seen any changes up or down in the second half of the year so far for specific segments. And you just commented on inventories for DRAM potentially coming down.
Could you maybe provide a little bit more color on what you expect each segments to do in the second half of the year and maybe non flash as well? And secondly, you just talked about DRAM 1 alpha nanometer production starting on the mobile side, it seems to be slightly early. How would you characterize yields so far? And what portion of wafer starts should be at 1.5 nanometer by Q4 of this year? And what's the broad target for
Well, now first regarding the demand by application in the second half. Now first regarding the server side, we see that the build demand continues to remain solid for server and also the related demand also remains largely unchanged.
High end
So for the server side, we see the demand likely to remain solid for some time, thanks to the CPUs that have been launched this year going into maturity and then also the new CPUs slated for launch next For PCs, now we actually see that compared to what we had expected, the demand coming from the customers was a bit stronger than our expectation. But then overall, for the demand for memory, now on the low end side, for the low end products, there had been some issues, especially for the Chromebook because of the part supply. But then we see that the demand actually has then shifted to the high end segment. So we see that for the low end memory mix, there is likely to be a lower mix, while for the high end, the memory mix is actually going to increase. So overall, this is going to even out the overall demand as well.
And then for the inventory level, now given the breadth of the parts supply issues across the SCM, it is very difficult for us to speak regarding the inventory for the industry under whole at this time. But then our outlook is that for the industry, So combining both the looking at both the demand and supply side, then looking at both factors and we believe that the inventory level will continue to decline into the end of this year and also into next year. And then regarding your question about the 1a nanometer. Yes, as you have also mentioned, we have started the volume production for the 18 nanometer product for mobile application. And as you would know, the the 18 nanometer product is the first time that SK Hynix is going to volume production utilizing the EUV technology.
Now having said that, Now although we are using the EUV technology for the 18 nanometer volume production, it also has somewhat of a testing purpose too. So this is also going to be the last product where the existing technology platform will be maintained. So yes, on one hand, we have the volume production and also so this also means that in terms of the yield, we have the economically viable yields so that we can go into the volume production. But also at the same time, in order to reach the cost crossover with the previous generation, it would take some time. But even though we are utilizing this technology platform, we believe that we will be able to have a rapid yield catch up.
The next question will be presented by Joo Yu Seo from HSBC. Please go ahead with your question.
I have some questions about NAND. First, I see that the company's margin for NAND business has been improving much more quickly than expected. And you have touched upon some of the factors earlier, but could you elaborate a bit more about the factors that are driving the margin improvement, for example, cost reduction? And also given the bit growth guidance, I believe that we can expect the margin to continue to improve. So what is the appropriate level of margin that the company sees?
If you could give us an outlook regarding that. And another question is about DRAM. And there are some concerns about the demand movements in the Q4 and early part of next year. So now depending on the demand situation, does the company have plans or plans to make changes to the CapEx implementation or maybe changes to your time line of the CapEx? Now first about the NAND market.
We see that demand continues to increase in the second half due to the new CPU launches in the server and also for the mobile side, the continuing penetration of 5 gs and new product launches. And combined with the favorable seasonality, we believe that the demand for NAND in the second half is likely to swiftly increase compared to the second quarter. And especially, there is demand for high density memory coming from the mobile companies in the Greater China region, which we believe will further drive demand. So overall, the demand for sales for the NAND in general will And then regarding your question about the appropriate margin for NAND. Now of course, for the company, the higher the margin, the better.
But then of course, what is important is sustainability as well. So as we had explained earlier, we are looking towards quarterly turnaround in the Q3 of this year. And for the year as well, we are expecting a turnaround to profit. And now for the 128 layer and 176 layer the 6 layer products. So based on these products, you would know the company's competitiveness.
So thanks to the competitiveness of these products, we believe that we will be able to maintain profitability next year as well. Having said that, there is the factor of the Intel NAND business acquisition, which we are planning to complete the closing of by the end of this year. So as a result of this, there could be some one off cost to be incurred next year. But then with the combination of these two businesses, we believe that the market share is going to increase quite considerably. And also in that process, there would be some synergy effect to be gained in cost as well, which is likely to more than offset the one off costs related to the combination.
So all in all, we believe that the NAND turnaround to profit for the medium to longer term will continue. And regarding your question about the DRAM market's implications on the CapEx plan. Now if I may take a step back and explain about the cycles in the market. Now usually, there are various cycles in the memory industry because compared to the fluctuations in the demand, it's not as easy to make adjustments to the CapEx on the supply side. And as a result of this, there have been some fluctuations in the cycle so far.
But what we are seeing more recently is that addressing the demand changes, there is a much quicker decisions regarding the investment changes on the supply side, meaning that the lead time has been much shortened. So this means that the speed to address the changing needs has also become much faster. And that is why the cycles that we are seeing recently are not the type of conventional or cycles that we are used to. So whenever there is a downtime, then demand will pick up more quickly than before. And also, likewise, any boom time is not going to last as long as it used to in the past.
And we believe that such changes bode well not only for the interest of the memory suppliers, But it is also better for the customer side, meaning that it is beneficial in increasing the overall social welfare. Now having said that, now for the let's say, any changes in the markets, then the company is also able to adjust the CapEx more agilely than before. And also but then at the same time, as we have explained earlier, Looking at the overall suppliers, then the inventory level, especially for DRAM, is considerably low at this time. So for next year, if the demand continues to grow at this pace, then we would have to make additional CapEx invest additional CapEx into the production capacity in order to fulfill the demand. And so the and because of this, what we have announced in the last quarter about our CapEx plan to fulfill the demand for next year will continue as planned.
Having said that, the CapEx size is not going to change because of the, let's say, growth in demand in the 4th quarter.
The next question will be presented by Hanro Do from NH Investments and Securities.
Now my question is regarding the DDR5. This was mentioned briefly earlier, but I believe that, that is one of the most hotly anticipated product in the market in 2022. Now with the DDR5, of course, the die density will grow, but also there will be some die size penalty as was mentioned. So with the launch of the DDR5, what does the company expect terms of any changes to the demand, supply or the pricings? Regarding the launch of the DDR5 next year, so yes, we believe that next year will is going to be the opening of the era of the DDR5.
Now looking at it from 2 perspective, one is from the demand side. We believe that the DDR5 is also going to drive the density for DRAM as well. So it is probably going to move the DRAM to a higher density. So for the by the end of the year, the 64 gigabyte in the DDR4 is going to reach close to the half line point. And we believe that this trend is going to continue in the segment next year.
And then from the perspective of the product value, now because the DDR5 offers very clear advantages in terms of performance and also combined with the new CPU to be launched next year, we believe that it will serve to further drive up the overall value of DRAM. And to make sure that we can launch the DDR5 products not only the server, but also for the PCs. We are leading the way, working together with the partners and customers in terms of the launch in the market and also for the ramp up of the production. And so we believe that the DDR5 will further solidify our competitiveness in the server market.
The next question will be presented by Dong Jae Woo from Bank of America. Please go ahead with your question.
Now since we are on the topic again regarding the DDR5, now currently, Intel CPU does not support DDR5. And then Intel also has the track record of having some delay in the launch of their new CPUs compared to the plan. So I wonder whether your outlook for the DDR5 is based on the assumption that the Intel's new CPU, for example, the Sapphire Rapid, will be launched on schedule in the Q2? And also or is it related to like other like AMD demand and so forth. Now regarding the let's say, the CPU suppliers or their, let's say, a time line in the past or in the future, I don't think we are in this position to make comments on that.
But for any factors, of course, we would have to think about the potential impact and be ready for it. So for next year, the launch of the DDR5 itself is going to be an event that is going to drive further demand. But of course, if there are some, let's say, unexpected factors that occur, then we believe that still there would healthy environment to keep driving demand. So for example, the CPU launched this year will be maturing. And then so there can be combined usage of like DDR4 and DDR5 and also the mix coming from both the mobile and the server side.
So we believe that the demand will continue to remain solid. And Of course, what you have mentioned is going to be one catalyst for demand, but we do not believe that that is going to turn into a big risk. Now then my follow-up question regarding the M16 fab. So the M16 fab has gone to operation, but I understand that at this site, there is no more land to build new facilities. And then in order to build a new fab in the Wonsanmen area, I understand that it would take at least a few years.
So do you believe that with the existing M16 size, it will be enough to sustain the business for next 3 to 5 years, for example, utilizing more EUV and also moving on to like 1B, 1C technology? And also, do you believe that you will have enough space for the clean rooms for the continuous tech migration? And in addition to that, I would like to gain a better understanding of the company's overall fab operation plan. So what we used to call the M10, so for their conversion to CMOS and also the facilities in Seongju. So what are your plans for those as well?
You're right that the new site that we have secured in the Wonsamyun of Yongmin, Now this is for the company to secure a new site for new fab. And but then, yes, for the also as you have mentioned, in the Icheon site, there is not enough land left to build another large scale fab. But the M16 fab, now it is much bigger in size than the existing fab. So for example, other fabs are 2 layered, whereas for the M16, it is 3 layered, including 1 layer for EUV. So in terms of capacity, it is much bigger than the existing fabs and it just got started in its operation.
So until we have the let's say, if necessary, until we have a new fab ready in in Yummin, we believe that it will provide us with enough capacity for the next few years. Having said that, of course, the memory industry tends to be very dynamic and also subject to rapid changes. So in the event of such drastic changes in the demand, then of course, we do have some backup options. For example, we could move some of the NAND capacity from M10 to Chengdu or also the M10, which is slightly outdated, so is not being fully utilized, maybe we can also put the M10 fab into more utilization. And of course, there is always the option of utilizing the Wuxi fab more actively.
So we do have such a backup plan, but then that but our assumption remains the same that the M16 capacity will provide us with enough capacity for the next few years. Let me make one correction. So I mentioned that if such a drastic demand occurs, then we could also move some of the NAND capacity from M10 to I'm sorry, M14 to
The next question will be presented by Min Sung Huang from Samsung Securities. Please go ahead with your question.
Now from the supply side, we see that one of your so your peers are increasing supply more than anticipated. And then also when it was announced that the some of the investment plan next year will be pulled up. The market reacted somewhat negatively. So what is the company's plan for the capacity for this year and next year for M16 DRAM and N15 NAND. So what do you believe is going to be the production capacity?
And also, it was mentioned that the industry's inventory in general is going to decline. So do you believe that this merits higher CapEx investments next year compared to this year? Now from the supplier side in the market, our perspective is of how we can provide enough supply to meet the demand coming from the market. So that, I would say, is the most important question for the supplier. So it's so what I mean is that we are not really thinking about or acting out of fear that what is increased CapEx leads to changes in the supply demand dynamics and also because of the competition among the suppliers.
So that is not our particular worry. It's more about how we are going to meet the strong demand coming from the market. And then regarding the wafer capacity at M15 and M16, I do not believe it is appropriate for me to make comments on them at this point. But again, our basic position is that there has to be sufficient CapEx investment made in order to fill the demand. But that so but then when we so what I mean by CapEx investment, it's not just about the absolute size.
It's more as a percentage out of the sales or EBITDA. So when we think of it in those terms, and I do not believe that it going to increase dramatically. So especially given the strong demand and the rise in the ASP, then I do not believe that the CapEx for next year as a percentage out of the sales or the EBITDA is going to increase all that much. So it is probably going to be maintained around at around the same level.
The last question will be presented by Jae Jae Park from JPMorgan. Please go ahead with your question.
My question first, I believe that the CFO also touched upon this earlier, but about the EUV adoption for the 1a nanometer. And I understand that the EUV adoption at this point is not significant. In other words, it's only applied for 1 layer. But then I also understand that the plan is to start applying the EUV at multiple layers for 1b nanometer products. And of course, I believe that each company would have different strategy for the EUV technology.
But then let's say for the 1b nanometer product compared to EUV process and non EUV process. What do you believe are the advantages of the EUV process? For example, is the die size going to be smaller or the process time going to be much shorter. So just about the advantages of the EUV process when applied to the 1b nanometer. And then my second question is a request for update on the Chinese authorities' approval for the Intel NAND business acquisition because I understand that the approval has not given yet.
So any update? For the 1A nanometer, yes, the EUV application is not that many in terms of the number of layers. And that is why, as I explained earlier, we are maintaining the existing technology platform and we are applying the EUV on the 1.8 nanometer products for testing purpose. And so as you have mentioned, different companies would have different approaches to the EUV. Some would try to put their existing EUV equipment to more utilization, while some might try to extend the use of the emergent technology as much as possible.
So I would say that we probably stand somewhere in the middle. And for us, we would also so and I believe that the different companies would have their own EUV adoption pace according to their circumstances. Now without going into much technical details, if I may just give you a high level explanation. Then for what's called the tech shrink, so going from 20 nanometer to 10 nanometer then to under 10 nanometer means that we get more chips out of 1 sheet of wafer. This also means that we can further reduce cost.
And now between the EUV and the Immersion technology, now EUV's wavelength is shorter, meaning that it is more conducive to enabling more detailed design on the wafer. And for the Immersion Technology, the length is longer. And also because of the inherent technical limitations, For certain designs, it had to go through the process 3 or 4 times in order to get the right design. But then for the same design, EUV can do this in one iteration, meaning that the number of process steps can be reduced quite a lot, which also is much helpful for cost reduction too. Now having said that EUV also has some challenges, especially when you're adopting for the first time, there could be some unexpected difficulties.
So depending on who can overcome such difficulties, how quickly would also spell the difference in securing the competitiveness. And your second question was about the approval for the Intel NAND Business acquisition. Now including China, we went through the antitrust review in 8 countries. And we have received the unconditional approval from 7 countries, including the U. S.
And the EU. So the last in the approval process is to come from China. And for this, what we are hoping for is to receive the approval in the in an appropriate time in the second half of the year so that we will be able to have the closing of the deal by the end of this year as we are planning to. So right now, the process in China is in the final review phase. Thank you very much.
That concludes the SK Hynix 2021 second quarter earnings release conference call. Thank you very much for your participation.