Hi. Good afternoon. Good morning, everyone, and thank you for standing by, and sorry for the delay. We ran into some technical issues, and we just solved it, and welcome to the AirTAC third quarter 2024 earnings call. I'm today's host, Angela Xu from Citi's Taiwan Consumer and Industrial Research. With me today on the call is CFO, Mr. Ivan Tsao. Following the presentation, we will conduct a Q&A section, and to make the call run more efficiently during Q&A, if you wish to ask questions, please click the raise hand button. You can unmute yourself and ask questions to the management after we call your name. With that, I will turn over the call to Ivan. Ivan, the floor is yours now. Thank you.
Thank you, Angela. Good day, everybody. This is Ivan Tsao from AirTAC, and welcome to join this conference call. As usual, let me brief our third quarter result and current market situation. In general, the basic demand for pneumatic is driven by the rising labor costs and declining labor population. Especially for the declining labor population, the number of new births has been lower than people's deaths from the year 2021 in China. Young generations don't want to work, or they don't want to work in bad environments. Companies have to improve automation. Even they don't want to add additional new capacity, but they still have to improve. Their automation level of their existing capacity is to be better automated. Pneumatic is replacing simple manpower to improve automation and also has capacity demand and component replacement demand at the same time.
Whenever there are production activities, they need to replace pneumatic on their existing process. However, the economy declined in China over the past two to three years as many caused by abnormal control from the China government and also from late 2021. And people seem to lose confidence in government policies. And they just spend money on meal, on traveling, limited on any product consumption. It hurts China's coming demand. And even AirTAC continues to launch more new items to support more existing customers, approach more new customers, and get more shares from the market to dilute such negative impact of the weak demand. But the overall shipment situation is still not as our expected. Especially in this third quarter, we have several factors that lead to a relative lower profit margin.
Firstly, in addition to weak demand, some customers delay their orders or shipments while waiting for the implementation details of the incentive policies issued by local government and the result of the U.S. presidential election. Shipments lower than our expected and resulting in a low capacity reduction rate and suffer worse fixed cost leverage . We currently expect to increase our reduction rate gradually, starting from late November or early December to improve the fixed cost leverage .
Secondly, as usual, we increase our employees' basic salary by 3% to 5% in July each year, which usually takes around two quarters to dilute such negative impact and recover our labor efficiency and also can improve our margins. Third one, the agreement between China and Taiwan, ECFA, on tariffs has been partially canceled from this third quarter. We have to bear higher tariff costs between the transaction of China and Taiwan subsidiaries.
This issue reduced our gross margin for the third quarter by about 0.5 percentage points . We have begun to relocate some items' production sites between our China factories and Taiwan factories. Instead to resolve this issue from fourth quarter of 2024 to first half of 2025, then we can dilute such or decrease or terminate, even terminate such negative impact from the tariff between China and Taiwan. Next, I will announce the company's third quarter financial result. Unaudited consolidated revenue for the third quarter of 2024 was RMB 1,639,000,000, a 5% decline year-on-year. Gross profit was RMB 759,000,000, a 5% decline year-on-year. Gross margin was 46.33%. Operating income was RMB 459,000,000, a 10% decline year-on-year. Operating margin was 28.04%.
Non-operating income was RMB 24,000,000, including 21 million of FX gains, 10 million loss on equipment disposal, which comes from the disposal of the replacement of equipment and to improve our production, automation, and production efficiency. Nine million subsidy from government, another five million of interest income, and five million of interest expenses. Income before income tax was RMB 483,000,000, a 15% decline year-on-year. Pre-tax margin was 29.52%. Net profit was RMB 384,000,000, a 13% decline year-on-year. Net profit margin was 23.47%. EPS for the third quarter of 2024 was $20.866 and $29.11 for the first three quarters of 2024. Inventory turnover days was around 151 days and 121 days for the receivable turnover day. Those two numbers are still healthy and also have maintained stable for years.
Revenue from top eight industries for the third quarter of 2024, the biggest one still was electronics, around 28% to our consolidated revenue. It's a 22% growth year-on-year. Second one, packaging was around 9% to revenue, 4% growth. Auto was 8% to revenue, 20% growth. Battery was around 8% to revenue, 40% declined. General machinery was around 7% to revenue, 3% growth. Machine tools was 7% to revenue, 28% growth. Textile and dressing machinery was 5% to revenue, 29% growth year-on-year. The energy lighting was 4% to revenue. It's 78% declined. By the way, the proportion of revenue from the aforementioned industry is only for direct customers' revenue, excluding 30% of the monthly revenue from distributors.
For current market situation, although there is noise in the market regarding China's economy situation, we believe Chinese government will focus on economy improvement after they resolve most of the political issue. They also have timely proposed verbal announcements or substantive incentive policies in the past couple of months. We expect more and more customers will restore their confidence and accelerate their capacity expansion plan. As the demand of various industries for pneumatic components in coming quarters, we expect electronics customers' demand or electronics industry demand will be stronger than past three years. Even could be a similar percentage as stated in past couple of quarters. Not just only most of our customers' customers have purchased most of their inventory and placed more orders to our customers, but also they say there could be more new models launched in the first half of 2025.
Customers used to build their new production line three to five months ago or three to five months before their launching day. Even though we cannot ensure whether the electronics industry can maintain a revenue growth rate of 20% to 30%, even higher percentage in coming quarters, there could be a double-digit opportunity to maintain. There still could be a great opportunity to maintain double-digit growth in coming quarters or in 2025. Better revenue growth from auto industry also could be expected in coming quarters or coming years, mostly caused by share gain, and we have built up our brand image in auto customers, and we still can sustain better market share in auto industry in coming quarters and enjoy better revenue growth from auto. Moreover, some traditional demand like textile, machinery, machine tools, and packaging also has been better from late last year.
Chinese government has reiterated its intention to expand the incentive scale of new equipment to replace old equipment. We expect those traditional industries to enjoy double-digit growth in coming quarters. However, we still have to suffer with demand from battery and solar due to high comparison base and some noise on over-expansion or over-capacity. It will be low base in 2025 from those two industries. The revenue percentage of those two industries also has decreased from 28% in 2023 to 12% currently. Even the impact of such weak demand from battery and solar, but we expect the impact will be lower and lower from those two industries. Once we have a better growth from electronics, traditional application, and automotive industry, and lower impact from battery and solar, it could be not difficult to sustain double-digit growth for 2025 from shipment.
Even if it's still too early to tell the guidance number of our 2025 operations to the market, but we still expect the shipment of 2025 should be much better than 2024. Pricing is reasonable for pneumatic. And the weakness of the Japanese yen won't affect the competition with our Japanese peers, mainly because the raw material accounts for around 40% to 50% of cost of goods. And most of the material costs are metal materials. Even if Japan has not produced too much metal, and they still have to buy those metal materials from foreign suppliers. Once the yen weakens, they have to spend higher raw material cost. Even if they can benefit from their Japanese production overhead and labor cost. In addition, the production capacity of our main competitors in Japan is around 40%. And another 30-plus percent is in China.
The currency impact should be similar to AirTAC. So basically, whenever the Japanese yen is weaker or stronger, it never impacts or affects the competition between AirTAC and Japanese peers. And raw materials pricing still budgeted in the reasonable range, which will be a little friendly for our profit margin in 2024 compared to 2025. In addition, the company is continuing to improve material application and reduce our production cost. And OP margin still will depend on the revenue scale and capacity utilization rate. Even we still can improve our margin by launching more high-end new items and continue to improve our internal production efficiency. Our current production capacity utilization rate is around 85% to 90% for pneumatic and just around 30% for linear guides . The production cycle of pneumatic components is long, and most of them are made by metal materials.
The inventory write-off risk could be very limited. Pneumatic component is a short lead time business. No matter the economy is good or bad, its visibility is just around one month. Also, whenever the economy is good or bad, this industry doesn't have to digest inventory in the sales channel or customer side because most of the inventory is staying on manufacturer warehouse. We are not sure whether the demand for the next quarter or next year will be good or bad. We can only predict the shipment or revenue based on our experience, market situation, and feedback from our customers.
We still expect the shipment in fourth quarter, even in 2025, would be better than past three quarters, not just caused by those postponed orders or demand from customers waiting for the local government implement more detail of the incentive policy, U.S. president elections, and the more new models will be launched in the first half of 2025. Shipment could be better from November or December of 2024 and also could extend it to 2025. We also expect China government will release more stimulus policies to accelerate the demand. Also could restore people's confidence and spend more money on consumption, and more customers will expand their capacity or CapEx aggressively. Our CapEx in 2024, even 2025, 2026, still could be 2-3 billion NT. We have generated free cash flow and still can improve it.
We also have increased our cash-to-income payout ratio to 50% in 2024 and also could be higher in coming years. The company does not have any greenshoe plans in the short term. We also don't have any plan to do any fundraising or private issue. That's my briefing, and we could discuss all your questions. Thank you.
Thank you, Ivan, for the very comprehensive presentation. Again, for Q&A section, if you wish to ask questions, please raise your hand, and we will call your name. From my end, I actually have one follow-up for the third quarter result. Ivan, you mentioned about the ECFA cancellation actually caused a bit of gross margin contraction in third quarter. I just wondered how much of the total shipment in China is from Taiwan facilities?
We have different items produced in different factories. The amount of transactions between the subsidiaries still depends on customers and demand. It could vary by each month. Okay. Okay. From this June, we have a plan to move some production from the Taiwan factory to the China factory. Then we can decrease the tariff between our subsidiary transactions.
Got it. You mentioned the impact on gross margin is about 0.5 percentage point, is it correct?
Correct.
Okay. Just double-check. We expect we are able to move or lower the impact by first half of next year?
Yes. Basically, yes. Yeah. The impact will be diluted from fourth quarter depending on various production or various items relocated from Taiwan factory to China factory.
Got it. Thank you for that. Also for the forward-looking perspective you just shared with us.
[Foreign Language]
Sorry for that. So do we still maintain our view that fourth quarter sales will improve quarter over quarter? And in terms of the end industry, which sector would be the key driver for fourth quarter in your view?
Yeah. Basically, the lead time is short. So we're just based on some customers' total AirTAC. They have postponed their shipment or demand caused by the local government have not implemented their incentive policy details. And some customers, they still want to wait the result of the U.S. presidential election, then they will do more capacity expansion plans. And the other reason why we expect fourth quarter quarterly revenue will be better than third quarter, it could be some new model launched in the first half of 2025. And before their launching day, by three to five months, some of the customers will build up their production line, then it could support fourth quarter revenue of this year. Got it.
Okay. So Ming, please, you can ask a question now.
Okay. Thank you, Angela and Ivan. Yeah, I got two questions. So the first question, Ivan, could you comment on the current pricing environment for both linear guide and ball screw? And what is our major competitors' pricing strategies for these two major products? Thank you, Ivan.
We don't have ball screw product currently. And linear guide, because of the weak demand from early October 2023, most of the peers or their distributors have increased in price aggressively. And it could be high 10%, even 20 percentage points, 20 percentage points from early October 2023 to maybe second quarter of 2024. But in third quarter, maybe such pricing could be a little stable in low label. And based on past experience, they have to wait the demand recovered, then peers will increase their price. And pricing for pneumatic is still pretty reasonable. We won't say there is no pricing change, but selective items for selective customers still have some pricing competition. But basically, it's pretty reasonable for pneumatic market.
Thank you. Okay. I think I've ended my second question. Since you mentioned that the 4Q shipment should be better than third quarter, and the impact from ECFA in 4Q should be milder as well. So for your OP margin, do you expect to improve QOQ in fourth quarter?
Basically, once we have a better revenue scale, quarterly revenue scale in fourth quarter, the OP margin should be better than third quarter of the year. We have relocated our product production site from Taiwan to China factory gradually. Some of the items' production line may be a little simple. It could be completed in fourth quarter of this year. Most of the items still have to extend it to first half of next year. We can complete it most of the relocation.
Thank you, Ivan. One more question. Since your utilization rate for pneumatic component is above 80% now, what is your plan for the CapEx for 2025?
We have not finalized our forecast or budget for 2025. Basically, we still will spend some CapEx to improve our equipment productivity. We're still in construction, constructing some buildings for basic new products. Basically, the CapEx number in 2025 still could be around TWD 2-3 billion. It still depends on the shipment and market situation.
Thank you, Ivan. That's all my questions.
Thank you.
Hello, Bill. You can ask a question now. Thank you.
Okay. Thanks, Angela. Thanks, Ivan. Just one quick question from my side. I just want to check what is the linear guide sales numbers in third quarter. And as the company started to be more flexible on the linear guide promotion, do you see more progress of the clients willing to use our product in recent months? And what to do if that group to be next year? Thank you.
Yeah. Basically, the overall demand of linear guide in the market is still pretty weak. And our pricing, before we change our pricing range in mid to late of July, the gap just around single digit is not good enough to convince customers to change their linear guide price to AirTAC. And after we change our pricing range, and we still need to take one to two months to promote to our customers. And customers still have some inventory from their existing linear guide prices. So even our order book in this August or September has been a little better than first half of this year. But the additional revenue contribution is still pretty limited because P plus Q. Better Q, but lower P. And more and more customers, they talk to AirTAC. They will replace or place some orders from other suppliers to AirTAC gradually. And they still take time to improve our shipment of linear guide.
But basically, once we have a higher pricing gap lower than Taiwanese peers or Japanese peers, and also expect the market demand will be a little better in coming quarters, the pricing gap will be increased. Then we can convince more customers to place more linear guide orders to AirTAC in coming quarters. And even our shipment in 2024 of linear guide still will be lower than our peers. And year to date, it could be around 30-plus% growth year-on-year. And we still expect we could have such number growth in 2025. But at the same time, we have not finalized our forecast or budget for 2025. It's just a rough projection or expectation for linear guide shipment. Thank you.
Okay. Thanks, Ivan.
Next question, Jeremy. Please unmute yourself, please.
Okay. Yeah. Just a quick question with regards to your comment about some customers delaying their shipments until after the U.S. elections. In your conversations with them, do you think that there's a difference in their decision whether or not Trump is going to win or if Harris wins? I mean, just because there might be a different interpretation on the risk of tariffs, right?
Yeah. Basically, whoever will win this election, it's just the difference between it's bad or worse, and even if it's bad, it's just a difference between the bad or worse. But some customers still will base on different candidate policies to decide or change their expansion plan, so just part of the customers delay to AirTAC. They want to wait the election. But the essential reason why the demand or shipment is weak in China market mostly is still caused by people don't have too high confidence of government, or they're limited on end product consumption. So China governments still have to release more incentive policies to restore people's confidence and spend more money on consumption. And election just a very small percentage impact to the shipment in third quarter of the year.
I see. Okay. So basically, their view is that, I guess, the China's domestic stimulus is more important than the geopolitics. Thank you.
Yeah. Yeah. Basically, yes.
Ivan, I have a follow-up question. Your plan to move more orders to China facility from Taiwan. So how do we deal with our capacity in Taiwan plant if we continue to allocate more orders to China facility? If it's running at lower utilization in Taiwan facility, would it affect our margins?
Basically, we accrue all the direct labor cost and all the depreciation expenses in income statement in China production. So even the utilization rate is lower, it won't impact our margin too much because all of those related expenses have in income statement items already. But the production efficiency in our China factory is still higher than our Taiwan factory. So once we relocate some production from Taiwan factory to China factory, it's good for our consolidated margins.
Got it. Okay. Thank you. The next question comes from Derrick, please. Okay.
Thanks, Angela and Ivan. I just got one question. Ivan, I'm not sure if you right now have a new target for your linear guide business revenue for 2024? That's the one. And also, could you give us some color regarding your price gap versus your Taiwanese peers after the price adjustment in 3Q?
Yeah, by end of the year. So basically, we still expect the shipment from this November or December will be better. So we don't want to talk any numbers for the linear guide revenue for 2025. There's still some uncertainty in the next two months. And pricing gap depends. I mentioned from mid to late this July, we have changed our pricing range. And we also divided our potential customers by different levels based on their total linear guide demand and give them different kinds of discounts. So the pricing gap between AirTAC and Japanese or Taiwanese peers based on what kind of customers. The highest one, the gap could be 20% again. And lower one still could be single digit or 10% lower than Taiwanese peers based on their current market price.
Okay. Thank you, Ivan. I appreciate it.
Next question comes from Kenny. Please unmute yourself.
Thanks, Angela. And hi, Ivan. I have a couple of questions. The first one is, you just mentioned that fourth quarter's shipments could be possibly better than third quarter. I'm wondering if that's applied for both pneumatic and linear guides, and which products are you seeing better demand for the final quarter of this year?
We just base on the overall consumption or scenario to expect fourth quarter shipment will be better than third quarter shipment. And basically, we don't want to divide it to it's coming from pneumatic or linear guides' weight . And linear guides, there's still so much addressable market for AirTAC. Just the market demand is pretty weak. Customers can get much cheaper linear guide from their existing suppliers. They are now urging to transfer or change their linear guide supplier to AirTAC. But once we continue to promote our linear guide product and convince customers, we have a higher pricing gap or much lower pricing than their existing suppliers. Maybe still can encourage some customers to change their linear guide supplier to AirTAC in coming months or coming quarters.
Okay. Got it. Understood. Another question is that regarding overseas market situation, could you share a little bit on the shipment growth situation for this year? And how do you expect them to be in coming quarters? And also, do you consider to disclose the percentage and growth rate going forward in coming quarters if you think the time is right? Thank you.
Yeah. Basically, the time is short. We don't want to disclose any revenue growth rate from overseas market or China market. We just will support or provide consolidated revenue growth rate in coming quarters, in coming years. The issue of our non-China business still could be similar to our China business 10 to 20 years ago, brand image. Pneumatic component is a complicated component. Many customers have very deep brand image. Japanese made, European made, better than China. We spent more than 10 years in China than we have a better progress in past 10 years. We still try to extend such progress from China market to our non-China market. We have recruited more local salespeople and also attend more customer satisfaction to improve our brand image in non-China market. Progress has been better in past three years.
And the revenue growth rate also has been higher than China revenue growth rate. So we still will increase our take-up of those people in non-China market. And the progress in Europe and North America also could be better than other areas or countries and still could be improved. And basically, all of our non-China sales team have to do is to promote our product aggressively. In addition, pneumatic component is a complicated component. Also, it's an industrial component, but it's very small percentage to customers' total production cost. So it's not easy to convince customers to change their pneumatic component suppliers to pneumatic component in China. And we have linear guide product already. So we have asked our non-China sales team not just to improve our pneumatic component business, they also have to promote our linear guide product aggressively.
Maybe some of the customers, they don't want to buy pneumatic from AirTAC in the past. But linear guide is a higher ASP or higher percentage to customers' total production cost. Also could be a little simpler than pneumatic. So we could convince customers to buy linear guide from AirTAC in a range. And once they buy linear guide from AirTAC and also could be supported by AirTAC, good product quality, good sales service supply time, and lower pricing, maybe a time later, a period later, they can buy pneumatic from AirTAC, not just buy linear guide from AirTAC. So basically, our sales rate in China, we try to apply pneumatic T o improve our linear guide business in China. But we try to extend our linear guide business to bring more pneumatic businesses to AirTAC in overseas market in coming years. Thank you.
Thank you so much. Thank you, Ivan.
Thank you. And next question comes from Jodie. Please unmute yourself and ask questions. Thank you.
Thank you, Angela. Hi, Ivan. Can you hear me okay?
Yes. Hi, Jodie. Yeah.
Hi, Ivan. Thank you very much for sharing. I have two questions. The first one is, now it's end of October, so I wonder if you could comment on the demand trend you see in October, maybe from a high level. Do you see any potential improvement? That's my first question. Thank you.
Y eah. Basically, the average day shipment in October still could be higher than November, sorry, higher than September or third quarter. But because the national holidays in October, the working days could be two to three days less than September. So the monthly revenue of this October still will be lower than September. But the average daily shipment of October could be higher than September. And the order book or book-to-bill ratio has been higher than third quarter in October already. So basically, we still expect the government, the Chinese government, they released more stimulus policies and tried to restore people's confidence. Maybe they still have some improvement in past one month already. And we still expect such improvement to sustain to next couple of months, even 2025, continually.
That's very helpful. Thank you very much. My second question is about GP margin. I think this quarter, the GP margin is about 100 basis points lower than last quarter. I think just now you mentioned the tariff impact about 50 basis points. And for the other 50 basis points, I wonder, is it mainly due to our linear guide price cuts, or is there any other reason for that? Thank you.
There could be so many reasons why you mentioned the linear guide price cut. It still will have some negative impact in the short term. Unless the utilization rate will be better and better in coming quarters, then they can dilute some price cut negative impact, and [the] lower utilization rate in third quarter of 2023, even if it could be a little low season compared to second quarter, but we still sustain our utilization rate to be around 90% to 95%. But the shipment in third quarter of this year could be much weaker than how we expected. And in this July and August, we expect third quarter shipment will recover or will improve caused by the Third Plenary Session of the meeting. And most of the customers, they expect more stimulus policies will be launched after this meeting.
But the conclusion of this meeting, the announcement seems not as high expectation as customers think. So shipment is lower, but we have built up a little high inventory in July already, in late of June or early of July already. So utilization rate in third quarter or in August, September, just around 90%, even lower than 90%. So revenue scale and the utilization rate also is negative to this third quarter's gross margin.
Got it. Thank you very much, Ivan.
My pleasure.
Thank you, Jodie. And next question comes from Joe. Please unmute yourself and ask questions. Thank you.
Okay. Thank you. Hi, Ivan. Thank you for taking my questions. Can you comment a little bit more on the competition landscape in pneumatic component market, especially our initiatives of launching more SKU to catch up with our competitors? Do we see any market share gain, and how should we expect the contributions from this SKU in the next year? Thank you.
Yeah. Basically, we still will base on market demand to launch more new items in coming years, and we just have around 240,000 or 250,000 items currently, still much less than main competitors, 700,000 items. Even we have not delivered pretty good results in third quarter or year to date, but as we know, the other two main competitors, their China business has since declined by 10% year to date. Basically, we still get shares, and our current market share in China of pneumatic could be 28% to 29% by value, but once by volume, maybe we have been similar to SMC's China market share.
Basically, we still try to achieve our expectation by the year ended on 2028 or 2030. We still expect we could have 30-plus to 35% China pneumatic component market share. And so far, we still enjoy pretty good market share in China pneumatic component market. And we still try to improve it and sustain it.
Thank you. Thank you. And a very quick follow-up regarding the competition. Since the demand in pneumatic component is very sluggish in China, do we see more intensified competition coming, especially from the local brands since they can offer very large price discounts and our customers are more price sensitive now?
Yeah. Maybe you have heard some big company or listed company in China try to enter a pneumatic component market. But basically, it's very difficult for them to compete with SMC, Festo, and AirTAC. Mostly, the SKUs of pneumatic component could be pretty high or so many SKUs, 700,000 items for SMC, Festo, 250,000 items for AirTAC. So many SKUs and have to support customers in very short time. Then you have to build enough inventory for each item to support customers lead time in one to two weeks. At the same time, you have to keep very high manufacturing efficiency for production plan, production product quality, unit production cost, inventory management, so many measurements, made the entry barrier very much higher. The company Huayu tried to mention, they have announced want to enter a pneumatic market from late 2021 or 2022, have been three or four years.
They did not set up new companies. They bought existing pneumatic players in China, but have been three or four years. We have not heard so many SKUs of pneumatic that launched to support customers. So basically, we still will observe competitors in current international peers or local China players closely and also will react to any condition from any peers to sustain market share improvement for AirTAC pneumatic business. Thank you.
Thank you, Ivan.
Thank you, Joe. And our next question comes from Derrick. Please unmute yourself and you can ask questions. Hi, Derrick.
Oh, sorry. My question has been answered. Sorry about that.
Oh, okay. No worries. Right. So due to the tight constraint, we can take one more questions from one more investor. So again, if you wish to ask questions, you can raise hand and we will call your name. Right. So Ivan, I have one quick follow-up. So for auto industry, earlier you shared in the commentary, you mentioned about share gain. So where does the share gain mostly come from? Is it from local players or foreign players?
Maybe both. Basically, we just have second tier or third tier auto customers in the past. But from around four years ago, because the car sales was not so good for those traditional auto customers. And they also have some production cost pressure. It made a pretty good opportunity for AirTAC to support their non-core production process first. And after they apply an AirTAC product and find it's good enough, then we can increase supporting to customers. And we also have some local Tier 1 auto customers or limited from international auto customers. So basically, we still can increase our supporting to those auto customers in coming years and also can enjoy pretty good revenue growth from auto business. Thank you.
Got it. Thank you. And for electronics, is it possible for us to break into more semi-related industry?
Yeah. Basically, we still have some items can support semi-customers. But just the percentage could not be as high as SMC did. But basically, we still will launch more items, new items related to semi-customers' demand gradually.
Got it. Thank you. All right. Final call for questions. Hi, Willie. You can ask questions.
Thank you, Angela. Thanks, Ivan. So regarding to the semiconductor product you mentioned, I remember previously you talked about we don't have a plan to get into semiconductor because that's SMC's main territory. Are we changing our strategy right now? And then do you have a target that semi will be in our product portfolio, a percentage that will be in our portfolio in maybe two to three years' timeframe?
Basically, a single item can support so many different applications, different customers, include semi. And we still don't want to talk too much about this issue. We say we are a local China company, and we can enjoy the China government local procurement policies. We have some cooperation with some customers. So far, I just can tell you to this stage. We still want to keep some confidential for customers. Sorry about that. Thank you.
Are you receiving orders from semi-client now already?
Maybe we don't want to talk this issue. Sorry about that.
Got you. Sorry, one last on the numbers. For linear guide sales, just want to confirm that in the first nine months, it was up about 30%. Is that the current numbers? You mean linear guide revenue growth rate?
Yes, yes. Yeah. Year to date or year the first nine months of our linear guide revenue could be around CNY 377 million. The same period last year was around CNY 277 million. It could be around 30-plus% growth year to date.
Got you. Thank you so much.
My pleasure.
All right. It's 5:00 P.M. now, and we will have to end the call here. Thank you for dialing in, and thank you, Ivan, for sharing all the helpful information with us. Again, sorry for the delay. Have a great day and stay safe and sound. Thank you and see you next time. Bye-bye.
Thank you, Angela. Thank you, everybody. Thank you. Thank you and keep safe.