Earnings Call: Q1 2026

Apr 29, 2026

Dear investors and media friends, good afternoon. Welcome to Lite-On Technology's Q1 2026 earnings conference. With the rapid upgrading of the AI industry, client demand and project visibility have largely improved. Lite-On is actively seizing this structural growth opportunity, accelerating deployment and investment of its locations in key global markets and getting closer to the core markets of major clients of AI infrastructure. Please wait a moment. The meeting will begin shortly. The senior executives present today include President Anson Chiu. Thank you. CFO, K.T. Lim. Thank you so much. Today's agenda consists of three parts. First, CFO KT will explain the financial and business performance for Q1 2026. Next, President Anson will explain the company's operational outlook and growth strategy. During the Q&A session, Anson and KT will provide further explanations for you. First, CFO KT will explain the financial results for Q1 2026. Good afternoon, everyone. First of all, I'm going to present to you the financial results for Q1 2026. Lite-On Technology's Q1 revenue was TWD 43.4 billion, GP TWD 9.4 billion, with a rate of 21.7%, OP TWD 4.1 billion, with a rate of 9.4%. Net profit after tax, TWD 3.78 billion, EPS TWD 1.66. Overall, Q1 revenue went up nearly 20% YOY, with cloud and AIoT revenue growing by more than 70% YOY. It's down 2% QOQ due to the structural adjustments of the consumer industry and also the slowdown in non-cloud businesses. GP went up 14% YOY with a rate of 21.7%. OP went up 12% YOY with a rate of 9.4%. In Q1, in accordance with prudent accounting principles, we proactively conducted a comprehensive review of low turnover inventory and made a one-time provision for inventory write-downs about, representing about 1.1% of revenue to bring our inventory structure closer to the current operational situation. Excluding this one-off impact, GPM in Q1 was 22.8% and OPM was 10.5%. This is a one-time adjustment and relevant products will continue to be sold. Net profit after tax, TWD 3.78 billion, EPS TWD 1.66, up 10% year-over-year, which is a new high year-over-year in the past 5 years. Revenue and profit of the three major segments in Q1 2026. Revenue of the 3 major segments grew by 19% YOY in Q1, OP TWD 4.1 billion, up 12% YOY, in which cloud and AIoT revenue was TWD 22.9 billion, up nearly 50% YOY, accounting for 53% of total revenue. It's benefiting from the shipment growth of next-generation high-end cloud power products, OP TWD 3.4 billion, up 60% YOY, which demonstrates our significant growth momentum. Optoelectronics revenue was TWD 7.2 billion, up 5% YOY, accounting for 17% of total revenue. High-end visible light, cloud computing, and infrared core applications in optoelectronic semiconductors continue to grow. OP was TWD 500 million, up 4% YOY. ITC revenue was TWD 13.3 billion, down 5% YOY, accounting for 30% of the total revenue. Despite the restructuring of the consumer electronics industry, the momentum of new products has increased. In particular, demand for low Earth orbit satellite power is strong, and Lite-On is a major global supplier. OP was TWD 800 million. Overall, we continue to strengthen high-growth, high-value businesses, driving a simultaneous growth in operating scale and profitability. Now let's look at our balance sheet. In Q1, accounts receivable went up by TWD 1 billion in current assets. Inventory went up by TWD 9.7 billion QOQ. This is mainly due to strategic procurement and advanced stockpiling. In current liabilities, short-term bank loans went down by TWD 6.5 billion QOQ. Accounts payable went up by TWD 5 billion QOQ. In Q1, current assets went up by TWD 1.3 billion QOQ. Current liabilities went up by TWD 6.9 billion. Quick ratio and current ratio are 1.01 and 1.42 times respectively. As you can see, net cash position, net cash position TWD 54.6 billion, down TWD 3.3 billion QOQ, mainly due to the CapEx of TWD 2.7 billion and the acquisition of U-Media for about TWD 800 million. Next, starting from 2022, high-value businesses have boosted revenue and profit, resulting in excellent annual growth. Benefiting from the growth of high-value cloud computing businesses, the revenue share of cloud and AIoT went up to 53% in Q1. Back in Q1 2022, the share was 31%, representing an 80% increase. GPM in Q1 was 22.8%, OPM 10.5%, EPS TWD 1.66. High-value businesses have continued to drive excellent annual growth in revenue and profit. Overview for Q1 2026. Revenue TWD 43.4 billion, up 19% YOY, in which cloud and AIoT went up nearly 50% YOY. Excluding inventory write-downs, GPM was 22.8% and OPM 10.5%. Benefiting from strong demand for AI infrastructure, global production capacity continues to expand. The proportion of high-value businesses is increasing, coupled with the synergy of close collaboration of the supply chain. Net profit after tax TWD 3.78 billion, EPS TWD 1.66, up 10% YOY, which is the highest YOY in nearly 5 years. In Q1, in terms of core businesses, benefiting from smooth shipments of high-end AI server power, cloud computing products, and power management systems, cloud and AIoT revenue grew by more than 70% YOY. Visible light cloud computing and infrared core applications in optoelectronic semiconductors continue to grow. In ITC, shipments of high-end power and low Earth orbit satellite power went up YOY as well. Next, I'm going to talk to you about the BOD resolutions this morning. In order to strengthen core businesses, pursue cross-border M&As, and accelerate overseas expansion to support AI infrastructure and strategic growth, the BOD this morning made the following resolutions. First, the U.S. investment of $919 million is used for long-term investment in land, factories, and equipment to expand energy products and production capacity for AI infrastructure. Second, the Vietnamese subsidiaries' capital increase of $149 million aims to support operational growth and capacity expansion. Next, in terms of expanding CapEx, upgrading from power supply to an AI system integration solution partner, we proactively plan for forward-looking technologies and production capacity in the AI era, such as AI energy infrastructure and system integration. By leveraging core technologies and investments, we can enhance competitiveness advantages of Lite-On and lay the foundation for industrial restructuring. We strengthen our presence in North America and globally, establish key locations in core AI markets, meet supply chain localization needs, and enhance operational resilience and customer loyalty. Third, diversification of fundraising channels. In response to potential cross-border M&A opportunities related to AI infrastructure, we have prepared a system for global M&A and capital utilization in advance to support the company's mid to long-term growth strategy. We aim to promote the internationalization and diversification of fundraising channels. The shareholders meeting requests that the BOD be authorized to handle and announce any actual funding needs in accordance with relevant laws and regulations, subject to careful resolution and approval. This concludes my brief presentation in terms of Lite-On's Q1 performance. Now I'm going to give the floor to Anson. Okay. Thank you, KT. I would also like to thank our investment partners and our friends from the media for attending our investors' conference for the first quarter of 2026. Thank you for coming to this overview of our operating results. First, I would like to give a quick look back at our first quarter. As you all know, the external environment for this quarter was greatly affected by geopolitical factors and the price of materials, fluctuations in the price of materials. These were all unfavorable factors. Thanks to a growth in demand in AI energy management systems, our revenue grew by nearly 20% year-over-year, and this represents the second straight year that our first quarter revenue grew by double digits year-over-year. This shows that our company is on a sustained growth trajectory. In the first quarter, some of our customers were affected by the tightness of the supply and materials, as well as rising material costs. Some consumer products saw delays into the second quarter. That's why our revenues grew year-over-year, but declined quarter-over-quarter by 2%. I wanted to give you an explanation of why. Looking ahead to the second quarter, I think there are still many uncontrollable and uncertain factors in the external environment. With cloud service providers introducing new ASIC platforms and using new GPUs, the demand for AI energy management systems is still very high, whether we're talking about in-rack power shelves or key modules for the 50 volts integrated power rack. We forecast that our revenues for the second quarter will be driven by demand in products such as the 33 kilowatt power shelf, the 8.5 kilowatt PSU and BBU, and the power supply for low Earth orbit satellites, as KT said. Our second quarter operations will see continued growth. We anticipate that revenues and profits for the second quarter will be higher than that of the first quarter. At the same time, the new generation 110 kilowatt power shelf is proceeding smoothly, and we project that they will enter mass production in June. As for liquid cooling solutions, the in-rack CDU will begin small shipments to customers in the second quarter. These new products will all contribute to a sustained improvement in revenues and profits for the future. As for networking products, AI RAN is the most crucial product for us, and these products will begin shipments in the 2nd quarter. The commercial deployments will also grow in scale, driving telecom operators to accelerate their investments into upgrading their network infrastructure. We have also completed our acquisition of U-Media Communications. Through integrating FWA products and key technologies, we will strengthen our strategic presence in the corporate communication technologies and in AI RAN applications. We will play an important role at Computex this June. We will focus on AI, cloud computing, and high efficiency power supplies, all key technologies as we showcase our strategic planning in edge computing as well as our system integration capabilities from AI infrastructure to end-to-end application scenarios. Looking ahead to the second half of this year, our 110 kilowatt power shelf has now been recognized by many of our Cloud Service Provider customers, and they will begin introducing this product in the second half of this year. There is a very clear growth trend here. At the same time, we have one power rack solution that is an 800V DC with a single rack power of over 1.5 megawatts. This is a collaboration with one specific cloud provider, and qualification will begin in the third quarter, with mass production forecasted to start earlier than expected in the fourth quarter. The 2.5 kilowatt DC-DC power brick will also enter mass production. These are all high-end products that will become important drivers of our growth momentum in the future. As these high added-value products account for a larger share of our shipments, our AI-related revenue will account for nearly 30% of our overall revenue. This remains our goal. I would like to say that as our company enters a clear and sustainable growth trajectory, we will continue to focus on AI as the core of our growth engine and deepen our strategic presence in diverse fields in order to drive growth in the medium and long terms. From power supply of AI data centers to ultimate applications, we will cover key sectors, including AI infrastructure, energy management, and edge AI. This will allow us to build a comprehensive AI industry chain and system integration solution. As I said, we will continue to work toward the goal of becoming a provider of systems and customer solutions, and we will continue to contribute to this field. That concludes my presentation. Thank you again for coming, and have a nice day. Thank you. Thank you, Anson Chiu, for your clear explanation. Now is the Q&A session, and we open the floor for questions, and Anson Chiu and K.T. Lim will provide more explanations. If you want to ask a question, please raise your hand, and our staff will give you a microphone. Thank you. Hello, managers. I have two questions for you. First, recently, power supply cost has increased quite a lot. Do you have plans to increase prices as a result? If so, if there's this possibility, what will be the extent, timing, and product line distribution? This is my first question. My second question has to do with inventory write-down loss. Could you tell us more? What are the products? In the future, is there a possibility of reversal? In Q1, inventory went up quite a lot, will there be a possibility of inventory write-down loss in the future? Let me answer the first question. We mentioned material price fluctuation, everyone knows about this. Our upstream and downstream have this situation, we have been discussing this with our customers, we are glad that some of our customers have accepted our price increase. It's inconvenient for me to tell you the price increase extent here, as I told you, supply chain price fluctuation is not unprecedented. It has been the case for decades. With our customers and suppliers, we have established a good management mechanism to adjust prices. For our operation and revenue, there isn't much impact, I can assure you. As for our 1-time write-off, this is not an AI product. This is an enterprise product. The customer gave us a higher forecast, and we prepared more materials as a result. Due to accounting principles, we have to have a predictive recognition. It doesn't mean that this product is being EOL-ed or turning idle over the next few quarters with shipments to customers. We will make adjustments accordingly. Our inventory increase doesn't mainly come from this. It comes from logistic inventory because now in North America for BBU and the future SKD products and power shelf, we have gradually been shipping to North America by the sea. This is why we have increasing logistic inventory, which is booked under ourselves. This is something necessary, and along with shipments to customers, we will establish a rolling mechanism to manage our inventory. Initially, you will see an increase of our inventory because after all, in the past, we shipped by the air, but it didn't work as well. Some materials and some SKDs have switched to sea transport. This is the situation. Sorry. Recently, POET, a major American opto communications player plummeted, and I've heard that Marvell said that there was a violation of the NDA, so they decided to cancel on their orders. I've heard that the opto communications products would be a cooperation with Lite-On. I don't know if there will be some impact on Lite-On. I'm not very clear about this, so there shouldn't be a big impact. Market rumor says that Marvell placed orders to Celestial AI, and Celestial AI placed orders to POET. Lite-On doesn't cooperate with this company? Of course, with POET, there is some contact, but there isn't actual business between us. What you mentioned isn't clear to me, so I'm not in a position to respond to what you said. Okay. Thank you. Hello, managers. I want to ask you mentioned GPM a while ago and inventory write-off, and you also talked about potential price increase. If we reverse it's 22.8%, which is about the same as last year. As cloud power has higher volume and share in the second half of this year, is it true that Q1 is the lowest point, and it will go up gradually due to inventory factors? You have announced a CB plan, but the previous rounds of CB were canceled, this time there's an extension of 3 months, you talked about diversification of fundraising channels. Are CBs this time going to be issued as planned rather than being canceled as previously? Thank you for this question. In terms of CBs, we are doing some final evaluations, the final decision has not been made. Well, to answer your first question, our GPM in Q1, I'm pretty sure that it's the lowest point throughout the year because in Q1 we had this one-time inventory write-off. With reversal, Q1 should be the worst case, the lowest point. As we told you, starting from Q2, our product mix will be different. AI-related products will increase quarter-by-quarter. I also told you that some high-end, high-value products will have higher shares. Our GPM will go up as a result. As I told you, when I look at Q2 performance, it's better than in Q1 as far as what I can see. Sorry, I arrived a bit later, I want to confirm with you that the operating margin for the first quarter was lower because of the lower gross margin because of the inventory write-off. Is that correct? Okay. If we add back the inventory write-off, you mentioned that the margin should be 22.8%, you also mentioned that the cloud sector saw very high growth in the first quarter. It seems that the gross margin did not grow significantly. Shouldn't it have been growing more? That is because of the product mix factor. In the first quarter, some of our products, particularly in game consoles, were delayed because of the memory shortage. The gross margin for game consoles is quite good. Because of the product mix issue, a lot of the better performing products in terms of margin were pushed to the second quarter. That's why the margin didn't seem to grow that much. As you said, looking to the future, as the share of AI products grows, we believe that we will see significant margin growth in the future. Anson, KT, Julia, good afternoon. I'm Sharon from Morgan Stanley. I have two questions for you. First of all, I would like to ask more of a housekeeping question, which is that, what was the inventory write-off at the fourth quarter last year? Were there any inventory write-offs in that quarter? What about the first quarter of last year? Well, our inventory write-off for this quarter was a one-time adjustment. As for the write-offs, from the fourth quarter last year, those followed our general accounting practices. We would write off some of our older inventory based on our accounting principles. This quarter was an exception. It was a 1-time comprehensive review of our inventory, that's why we had a larger write-off this quarter. This 1 percentage point change is incremental to your general accounting practices. Is that true? Yes. Yes. In the second quarter and beyond, as we ship more products, this will change as well. I understand. I just wanted to understand if there has always been inventory write-offs. Yes, there is. This is just on top of your usual practices. Correct. Our inventory loss for last year was about 0.3-0.5 percentage points, looking at the entire year, to add to that. Okay, understood. My second question is, you mentioned that you are planning to increase your CapEx for this year. Can you give an update now on how you see your CapEx for 2026? Thank you, Sharon, for your question. To give you an update, last year, our ultimate capital expenditure was about TWD 7 billion. For this year, 2026, we forecast a capital expenditure of about TWD 13 billion. This does not include the investments that we're planning to make in the United States. It does not include that investment in the U.S. Okay. Understood. Thank you. I would also like to ask, looking at the business group breakdown for the first quarter, it seems that the IT group saw a pretty big decline in operating profit for the first quarter. Can you talk about why? Was it because of the inventory write-off? No, it was not the inventory write-off. I would first like to add a bit to what KT said regarding our CapEx. We are going to make such high capital expenditures this year because of the changes in our product mix. To give you an example, our PSU used to focus on the 3 kilovolt or 5 kilovolt level, but now it's up to 8 kV, and in the next generation, it could reach 18.3 kV. Our manufacturing facilities do not meet our production needs anymore. We need to rebuild our manufacturing lines, update our equipment, and expand our capacity when it comes to high-power products, including in our laboratories, our R&D testing, our qualification, our equipment, et cetera. As to your question, I had explained to you why the gross margin had gone down in the first quarter, and mostly it was because of the RAM shortages, resulting in game console products being delayed to the second quarter. If you look at the IT business group, you see that a lot of the game console business is in the IT and CE group. You see a lowering of the margin in that group, and it seems that the margin cannot compare to the AI sector. Again, that is because of the delay in the game console product that I talked about at the start. We can say that the IT group overall revenue actually decreased by only 5% year-over-year, but the operating profit went down by 25%. It was because of the product mix. Is that correct? Yes. When it comes to the game consoles, there were delays, but we actually saw growth in ICT products, and that actually surprised us because we had expected that the ICT segment would be affected by material shortages and prices. It turned out that we were wrong about that. Our customers actually increased their shipments, and they increased their orders as well. The revenue did not see much of a decline because the ICT segment had saved a bit of the decline of the game console segment. Okay. Thank you. You also mentioned that your core business will see both year-over-year and quarter-over-quarter growth, but you have uncertainty when it comes to IT and consumer electronics. What is your outlook for the second quarter on these non-core businesses? Well, it would be a special situation because we're seeing right now that a lot of our customers are worried about materials costs and material shortages. Looking at the second quarter, we see that a lot of customers are actually pulling their 2nd half demand ahead. When it comes to ICT products, we're still very optimistic. However, we discussed the game console market being affected by the DRAM shortage. In the second quarter, the shortages look to be somewhat mitigated. The customers will resume their orders for the second quarter. I think the game console business would not have too many problems in the second quarter either. What we are concerned about is that with the demand being pulled ahead, we worry that in the second half, the ICT product orders might slow down. Our forecast for the whole year was a 6%-9% decline compared to last year. Looking at the latest data, we think the decline might be as high as 15%. We are somewhat concerned about the second half of the year. Fortunately, though, our customers also know this. When it comes to the consumer electronics sector, they are adjusting their prices. Their shipments might be going down by 15%, but they've adjusted their prices upward, so their revenues would not be so badly affected. That applies to us as well. Our shipments will probably go down in the second half, but from a revenue perspective, we do not see a very large effect. As for the other segments, we do not see many problems, and we are quite optimistic that we would still have a pretty good performance this year. I want to add to what Anson said. 18.3 K watt and 110 K watt power shelf, our Vietnam CapEx alone increases by TWD 2.4 billion. Yeah, this is what I wanted to add. Anson, K.T., and Julia, I'm Michelle from Fubon. You talked about CapEx. Can I ask you, BBU and PSU capacity expansion this year? Thank you. We will focus on PSU. We said that our power shelf still needs PSU, right? PSU will go from 8 K watt to 18.3 K watt. We need to focus on PSU in order to have enough production lines. As for BBU, we are now in full capacity. Our capacity currently can satisfy future customer needs, so the share won't be as high. As for power shelf production lines, as K.T. Lim mentioned, and this is also our investment focus, PSU plus power shelf are our focus. As for BBU, we already have sufficient production lines, so we won't put as many resources. Compared to last year, how much is the YOY increase? About 30%. If you remember, our capacity went up quarter by quarter last year. From Q4 last year to Q1 this year, our capacity doubled. Our capacity this year will be 30% higher than last year. As for PSU and power shelf, well, they are different because PSU and power shelf have different production lines. We need to have new production lines. We need to invest in new production lines. The wattage, the equipment, and the automation level are all different. We need to invest in building new production lines rather than using existing ones. Understood. You mentioned 30% as the AI target this year. How much is power, BBU or liquid cooling? Well, BBU, power shelf, and PSU all belong to power. Among this 30%, a lot comes from power supply plus energy storage. I think 90% is this. Some come from liquid cooling and power rack. Got it. Thank you. Hello, managers. I want to ask you, we see Delta Electronics showing 800V 16K watt BBU, and as I see on your slide, yours is 8.5K watt. Is that right? Also, I want to ask you about power and BBU number per rack, and is this standard or optional? This is my first question. Thank you. Well, our main customers are hyperscalers. For each one of these data center customers, we customize. Simply put, for these hyperscalers, there are a few data center architectures. One of them is MVL. We are more familiar with this. Another is ASIC. For these two types of customers, well, we have both of them, and we need to customize for them to build different power shelves and standalone power racks. There's a lot of customization involved. On the slide, you see 8.5 kW PSU and BBU. Here we are talking about single units, and the power has gone from 4 kW-5 kW to this year, 8.5 kW for both PSU and BBU. This is power shelf and BBU shelf. This is one type. Another type, as you know, the next generation platform is about to emerge. These hyperscalers are trying to go into the next generation of power racks, and the ultimate goal is to go towards 800V DC. For different platforms of customers, including ASIC and MVL customers, 800V DC power racks, we help them build the power and the output they need. These are the two types. For 800V DC, the single rack power exceeds 1.5 megawatt. The other type, you are more familiar with this because we just showed this, showed it in GTC. The single rack is 600K watt. Simply put, for PSU and power rack, we serve both ASIC and MVL, these two types of platforms, so we need to customize for them. The commonality of them is that this year, the specs they demand are significantly higher than last year. This is also what KT mentioned. This is why CapEx this year doubles from last year. Okay, my second question is, in Kaohsiung, you established BBU-related capacity. Do you take Dynapack BBUs and you assemble by yourself? Is this, is the focus 400V or 800V? When will be the shipment? Thank you. Well, simply put, of course, it's inconvenient to comment on customer needs and suppliers because we all have different plans. Simply put, currently speaking, those who need, that need a BBU are high-end AI server, power racks, and the mainstream now is 50V DC BBU. The next stage, as you see on the slide, it's not just 50V. For example, 8.5 kW power shelf, the single BBU power has increased. Right now, the mainstream is still 48-50 V DC, but the next generation will be 800 V DC power rack directly. In the near future, which is about the second half of this year, 800 V DC power rack, BBU output, power will be 800 V DC. This is to follow the timeline that we see on the slide. Okay, thank you. What's the BBU contribution to the overall revenue this year and next year? Thank you. Well, for next year, maybe we can give you a clearer guideline in the second half of this year. As for BBU, when we look at the structure, product structure, BBU contributes to 20% roughly, and the main revenue and profit comes from power shelf, and power supply accounts for roughly 70%, and about 20% comes from energy storage. As Anson said, power supply and energy storage account for 90%. Anson, K.T., and Julia, good afternoon. I'm Ann from Nomura Securities. I would like to ask about the 800 volt DC, 1.5 megawatt product. You mentioned that the customer originally wanted 400 volts and then upgraded to 800 volt. Is that the same project? Is this a new customer milestone for you? Well, the customer's project originally planned for 400 volt, but now they upgraded to 800 volt. I remember that you mentioned that this project would probably be shipped in 2027 Q1, but now it's moved forward? Yes, it has been moved forward to Q4 2026. Understood. Can you talk about if this project is more GPU or more ASIC oriented? Okay, it's ASIC. Next I would like to ask about DC-DC. The 800V DC project, does this include the converter between 800V to 54V? No, that's just the power rack. When it comes to the back end converting and lowering the voltage, that's another product. Yes, that's another product. It's not part of the 800V VDC. They're in different power racks. I understand, but I just want to understand if the shipment includes the converter. Yes, they're shipped together. In fact, the HVDC product, it's actually an HVDC plus converter rack, so it also includes the voltage lowering converter. I see. It seems that the visibility when it comes to shipments is higher now. Can I ask, it seems that a lot of this involves the BBU and the capacitor tray as well. If you talk about the 800 volt DC 1.5 megawatt, how do you evaluate the gross margin and the unit price? That's what investors really care about. Well, we're still talking to the customer about these issues, but when it comes to unit prices, I think, well, you can refer to our current pricing. If you look at the current pricing, it's about $100,000-$200,000 per unit. Of course, every customer is different. But in general, it's on a completely different level from PSU and BBU. Does this include the BBU? It's the whole rack. Okay, I understand. Thank you. Good afternoon. I'm Terry from KGI. I would like to follow up a bit on the image. I want to talk about the DC-DC power brick. It seems that you've been discussing this for a while, but now we finally have a shipment date. What is the customer here, and what is your outlook about this new product? Well, when it comes to the DC-DC power brick, we did not develop it in the past because our assessment was that the market demand for it was low. However, with the growth in AI applications, looking at it from an HVDC perspective, the demand for the DC-DC power brick would be very high in the future. We always had the capability to make it, but we didn't see the demand. Now we do see the demand, and what are the customers? It's the CSPs mostly, as well as enterprise customers. They all have the DC-DC brick demand. Looking at the mainstream market right now, we know that the 1.6 kW and 2 kW products are the mainstream. They're more of a red ocean market now. Now we're going straight to the 2.5 kW sector. As I've said before, we've been investing in this for some time now, and we will start shipments in the fourth quarter of this year. Our strategic planning in this sector will continue. We may engage in some mergers and acquisitions to acquire more IPs in these products, because if we go from 50 volts to, The lowering voltage converters down to 54 volts and 22 volts will require some more products, so we will gradually broaden our product range and build a comprehensive product line. Good afternoon. I have several questions. First of all, I would still like to confirm about the write-off because you said that it was for an enterprise customer. In terms of business groups, is it under the IT group? It's under the cloud group. Yes, it's in the AI group because they're high-power products. Okay. The effect on the first quarter margin is in the AI group. I get it now. Second, is this one specific customer or more? Okay, it's one specific customer. This one customer affected your margin by about TWD 400 million. I see. My second question is that people are talking about the 1.5-megawatt project. You mentioned that the unit price for the power rack was between $100,000-$200,000. This is the 1.5-megawatt product, right? No, we have no prices yet for anything you see on the screen. When we talk about $100,000-$200,000, it was for past products for your reference. Okay. Based on your experience, if you look at the 1.5-megawatt product, what is the price per watt? Well, that's not a good way of looking at it because as I have said in the past, the growth in the number of watts does not mean growth in the price per watt because the whole design is different, but the overall price would certainly grow. For example, if we look at PSUs, when we go from 33 kilowatts to 110 kilowatts, that's a growth. That's a growth to 3 times the amount of wattage, but we can't increase the price to 3 times it was previously. It does not grow linearly like that. The same applies to power racks. We are discussing with our customers how to best calculate the cost, but it is not on a per watt basis. When we see the 1.5 MW product, are super capacitors part of it? This is something we're planning for our customers. We custom design our energy storage solution based on the customer's needs. Okay. Next, I have a minor question, which is that you say that this year the cloud computing revenue grew by 70% year-over-year, and I believe the growth was also 70% last year Q1 as well. What about the coming future? Do you think that for this year, the year-over-year growth would probably be higher than 70%? Well, based on our understanding of our customer budgets, it would probably be higher than 70% this year. What about next year? Well, our understanding of next year is that the growth will not be this high. It will still grow, but not so rapidly. It will not be another 70% growth like this year. Correct. The budgets will not be as high as this year. Of course, things could change, but what we understand right now is that our customers' investments for next year will not be quite as high as they are this year. Okay. Thank you. We can accept one last question. Hello, Anson. I want to ask you, in terms of 1.5 MW project, what is the competitive landscape? What's the attitude of customers? Is it the more the better? They invite all the vendors to give samples, and they accept everything that passes? Or is it true that for each project, they only cooperate with one company? Very quickly, I understand that speaking on behalf of customers is a bit sensitive. We can only tell you our stance. This customer is our major customer. We have strong commitment mutually. We are a faster runner in their pool. This is why in Q3, we will complete product certification, and in Q4, we will start shipment. Among all the players, we are a faster runner in their pool. If there are no further questions, thank you so much for coming to our conference call. All the materials will be put onto our official website. Thank you for your participation.