[Foreign language]
Hello everyone. Before the official start of today's meeting, I would like to do some very brief self-introduction of myself. So, my name is Rodney. I am in charge of. I'm in charge of the company's investment activities, including the IR program. So, since Yancey has retired from the position of chairman, so I will help moderate the meetings from now on. So I'm going to report the financial numbers of Q2. As usual, all the financial numbers are reported based on IFRS, and the consolidated numbers have been reviewed by CPA. Q2 revenue was TWD 103.4 billion, representing a 3% year-on-year growth and a 13% seasonal increase. As for the gross profit, thanks to a favorable product mix, our gross profit in Q2 improved by 20% year-on-year and 31% quarter-on-quarter. Gross margin in Q2 reached 34.1% from 29.2% a year ago, and 29.5% in Q1.
Q2 OpEx increased by 16% year-on-year and 13% quarter-on-quarter. The intense competition for engineers and geographic diversification of R&D footprint had led, have led to the R&D expenses continuing to outgrow our revenues. Despite the increase in OpEx, thanks to the gross profit expansion, operating profit in Q2 improved by 28% year-on-year and 78% quarter-on-quarter, while the OP margin was 12.7% compared to 8.1% in Q1 and 10.2% a year ago. In terms of the segmentation performance, all segments showed different levels of sequential increase in Q2, while automation and infrastructure still experienced declines from last year's high base. Earning-wise, all segments in Q2 showed substantial sequential improvement, with the strong earnings recovery of automation and infrastructure, mainly due to the low base in Q1. On a year-on-year basis, mobility and automations saw some profit contractions due to the soft underlying market, underlying demand.
Q2 non-operating profit was TWD 1.9 billion, increased from TWD 1.4 billion in Q1 and TWD 1.6 billion a year ago. The rise in interest income was mainly due to the growth of cash balance. In Q2, we had TWD 15 billion profit before tax, up 26% year-on-year and 72% quarter-on-quarter. Q2 EBITDA was TWD 21.7 billion, up 24% year-on-year and 45% quarter-on-quarter. Q2 tax expense was about TWD 3.1 billion, representing a 20.5% effective tax rate. Net profit after tax was about TWD 9.9 billion, up 22% year-on-year and 73% from Q1. Q2 EPS, therefore, was 3.83. Now we have a look at the accumulated numbers of the first half. The first half revenue was TWD 194.7 billion, up 1% from a year ago. Gross profit was up 13% year-on-year, with gross margin improving to 32.0% from 28.4% a year ago.
The OPEX in first half was up 15% year-on-year, which was in line with our budget planning. With the increase in the gross margin, the operating margin improved, also improved to 10.5% from 9.7%. As for segment performance, we found revenue growth in power electronics and mobility, while automation and infrastructure continued to suffer from languid low demand from end market and last year's high base. Profit-wise, we found earnings expansions from power electronics and mobility, but still experienced some profit contractions in automation and infrastructure. Non-OP was TWD 3.3 billion, similar to a year ago. In first half, we had TWD 23.8 billion pre-tax income, and EBITDA was TWD 36.6 billion, up 12% from a year ago. The first half tax expense was around TWD 4.9 billion, representing a 20.5% effective rate. Net profit after tax was TWD 15.7 billion versus TWD 15.1 billion a year ago.
So the EPS in the first half was 6.05, up 4% from a year ago. So now we are open to questions. The first question is related to the second half, the outlook of second half. I understand there are many uncertainties in the market, but can you give us some colors on the second half outlook? So, for the first question, to be honest, it's pretty hard for us to really predict the economy. B ut if you look at GDP of the U.S., especially if you look at the second half of last year, it was still over 4% in terms of the GDP. But if you look at the Q1 of this year, it was, I mean, already less than 2%.
It might not really be an official recession, but still, I think it's kind of indicating the deceleration of the market. If you look at the European market, I think the whole EU, in terms of the full-year growth prediction, is going to be probably less than 1%. For the emerging markets, including China and India, I think the current prediction is around maybe 4% for the whole year. But the 4%, I don't think it's, I mean, considered to be a very decent number, I mean, decent growth for the China market. I mean, generally speaking, if you look at all those markets, I think it's kind of indicating the benign growth of the global market.
I think that would be the very brief and, maybe very initial, idea for the outlook for the economy. F or the electric vehicle market, I think, even though there are some noises, I mean, in the market, but I think it's not going to, I mean, return to the old time. So, but just for the whole industrial transitions, the transitions do take time. So there are always some ups and downs along this journey. So even though that, if you look at the number one OEM in the market, their shipment has been declining from the last year. But our major customers are actually the traditional OEMs.
So even though I think the growth rate might be decelerated a bit by far, but still we are going to, I mean, they are going to have, I mean, some new model or new products introduction. So we do believe there is a chance for us to at least not, I mean, fall behind the market growth, or if we, if we get lucky, I think there is a chance for us that maybe we can still beat the market growth because of the new product introductions of our major customers. So for your question regarding the reversal of our inventory, in Q2 we had around TWD 6.7 billion reversal. Except for the mobility segment, we basically had the reversals for all other three segments. So the inventory reversal is actually based on our consistent accounting practices.
So during the pandemic, due to a significant increase in the inventory and the aging of stock, we accordingly recognized substantial provisions of inventory write-down losses. So starting from the Q2, we have seen the effects of inventory reduction. So for the inventory, can we expect more inventory reversals for the rest of the quarters of this year? So if that is the case, can we expect some further margin, I mean, gross profit margin, improvement in the next couple of quarters? It really depends because it really depends on the actual shipment of our products. So I can hardly provide any forecast for you because whenever the components or materials of our, I mean, certain products are being used, that there might be a reversal on the financials, on the P&L.
We can hardly, I mean, predict the growth, I mean, or the shipment of each business product line. That's the reason I can hardly provide a very detailed forecast for you in terms of the inventory reversals. In terms of the, I mean, your questions, I mean, regarding the AI servers outlook, I think as everybody knows, the AI servers, I mean, the major bulk buyers of the AI servers are actually the hyperscalers. If you look at their, I mean, CapEx planning for the next two and three years, I think, there is no, I mean, evident reduction in terms of their spendings or the build-outs of the new data centers.
E ven if there are some hiccups, I mean, in the economy, but I do expect a relatively steady shipment of our AI server power business because, I mean, given the circumstances. So in terms of the liquid cooling sales contribution to the company, I think the liquid cooling, I mean, the actual shipment, the mass shipment of the liquid cooling products will only start from Q3 of this year. So, I mean, in terms of the shipment, I think there are still many uncertainties because we don't know, I mean, the adoption rates, the real adoption rates, I mean, from clients for those new products. So it's pretty hard to say the sales contribution of our liquid cooling products for the next year.
I have a follow-up question regarding the growth outlook for your mobility business this year. So, I mean, in the previous analyst meeting, you actually mentioned you expect the mobility segment to grow maybe around 20-some% this year. But it seems there are some adjustments in terms of the growth expectations for the mobility this year, right? Yes, that's correct . I think the market is very dynamic. The 20% growth rate we previously gave was based on the budget, I mean, planning of last year. But if you look at the inventory digestions in our warehouses, I do observe some slowdown in terms of the speed our clients pull out our merchandise.
But even, I mean, even with this, I mean, deceleration of the electric vehicle market, we still observe very decent growth of our passive components for the automotive application because the passive components are not purely for the electric vehicles, but also for the traditional internal combustion cars. So we have been seeing nice growth for the automotive passive components. My next question is regarding your competitive advantages in the liquid cooling market. I think in terms of the liquid cooling solutions, there are actually two different levels. For example, including the rack-level coolings and building-level coolings. I think traditionally we have been focusing more on the rack-level coolings, including air cooling and liquid cooling.
I think Vertiv, the competitor, I mean, or the peer you mentioned, they actually has done a lot and so focused a lot, I mean, on the building level cooling. For the new AI data centers, I think, it's very, very, very giant. It can be as large as like 10 football fields. I think none of the players in the market can provide all the components to those kinds of, I mean, AI data centers. So I do believe it actually requires the collective participation by many different players in the market. Speaking of the fast growth of the AI investments, I think the focus is not just on the cooling side, but also on the power consumption side.
So if you look at the carbon footprint or the carbon emissions of many hyperscalers, actually they have been increasing in the recent two years because even though they are trying to, I mean, adopt some renewable energy for their data centers, but the renewable energy can't actually provide a base load. So many of the data centers, while they are adopting some renewable energy resources, but at the meanwhile, some of them, they are actually also building up new power plants. And all those new power plants are actually the gas turbine power plants.
So I think they are going to, I mean, in this case or in this scenario, I think there are going to be a lot of, I mean, maybe adjustments in the data center architectures to mitigate the impact, I mean, to the climate. So that would be my opinion, I mean, for the liquid cooling, or the whole power architecture, in the data center, in the data centers. So my next question is related to the, I mean, Delta Thailand has announced its financial report a few days ago and separated out mobility segment. Are there any differences in how the two companies define their four major segments? If not, it can be observed that Delta Thailand's revenue from mobility is very close to yours. Are electric vehicle, I mean, related components primarily planned to be produced in Thailand in the future?
I think there is not much difference in the classification principles between us and Delta Thailand. Currently, I think most electric vehicle components are indeed produced in Thailand, but as several new factories are going to be completed and put into production, I think this concentration will lessen in the future. So, the next question is related to the, I mean, any chance of demand improvement for your networking business, telecom power business, and your EISBG? So I think these sectors have indeed been relatively sluggish recently. Telecom power business is struggling because 5G applications are still immature, leading to low usage willingness and this reluctance, I mean, from operators to further invest in expanding base stations.
For the networking business, I think it's mainly due to the very weak enterprise demand. So it has, I mean, some negative impact on our networking business. But in the future, I think the networking products or the telecom powers might be benefiting from the AI investments because if you look at all those AI models, they are mostly on the clouds. So in the future, you are going to, I mean, maybe expand the bandwidth. So in that case, we do believe, I mean, there are some opportunities for the, for the upgrades, I mean, in terms of the upgrades or new deployments of networking products and telecom powers. And the next question is regarding how do you see the outlook, I mean, or the seasonality of this year?
Is the outlook of Q4 going to be better, I mean, than Q3? I think we don't really make official, I mean, financial forecasts, but I do believe, I mean, the second half is going to be much better than the first half, which is in line with our seasonality. So the next question is related to, I mean, your guidance for this year's OpEx growth. So is the OpEx, I mean, still expected to grow by 15% this year given the good performance of GP margin? Is it implied that expense growth rate might increase further? I think our OpEx increase is basically based on our budget planning for the whole year. And all of those, I mean, investments are investing for the long- term. So it's not actually going to, I mean, be. It's not going to fluctuate just because of the near- term, I mean, fluctuations of revenues.
And the next question is, will there be any changes in the estimated tax rate? The effective tax rate is currently stable at around 20% because Delta has many subsidiaries and tax rates are, and the tax rates are related to the tax laws and regulation changes in various countries. So it's difficult for us to make predictions. And the next question is, how do you see the outlook of Q3 and what are the growth drivers? I think we have already answered the similar questions before. Maybe just move on to the next question. And how do you see the economy, I mean, in China? And is there any improvement in the AI market?
I think since the pandemic, we haven't really observed any evident signs of economic recovery in China. But I think, as I said, I mean, at the beginning of the meeting, I think the GDP growth, I mean, in terms of the current prediction of the China GDP growth for this year is around 4%. So I think it's just a matter of time to see the recovery or pickup in the China economy given the relatively low base, I mean, currently. So I think according to what you have been saying, can I say you are relatively conservative about the macroeconomy in the second half of this year, just like many other Taiwanese companies?
W ell, personally, I think I would expect the second half of this year is going to be better than the same period of last year. So, can we expect any further expansion of your gross profit? I mean, for the rest of the year or for the remaining of the year? I think it really depends on the product mix. But given the AI components are actually the products carrying higher gross profit margins, and also there might be some inventory reversals in the near- term. So yeah, we do expect decent product mix for this remaining of this year. So, what is your view on the AI PC and AI smartphone markets?
So I think overall, I mean, generally speaking, for those AI PCs and AI smartphones, they are all going to enhance the edge AI capabilities. I think, theoretically speaking, because we provide many different types of components for both AI PC and smartphones. So if there is indeed a robust demand for such, I mean, edge AI products, I think it's definitely going to benefit our business. But I am not sure, I mean, the real demand for such products, and I don't think at present I have the answer for this. So the next question is regarding the effective tax rate because there are actually many, many countries, more and more countries, they started to adopt the minimum effective tax rate in their country. Is that going to, I mean, have some impact on your production capacity allocation?
I don't think that is going to have any impact on our production capacity allocation because we are not planning our production allocation based on this. The next question will be related to the profitability of your mobility business. Given that you have, I mean, guided down the growth rate of your EV business in that case, would you expect any loss, I mean, of your mobility business? I think even in that, I mean, even with, I mean, a relatively moderate expectation for the EV business growth rate this year, I think still we are still going to, I mean, have some maybe very minimal profit for the EV business. So I think it's not going to be in a loss for this EV business.
So, given that, I mean, we are actually experiencing the downturn, I mean, of the whole EV market. When do you see there might be a recovery in the whole EV market? I think there, as Mark Ko said, I think there are always going to be some ups and downs, I mean, during the transitions of the industry. So last year, the penetration rate of the EV, the EV penetration rate was around 15%. So even with the deceleration of the increase, I think the transition toward electric vehicle is not going to go back. But there are some challenges, I mean, holding back the further increase in the penetration rate, the EV penetration rate.
I think the relatively higher cost of getting electric vehicles is one of the major reasons. So I think if you look at the electric vehicle, I think there are still some challenges in terms of, I mean, for example, the comprehensiveness of the charging facility and infrastructure. But if the government is going to achieve, like, the zero emission target, I mean, in the next couple of decades, electric vehicles are definitely one of the major contributors to this, I mean, carbon emission reduction. Because for the EV, for the electric vehicle, whether they are powered by the nuclear power or renewable energies, they are, I mean, considered to be the green power. But for the internal combustion engine cars, they are essentially fossil-powered vehicles.
So, I mean, according to all those factors, if we are able to see or to help the complete completion of the whole, I mean, power infrastructure, including the charging facilities and charging infrastructure, I think if, I mean, the whole charging facility or network is complete, I think there will be an acceleration for the electric for EV again. So here we have our former chairman, Yancey, as a VIP, I mean, to this meeting.
[Foreign language]
So I came here today to say thank you to all of you. Some of you, we have been knowing each other for maybe more than 20 years. I still remember, like maybe 20-something years ago when we first started to host this annual meeting, there were only maybe just a couple of audience, I mean, joining this meeting. But today, we have so many people with us to join this meeting. But no matter how many people are sitting, are sitting here and listen to us , I have always had this principle: we have to maintain and to improve the transparency of the company to the investors. So whether there are many or just very few, I mean, audience listening to us, we have always to maintain the transparency to our investors, and that's my principle. So today, I mean, I'm here to give you an official goodbye and thank you all for all those years' support.
So in the future, I'm very looking forward to the new chapter of my life. I think, 20 years ago, I actually built a resort, in Thailand, but for the past 20 years, I didn't even have time to pay at least once visit. So right now, I mean, after my retirement, I finally, I have time to visit the resort I built in Thailand. So I actually, watched the annual meeting online before I came into the meeting room. As you can see, Mark Ko actually has a very strong background, in electronics, so he is very familiar with the technology. And also, Rodney Liu and our CEO, Mr. Ping Cheng, they will also continue to provide insights on behalf of the company. So I think right now is the time for me to finally take some rest. I would want to give you a very special thanks. Thank you all for all those supports in the past decades. Thank you so much.