Hello, and welcome to ASUS's online investors conference for the Q3 of 2022. Today's conference will be hosted by our Co-CEOs, S.Y. Hsu and Samson Hu, and our CFO. First, our CFO will go over our Q3 financial results, then our Co-CEOs will explain our strategy and operational outlook. Will be the Q&A segment. You may ask any of your questions through the online interface, and we will collect and answer them at the end. Now, let us turn the floor to the CFO.
Thank you. Please look to slide number five, which shows our P&L for the Q3 of 2022. You can see that the PC industry is still facing many challenges, including inflation, economic adjustments, pandemic restrictions, lowering consumer confidence, and changes to the industry.
Overall, our brand net revenue was about TWD 132.9 billion for the quarter, a year-over-year growth of 2%. We are one of the few PC group brands to maintain positive growth despite the challenges of this quarter. However, with the shifts in the industry and our adjustments to our inventory, our profit was about TWD 3.06 billion, which is a quarter-over-quarter growth of 56%, but it's down year-over-year. Our net profit was TWD 6.19 billion for an EPS of TWD 8.3. Looking to the next slide, our non-operational items, you can see that in the Q3, our main investment subsidiary, ASKEY, after a long period of adjustment, finally achieved a quarterly profit.
We recognized TWD 185 million in profit. We are looking to maintain profitability for ASKEY over the coming quarters. Our other investments are also doing quite well. We recognized TWD 840 million total in non-operating profit. We also saw good dividend income of TWD 3.08 billion, of which TWD 800 million was from Advantech and TWD 2.2 billion was from Pegatron. Looking at slide seven, this is our combined balance sheet. You can see that our inventory has declined from TWD 206.2 billion to TWD 174.5 billion. The number of days of turnover has gone down from 180-148 days.
The pace of inventory adjustment has met or even slightly exceeded our targets. Looking at slide 8, our product mix, you can see that PCs account for 71%, components 27%, and phones 2%. Compared to the same period in 2021, because last year there was a relatively high base for video cards. Now that the market is normalizing, with this adjustment, our share of components in our revenues has gone down. Looking at slide 9, our region mix, you can see that Europe and the United States and the Americas, because of various issues such as inflation, geopolitical issues, and lowering consumer confidence, the share for these two regions has gone down. The share of Asia, in particular driven by Southeast Asia and India, has grown to 52%.
Looking to the next slide, which is our outlook for the Q4 of 2022. Overall, we see that the PC industry will continue to face challenges, together with the global macroeconomic environment, and we may approach what economists call the double-dip recession. In addition to a low point in the Q2 of this year, we forecast that in the Q4, demand may also see a decline year-over-year. Looking at forecasts by major chip manufacturers, the overall PC market for the Q4 this year may see a decline of up to 20% year-over-year. This could be a second dip in the market. Faced with this challenge in the industry, we are forecasting that shipments of PC products will decline by 15% quarter-over-quarter.
As for components, due to our introduction of new platforms and new products, we are still forecasting a growth of 5% quarter-over-quarter. Overall, the industry, as I said, will see a dip in both the second and Q4s of this year. Looking ahead, although for the first half of 2023, the industry will still be in an adjustment period, we still are fairly confident about the overall long-term growth in the industry and the demand for productivity growth. We believe that ASUS's operational momentum will continue. We will maintain our revenue growth and the shipments growth, and we will continue to optimize our brand and our product portfolio. We believe that our continued work in the PC market will continue to build upon our advantages and value to our customers.
I think our Co-CEOs will discuss more on this issue in their respective presentations. Thank you. Now let me hand the floor over to our Co-CEOs about ASUS's strategy outlook.
Good afternoon to our investors and friends from the media. I am S.Y. Hsu, Co-CEO of ASUS. I will begin my presentation now. First of all, thank you for taking the time to participate in this online conference. Here at ASUS, our three key business objectives maintain remain unchanged. First, there's one ASUS, which is to align our culture and our practices within ASUS. We have many different business groups across components, across systems, et cetera. How these business units can all leverage our collective capability is a major goal for us. Second, we will continue to pursue product innovation to offer the best experiences for our customers.
Third, currently we are facing a very competitive market, but we will continue to have highly aspirational targets. Despite the headwinds in the market, we will continue to expand our business so that we can finish off this period of adjustment and reach the targets that are beyond those of our competitors. In practice, we will really look to these three major approaches. First is managing market dynamics. I see that there were a lot of questions in our past conferences about our inventories. So back then in the Q2, we said that we will adjust our inventories over the next two quarters. As our CFO said, our pace of adjustment has actually beaten our targets. Second is strengthening competitiveness.
Currently, the market is down year-over-year, but actually, for the first three quarters of 2022, ASUS's PC shipments were actually up by 1%. Compared to the overall market, we actually outperformed the market by 15%. ASUS will also continue to invest in our long-term value to expand our market and accumulate a long-term competitive advantages and value. Over the past few years of the pandemic, I think we can all agree that PCs are still unbeaten as productivity tools. Of course, now that the pandemic has conditions have changed, the market demand has slowed. There's a downward adjustment. We do believe that the market will bounce back in the future. Now, as you know, market demand has weakened and there's been a downward adjustment. There's a lot of uncertainty in the market.
However, ASUS has continued to outperform the market on average. Our inventory adjustment has beaten our expected pace, and we are continuing to pursue a growth strategy. We still define ourselves as a rapidly growing brand, and we will continue to seize upon the long-term growth opportunities. These are some of our results so far. For example, in our inventory adjustments. Actually, our forecast Q4 inventory will actually continue to go down. We actually achieved growth in the Q3 year-over-year. We're one of the few PC brands to achieve this. This fits our goal of growth, of pursuing growth. As for our high-value products, our revenue has grown by 50%, including gaming, creator PCs, and other high-end PC products.
The rise of the share of these high-value products will really help out our financial position and our brand in the future. Here, let me reiterate our Q3 shipments for 2022. You can see that our growth has beaten the market, meeting our targets. In the first to Q3 this year, our shipments outperformed the market, and we were one of the few PC brands to achieve growth. Although there were short-term pressures with demand and with our need to adjust inventory, ASUS has nonetheless continued to invest in our future, reflecting our confidence for future expansion. In 2019, ASUS started our AIoT business group. Now let me give a report on our progress. Currently, our AIoT business group still does not account for a particularly high share of our revenues.
Looking for it from a growth perspective, in the Q3, this business group actually achieved 100% year-over-year growth. That performance is excellent. Also, in terms of AIoT, we focused on smart factories, as well as smart healthcare. We are working with some of the biggest hospitals in Taiwan to introduce our xHIS platform, our smart healthcare platform. We will continue to invest in our R&D in these fields to develop new solutions for the market. Going into further detail on our xHIS platform, this is not just a platform for medical data. We hope through platformization and a modularized design to build a platform as a service for medical data. We are now working with some major medical centers here in Taiwan.
We are planning for the clinical visit system to come online in the Q4 of this year. We are working with Taipei Veterans General Hospital, as well as Cheng Hsin General Hospital and Microsoft. We are working on this smart medicine cooperation project with the National Science and Technology Council, and we're looking forward to this collaboration, and we will keep you updated on progress. You may also have seen that ASUS's first AI-enabled smart factory has come online. This factory is in Shulin. It was built by our AIoT business group. It integrates technologies such as AR smart glasses, autonomous robots, transport systems, and AI-driven defect inspection systems to achieve low volume, high mix manufacturing.
Throughout the manufacturing process, the equipment are all connected to an online database to collect data for quality analysis. This will also help us achieve environmental monitoring to achieve sustainable growth. This is a demonstration of ASUS's capabilities to integrate hardware and software in our AIoT business. We hope that we will be able to produce solutions that helps manufacturing achieve a digital transition. ASUS's dedication to product design has been recognized by many awards around the world. This year at the Good Design Awards, we had a record-breaking haul, receiving 17 awards. We were actually the most awarded Taiwanese brand this year. This is all thanks to the hard work of our team, and of course, we need to thank the organizers as well for recognizing us.
Also, as we all know, the Metaverse has been a very hot topic in recent months. ASUS is continuing to devote resources to develop this new technology. We have announced a new NFT platform known as Art Black Hole, which is our first move into Web 3.0. The focus of this platform will be cross-disciplinary applications. Not just art, but also photography, videos, and games, et cetera. All of this can be synchronized with our Metaverse scenarios. We anticipate that the Metaverse will be a major industry moving forward, and we will devote resources as needed into this new technology in the future. Next, let me hand the floor over to Samson. Okay, thank you.
Good afternoon. I am Samson Hu, our Co-CEO, and now I have some further numbers and details for you. First on this slide, you can see our, the performance of our system business group. You can see that revenue growth was 5% to 10% year-over-year. Over the past two years, one of our major focuses was our OLED laptops, and we are now first in market share, over 70% in this segment. We are number one in market share in almost every market around the world. As for gaming laptops, our market share also grew by 3.3% year-over-year, reaching the high 20s. For premium PCs, our market share is also growing. In the Q3, our average price grew by double digits. ASUS is also continuing to expand our gaming ecosystem.
We are continuing to execute on our cross-industry collaboration strategy, and this has delivered strong growth for the ROG brand. Looking at the next slide, you can see that for the Q3, as SY told you all, we were the only Windows PC brand to see growth. Across the gaming, the creators, and the commercial segments, we were able to achieve high growth. Looking at specific segments, for regular PCs, our Q3 revenue was flat. Compared to the overall market, which saw a decline, ASUS was still able to outperform the overall market. For creator PCs, our revenue saw over 100% year-over-year growth. For gaming, our year-over-year revenue growth was over 20%, which beat the market significantly. In China and North America, we also saw significant market share growth.
In China, our market share grew by 6% compared to 2021, and in North America, we grew by 5% in the gaming PC segment. For commercial PCs, over the past 3 years, we've worked to establish our position on the commercial market and to expand our shipment volumes. Looking at the Q3, excluding Chromebooks, the revenue for our commercial PCs grew by 15% year-over-year. Significantly, in the Asia-Pacific market, the market share of our commercial PCs grew into the double digits. Looking at the next slide, in the open platform business group, our revenue for motherboards grew by in the high teens year-over-year. For video cards, as you know, the industry has shifted over the past few years, with cryptocurrency mining having peaked.
The base last year was very, very high, and that's why we saw a double-digit decline year-over-year in terms of revenue. This is video cards. But we are continuing to expand the market share and mind share of our motherboard, which is already industry-leading. Our market share actually grew by single digits for motherboards. For video cards, despite the peak in cryptocurrency mining and the normalization of the market, we are still seeing growing demand from the gaming segment. Momentum for the video card segment will continue. In the 2022 EHA Reader's Choice Awards, we were chosen as the best video card brand. There are several major highlights of our components business. First, our X670 platform has now achieved a market share of over 50%.
As for our Intel platform, our Z790 motherboard actually achieved a world record in terms of overclocking, with CPU frequency reaching 8.8 GHz. This is a world record. In the PC DIY community, this has won a lot of acclaim and support. This makes us extremely confident in our future components business. Looking to the next slide, at the creators market, ASUS provides a complete ecosystem, a complete product line for creators, including desktops, laptops, displays, projectors, et cetera. All of these products are integrated through our in-house ProArt Creator Hub for integration. This provides the best experience for creators. A research report has shown that our creator segment market share is 35%, the number one worldwide. Our ProArt display is also growing rapidly.
From the first to the Q3 this year, shipments grew by over 30%. Looking to the next slide. In the gaming segment, we will continue our strategic triangle of brand, products, and community. The ROG brand has the vision of helping gamers become the best they can. Over the past few years, we have been working with the top individuals and companies across many different fields. For example, in anime, Evangelion, and with Alan Walker and with IKEA. Through these collaborations, we deepen the identification that gamers have with our brand, and we also attract new customers from different fields, which will continue to drive the ROG brand and market share growth. From 2019 to 2021, these three years, our CAGR growth rate was over 30% annually. Looking to the next slide.
For our gaming products, we have very hardcore products, the components, but we also have laptops and phones. ROG is aiming to build a complete ecosystem for gamers and to introduce products that beat the market and use our own software pro-platform to integrate software, hardware, and game content to create the most synergy. We can also tell you that this year in the Q3, the overall revenue for our gaming product line has reached $1.8 billion. This is 45% of our company's overall revenue, so this makes us the number one gaming brand around the world. ASUS has always emphasized human-centered design thinking, so we seek to better understand the needs of gamers. We listen to all kinds of gaming communities, from e-sports, from overclocking, and also pan-entertainment communities in music and sports, et cetera.
In addition to supporting these communities, we also sponsor e-sports tournaments and teams because we are part of the community as well. The gaming market is enormous. One market research firm estimates that currently there are 3 billion gamers around the world, and that looking at the so-called Z, generation Z, the Zoomer generation, 70% of this generation are gamers. We do believe that this is a huge, this segment has huge potential. We will continue to pursue our brand, product, and community golden triangle and devote more resources to continue our momentum in the gaming segment. That concludes my presentation. Thank you.
Now is our Q&A segment. If you have any questions, you can enter them into our online interface, and we will answer them now. Okay, we've collected some of the questions. We will start answering them now. The first question is from JP Morgan, which is that, in the Q3 this year, inventory reduction actually beat expectations. What are the targets for future quarters in terms of reducing inventory? And when do you forecast a return to normal inventory levels?
Okay, I'm Samson Hu. Let me answer this question. For the past quarter, we've worked very closely with our upstream supply partners and our downstream retail channel customers. Thanks to our collaboration and the hard work of our team, in the Q3, as we said, we were able to reduce our inventory by TWD 32 billion. For the Q4, we have set a target reduction of a further 20-30 billion TWD. If we are able to achieve this, then we will continue to beat our previous forecasts.
Originally, we estimated that inventory levels will return to normal by the latter part of the first half of next year. Now we believe that we will be able to achieve this slightly earlier. Of course, the overall environment is still changing very quickly. Right now we continue to face inflation and questions about when consumption will bounce back. These are all issues that we need to monitor closely and respond. We will do our best to bring inventory back to normal levels, but we will also need to continue to monitor the macroeconomic conditions and adjust accordingly.
The second question is also from JP Morgan. You are forecasting 5% quarter-over-quarter growth for components. Does this apply to both motherboards and video cards? Also, there are now reports that EVGA, a major American company, is dropping out of the video card market. What does ASUS see, think regarding the effect on the market and whether ASUS will be able to increase your volume, your sales or market share?
I'll take this question. As you all know, for the PC product segment, a major factor to attract customers is new products. In the Q4, in both video cards and motherboards, we will introduce new products for both segments. That's why we are forecasting positive growth. We are quite confident because we always have had good market share in our components business, and our new products have excellent performance, particularly in overclocking, which will really help us. For video cards, you know that NVIDIA has also introduced new products, which I believe that will also help growth for us as well.
As for the question about EVGA, of course, ASUS has set aggressive targets internally. We are looking to achieve the highest market share that we possibly could. Of course, I think this can be driven by several factors. For example, we always had very high market share, and we have very good relationships with suppliers. We've been in close contact with a lot of these suppliers. Of course, the market is very competitive, and there are many other video card players as well. We do have very aggressive targets, but ultimately how much of EVGA's market share we can take over, we'll have to see. Of course, we'll do our best. We're sure that we'll have more to say on this in future conferences. Thank you.
The next question is from KGI. The question is, what is ASUS's outlook on the PC industry as a whole in 2023?
Let me answer this question. I believe that the overall PC industry will depend on the macroeconomic environment. Right now, what we're seeing is that the environment is not positive. Inflation is continuing, which has caused weakening consumer confidence and slashes to corporate budgets. In the industry, inventories, both upstream and downstream, are also going through adjustment, and we believe this will continue for several quarters into the future. For 2023, we still see, we still believe that the effect of these factors will be clear for the first half. As for the second half, it will still depend on some of the future developments in the macro environment.
For the PC industry in 2023, how much it will grow or decline, our forecast is that for the whole year, the industry will still be in a state of decline. As for a percentage, we are seeing a decline of high single digits or even double digits. That is our outlook based on our assessment of the macro environment as well as our discussion with suppliers. This has obviously been a topic of concern for many players in the industry. Thank you.
Okay. The next question is from UBS. What is ASUS's outlook on the profit margin for the Q4 in the face of challenges to the industry?
Okay. I'll answer this. Overall, we are seeing that, going from the third to the Q4, demand has fallen even lower than forecast. Consumer confidence is low and many retail channels are slashing their purchases in trying to manage risk. One major chip manufacturer actually forecasts a decline of over 20%, both quarter-over-quarter and year-over-year for the Q4. Overall, the industry after the dip in the Q2 may experience another low point in the Q4. There could be a double dip in the Q4. In light of this, based on our current shipment and revenue outlook, we do see ASUS outperforming the market by 5% to 10%. However, for the Q4, inevitably, revenue may still see a decline, both quarter-over-quarter and year-over-year.
In the face of these headwinds in revenue and continued adjustments in inventory, it's true that profit margin for the Q4 will be quite challenging. We have set internal targets and measures to try to strengthen our profits in the Q4 as much as possible. Looking at long-term value and profitability, we still think that the current dip in the industry represents short-term challenges and short-term turbulence. In the face of this, we do want to maintain strong momentum in terms of shipments and to improve our brand positioning and product portfolio. If we are able to maintain this momentum and continue to optimize our portfolio, we will continue to be very confident in our long-term competitiveness and our long-term value to our customers. These are the long-term goals of our business. Thank you.
The next question is from EE Times. Can you discuss the shipments and profit of your phone business?
Let me share some information. ASUS in 2019 transitioned to focus on gaming and premium phones, and in particular, we have been very successful in the gaming phone segment. As you all know, globally, the biggest market for gaming phones is China. Last year, our shipments of gaming phones was over 800,000. This year, as you all know, China has faced pandemic restrictions, which has dragged down momentum in the first half of the year. After the restrictions were lifted, inflation began affecting the market as well. This year, we are forecasting shipments of about 600,000. In the face of declining shipments, profitability will certainly be a challenge.
However, in the first half of this year, as pandemic restrictions began taking force across China, we reassessed this year's profitability estimate forecasts, and we took some relevant measures as well. Currently, our phone business unit is meeting expectations in terms of profit and loss. It has not been particularly the case that the decline in shipments has affected ASUS's overall finances. It's still within our expectations and within our control. This year, we are also collaborating with MediaTek to introduce phones with MediaTek chips. With two different platforms, we will have better opportunities at collaboration with the supply chain, and I'm sure that in the future, it will help us return to profitability.
Thank you. The next question is from KGI. What is the share of finished products in inventory for the Q3? What is the inventory level for retail channels, and how do they compare to normal levels?
Let me answer this question. Looking at ASUS' own inventory, finished products account for about 60%, a little bit over 60%. Of course, the regional breakdown is different because of different market conditions around the world. As you all know, the E.U. and the United States. Currently are facing huge challenges in the macroeconomic environment, and the PC industry is facing severe slowdowns, for reasons that you're all familiar with. The Asia-Pacific and China regions are also facing, weakening momentum compared to last year, but the decline is not so severe. To give an example, in China, what we're seeing is that the Q3 is continuing the momentum of the Q2.
Because as you all know, for the major online shopping platforms in China, June 18th is a major retail event for all of the retail players. The momentum of this year's June 18th has continued into the Q3 through the summer sales and the back-to-school sales over the summer. It's true that in the end of September, we saw some slowing momentum, but currently, as you know, tomorrow is November 11th, which is also a major retail day for the Chinese market. This will help kickstart the retail market again. The November 11th events actually begin in the end of October and gradually ramp up. Looking today, November 10th, we are seeing quite positive momentum. The Chinese market, despite the overall decline globally, we still have good expectations for the China market.
Looking at inventory levels, the highest inventory levels are in Europe and the U.S., and the second is the Asia-Pacific, and China is the lowest. Right now we're seeing that a lot of questions are focusing on inventory as well as profit margins. We've answered most of these questions as well. If you have any other questions about other topics, you can ask them now. Thank you.
Okay. The next question is from Nomura. The co-CEOs mentioned that inventory will probably be back to normal levels by the Q2 of next year. Does this apply to both system and components, or is there a difference?
Let me answer this question. We've looked at the inventories for major PC brands, for both components and finished products. Looking at the Q3 of this year, what we're seeing is that the total for all brands is that inventory levels are about twice that pre-pandemic. Inventory is really an industry-wide problem that we're all working very hard to reduce. To return to your question about the breakdown of the inventory normalization. Well, when we say that normalization will be in the Q2 next year, I think we're talking mostly about the system products, but for components, for motherboards and video cards, ASUS is probably stronger competitively, so we are more optimistic. The optimistic expectation is that it could return to normal by the Q4 of this year. That's the breakdown.
Okay. The next question was asked by both UBS and KGI, which is, in your outlook of the 2023 PC market, does this include both desktop and laptops or only laptops? Based on your outlook, how much does ASUS expect to beat the market in terms of your targets?
Okay. Sorry, I was probably not very clear. When I said that we are forecasting a high single-digit to double-digit decline for the market in 2023, I was referring to the PC industry as a whole, both desktop and laptop. In the face of this, ASUS has still set very ambitious targets, as we always have. Our CFO and Mr. Hsu have both mentioned that we are setting ambitious targets, so we are still looking to beat the market by at least 10%.
This means that if the market is down 10% next year, then ASUS's target will be flat compared to this year. That is how our target has been set. Thank you.
Okay. The next question is from Fubon. You mentioned your outlook on the PC market as a whole. What is your outlook regarding gaming PCs, specifically?
Okay. The gaming segment is a relatively independent segment. As I said, a market research firm estimated that right now around the world, there are 3 billion gamers, which is a huge number. The Zoomer generation, if you look at that generation, 70% are gamers. In this environment, we are very optimistic about the gaming segment.
As for growth between 2022 and 2023, what we're seeing is that 2022, the gaming market segment will be flat compared to last year. Compared to a decline of 15% to 20% in the overall market, the gaming market really is quite resilient. We're seeing a flat performance compared to last year. For the next year, we are also quite optimistic, and we believe that it will maintain a flat growth compared to this year.
Okay, the next question is from Taiwan Cooperative Bank, and the question is, "What are ASUS's plans for dividends in 2023?"
I would like to reiterate our commitment to pay out dividends at a level higher than the market as a whole and the industry as a whole. That the yield on our stocks will also be higher than the industry as a whole, and this commitment will continue into our dividends policy for the next year.
Okay, I believe that most of your questions have now been answered. If there are any other questions that we would like us to answer, you are welcome to contact our IR team. Now let us invite our co-CEOs to deliver their closing remarks.
Okay. From your previous questions, I can tell that you are all very concerned about the Q4 and the next year. Of course, as we face headwinds in the overall environment, our team members will continue to work very hard. In these challenging times, we need to focus on maintaining stability in our performance. This will be the priority for our team and our executives. Our hope is that our performance in the future will be satisfactory to everybody, to you all, and we hope that you will continue to offer your support and feedback in the future.
Okay. Thank you for the participation to our friends in the media and to our investors, and thank you for your questions and your feedback, that really concentrated on some major, important topics for us. In the short term, the industry is facing headwinds. ASUS will respond to these headwinds with flexible measures and improve our resilience. Looking at the long term, we will continue to be proactive in seizing new opportunities to build up our company's long-term value. We will definitely work on both short-term and the long term. Thank you.