Earnings Call: Q2 2020

Jul 30, 2020

Welcome everyone to Chroma's 2020 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. And answer session. For your information, a webcast replay will be available within an hour after the conference is finished. Please visit www the Chroma to come to TW/investorindex under the Investor Relations section. And now I would like to introduce Ms. CFO, Paul Ying. Mr. Ying, please begin. Thank you, Jason. This is Poying and Jennifer, from promo. Thanks for your participation of his second quarter of 2020 our financial results release? Well, 2020 second quarter, the sales revenue of parent company reached at the $2,313,000,000 This is q over q13 percent up and 14% up on a y or y base. And the gross margin of the second quarter of 2020 is approaching 52%. And operating margin reached at the 25%. Our net income, the final outcome is the $584,000,000. And this is, q over q, 24% up and another 23% up by YOI base. For the second quarter highlights, the major growth in this quarter, it contributed from the semiconductor and photonics sectors. This represents a growth of 21% on our Q over Q base and a 43% growth on a Y oy base. Well, as to the summary of the second quarter and we give the guidance, for the year 2020 like the following. Our first half consolidated sales revenue reached at the $7,200,000,000 and this represents a growth of 20 percent on our Y and year over year basis. The parent company sales reached at the 4,400,000,000 and this has reached, which represents a growth of 22% growth on the year over year pace. And this is mainly contributed from the attempts on Doctor and photonics testing solutions again, which increased to 57%, compared to the last year. Up to year business outlook for 2020, and the first bullet point that we show that the this is a rapidly development of the AI IoT commergence of the AI and IoT and increasing the application of highly of higher performance chips. Such as CPU or CPU sensors, RF connections, etcetera. Which will be continuously driving the sales growth in semiconductor and photonics testing solutions, particularly from several areas. The first one will be the high reliability, testing solutions This is including a burn burn in test and SLP system level testing test and thermal control. And temperature, stimulation. And the 2nd sector will be, like the Excel, and the TOF testing for 3 d sensing. Another one will be like the OFC stands for the optical fiber communication testing. The other area will begin the test and instrument and ATS for power testing solutions, along to new generations power electronics testing, which will enhance the power density and functional testing for using in green energies, including CV related components, battery module, battery pack, and smart grid and 5G server related power testing. So we still maintain a pretty good outlook at the third quarter. Well, Well, again, third quarter is the traditional peak of the year for seasonality. Well, as to the fourth quarter, we still look at that. There's probably some uncertainty like COVID-nineteen, still stay there. And it seems that in some countries, still cover our serious conditions. So that will be one of the uncertainty. The second is uncertainty is regarding to the the elections in the United States presidency. And the third one is the, the conflict between the, China and the United States still, well, left the economy in very unstable status. I think these are the uncertainties that we look at the fourth quarter. So we don't see anything as clear yet. Okay. So, this is the, this is the outlook for the 2020. And now open for questions. Yes. Thank you, Ms. Dean. You. Thank you. And the first question is coming from Jeff Waller of Macquarie. Go ahead please. Yeah. Hi, Paul. Thanks for taking the question. Can you talk a little bit more about, you said, third quarter is normal peak season, and it looks like it's gonna happen again this year. You need to talk about the, the the sequential momentum for APS semi photonics turnkey and then, you know, the subsidiaries, anything that's particularly growing faster or slower than the rest of the company sequentially in third quarter. Thank you. Hi, Jeff. This is Jennifer. Yes, Abby. Our second quarter performance is still better than first quarter. And, we're actually expecting the third quarter will be better than second quarter. And I think this year, we probably will enjoy so called this is not in pattern, which is 3rd quarter would be the pick. Major delivery in the third quarter is, number 1 is mostly comes from the SLT testers deliver. And then, we do have at least 1 20 projects, which is the battery still to deliver in the quarter. And our, I think I'll answer it. I wouldn't say answer it. We need to keep eye on the 4th quarter due to, you know, the US and also the U. S. And China tensions. So maybe so far, we we have a little bit concerned about 4th quarter, but, 3rd quarter our order deliver is pretty much on track. And we ever, okay, back to the product sector, so we ever guide that our semiconductor for 20 sectors. Last year, we present a 20% growth rate. And this year, we probably would enjoy a similar growth rate on so far, based on Odonto has to be better than, we guided 20%. And first half, actually, we delivered more in the photonic sectors versus, IT tests, like SLT testers. But the second half, SOP will be better than photonics receptors. And ATS, so far, it's not bringing change. I think they will present another year of a stable growth. And then our turnkey, hopefully, if we do have 2, 20 solution for the one with the downpads already. And, we hopefully do have a similar hopefully to have similar, sales, the last year, if there is not much changes. Yeah. And this is so far we could guide. Results at all parties. Okay, great. Thanks. Thanks, Jennifer. And I guess maybe another follow-up question. On the photonics side, if you put that VCSEL TOF and the OFC testers. I mean, how different technology or products are those 3? And, you know, is there a much are we seeing any competition in those areas at this point? You need the VCSEL comparison? No. Yeah. Like, that's for for you know, if I look at Photonics, essentially you list VCSEL, POF, and OOC, and I'm just curious, 1, is there much difference in in testers for those 3 products? Are they very similar in terms of technology? Okay. Yes. The OSC is different to the Pixel because Pixel apparently is, just QOLs. Okay. And, we highlight also 3 d is because recently we received this U. S. Customer is the next generation of products with the different design of the TOS. So I wouldn't say this is for Iphones. So, they are developing another products. And optical fiber one is the E or whether it's testers. So yes, there are different models. Okay. And then just so last question that kind of related, so are there, are you seeing any competitors for you, anything in the photonics area at this point, or you still essentially dominate that space? We're pretty much dominated, especially for the gallium nitrate applications, because, Android count they are expecting to redesign their their TRS. So, since we covered most of Dialys and the e wafer textures, so you can say we pretty much Dominican markets full fled. Okay, great. And I guess one last question before I jump jump the line, back in line is, SLT. I know historically a lot of those sales have been for auto related, I see that it's going forward. You talk a bit more at what where where where are you specifically seeing end market growth for for Chroma specifically in SLPs? According to actually SLT application, you can simply break down to 2 large sectors. I mean, 3 large sectors. Our first one is for mobile. This is a mostly related volume. The reason for that is because, as you may notice, the 5 g mobile because we move on to 5 g, due to complexity and the integrated designs, which is what we need more demand for this SLT And we believe this is the market where the event has a paradise focused on because of volume, so they can bring out the protesters price because of having a large number of testing. Second one is in each market. Any anything you consider about HPC market. So HBC because you're looking forward, well, your target is 0 defect. So you have to call you have to use the SLT. But the issue for any market, including like GPU, single image sensors, AI postage, and the whole total I for wallets, they first thing is they couldn't be consistent size. Okay, they all come with different size, different ping comm, different solution. You you, why do you need that for back to back of design? So this is where the Walmart is situated for the market. K? Currently we have a biggest portion of market share for the niche market parts. And then as you may notice from the TSMC, the guidance, the HPC operation will gradually increase. And this is where we benefit from our HPC market. And last one is CPU, but CPU, when you decide, this is asterisk do you fit into a CPU, this type of products, you know, if the design of the package tend to be inelastic, So we cannot be really fitting to 1st 2 market, which is, you know, fast turnover and upgrade the fact this kind of, a cashier's design. So so far, it's only Adrian who's just being supportive intel's only because sometimes we will cross the line, for example, sometimes we're selling out some more temperature information to the CPU's Intel for testing their auto, which is total CPU. And at some times, we also sell in some of the passengers, which is covered for more battery, mobile trip because, they need to isolated this kind of 5 g signal to complete the testing. So, we we do SOP, you know, 5 or 6 years earlier, you know, a set of markets. So if you talk about applications, the design phase that we are patterns, we have much more, special technology compared to the other competitors. Okay, great. Thank you very much. Thank you. Thank you. And the next question is coming from Hankus Singh of HSBC. Go ahead please. Hi, guys. And so I wanted to know, you had a, you had a gross branching thought of not being 2nd quarter, despite your electronics actually going pretty strong. So can you give us some color around the gross margin, you know, movement in second quarter and maybe going into maybe, second half, the direction of why. Thank you. Your question is based on the gross margin, right? Gross margin would you pretty much target on 50 to 55 for Sam, and I would say it's not really a certain part of that is role modules. First quarter, I think because we delivered large number of 5 gs, there was several related, high power testing. As you know, we have, pretty good strength in the power high power testing. So, maybe this could be a reason why gross margin is around 55%. It's still it's still the product mix. Yes. And the second quarter, I checked the numbers. I think mostly confounder some of our electronics and, selling SLT. I don't think SLT is really picking up in the 2nd quarter. I think it's just based on some of products from the semiconductor factors, I would say. Yeah. So as long as it's over 50%, it seems healthy to the management. Yeah. Maintaining 50 253. I think it's quite, quite normal. I I pretty much agree with you because, that third quarter, even we delivered the batch to sell order, maybe gross margin will be not very much different compared to the second quarter because that's what July July, most July, August, August, I would say mostly SOP. And then August, September, we will have a batches of orders. So maybe blend everything together to able to over 50%. Yeah. I see. Because the the reason why I asked you is because, I think traditionally your test interest instrument, business gross margin is is, is higher than, turnkey. And I don't know if, you know, some of the partners who has a gross margin is is is is is higher or below test instrument because I see your semiconductor products actually going to be strong in 2Q, but you are coming off from 1Q to 2Q was course gross margin did. And now with 3Q coming in with a turnkey project today, and I wonder, and elbits, but, you know, the payments increment actually continue to be stable. So no longer you may be, you know, gross margin. Though, you are going, you are top line will still grow, quarter to 6 on peak. So gross margin, you know, from this might be some, pressure despite, growing top line, right? Oh. No. They're they're acting otherwise, I guess. Yeah. Because the tanky is a blended gross margin. Yeah. Sometimes they there's no way every project can enjoy sex with the 50% gross margin. But if you if we review the while for what we're going to deliver in third quarter, you know, when semiconductor factors and then plot with us, I mean, 20 together, I think 43 able to over 50%, still pretty much in line with the corporate average. I see. Okay. My my no, ma'am. My second question is with regards to, your and I and I asked the run rate now seems to be below $1,000,000,000 for this year. Can you help us, you know, you know, give some color about, you know, what's going on in the NAS segment now. And is the current run rate of NASH seems to persist through this year? And maybe you don't go into next year? Yeah. Just so I'm covering all the M and A. Next year will be a little bit too far, but for this year, I I would, assume that the, expect that the NIS will perform pretty much like the first happened, well, maintaining the the ordinary business of the, of I think mainly is, on the market at the men in China and looking at the panel and the solar cell and also some other kind of electronics kind of mechanical design and product. Okay. Great. Okay. I'll I'll go back to the queue for now. Thank you. The next question is coming from Willie Chen of JP Morgan Asset Management. Go ahead please. Hey, Paul, thank you for your 3 question on buy side. It's possible. The first one is also related to gross margin. So If we look at more historical number, don't return trend, the gross margin for our parent testing, basically, client files, 45 so it's 50 54 percent in 2014, to all the way to around 50% in 2009 right? So I understand that you mentioned that 50% is actually a premium to the margin and I also agree that, but you know, which is understanding that, you know, because you mentioned that the increasing power, output for the power, the testing should be higher margins. So think if all of it has new years, that should be okay. But I'm just wondering that why the model trend, you know, over the past, it has been a decline trend. The rest will be strong. So can you just talk a little bit about this? That's the first question. Your first question, the question is of related to consulted, right? No. The parent, the parent testing parent testing, that'll come out with a parent testing. Oh, parent testing is the gross margin? Yes. We have to collect on 55% level to about 50% it was still pretty strong. Just wondering over the past 4 or 5 years, despite the rising power output, information of how high power testing should be higher margin if they trust that, you know, why the margin for the overall parent company and it'll show up to cause for all the past few to 5 years. You know, our corporate gross margin target is always drawn to maintain around 50%. Okay. And then the honestly, the gross margin stream is sometimes, it should mostly come from the customer's feet line. Sometimes we want to gain some order and the customers will like us besides these order, the one that will help them to integrate some of the tours into the testers. And, you know, this is some kind of value added. There were extra servers. To our customers. And in this case, customers notice those integration is constantly required, then it's highly not possible to just raise out the gross margin because this is additional services. And you know, later in 3 or 5 years, we do a lot of cases going forward will be the same situation. We go to the, sorry, direct design to those large companies. Are. So, you know, those giant companies. So, we cannot say the discuss situation will not happen again. Honestly, this do happen in some of the pixel cases and some of the SLT cases. You know, sometimes gross margin could not be stick with always 50 factors. But even when you grant this technology, you know, 1st runner or first adopters, But sometimes we will do extras, you know, servers, helping customers integrate some of tours just to, you know, make the customer satisfaction and then create a I do. Do do you have any, like, specific sectors that you are seeing, phasing the margin, more margin pressure, is it more, is that more correlated to the test instrument or semiconductor? Because that interest there has been, you know, declined trend. So I think for key contribution will be, for the interest and also, for colleagues, and so do you see any, did you, do you see any specifics that face this margin headwind because of the decline compared to the, you mentioned on the expertise items. Okay. I don't I wouldn't say it's a gross margin pressure because this, I would say, this product matures. Because if you look at the, 20, you know, you plan a lot of different, you know, automation phases. Of course, gross margin blended. So for projects, this is kind of nature. They the whole you look at the project's gross margin. You don't look at individuals attached versus gross margins. So I would say turnkey project is a blended gross margin. But if you for cases that I just mentioned, providing extra servers or extra integration, this is not what happened to the semiconductor. I see. I see. Okay. Oh, okay. Second question is related to the semi testing you mentioned. So if you're in the first half, you're wrong, close to your 1st run rates, actually, 60% figure growth. You mentioned that your target of this year will be percent, and there will be double upside potential. So, for the second half, you measure our guidance also for high 16, but how about a long way of growth compared to the first half? Are we seeing a similar pathway versus the first half or will probably feel a slowdown forward. Right? Not the 15%. No. I mean, I mean, the growth rate. Yeah. I mean, the growth rate. The sales growth rate. First growth rate. Okay. I want to tell you second half sales will be better than first half. For 3 and 46. Very helpful. Okay. I'm sorry. We got it's similar growth rate as last year, 20%. So after 2.3 30 years, you know, now we forecast, it will be better than 20% growth post rate. So you can use last year numbers at times more than 20% growth rate. 20 something something growth rate. Yeah. Right. It seems like if I use that and try to have growth rate for semi and photonics, So you're probably, resulting, right, like a team level, or, you know, low digit level. Is that is that the entire growth rate for the food setting and food value that you can have? You mean because the first half, we only have $1,500,000,000, so maybe it should be less than $1,500,000,000. Is it what you mean? Right? Yeah. So I'm just wondering. Just wondering. Because you just have to go through some options. Right? I'm just wondering. Because I just have to go through all your calls, already 57% close to the 16%. Of the growth plan. Right? So so, if you fight even 30% growth, that's for the, actually, if you will be slowed down to about 15% per year. But still pretty strong. Is that the case? I just want to the direction. And I'll let you point out a project, if you don't, if they come with a change, but just wondering, is that the trend we are capable? Well, our SOP and the performance, these two factors, 1st, second half, If you add the SOP and the performance together, first time it's gonna have not very much changed. So I need to double check with, our workforces department, how they I think the determinant factors come from this one. Okay. Okay. Sure. Yeah. Maybe maybe maybe not too far from the first half. Ever anyway. This is the best we could say. Okay. I'll see the order already first. Yes. Okay. Thank you. It's very clear. Last question is possible. It's regarding to the past instrument and HS, because at the second quarter, we see a year on year decline, about flattish this quarter. Can you repeat to you and elaborate a bit of what I call for down there on the flat pitch? Is it because of Cbo, because any other, you know, segment that caused the flattish vouchers for APS quarter on quarter. It's just I think we don't have a it's the same thing, our capacity allocations. You can you know, actually our 2nd quarter mostly capacity, you need to prepare for scheduled for photonics and then, SLT sectors actually, you know, We don't deliver all the products. In one quarter, sometimes we need to allocate some resources between let me contact the faxes and then ATS. So you can say from my numbers, I would say 2nd quarter, the major deliveries supposed to be portfolios related. Issue, right? I mean, for ATS and then it has an instrument in the 2nd quarter, it it it was stopped because of demand issues more like the internal resource allocation. So for other demand, I didn't know what will happen in the second half. Yeah. I would say, if you look the best way to look at ATMs is look at year to date. Now. Thank you. And the next question is coming from Angus Lynn of HSBC. Go ahead please. Hi, guys. I think in, in the year 2020 outlook page, you said that you are going to launch a new power testing equipment for D powers, migrate, and RG Server. Yeah. Sorry. I know you guys probably mentioned this in the very market, but I I dial in later, so probably I missed this. I'm wondering from this, is it going to be a strong second half test instrument segment driver? Because you mentioned that, you know, 1st half you have, like, capacity constraints. So you guys are able to take more to, like, semi photonics. So testing from there was a bit weak in 2Q. But, you know, from your launching new equipment tool like EV power testing part, are you seeing, you know, a test increment to pick up, you know, in the second half first half? I think overall this year, 'eighteen is really intense, just a stable growth. I don't expecting like over 10 the same post this year? Well, this is a pretty much very constructive view because we mentioned in the beginning, we do have some concerns in the fourth quarter because the election and also the Chinese and U. S. Tensions. Okay. So I think I moved to, like, a longer term question instead of just near term, you know, dynamic Yeah. So I think you guys have a very, very, solid growth, this year, potentially for Silicon And if you look into next year, you know, maybe we're not going to talk about, you know, maybe the the dollar or whatever of this. But make sure, are you going to foresee, you know, any reacceleration or even, you know, deceleration for your 3 segments, 3 current segment business. Like, for me, it's like, you know, you have spent, photonics especially TOS pretty much ramping, in the past 9 months already with SLT to kind of catch up the momentum from here going through the year end. I'm wondering going to next year, what would be some, you know, drivers that you see would actually persist or, you know, being much stronger. We ever guide in the beginning of the year. I think it's a major growth for this year. Which is so we we pretty much deliver for what we're guiding at the beginning of the year. It's the same SLV as a bigger flow drivers and then follow-up by the photonics, like an Indian waiver testers. And we will give a guidance regarding to next 3 years respecting our semiconductor account vital for phonetic factors, altogether, will be close to, you know, 50% of the testing equipment business. So this despite those, there will be no decline from the ATMs, which is power testings. So in this case, that's how the sorry. So the semiconductor sector need to maintain certain types of a growth rate for coming, you know, next 3 year time. We see the driver has actually come from HPC market's obligation to increase, which is really the increasing demand for SLT. And especially this year, so we launched this product. The reason why we gained so much order, for the SLT this year is because we to launch with some of the, this kind of very flexible, the design, for the SLK, which is the increase of throughput. For the SOT for testing the niche cloud like a GPU AI processors and even to cover start to cover CMOS image sensor And we do some, we see some other occasion, for example, like, a wallet, like, a dial inks and then Skyward also interested to try out our new testers because, maybe on the tentative relations and then also the site is the maximized numbers in the market. And so we do see the continued increase of demand for this, you know, operations for which market is supposed to also need to increase the DMEA for SLT. And if I really think that our design is very competitive, second is, gallium nitrate application, which is we already mentioned you, like a T. O. I think going forward, several, I think couple of new products that customers pass on to the designs, mostly related to yours. So you will see more applications from tier of designs. Besides this EO wafer, EO wafer, I think this is a volume driven. I think after this this kind of tension is settled, I think 5Q will continue to develop. I think we still can continue to see the demand for the e mail wafer testers. So we don't have a very, you know, too much concerned about the year of the demands. And then VCSEL, we are pretty much on his wife's friends. Not only this generation, the TRS ones, we also got another 2 designs of the TRS. Okay. I see. So I think that we do have I wouldn't say, like, you know, she's just happy to pay I wouldn't say, like, 100% sure, but, you know, we, we already pretty much, you know, right on the I think we're getting conducted developments and we are pretty much on the right track. Okay. Got it. And the next question is coming from Willie Ken of JP Morgan Asset Management. Go ahead please, Willie. Thanks, Jennifer. Sorry, just one final question. I mean, you mentioned SLT testing demand is pretty strong. I guess it would come in a bit on a 3 day answer. Right? So, just wondering, like, can you just share, like, SELT as a percentage of our semi and power testing, but how much, that account for ourselves in 2019? And then, you mentioned the 3 segment, for SRT, I I think that probably, you know, puts it in a niche market. And then can you, you know, say, like, what what's the promotion? I mean, for SLC margin, can you break up this, like, mobile niche market and CPU, what's the size? Of each month or the percentage of size of each month and then who are you competing against each month? Okay. Last year, we generated total semiconductors for tonnage sectors, $12,300,000,000 and $1,000,000,000 that is for tonnage related. And I can say I only could say the, like, over, last year, I think, over 50% company are wafer. So you can see the 5G is pretty much speed up. And this year, yesterday, I was definitely talk to later. First half, first half, I think I see characters and versions for Thomas. I would say pretty much either pretty much even. And then, EEL is still more than BCSEL. This is because Let me brief a little bit because, for policy sectors, first quarter, we mostly delivered through Android, but, you know, Android after seeing the iOS launch are deciding are deciding to redesign HUS. So in the second quarter, when we did deliver photonics, the VCSEL is multi to iOS. But, however, for hoteling sectors, most most of us still come from, I would say. Yeah. For Yale. Remaining the remaining IC Testers, I think the SOD start to pick up on second quarter, but I I don't think I would, you know, I would give a precise number for SLT sales contribution, but we do ever comment SLT this year will be reached the 1st set of milestone to over 1,000,000,000 of sales. Okay. So 2nd half will be if you talk about 2nd half will be more than 1st half. So what sorry, what is the second question? I just Missus. Alright. So so you mentioned that the 3 end markets, mobile, niche packet. Oh, okay. 30 years ago, we passed away gave up to 4 gs our 4 gs mobile because we don't have time to deliver it to more sites. Because we were homegrown as a big part of our equity makers. And So at that time, it's already gave to Teradyne. Remember, Teradyne, I acquired universal information. This is the first time they stepped into the mobile. The reason they can bring that order some people, 2.5 US dollars is because they can decide the trade, which is stating the biggest numbers of mobile the mobile chips can be very small. So which pretty much is economical to fit into Teradata and then test their business models. And move on to 5 g this year, we start to get into 5 g markets because some of the niche testing methods they uncovered. So maybe the reason we do receive several Comenia tech Qualcomm prefer our some of our testers mean, SLP test drive maybe single functions or multi functions. The reason for that is because we are we able to design a good feature with better, very competitive device. You know, we're able to design Sourcing price range very big from $200,000 to $2,000,000, but this kind of includes scale cannot fit into okay. Let's talk about English scale. This kind of business model cannot fit into niche market. What's the big guy number? Big size big size shipped markets because, you know, the chips cannot be marginalized. I mean, techs cannot be marginalized and chips cannot be standardized. And then how could you for this kind of fixed size, how could you fit into a big number as possible? If everyone tries to pretty much defend, Not possible. How could you selling a a tray which is only competing for, like, 16 dice and you wanna sell for 2,000,000? And which is close to only $200,000. So not possible, right? So also not to talk not to talk about Okay? For the niche market, which is the HPC market, you need to have a special technique. For example, if you talk about wireless, No matter you are talking about wireless AR for the chips also, you compress forward. You need to compress the chips with the ports over 100 pages to 300 pages So you'll still be able to reach out with the motherboards to do testing. If you if you couldn't reach this kind of force rate, you can't you cannot account that. Okay. When you come in, it tends to get really high. Sometimes over 90 degrees. All the SIM card will start to melt. If you couldn't do thermal control, So to text the next one, if you have been having several special techniques. So it's nothing more than just incoming or you're just confused with price. So that's what I mentioned in the beginning, if you want to cover niche markets, you need to have a capability to to do back to that design for all different types of chips. So I served giving you, I couldn't use for ai courses, either as you're using the face account, which is in India. Okay. I I think because the SIMPAD entered, I also mentioned the SLG, demand was pretty strong. And I think that that's strong. The strongest is actually mainly from the volume or the mobile business side. Like, they Yeah. I on the box because the DRAM, your strength. Do you remember the ID number of your strength? So No. You guys, you don't need the SOP. Do you really, Roni? Yeah. I'm ready. Actually, he's designed because the contract is a hardship. If for this customer model, you currently use only the SLT. And then only granting the mobile market can fit into their business model. If you look at their business model, their algorithm needs to self touch overall to do that. If you if you You do not trust me. You just call check with Teradyne, or they'll check the settlement over at 2,000,000. But, you know, I think the the biggest threat of a terrorist attack is a drug test because a drug test, they do they do have the key design, you know, going forward, you look at 5 gs market, what is really a key? You know, first one, learning system, second one, can you just imagine? This is we all have a product we all have that for many, many years. But, you know, Tara and I, they don't have it two key, you know, burning and, thermal control. And the one that, because if you look at 5 gs market, it's all high power consumption, you definitely 3 years ago, have you ever heard any shipping to have burning lawn? Nothing. But now most of the 5 g related chips not just only for HPC, including mobile, all need to have a burning process because it's all 5 gs all about power consumption. And if you also want to step into, for Target, couldn't compost any related that you need to have a feel about thermal control and temperature submission. Because in order to gain a combo semi market, temperature is the key. So so far, advanced tests, you know, used at the sales, mostly is a consolidated step from the company they acquired. They haven't really elaborate what we integrate those features and come up with a Most of the core mass passengers is all integrated for the company we acquire. So we consolidate in. Thank you so much, Thank you. And ladies and gentlemen, we thank you for all your questions. There are currently no questions. Then I'll hand it over to the CFO, Paul Ng, for closing remarks. Please proceed. Well, thanks, everyone. It seems to us that we have pretty good second quarter and 1st half. And we have, we didn't put it in half and and let's move forward. Thank you, and bye bye. Until next time. Thank you, Mr. King. Ladies and gentlemen, we thank you for your participation in Chroma's conference. There will be a webcast replay within an hour. Please visit www.chroma dotcom.tw/investorindex under the Investor Relations section. You may now disconnect. Goodbye.