Good afternoon and good morning, everyone. Welcome to Advantech's first quarter 2026 earnings call hosted by UBS. This is Eileen Chan, covering the industrial sector at UBS. It's our pleasure to have Advantech's management team joining the call today. On the line we have Eric Chen, President of GM, CFO; Linda Tsai, President of Intelligent System Sector; and Grace Liao, the IR Manager. For today's meeting, we will start with Grace's presentation and open up for Q&A later. Now let me pass to Grace.
Thank you, Eileen. Good morning and good afternoon, ladies and gentlemen. Thank you for your time today. This is Grace Liao, the Senior IR Manager of Advantech. Regarding our Q1 2026 financial results, Q1's revenue reached TWD 20.4 billion, increased 17% year-on-year, 14% quarter-on-quarter. Gross margin rate reached 39.1%, slightly lower on both quarterly and annual basis, mainly due to component cost up. Operating profit reached TWD 3.7 billion, increased 28% year-on-year. Operating profit rate reached 18.3%, which greatly improved from 15.7% in Q4 2025. Q1 effective tax rate was 18.4%. Net income reached TWD 3.3 billion, increased 22% year-on-year. Earnings per share in Q1 2026 was TWD 3.85. Q1 2026, both top line and bottom line reached a record high and also beat the company guidance.
For regional performance, in terms of U.S. dollars, Q1 2026 revenue reached $644 million , increased 22% year-on-year. For regional performance, all regions reported a double-digit growth. Major three market continued to contribute 70% of our total sales, with slightly shifts in regional mix. North America increased 13% year-on-year, driven by semiconductor equipments and data center projects. Europe market increased 19% year-on-year due to strong medical equipments and the channel sales. China market increased 38% year-on-year, benefit from channel sales, semi equipments and transportation projects. Korea market showed a 44% increase rebound from low base last year. Taiwan market enjoyed 75% year-on-year growth, driven by semiconductor and automation projects. For sector mix perspective, all sectors enjoy positive growth year-on-year.
Both IoT automation and Intelligent System increased 19% year-on-year, driven by semiconductor, energy and transportation projects. Embedded sector increased 15% year-on-year, benefit from strong growth of medical equipments in North America, Europe, Middle East and Africa. Intelligent Service increased 3% year-on-year, driven by healthcare in Europe and the Middle East and Africa market. However, retail in North America slowed down due to component shortage. For balance sheets, this is also my last page. Inventory accounts for 18% of our total assets, while inventory turnover days slightly improved to 97 days, reflecting improvements in readiness of future shipments. Cash conversion cycle, CCC, maintained 84 days, within a healthy range. Now I'm handing over the time to President Eric to share overall business outlook. Thank you.
Thank you, Grace. Good morning and good afternoon, everyone. Thank you for joining today's meeting. This is Eric. Let me start with a few comments on the first quarter result. In the first quarter, our top line and operating profit exceeds our expectations. Our gross margin was in line with our guidance. Top line performance was mainly driven by strong demand from the semiconductor and the medical sector, also the transportation sector as well. In addition, higher DDR4 and SSD price promotes customer to place orders early and push the faster delivery. In the first quarter, our OpEx ratio declined by 3.1% year-over-year, and operating profit improved by 1.4 percentage points, with operating profit up 27% year-on-year. With a stable tax expenses, we achieved a record high first quarter results, with earnings per share of TWD 3.85.
In terms of regional performance, China, Taiwan, and emerging market deliver significant growth of 38%, 75%, and 24% respectively. Demand in China was mainly driven by the distribution channels, transportation and energy sector. Taiwan delivered the strongest result driven by the semiconductor and factory automation sectors. From a sector perspective, the IoT automation and Intelligent System segments perform well, benefiting from strong demand in semiconductors, energies, and transportation sectors.
The Embedded sector benefits from increased shipment of medical equipment in North America, Europe, and the Middle East and Africa. Intelligent Service YoY increased by 3% only, driven by growth in healthcare project in Europe and Middle East, partially offset the weakness in North American retail business. This concludes my comment on the first quarter. Next page. Thank you. Let's look at the BB ratio trend across regions as shown on this page.
The first quarter BB ratio rose to 1.77. In the U.S., the BB ratio was 2.337, mainly because key account placed order aggressively to secure product allocation and rising DDR4 and SSD prices. The BB ratios in Europe and China were 1.76 and 1.30 respectively. It is also worth noting that both BB bookings and shipment increased by 48% and 11.6% respectively, compared with the fourth quarter of 2025. Next page. Yeah. Looking ahead to the second quarter, we expect revenue to range between $6.0 million and $370 million based on an exchange rate of $1 to 31.5 TWD.
In terms of margin, we anticipate second quarter gross margin of 38%-40% and operating margin of 16%-18%. Next page. I could also highlight an event, a coming event, that's Computex. We have arranged a series of activities designed to engage different target audience. On the afternoon on June 1st, we will host an Edge AI conference at the Huanan International Center. The conference will cover three key themes, regional leadership in the era of Edge AI, real world AI impact across industry, and acceleration of WISE platforms and ecosystems. Day two will include an on-site visit to Advantech areas at the Computex exhibitions. For investor, we will arrange more than 10 rounds of product briefings and booth tours. Day three will focus on our annual World Partner Conference.
It will be held at our Linkou campus with business matchmaking and a sector forums as the key activities. We would like to honor to have you join us for the day one or day two events. Many investors has already reserved a spot for the day two on-site booth tours with Grace. Please feel free to reach out to her to registers. This conclude my guidance for the second quarter, and thank you for your attention.
Thank you, Eric. I'll hand over the time to Eileen. Thank you.
Okay. Thank you, Eric. Thank you, Grace. Now let's move on to the Q&A session. We will start with questions we collected from investors before the call and then open up the floor later. Now, on the first one, about financial and outlook, what is the expected sales mix target in 2026 and 2027, and what's the demand for non-Edge AI project expectation?
Let me try to answer these questions. We expect our system and IoT automation to have a stronger growth momentum than embedded and Intelligent Service in 2026. Demand from semiconductors, factory automation, and energies remain promising. The products such as SKY servers, IPC, Box PC, and industrial communication solutions should benefit. Embedded should benefit from demand in medical equipment and robotics, but we expect its growth momentum to be lower than in semiconductors. In robotics, AMR and AGV demand is stables, while humanoid robotics will take time to move from engineering sample to mass productions.
Even though we currently have around 130 pipeline on hand with total revenue of TWD 120 million. Intelligent Service is facing a key chip allocation constraints, which may put some pressures on order fulfillment in this first halves. Regarding the demand of for non-Edge AI projects, because Edge AI project accounts for about 20% of our first quarter revenues. Most revenue is still generated from our edge computing and devices. At this moment, we do not expect demand from non-Edge AI product or project to be negatively impacted by Edge AI requirement. This is my answer to the first questions.
Thank you, Eric. The second question is about, I think the first part, what is the sales mix for Edge AI project in first quarter? You just answered that it's 20%. I think another question is about which verticals are driving Edge AI related orders?
Okay. Edge AI revenue in the first quarter was TWD 132 million, accounting for 20.5% of total revenues. We classify Edge AI revenue into two categories, Edge AI products and Edge AI components. We always have two categories to calculate Edge AI performance. In the first quarter, Edge AI product revenue grew 67% to TWD 123 million, while Edge AI component revenue grew 58% to TWD 9 million.
We, here we define the Edge AI component as a purely buy and sell model with no value added to Advantech products. They account for only 6.8% of our Edge AI revenues. For the sectors, for the demand from the sectors, Edge AI related demand mainly come from the factory automation, robotics, smart city, and transportation sectors. By geographies, the U.S., Europe and China accounts for a large portion of these orders. Yeah. This is my answer. Yeah.
Okay. The third question is about regarding the BB ratio, what percentage of order backlog is for delivery in second half 2026 or 2027?
Okay. Based on our ordering system, we have a central ERP system called SAP system. We have a central data. The percentage of our first quarter order with delivery days more than six months out was 37% in January, 57% in February, and 47% in March. Overall, delivery schedule for May more than six months of this year represent 47% of the total quarter one bookings. Advantech, normally at Advantech, a customer order fulfillment generally fall into two categories.
We have standard product and DMS or tailor-made products. For standard products, the lead time from order to shipments is typically under three months. For DMS and the tailor-made products, lead time depends heavily on customer requirements. In most cases, the shipping occurs within six months. For the quarter one bookings, the overall is 70%, 47% delivery day more than six months. This is my answer.
Thank you, Eric. Next question is about material cost impact and the reactions. In terms of profitability, what extent can the increased cost be passed on to customers in terms of different kinds of projects? Any signals that higher project pricing is hurting order intake?
Okay. Thanks for the questions. Advantech go-to-market sales strategy have three priorities. Key accounts, a channel partner, and general account. For general accounts, we have full pricing power for key account and DMS business. When our design products represent a relative small portions of the customer total system cost. Here, I just give you an example. We provide a high reliability embedded board or Edge AI system were used in the medical device such as surgical robotics or MRI systems, or in a semiconductor equipment such as front-end modules or wafer sorters. We are more likely to pass a cost increase through our customers. Because, again, our offering is just a small portion of the whole systems. This type of project represent around 70% of our design-in business.
However, in the other side, for projects serving the retail market, for example, the kiosk or POS systems, customer tend to more cost sensitive. Free passing through a cost increase is not always practical. In this case, we negotiate with customer to agree on proper pricing adjustments. At this stage, we don't see the higher project pricings. Materials affect order intake in some semiconductor customers. They tend to place an order cover the next 18 months to secure further allocation and capacity to Advantech. We don't see any order intake. Yeah, this is my answer, yeah.
Okay. Thank you, Eric. Next question is about the progress of replacing DDR4 with DDR5, and what has the price increase so far? Has the price momentum eased?
This is Linda. On the migration from DDR4- DDR5 in embedding an industrial customer is still ongoing, and typically takes 15 to eight month, and depends on applications. In Q1 and Q2 2026, memory price still remain an upward trend, especially on DDR5. It's roughly like EUR 30-EUR 50 , driven by strong AI demand. In DDR4, stay at a more moderate level. The ongoing supply is still very tight because the industry continue to face our legacy product. Yeah, thank you.
Okay, thank you. For the price increase, for other components such as CPU and other passive components, what's the extent of the price increase, and what is the inventory level of these critical components? Is there any sourcing issue?
From early to mid 2026, in addition to memory and SSD, we are seeing the pricing pressure on CPU, especially from Intel and AMD. It's around 10%-20% price increase, depends on the SKU. Again, it's driven by strong AI demand and limited supply. In addition to CPU, we also see that AI driven demand contribute a higher PCB cost, also a longer lead time. Overall, the component availability remain tighter than historical level, and the sourcing condition are becoming more competitive as the lead time extended across more component. We are also pointing the long term PO vis-a-vis to our supplier. We continue to manage this through diversified sourcing with different strategic partner and the long term purchase commitment with our upstream supplier, and the closer engagement to support and make sure the supply continuity. Thank you.
Okay. Thank you. Thank you, Linda. Next question is about regional and sector performance. What are key order drivers by each sector and by different market in second quarter 2026? How is first quarter 2026 new project design win progressing versus fourth quarter 2025?
Okay. The key orders drives by sector and by market are as below. For the factory automation, including vision inspections, warehouse management, and safety, restrict launch detections is mainly for factory automation. For robotics, including AMR and AGVs, we are also receive many RQ for humanoidal robot. As mentioned earlier, we have a lot of pipeline with the more than TWD 120 million total revenues. Smart city and transportation, including video surveillance, such as railways, heavy duty vehicles, traffic management, and road size video surveillances. Factory automation demand is primary in Asia. For robotics, demand is primary from the U.S., Europe, and China, with a small portion from Korea. Smart city and transportation demands mainly from the U.S., China, Asia, and Europe.
For the healthcare, demand is mainly from the U.S., Europe, and Korea. For the indicator design in indicators, compare with last quarters, below some data for your reference. In first quarter 2025, Advantech secure 46 design win with an estimate annual revenue of TWD 67 million. In this quarter, in first quarter this year, Advantech secure 53 design win with an estimate annual revenue of TWD 158 million. Compare with last quarter, the design win count increased by seven, but the EAR means estimate annual revenues, increased by 2.3x . This is the data. Please note that design in activities can be affected by customer demand cycle. Therefore, a six months review window provide a more accurate and meaningful compare with just a single quarter. Yeah. This is my answer.
Okay. Thank you, Eric. Next question is about what are the possible impacts from Middle East uncertainties on Advantech, and what's the company strategy to mitigate risks?
The impact of Middle East crisis has been primarily on smart city infrastructure project, especially in transportation sector, where the implementation plan timeline has been experiencing delay. Overall, the affected business portion remain relatively limited. However, most of business are actually facing indirect impact, including the one we shared previously on the increasing cost and the extended lead time for the key component. Thank you.
Okay. Thank you, Linda. Next question is about what would be the highlights of Advantech Computex exhibition?
Well, as Eric mentioned earlier, I think, we do have a full series of three days of events during Computex, including our Edge AI conference in Huanan International Conference Center in June 1st. During the Computex exhibition, we do have lots of application and the physical AI showcases in the Nangang center, exhibition centers, in June 2nd. In June 3rd, we do host WPC World Partner Conference in our Linkou Campus with our grand keynote and also sector forums in different partners, global partners and the customers in the Linkou Campus to have a further cooperation and to build the ecosystem in the future. I think, for investors, we'll quite welcome, the investors and also, the media to join us in the June 1st and June 2nd event.
We also have a keynote speech by Miller and Richard, right?
June 4th
June 2nd or June 4th. Oh, yeah.
Yeah.
Yeah.
Afternoon of the June 4th.
Yeah.
Okay. Okay, thank you. I think we've finished the questions we have on hand. Now we will open up the floor to allow participant to raise questions. If you wish to raise a question, please use the raise hand function and then unmute yourself. I think while we are waiting for questions from the participants, maybe let me start with a follow-up on BB ratio. The BB ratio was like 1.77 as of end of first quarter. Is there any updates like BB ratio as of most recent recent ones? Thank you.
I think the aggressive BB ratio in Q1 2026 indicating two parts. First of all, I think we do see very strong demand in the market sides from the enterprise customer, especially in robotic and also automation and the semiconductor equipments. That is real demands from the end markets. However, with the balance of the supply chain and also continuously cost up in the component side, I think most of the customer is prompted to place their orders within 18 months, which means I think they are quite aggressive in their order behavior to secure the sourcing allocation from us. Yeah.
Okay. I often get asked by investors about how to calculate the BB ratio. In terms of shipment, is that defined as the quarterly shipment? Or can the management team elaborate a little bit on how to calculate BB ratio?
Yeah. Let me try to answer these questions. For the BB ratio is called bill to bookings. The ratio compares the shipment versus the order. Just mentioned earlier, we have a central ERP system. We call it SAP HANA. When the new order pass, we will keep the order as an order date. The booking means, for example, for the April, all the new order came in from April, we keep as the booking. The order date cannot be revised by the manuals. They create by the system automatically. This is we so-call the bookings. For the shipment as invoice date, as you know, we will generate invoice after the finished goods ship out from Taiwan or from China, Kunshan.
BB ratio, the B, booking means the order entry in a certain period, especially we calculate by monthly base. For another B, it's called billings, as it's about how many invoice we generate and send out to our customers. This is we call the BB ratio.
Understand. Understand. Thank you. Actually, so if our revenue is already growing very strong, and, but BB ratio is increasing, which means our order backlog is also increasing a lot.
Yeah, exactly. Yeah, exactly. Pay attention for, because the fulfillment time is normally, we get a certain order. We have huge amount of certain order, but the delivery, that means the business might be happens in the coming two to three months for the standard products. For the design product, it's very depends on customer required date. Normally, I just mentioned earlier, it will be shipment within six months.
Understand. Okay, thank you. Separately on the gross margin front, last earning last analyst meeting, we understand that we should be able to, Advantech should be able to pass over most of the cost increase. Meaning that the input cost difference between the signing of the agreement and the delivery day, the cost, the price gap can be largely passed over to our customer. Is this still the practice now?
Yes. As we mentioned, in the previous investor conference, actually we take more aggressive pricing policy to our customer. First of all, we do have overall ASP hike in October 2025. That is the first wave of ASP hike with the hiking range of 4%-8%. From beginning of this year, we take more aggressive pricing policy with bi-weekly adjustment, pricing adjustment, to our system level product and monthly adjustment to the board level products. We are able to transpass most of the pressure to pricing pressure to our customer.
As Eric mentioned before that, actually, the IPC and also the overall purchasement cost of in customer points of view it is a small portion. It's quite limited to their overall CapEx. Therefore, I think there is a lower sensitive to the in the cost in the cost of pricing sensitivity. Yeah. going forward, I think we're still facing the upward pressure from the component side. As Linda mentioned that, besides memory, we do have several items is still under pressure. we will more cautious to review our overall cost structure and if necessary, we will continue to pass the pricing pressure to the customer. This is a continued theme of the whole year. Yeah.
Okay. Thank you.
We all decision there's a time gap, a time lag, how to say that the time lag between the new order, also the existing order. We will compensate a little bit for the time lag. If the component is still going higher, then we need to a little bit time to adjust our price. Yeah.
Usually the time gap is, roughly one to two quarter.
Yeah, yeah.
Yeah. Okay. Okay. Thank you. Let me remind the participant online, if you wish to raise a question, you can press the raise hand button and then unmute yourself to ask questions. Okay. We have Meryl on hand. On Meryl, please go ahead.
Hello, management team. Can you hear me?
Yes.
Yes.
Please.
Okay. Hi, management teams. Thanks for having me. I'm Meryl from the Taipei Times. I believe last time, like in our news conference last time, we talked about we have this forecast for our Edge AI percentage to account for about 30% of our total revenue this year, which it was 20% last year. According to what you just said, I believe we can have a more positive outlook for our Edge AI products this year, right? I would like to ask if we have a new prediction on the specific proportion of Edge AI percentage of our total revenue. This is my first question. My second question is that, because I think Advantech has been releasing positive outlooks on our robotics sectors as well.
I would like to ask, because I think it's either Eric or Miller, like you guys said, we have been cooperating with about 20 robotic clients last year. I would like to ask if the number has been increasing. Like did we cut into new robot clients or we are sticking to the 20 clients that we had last year, and we are still sticking to them, instead of like developing into new customers. Yeah. Thank you.
Thank you, Meryl. I'll try to answer your questions. First of all is the Edge AI revenue contribution target this year. I think our target is still maintain a 30% of, by end of this year. I think right now the progress is on track and slightly beat the expectation. Q1 is 20.5% of a total revenue contribution from Edge AI. According to Eric, that Edge AI revenue is actually in first quarter is reached $132 million. I think we are quite positive for the Edge AI progress this year because both the Edge AI products and Edge AI components seems very it grows very aggressively.
I think right now we do see a very positive feedback from customer sides in the factory automation, robotic and the smart city transportation sectors, especially in U.S., Europe and also China market, which is our major three markets. I think the first question right now is on track, and I think we are quite positive with the progress right now. The second question's about the robotic clients globally. Last year's around 20 customers, and we are still stick with those key accounts and the major players globally. However, I think robotics still is a early stage for the global.
I think the real contribution is gradually coming up rather than a rapid growth in the short time. I think right now Advantech do have a very good positioning with, we do have a fully product offering for the building block for the robotic applications, including all the sensing technology, all the calculation core centers and also the modules. However, I think the real contribution right now is still very limited in the first half of this year. I think we are continued to co-work with those key accounts globally.
Just one appendix from my side. We have endorsed the robotics engagement just not only for Embedded sector, but also for the Intelligent System sector. I think that can update a little bit about the progress for the robotics. Yeah.
Yeah. For robotic, some of custom design you using embedded board, some of them in the box. As you may know that, last year NVIDIA released Jetson Thor, and they also have one is called Jetson Thor IGX . That product's especially targeting AI robotics. Either it's human robotics or robotics wheel arm. With this new platform, we also have some of the good customer we are working on the designing. The new platform for this year is that Intel also launched Panther Lake. This is also the one with the several application they focus. One of the important is on the robotic as well. At the beginning, since quarter end of last year, this year, we are working with some of the customer, especially in U.S.A., on the new platform from NVIDIA Jetson Thor IGX, and also on Intel Panther Lake.
Got it. Thank you.
Okay. Thank you. If anyone wish to raise question, please use the raise hand function. I also have one follow-up question on the demand front. How will we view the demand? Where it come from? Is it more of a top-down upcycle in terms of automation, in terms of CapEx cycle? Or do you see an uneven demand coming from a different subsector? If this is all about a cycle, where are we in the cycle? Are we just at the beginning and how long would you expect?
I think because Advantech's business is quite diversified, so we covers quite different sectors. Therefore, I think both of the drivers do have a positive effect to our business. For example, I think we do have a policy driven related sector. For example, like automation or even like semiconductor kind of subsidized by the government, especially for U.S. or even China markets. I think policy driven is one of the angle here, including semiconductor high tech.
In that nature.
high tech and also like, for example, like energy or infrastructure related. First for second, we do see lots of emerging sectors, for example, like robotic and also like maybe like AI embedded technology, especially in the healthcare, for example. Emerging technology or emerging sector is one of the driver here. Maybe Linda can add on more information about this question. Thank you.
Yeah. I think I will feedback on that some of the vertical market on the demand cycle, especially on semicon, energy infrastructure, and the data center. On semicon, of course, everything is driven by AI demand. This is still at the, I would say that the beginning of cycle because our target customer are the semicon equipment builder, no matter is the front end or the back end, the customer globally. We still see a very strong demand from our customer where we are already designing, and recently there are then more design requests from our customers. I think on the semicon equipment builder that are still at the early design cycle, and they are demand from all the Fab, one of the very important from Taiwan and others.
On energy side, there are two perspective because the power is very critical for all the data center. We're targeting that that's already is Advantech that focus market, energy sector, smart grid. We see the demand for smart grid that we provide the smart substation and virtualization, also the connectivity. That's also the demanding. On the I would say still at the beginning because that's all fulfillment for the data center, how they gonna build out their smart grid infrastructure.
Lastly about this is data center. We are not doing business with data center, but with our automation product and customer. In the data center, in addition to the energy, they need a lot of gateway and automation control. That's also fluid in the right doing data center through our automation customer. On semicon energy, especially on the infra side, on smart grid, and on the data center also is on infrastructure wise, it's benefit to us, I think it's at the beginning of the increasing cycle demand. Yeah. This is my answer.
Okay. Thank you, Linda, and the team. checking if anyone have any question.
While we are waiting for further questions, I would like to recap the key points that we deliver in during the last investor conference. Because we, this year, beginning of this year, approved by the board, actually, Advantech do have minor majority changes in our new dividend policy. I would like to take a few minutes to recap the key points for that. We do have a new dividend policy beginning of this year to realize more the profit sharing to the shareholders and also try to optimize the ROE and the value creation of the company. The key point for the new policy would be including three parts.
First of all, dividends, format shifting from stock dividends plus cash dividends. Right now, shifting to 100% cash dividend base. Second, we increase cash payout ratio, raising from 70%- 75%, up to 70%- 80%. This a kind of a range. The third part is, we also announced the special cash dividends for the next three years, for additional TWD 2 per a share annually, sourcing from our capital reserves. This is for the next three years, a period from 2026- 2028. Therefore, with the new dividend policy take, the year 2025, for example, our total EPS last year is about TWD 12.25.
With 75% cash payout ratio, that would be TWD 9.2 per share, plus TWD 2 special cash dividend additionally. That was a total TWD 11.2. The overall cash dividend payout is TWD 11.2 out of TWD 12.25. I think the total cash payout ratio would be 91.4%. That is higher than the historical range in the historical. I think this is again, the new dividend policy from the management team and also approved by the board. This is a try to realize the profit sharing to all every shareholders. Allow me to recap this key points to the investors. Thank you.
Okay. Thank you, Grace. I saw we have two questions. First from Rohit, please unmute yourself. Yes, please.
Hi. Thanks for the opportunity. If you could give us some more color on what exactly are the kind of products going into semiconductor equipment customers? Into data centers, if you could provide some flavor. Second is, both put together, what will be the sales contribution from this?
Okay, thank you, Rohit. Maybe Linda can share.
Yeah. For semicon equipment builders that we sell our product is on edge computing, from the front end tool of the semicon equipment tool, they need that server grade of that computing over there. That's all their engine. In addition to that, some of our semicon customer, they also require the IO, AIO, and some connectivity where Advantech can provide that bundle selling together. That's for semicon. Some of semicon customer, they also, like, require the rack integration. There's also new emerging business that we're incubating instead of just providing a rack server used on the semicon tool, also the full rack integration.
Data center, we are not selling server to data center, but data center-wise, on the infrastructure, they are the energy need to be monitoring. Those requiring the gateway, again, also with some of the IO connectivity. That's why we work with our OEM customer for data center. Some of the OEM customer, they are the automation OEM, and we work with them closely, and we them, they sell to data center. I hope that answered your question. Yes.
Got it. That's very helpful. Both put together semicon equipment customers and the business for data centers, what would that be as a percentage of sales for one quarter, just to get a sense?
The big portion of the revenue should be on semicon tool.
Right.
The portion, because we are the I mean, the Advantech business Okay, most of the semicon business, I mean, semicon equipment builder, semicon tool, the front end, back end, mostly it come from Intelligent System team. From Intelligent System team, quarter one, we have, like, 234, I would say, like, 30%-40%, because this quarter one of the growing driver is semicon from U.S., Taiwan, Japan, and Korea. I would say that 30%-35% minimum is from semicon, or could be higher. Could be higher.
Okay.
Yes. Could be higher.
Okay. Okay.
Yeah.
Yeah.
On the other hand, data center, because we are selling gateway, the ASP is much lower. The gateway is not a high performance server used on the tool. Data center is more like we're selling the gateway, could be the on-base. That revenue portion is not that big. It's more on the quantity-wise. Yeah.
Got it.
Those are mainly from automation product line, IoT automation product line, yeah.
That's helpful. Just one follow-up on the memory side. How is Advantech securing memory supplies for the next, say, you know, few quarters? Are we directly speaking to the memory companies and signing long-term contracts, or are we relying on the spot market, in case there is a shortage?
On the memory side, no, we do not talk to Micron, Hynix, and Samsung directly. We work with the module house in Taiwan. Module house, the several of them in Taiwan, they have the long-term agreement with Samsung, Hynix, and Micron. Between Advantech and module house, we have the long-term agreement with them, that long-term agreement, and we show them our forecast. That's how we can guarantee the allocation. Really, in case, if our demand is out of our forecast, then we will still work with our module house because they have the inventory, and then we have the buffer, even though our demand is higher than our long-term agreement LTA.
Understood. That's very helpful. Thank you so much.
Okay, thank you. Next question comes from Lorraine. Lorraine, please unmute yourself.
Hi, thank you for taking my questions. The first question is about your order backlog as of the first quarter or as of April. Can you share the percentage of your total backlog that will be delivered for the next six months? One more follow-up on this question is that would you foresee any factors that will prevent you from deliver this product within six months schedule, likely maybe CPU or memory shortages? Thank you.
For the BB ratio, as Eric mentioned during the previous session, that overall this year, the order schedule delivered in the second half of this year, which means more than six months deliveries, around 47% of total Q1's booking. I think this is based on the component situation in the current moment. For IPC, I think the preparation and usually take maybe around six to eight weeks, more than six to eight weeks.
I think this is probably is quite fixed in the whole year. I think the under the supply chain situation right now, there is unlikely to push the delivery before the schedule right now. I think for the booking situation this year, considering the pricing, the component pricing still went up for the following quarters. I think our BB ratio could be in the high range for the following quarters. That is from BB ratio points of view. Maybe Eric can share-
I can share the backlog situations. We do not disclose your list numbers, just for your reference, from now till December, the BB ratio, or the backlog, I mean the backlog, is over TWD 1.3 billion. For the second quarters, at over TWD 700 million. Due to the shortage on DDR4 or SSD, we have more conservatives. Our guidance is below, a little bit below the backlog. Here the backlog it's most come from our customers. The reality is sometime we will encounter the material supply issue. We just give a certain discounts, give you the guidance. The backlog actually is over TWD 700 million. We will gradually increase the backlog till the second quarter. Yeah. Just for your reference. Yeah.
Thank you. I have one more follow-up. Could you also share on the current bill of material for memory and CPU on your component and system level product? Thank you.
Sorry, can you repeat your question again, Lorraine?
Oh, sorry. The BOM cost as of the first quarter 2026 on memory and CPU on your, on your, system and component level products.
In BOM cost, structure points of view, actually we don't disclose the detail as a usual basis. Yeah. Roughly.
It very depends. Yeah.
It very depends because we have like embedded board or the memory chip down, and we could have the edge computing with the memory module, and we have the server. With the RDIMM is very expensive. In terms of the memory cost, over of bill of material, the percentage really very depends on different product line. Some of the boards on the system, it depends on what the chip set. Yeah.
Yeah. Lorraine, which means we are not able to disclose more detail in the BOM cost points of view. I'm sorry. Yeah.
That's okay. Thank you.
Thank you. Probably due to all the limits of the time, maybe we can take one last questions. Any inquiry from the investors or from Eileen's side?
No? Okay. Okay. I think, we are all good here. Any final remarks from the management team before we conclude the call?
Not exactly. Just welcome you to join us on the Computex event, especially for day two. We already arranged more than 10 rounds of product briefing, also the booth tour. It's our honor to invite you to join our Computex event. Thank you.
Yeah. Okay. UBS also host a Computex tour, so if you want to join, please register with us. Okay?
Yeah.
All right. Okay. Yeah. Okay, thank you, management team. Thank you everyone for joining the call. Let's conclude the call today here. Okay, thank you.
Thank you.
Bye
Thank you.
Bye-bye. Bye-bye.