Welcome to Nanya Technology's 2023 third quarter earnings conference call. All lines are in the listen-only mode. The conference will be held only in English for investors around the world. Today's conference will be approximately 60 minutes. Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the third quarter of 2023, followed by our guidance for the next quarter and key messages. Then, Nanya Technology's Executive Vice President, Dr. Lin-Chin Su, Vice President, Mr. Joseph Wu, and Financial Executive, Mr. Philip Tsao, will join us as we open our Q&A session. Today's presentation materials are available for download at Nanya Technology's website at www.nanya.com. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause the actual results to differ materially from those contained in the forward-looking statements.
Please refer to the safe harbor notice that appears in our presentation materials. Now, I would like to turn the call over to Nanya Technology's President, Dr. Pei-Ing Lee, for the summary of operations and current quarter guidance. Dr. Lee, please begin.
Ladies and gentlemen, welcome to Nanya Technology Q3 2023 investor conference. I'm Pei-Ing Lee. In general speaking, Q3 2023 still a tough quarter for Nanya. However, we are seeing signs and opportunity for future improvement in the market. I will begin with presenting Q3 revenue and result, followed by CapEx and shipment, and discuss market outlook, then conclude by Nanya business review and outlook. First, our Q3 financial results summary. Our net sale comes to TWD 7.736 billion compared to Q2 of TWD 7.027 billion, is an improvement of about 10%. However, the gross profit come down to loss of TWD 1.953 billion compared to Q2 of TWD 788 million.
This is largely due to idle costs and some by ASP reduction. Operating costs are -TWD 4.34 billion versus -TWD 3.185 billion in Q2, and with the same reason. EBITDA are at -TWD 475 million. Non-operating income is TWD 1.198 billion, very similar to Q2. And the income tax benefit, 638 million NT dollars compared to Q2, 1.15, is less of about five hundred million NT dollars. And the net loss comes to 2.505 billion NT dollars versus Q2 of 771 million NT dollars.
Earnings per share is loss of $0.81 per share, compared to Q2 of loss of $0.25. Book value per share, $55.52 per share. For quarterly revenue comparison and year-to-year revenue comparison, the revenue for the quarter is about 10% better than Q2. The shipment increased by high teens, which is some good sign. ASP decreased by a high single digit, and exchange rate increased by a high single digit. For year-to-year, revenue is still down by 29.8%, and the shipment is increased by low twenties. Now it comes to a little bit of more detail comparison, quarter to quarter.
For next sale is an improvement of 10%, largely due to volume increased by high teens and ASP decreased by a high single digit, with exchange rate favorable, low single digit. Gross profit - TWD 1.953 billion versus TWD 188 million . The gross loss increased by TWD 1.165 billion, mainly due to higher idle cost and ASP decrease. The operating expense are TWD 2.387 billion, which is very much similar to Q2.
Operating income - TWD 4.34 billion versus Q2, TWD 3.185 billion, is due to operation loss increased by TWD 1.155 billion for the same reason in the gross profit. Net income - TWD 2.505 billion versus - TWD 771 million. The net loss increased by TWD 1.734 billion, with the reason, operating loss increased by TWD 1.155 billion, and income tax unfavorable at TWD 512 million. For operating expenses, our SG&A expenses are TWD 600 million, which is in the normal range. And R&D expense is at around TWD 1.787 billion, also at normal range. Notice that this is the unaudited result. For cash flow, beginning balance for Q3 is at TWD 59.665 billion, with the cash from operating activity at -TWD 891 million and capital expenditure at -TWD 2.431 billion. Financial activity, which is + TWD 4.125 billion.
If you're looking at the note underneath, you see that we have include a short-term debt of short-term loan of TWD 8.5 billion in Q3, plus the net dividend payout at TWD 66.1 billion, with the exchange rate gain about $1.9 billion. Okay. Then the end balance for Q3 comes to TWD 60.468 billion . And free cash flow -TWD 3.322 billion . And if you look at the bottom note, the you see that our net cash, which is the cash minus debt, comes to TWD 52.2 billion . Looking at the right-hand side, this summarize our Q1- Q3 cash flow situation.
Beginning of this year, cash situation is TWD 73.593 billion . With the cash from operating activity, - 6.677 billion, and the capital expenditure, - 11.055 billion, with the financial activity, plus 4.607. The end balance comes to TWD 60.468 billion , as is branded on the left-hand table. For CapEx and shipment, Nanya's capital expenditure in Q3 is around TWD 2.4 billion and accumulated Q1- Q3 at TWD 11.1 billion . We plan for the whole year to spend estimated around TWD 15 billion . Within those, 50% are wafer, wafer equipment related. Okay.
For the shipment, our Q3 shipment increased by high teens. For Q4, we will continue to plan for production output, dynamically reduce by up to 20%, very similar to Q3. This will be looking into our product portfolio situation and market demand situation, doing dynamic adjustments. For annual shipments, we are expecting to be down by mid-single digit for the year. Now comes to market outlook. Overall speaking, we are expecting some improvement in Q4 demand, and we are seeing suppliers gradually destock as a result of production cuts. And, suppliers continue to adjust capacity and focus on next-generation high-end products.
We're seeing that geopolitical issues, including Russia-Ukraine war, U.S.-China trade conflict, and most recent Middle East conflict, remain key to recovery of global economics. From a supply side, DDR5 and HBM are instrumental in improving market demand and alleviating DDR4 inventory. CapEx and capacity are expected to remain conservative in 2024, which may help restore market balance. From each sector demand point of view, for server market, we're seeing growing demand for DDR5, driven by AI computing in enterprise cloud center. The server market would show quarterly improvement, Q4 and beyond. Mobile market, the smartphone market in China is expected to rebound in Q4, and globally, AI smartphone may trigger future demand.
For PC market, new product launch will drive the demand for DDR5 and LPDDR5, which will gradually replace DDR4 and LPDDR4 as the mainstream products. For consumer market, demand growth for TV, IP camera, networking, industrial, and automotive application remain stable. For business review and outlook for Nanya, Q3, we had a net loss of TWD 2.505 billion, EPS at - 0.81 per share. We are doing second generation, 10 nanometer cross generation, 16 GB DDR5 product piloting. Q4 production output will be dynamically reduced by up to 20%. Inventory has started to decrease and overall demand is improving gradually. With that, conclude my report to you. Thank you for your attention.
Yes, thank you, Dr. Lee. Ladies and gentlemen, we will begin our Q&A session. I would like to remind everyone to limit your questions to two at a time, to allow all top participants an opportunity to ask questions. We'll begin taking questions from dialing first. For webcast participants, please message your question with your name and company name to Nanya operator in the chat box. Now, for dialing participants, please press star key and number one on your keypad if you would like to ask questions. To cancel your questions, please press star key and number two. As a reminder, it is greatly appreciated that you turn off the speakerphone mode of your device to prevent possible echo effect. We thank you for your cooperation. Now, please press star key and number one if you would like to ask questions. Thank you.
The first one to ask questions is Jeff Owider from-
Yeah. Hi. Thank you, Dr. Lee. Two questions for me. First one is any inventory write-downs, number one, and number two, can you talk a little bit about any kind of ASP momentum into fourth quarter? Thank you.
We had both the idle cost as well as some inventory write-down, yes. For the ASP, for fourth quarter, we are expecting the market gradually improvement in ASP. First of all, particularly in DDR5, likely the ASP will be improved substantially, and DDR4 there will be some improvement. As well as the DDR3, we already seeing some sign of improvement.
Okay, great. Thank you.
Thank you.
... Ladies and gentlemen, we are now in Q&A session. If you would like to ask questions, please press star key and number one on your keypad. Thank you. Now, please welcome Simon Woo from Bank of America. The line is open to you now.
Okay, thanks. Good afternoon, Dr. Lee. Thanks, Q, very much for your great presentation, as always. Just a quick follow-up question. You mentioned that it seems to be, for the first time, Nanya Technology recognized inventory write-down. Would you provide more details? Because why this time you recorded inventory valuation loss, and then we can also discuss the definition of the idle costs. Still, I didn't get your point for idle cost, but let's kick off with the inventory valuation write-down details. Thank you.
Okay. In general speaking, our inventory, still largely, the value for inventory is still higher, higher than the cost. Okay? So in general, we don't have to do inventory write-down, except certain, very small amount of the inventory, which had, basically, the time limited that we put in, to write it down. And we do, do some degree of write-down for the long duration part. Okay? However, the idle cost question is that we do have the production reduction, and we have to take the idle costs for those equipment that is not fully utilized. And that's actually accountable for majority of the difference between Q3 and Q2. Okay.
By majority, for the, from the growth, from a growth profit point of view, it, there are two major reasons. One is the idle, idle equipment cost, the other one is ASP down. With idle equipment cost, I actually contribute to majority of those difference between Q- Q.
Okay. Dr. Lee, you are saying inventory write-downs, the amount cannot be significant, right?
Right. It, it's not significant. It's only, only certain small quantity of product that, we, we need to write it down for the reason, not because of the internal problem, that we have the inventory value-
Mm.
lower than the value we can sell. Okay?
So this one is mainly for the low density legacy DRAM, or your some newly started high-end DDR4, or some samples, DDR5. Would you share some, some details? Which product?
Mostly DDR4.
Yeah, not necessarily for DDR4. DDR3, I mean. Mostly DDR4?
DDR, DDR4, yes.
Okay. Not necessarily DDR3?
Not DDR3.
Yeah. Yeah. And then the Idle Cost, it sounds that the maybe some equipment now underutilized. So it sounds like, you know, asset impairment. Is it fair to say maybe so Idle Cost is still, you know, some capacity not utilized, that means your asset value is lower, and then you recognize some what? Some restructuring charge, so asset impairment. How did you derive Idle Cost to this?
Idle Cost means that when you have equipment in production.
Yeah.
low mode, and then, you have to cut down your production.
Yeah.
As a result, some of the equipment will be idle.
Yeah.
You have to take the cost from those equipment, for example, the depreciation cost had to be continued to be taken care of. Yeah.
Yeah, but your total cost... I get your point. Per chip basis, we can say higher, you know, depreciation cost.
Yeah, the bigger fraction is depreciation cost. Yes.
Yeah, the total form-wise, I didn't get the, why your depreciation cost for the entire Nanya Technology Q3 result can be larger than the previous quarter.
The depreciation cost will be when you take this equipment for the production. Okay, this depreciation cost will be in your cost. When you're not taking this equipment into production, you are still in a depreciation cost.
Sure. Yeah.
So that's why you're seeing the same depreciation cost.
Yeah. Okay. Very quickly, sir, 20% production cut, it means out of your total, maybe how, how many wafers per month these days? Capacity maybe 65K or 70K?... then you are inputting the only 80% versus the total capacity, that's the definition?
Yes.
So-
Yeah, that's the-
Yeah.
Yeah, that's the, probably speaking, our input capacity in a certain amount.
Yeah.
If we only loaded the fab with only 80%, means that we do the 20%.
Yeah.
Of the capacity.
Your capacity about 70K, right? Plus, minus.
It depends on what, what, what product portfolio, but roughly speaking, is around 65K or so. Yeah.
Yeah.
Yeah.
And then lastly, do you believe the blended ASP anyway down high single digit? But I just updated your competitor earnings model, but it is showing blended ASP increase, but I think it's a matter of the product mix trend. But do you believe that your blended ASP can go up for December quarter, then? Thank you, sir.
I think, I think there's a good opportunity for blended ASP to go up, but the extent of going up may not be as good as those company who is already delivering DDR5. Okay.
Yeah.
The reason what you see that some company may be doing a little better than the other, mostly due to the DDR5 contribution, is pretty significant. Okay? And Nanya are still working on our DDR5. We used to be distant number four, and hopefully that distance is narrowing down. We can gradually catching up on this DDR5 behind. Okay?
Yeah, but overall, the Nanya Tech blended ASP for December quarter will be likely up quarter on quarter, anyway.
Yeah, there's a good opportunity for that.
Yeah.
Yeah.
Excellent. Yeah, great. Thank you so much, Dr. Lee. Appreciate it. Thank you.
You're welcome.
The next one to ask question, Anthony Lau from Yuanta. The line is open to you now.
Hi, Dr. Lee, thanks for taking my question. My first question is, what is current, like, our customer's inventory level for, like, the niche DRAM product? Has it down to, like, healthy level, or when we'll using, that will down to maybe healthy level in maybe this year or maybe next year?
The customer inventory level, if I look into different sector of the customer, I see that the inventory level for cloud customer in DDR4 may be a little bit, still a little bit high, but it's coming down. We're seeing that for PC customer, inventory level is pretty healthy. We're seeing that the consumer side, the end customer, inventory level is also pretty, pretty healthy. Okay? With the mobile side, because Nanya is mostly in the low density, as well as special application mobile, okay? So our customer specifically, inventory level is, is okay. Okay, not too bad. However, in the mobile side, okay, in the mobile side, I see that some customer becoming more enthusiastic in terms of buying more parts.
It indicated that even the mobile phone side inventory level is becoming healthier day by day.
I see. So, I just want to figure out that in the third quarter, we see the, higher shipments, like, sequentially about, like, high teens. So, like, which end application maybe, like, is PC contribute? Or maybe, like, what application contributes this, like, higher, shipment, like, mix in, in this, in this quarter?
We have pretty healthy fashion continuously for our biggest business sector, which is the consumer side. Okay? That continued to be okay for Nanya. Okay, and we're seeing that, particularly the PC side and spot side has also helped. Okay? And with the cloud computation likely will be getting better. Okay? We're not seeing the big momentum yet there, but we expecting that Q4 the cloud computation will also get better, particularly with the help from DDR5 conversion, okay, and also the inventory digestion from the supplier side in DDR4.
... I see. So back to the customer size, do Dr. Lee see like some part of customers, like, has started accepting, like, price hike in this quarter, like this quarter, or maybe the next quarter, maybe the, the December quarter? Do you see this kind of signals happening?
In terms of, say, DDR5, it's already happened, okay? That already happened in both the cloud business as well as the PC business, okay? Mostly it's in cloud now, because the supply is still not sufficient enough, okay? In terms of DDR4, still a bit of negotiation happening, as we speak. Maybe in a few weeks, this will become more clear. My expectation is that DDR4 likely to have some small margin of improvement as well, okay? With at least two out of three suppliers already getting into a healthy range in terms of their inventory, okay? For the DDR3, I'm seeing marginal improvement as well in the consumer side.
I see. Okay. And my last question is about like the DDR5. So, can you tell us about, like, the DDR5 shipment mix currently, and like, which target that about, like, the shipment mix or like the sales mix in next year?
Unfortunately, Nanya still don't have the DDR5, good DDR5 product to be delivered to market requirement. We had one 8 gigabyte DDR5. However, this is not the main market demand, okay? We will not be doing a lot of business here. We are preparing 16 gigabyte DDR5 on our second generation, what we call 1B generation process. That's going to be qualified in the middle of next year, and likely that we may have some shipment in second half next year. Hopefully, started from Q3.
Thanks a lot, Dr. Lee.
Ladies and gentlemen, we are now in Q&A session. Please press star key and number one on your keypad if you would like to ask questions. Thank you. Please press star key and number one on your keypad if you would like to ask questions. Thank you. Next one to ask questions, Simon Woo from Bank of America. Go ahead, please.
Oh, thanks again, moderator, because no one is asking the question, so I'm taking this slot opportunity for another question. So, you know, the NAND maker, you know, they announced the production cut already, late September, last year, so already one year long, the production cut in NAND flash. DRAM area, we think, the production cut started, you know, the Q4, December quarter last year. So maybe how about the Nanya Tech? Would you recap the recent history when the Nanya Tech started, you know, lower wafer input? And then what was the degree initially, and then the 20%.
And then you think, this 20% production cut versus maybe your competitors, 30%-40% cut ratio, you think, it is enough to make the industry more balanced, particularly for the DDR3 or consumer DRAM? So, yeah, let's revisit the chronology of the Nanya's production cutback history. Thank you.
Simon, I guess, the NAND side you know very well, right? And for DRAM side, that you can see that at least two of the company already start doing some cut on the beginning of the year. So it's Nanya and... However, the degree of production cut is different for Nanya, dynamically, which means that we may have some product we need to reduce our output more than the others, okay? And so, maybe there's one company has had their production rearrangement a little bit later than the others, okay, in DRAM side. Okay.
For Nanya, though, if we look at this, this rearrangement of our production strategy, we mostly do this according to our product portfolio and customer requirement, okay, and see, which area or we need to do more, more adjustment than the other, okay? Nanya is now doing a lot, a lot of different product portfolio. We're running near 30 different product portfolio at the same time. So we're making adjustment for those customer, maybe 700 or 800 customer according to their need. Okay. That's what Nanya have been doing accordingly, what we've been serving the market, serving our customer. In terms of overall market demand, supply, balance, point of view, Nanya is relatively small. Okay? We are very, you know, we are only a fraction of those, the big, big supplier.
So our impact to overall demand, supply balance is relatively small. Okay? Well, therefore, we are not doing our production arrangement for that reason. We are doing it for our market reason, our product portfolio reason, our customer reason. So that's a little bit different, different strategy compared to the big supplier.
Yeah, very clear, sir. So you don't feel, you don't need to make the production cut ratio at 30%, 40%, no need. 20% for Nanya Tech is enough?
Yes, yes. Actually, in the beginning of the year, as I said, we are really doing some cut. Okay, but because at that time we don't need to cut as substantial as Q3, okay? Q3, we cut a little more. Okay? So quarter by quarter, the cut is different. That's why we say we're doing this cut dynamically according to our customer requirement and our inventory situation. So that's a little bit different from the major concern of overall market demand supply. Instead, it's more small items than individual customer and product portfolio issue.
Yeah, yeah. But when we look at the your second quarter financial report, inventory amount hit the record high, TWD 28 billion. But the year to date, you know, production cut more meaningful. So what's the financial amount value, the inventory in your balance sheet for Q3? Or maybe CFO knows this, or?
So as I explained just now, in general speaking, our inventory is high. However, our value of our inventory still higher than our cost. Okay? In general speaking, we do take some inventory write-off only on specific small quantity product portfolio that we need to do that, but in general speaking, we don't need to do major inventory write down. Okay.
Mm-hmm.
So that's case by case situation for Nanya.
Yeah, but my question is, according to your Q3 financial statement, you may have some preliminary data.
Yes.
So what's the amount of the inventory for just the second quarter? Second quarter was TWD 28 billion.
Yeah.
September quarter, how much now? 25, or?
I don't have that number, but in terms of dollar value, may not be a huge difference, but in terms of number of days of inventory, maybe a substantial improvement already.
Okay.
Because we-
You mean the-
Yeah, because-
Inventory turnover.
Yeah, because we sell in a lot, a lot more than before.
Yes, sir. And then, sorry, almost lastly, to derive, what, single-digit bit growth, mid-single-digit bit growth, annual bit growth for 2023, what's the implied bit growth for December quarter? Still need, what, 10% quarter-on-quarter increase or what? Negative growth quarter-on-quarter. What's your December quarter bit growth outlook, sir?
Okay, I need some help on this question. Okay. Yeah. Okay. We are expecting a mid to high single digit improvement in shipment.
Okay. And then through the Q3, Q4, overall, the second half of bit growth is better than first half. Why you think this can happen? It's a per box content increase or it's more channel inventory restocking or who, who, who is taking your, you know, extra shipment growth sequentially?
Both. I think in general speaking, as I say that there are some demand improvement, and there are also some customer feel like the market may be already low. Okay, they are more enthusiastic, and there are also some recovery in sector of market expected, including, say, mobile business and compute, cloud computation. We are expecting quarter by quarter likely to be some improvement.
Yeah. All clear, sir. Maybe I think, no question from the queue, but for now, so maybe one last question should be, your long-term view for the memory cycle, you know, the, is it fair to say an up cycle will eventually come, but the question is when? So, but, do you-- what's your rationale to expect a better cycle maybe, next year or 2025? Would you share your insight on the DRAM cycle going forward? Thank you, sir.
Simon, you have an excellent question, and it's also very difficult to answer on this question. If you're talking about overall demand point of view, as I indicated, that there are some opportunity seen and some sign of improvement being shown in terms of improvement in the market. However, I don't see a very big jump in terms of market recovery, because still there are so many uncertainty out there, okay? This time, I would say, the market demand come down severely from the cloud computation point of view, from the mobile application point of view. So that's not, that was not very good and come to a very, very low market.
Luckily, this area probably good opportunities is the only way to go is going up, okay? It's already very, very low, okay? So there are some demand improvement likely to be seen. The biggest concern, okay, is geopolitical issues, okay? Now with the global inflation, maybe people already getting used to that, interest rate issue, people already getting used to that, okay? The COVID impact is actually getting better, they've been relieved, some relief. Supply chain issues, some relief already happened. But biggest uncertainty is still geopolitical issues, like European war, Ukraine-Russia issue, the U.S.-China trade conflict issue. Now on top of that, the Middle East issue is going to be impacting on the energy sector.
Last time, it's because of energy sector, okay, the Russian petroleum issue causing energy sector that basically kick off all the global inflation. How is this Middle East, Middle East issue is going to be improved or getting, getting even worse? That's something that we have to be very careful and wait and see, okay?
Yeah. Yeah.
Overall speaking, if the global economics is still hindered, still influenced by this geopolitical issue, the overall demand for all the memory, including DRAM, NAND flash, and/or even logic devices, could be all slowed down to some bit. Luckily for DRAM is that we now have a AI trigger issue. We now have a DDR5 conversion topics that may help, okay? That may help the production being focused more on the new product, alleviate the existing inventory, okay? Also on top of that, with the production control, the balance between supply and demand can become slightly healthier day by day, hopefully, okay? I think still, we have to be very careful about geopolitical conflicts around the world.
Yeah. So appreciate your great color, sir. But if this happens, you have to, you know, continuously underutilize your capacity, then though, should we expect, further, further idle costs for December quarter or at least another?
Based on historical results, every year that the peak demand is, say, increased by 15% or so every year, okay? That means that the suppliers typically have to spend money in terms of new capacity or in terms of technology conversion. Now with the cutback situation, likely they don't have to make more spending and then recover those existing cut back as a first priority, okay? Before they see that, likely more spending on CapEx or new equipment is not making a lot of sense. That will be in general true for the situation, and then the adjustment will be gradually quarter by quarter. Okay?
First of all, to digest the existing capacity and then gradually resume the 15% bit growth yearly, hopefully, and that likely will happen. And if the geopolitical issue been resolved, which it's so much uncertainty, then maybe there's a bigger recovery may happen. But-
Yeah.
Again, that's so much uncertainty there.
Yeah.
Okay?
But the Q4 Idle Cost will continue, sir? Sorry for the short question.
It, it may continue, but the degree of the idle cost may change dynamically, as I explained to you many times just now.
Okay. All clear, sir. Really appreciate. Sorry for the many questions. Thank you. Appreciate.
Oh, you're welcome.
Next one to ask questions, Charles from Bloomberg Intelligence. Please ask your question.
Hi. Thanks for taking my questions. Hello, can you hear me?
Yes. Yes, please.
Hi, Dr. Lee. Thanks for taking my questions. I have two questions. First, I just want to know more about your production planning. You mentioned that you are going to cut by 20% in the fourth quarter, same as in the third quarter. Can I know, is this 20% on the bit shipment or on wafer, wafer volume? Also, in what situation do you think your company will actually be back to the full capacity production status? Is that depending on your customer demand, like in the server PC, or actually maybe more leaning depending on your inventory level? That's my first question.
Okay. Again, let me, let me answer your first question first.
Mm-hmm.
First of all, our Q4 plan dynamically up to 20%, which doesn't mean it's going to remain 20% flat, okay? We will be doing this dynamically, okay? Likely to be in between somewhere, okay.
Mm-hmm.
Depends on different product, depends on customer requirement. Okay, and when are we getting back to full production? Actually, in the last question asked by Simon Woo, I explained that already, okay? The industry likely to digest the idle equipment, resume the idle equipment to production as a priority first, okay, before we move on for more big growth with the new equipment, or more technology conversion, et cetera. Okay? When that will happen, that's likely to be happening gradually, quarter by quarter, okay? That, again, will depend on the market recovery, depends on DDR5 conversion, and also depends on all the uncertainty, geopolitical effect, is that going to be coming down one way or another. Okay. That's a complicated question to answer.
I don't know I can give you specifically when, okay? But I seen that there are some signs of opportunity of happening gradually as we speak.
Mm-hmm. Okay, sorry, I just want to clarify.
Yeah.
Can I assume that, in the worst case, in the fourth quarter, I can assume that Nanya will actually have the capacity utilization rate keep at 80%. Is that correct?
My hope is that keep it at 80% more, okay?
Mm-hmm.
We are already taking quite a bit of a production cut in Q3. My hope is that we can somehow reduce that cut. We, our customer and our product portfolio, can react better to the market demand.
Okay, got it. All right, my second question is about your shipment. I just want to have a more clear picture on your operation details. So do you like to, can you give a introduction about what is your shipment mix by products, by DDR3, by DDR4 and 5? How much percentage is that in your current shipments? And also, I just want to know more about your coming launch of the second 10 nanometer class DDR5 chips. So when you think that will be actually going to in mass production and shipping to your end customers?
... DDR5 shipment, okay?
Yeah.
We're expecting that we can get some DDR5 shipment second half next year. Okay?
Okay, excellent. Great.
And DDR4, our major shipment now is DDR4, DDR3, and some low power, okay? And the low power by itself is taking around 10% plus minus of our shipment now. And the rest of the shipment, DDR3 and DDR4, is about roughly similar.
Similar. Okay. That's by bit or by wafer?
That's probably by wafers. Yeah.
Okay, thank you. All right. Thanks a lot for answering the questions. I have no more questions. Thank you.
Thank you, Charles.
Thank you, ladies and gentlemen, for all your questions. Now we are going to continue our Q&A session from webcast. Dr. Lee, please proceed.
Okay. We have a first question by JP Morgan. Mr. Lee, Sanjik Lee, your question is: With memory ASP now expected to recover, what would be your CapEx outlook for 2024? Okay, our CapEx outlook for 2024 still need to be approved by our board, so I don't have a specific number for you. However, our equipment CapEx will continue to be conservative for some time. Okay? The question also, the next question is, do you expect CapEx to move up compared to 2023? And I already explained that just now. The second question by SinoPac, Stanley, your question is, could you please recognize idle costs, explain idle costs, largest to smallest?
As compared to Q3, Q2, and fourth quarter, Q2, fourth quarter, 2022. And, yeah, we, we had, we had, more, idle costs in Q3, 2023, compared to Q2 and Q1, which is, relatively, smaller compared to Q3, this, this past quarter. Okay?
Thank you, Dr. Lee. Ladies and gentlemen, we thank you for joining us today, and that concludes our conference call today. Please be advised that the replay of the conference will be accessible within 3 hours from now, which will be available through Nanya Technology's website at www.nanya.com. We hope you will join us again next quarter. Thank you for your participation and have a wonderful day. You may disconnect your line now.