Good afternoon, everyone. Welcome to Innolux Group First Half 2024 Investor Conference. Today's event is being webcast live through Innolux and InnoCare company websites. T he same place where you can download the conference materials. Please take a moment to read the disclaimer notice now. Today's meeting, we will have three speakers to provide the company's key messages. The first one is Mr. Jim Hung, Innolux Chairman and CEO. Second is Mr. James Yang, President of Innolux Corporation and Chairman of InnoCare. And also Mr. Eric Lee, President of InnoCare. After the presentation, we will conduct a question-and-answer session. Now I will hand it over to Jim.
Thanks, Phoebe. Good afternoon, ladies and gentlemen. Thanks for joining us this afternoon. I'm pretty excited about today's meeting, physical conference, and be able to see everyone face to face. Actually, today's event is pretty special, not because we speak English. B ut because it's the first time that Innolux works as a group to have the analyst conference. Today what we are presenting is not just on the Innolux itself. B ut also on InnoCare, our X-ray detector solution provider. We want, through today's meeting, to be able to provide you not just the company individually, but also jointly the whole group strategy, and also about the near-term and the long-term vision of the company. Without wasting time, I will just hand over to James with the market update, and I will take over on the company strategy and overall. Thank you.
Thank you, Jim. Good afternoon, everyone. It's James. A nd I will walk through all the market outlook in short-term, mid-term, and long-term. Please see on the page. Conclusion comes first. We expect the display market will enjoy a mild improvement in short-term with the support of supply and demand. First is the production discipline, and it's observed the panel industries is adapting the made-to-order discipline to avoid the oversupply. In addition, both the panel and the finished goods pipelines, the inventory level has been very healthy to lower since last year. The very important factors to encourage our customers to kick off their restocking of TV panels and IT panels, especially for the larger-sized TV panel for upcoming three big sports events.
We also expect the IT product could be encouraged a bit later with the replacement of Windows OS and also the AI notebook from this year. Next page, please. So, here. From the mid-term market, we could compare the capacity and the demand trend for more hints. Black color means demand. Red color is supply. From the capacity side, we don't see any new fab or capacity increase in two years. Although market settlement is very difficult to predict, the need to replace is always there. That's our opportunity. As the average TV size grows larger and larger, it will pave the foundation to consume the ordinary capacity in a faster pace. The tight supply and demand, this trend will lay the foundation for the competition of new technology and also spec up.
The industries' approach has been changed a lot a few years ago. In the past, it was always about the size, the quantity, and the capacity. From now on, it's very clear the panel industry becomes more focused on quality and then performance. Consumers need the larger-sized TV with better resolution, higher mobility, and so on. It takes more efforts to build good panels more than to build new fabs. Next page, please. In the long-term strategies, we focus on display, Automotive, and then semiconductors. We expect the display business to still be the main core business of Innolux, and it will be growing based on the size migration and also the diversification of application.
Surely, the display technology will be more diverse too, like the things Innolux is working on, and more information will be shared to you later by our CEO, Jim. Automotive is very important, the battlefield. Now everyone focus. The major differences of Automotive display is that the longer, older visibility, and then more the quality and the integration-oriented efforts. I believe most of us, you have your TV, monitor, notebook, tablet at homes. But now you don't have a larger screen, a larger-sized integrated display, Automotive display. That is our opportunity. On top of the size, the capability of system integration with the software, firmware, that is also the barrier of our industries. Innolux, we earlier cut in and then the role of a tier-one supplier.
Automotive will be the driven force of the display and also of Innolux. Last but not the least is the semiconductor, about the transformation. Whatever rainy day, sunny day, whatever the profit in the loss, transformation is needed for every day and every corporate. Innolux cut in after the Automotive business, and then now we extend our innovation onto the semiconductors. That means our peer advanced package. Our peer may be transferring their fabs for the different applications. Innolux finds our way to deploy the original fab to utilize our talent engineers to semiconductor business. That's our long-term capacity plan and also our factory reorientation plan. I will stop here and hand it over to Jim. Thank you.
Thanks, James. I think as James mentioned, I think on the screen you can see that more than panel slogan, and I'm sure that you have heard that hundreds or thousands of times in the last couple of years. Honestly speaking, back to 2019 or 2020 when we first raised this slogan, it's just a direction. We want to do or we want to be viewed more than just the pure panel players. But at that time, it's more like a rough idea. But after these five years' work, I think the new place of Innolux led by this more-than-panel strategy is quite clear. I think display is our foundation, while auto and semiconductor business are the shines to make us a star. I think display domain will continue to be our major revenue stream in the next couple of years.
Other than just the pure component suppliers, we are also stretching the bridge to the system integration to be able to provide our customers with higher value. Also, I think quite a few of you know that we have raised the Indian projects last year, and that is an innovative idea that we want to turn our know-how into income without the pressure from CapEx. On the non-display side, what we can say is very clear that rather than just a direction, we know exactly the place we want to move on, which, like James mentioned, is Automotive and semicon. I think this is our key transformation approach. Although the revenue share currently is around about 22% plus-minus, but I think we are expecting that to continue to grow and ultimately will be contributing to a much more significant share for the companies on the revenue and our bottom line.
I think a lot of our panel peers are also talking about the Automotive or even Medical. But what makes Innolux special is that we leverage our oldest fab into the IC packaging business by leveraging our talent pool and also our hardware. We believe that by doing so, we are able to leverage our value into the next level. I believe that most of us would agree that Taiwan is a leading stage on the technology industry, and the semiconductor is particularly the most competitive or the focus among all of this. We have not only the complete value chain from the mask, from all the different ingredients on the semicon related. Also, we have a very competitive regulation environment. We have a very competitive financing or the banking environment. Even to an extent, the school or the academic resources on the semicon related are very abundant.
That also the nature advantage we believe that we had to help us to move into the Fan-Out PLP . I think also if you look at on the market side, the soaring demand on the high-end IC, which are the EV or the AI computing related that further fertilizes the opportunity for us. We are working our best to grab the chance to create the best value for our investors. Coming back to what we say on our strategy overall for both the display and the non-display, like I said earlier, that display will remain as our key focus in terms of the revenue contribution in the next few years. But I'm sure that all of you understand that Innolux advantage on the vertical integration, on the amorphous TFT, so on and so forth.
I think I will use this page to further elaborate our technology roadmap, particularly on the microLED. I think that is still one of the major focus. As you can see that most of the clients on the microLED, what they will ask. N umber one, is the color uniformity. We are very proud to say that in 2023, we have made the major milestone, the key breakthrough. We are the number one on the color uniformity by leveraging our color conversion technology as well as our fluid mixing. We'll be able to provide the best color uniformity to our customers. Secsondly, the ACR or the so-called Ambient Contrast Ratio is the technology that allowed us to have a better visual experience no matter under the direct sunlight or the dark environment.
I think Innolux is going to premiere in the coming Touch Taiwan the largest microLED panel in the Touch Taiwan. I welcome every of you to come join us on the Touch Taiwan this April to see to believe how the microLED display would change your whole visual experience. Thirdly, I think the Automotive applications, we are also the number one on the best resolution, i.e., the best PPI. Lastly, I think in terms of the IP, Innolux has the Taiwan number one and also the worldwide number three patents on the microLED related patents granted. I think these are the few major milestones we have been achieved in 2023 on the microLED, which further demonstrate our competitive advantage on the display side.
On the non-display side, I think obviously the Automotive and the Medical related, those are the two key areas we have. I think James already described our robust, strong demand on the Automotive. Later on, I think Eric will also introduce you on the Medical and particularly on the X-ray detector related demand. I will use this page to introduce you further on what's so-called the Fan-Out PLP . I think a lot of you are still wondering that how come a panel company would move into the semiconductor or the packaging business. Just from the very root cause, actually, the Fan-Out PLP z nd the TFT LCD on the process has about 60% similarity.
Compared with the other IC packaging peers, we actually have this nature advantage because we have 20 years experience in etching, developing, and heterogeneous integration manufacturing the fine line spacing IC on this large square panel with the controlled and the limited warpage issue. That's the major root cause leaders or inspires us to move into the advanced packaging business. I think our goal in the industry is to act as the new but also the experienced supplier on the Fan-Out PLP . We call ourselves a mature freshman. I think our oldest generation 3.5 fab in Tainan happens to be the largest one in terms of the IC packaging. We can produce 700 x 700 mm size on the substrate, which means that we can coating in one time, 7x of the wafer.
That will make us much more cost competitive. Also, we are working with the existing IC packaging peers to generate the best IC specification and the cost. On top of the hardware, I think James also mentioned that our talent asset, our experienced employees, they are also very familiar with the older processing, like we mentioned earlier, because of the similarity of the TFT LCD and the Fan-Out PLP. We think that advantage is impeccable. We think that instead of building the whole team from scratch, this ready-to-go team will lead us that much time a lot of the time-sensitive testing or the experience with the clients will leave us a significant advantage. Again, I think a lot of you are curious about Innolux, the mass production schedule.
As you can see on the presentation, there are two types of the technology we are developing under the Fan-Out PLP. Chip first will come out with the mass production first. We are already past the RA, the reliability assurance test with our IDM clients. We are expecting second half of the year to have the major shipment come out with the mass production. What follows is the RDL first, the redistribution layer. On that, we are also working with our existing IC packaging peers to the new business model. I think the product feature is a fine line printing on the 620 x 750 mm substrate. We will deliver to our clients with the processed glass substrate. Again, I want to emphasize that for this business, what Innolux is good at is devoting what we have on this etching or the developing process.
We want to work with the existing IC packaging companies to help to further strengthen or enhance Taiwan's semiconductor position on the global supply chain. That's on the semiconductor side. I will wrap up the Innolux part at the financial performance. I think you can see on the chart that our so-called non-displayed revenue contribution has stabilized at around 22% - 28% last year. I think that because of the Commodity business still very volatile last year. While on the other hand, the non-displayed business, both on the Medical and the Automotive, we are seeing the robust and steady growth. Taking the Automotive, for example, the absolute revenue terms has grown 46% year-on-year on the Automotive side.
This is also the major contribution item for our last year's non-displayed domain. Our key advantage on the Automotive side is obviously our tier one position. Instead of other Commodity business, we are keen to try to win from the clients' different specification by the cost management. Actually, on the non-display side, we are working together with clients to developing the new product launch two years beyond the role. Instead of just competing on the cost or the different specification, I think on the so-called non-display side, the reason we put the Medical and Automotive is because our position on these two parts of the business is rather than just a component provider. It's actually an overall total solution provider.
That's also one of the key highlights I want to share with everyone. Also, I think on the Automotive side, because the display, the position has changed significantly from previously only as an entertainment-oriented, now it's almost like a vehicle steering interface. It's like a control tower of the whole car's movement no matter from the radar, from the different sensor has to through the interface on the panel to interact with the driver or even to the autonomous driving time. Again, we are very positive on the view of the Automotive side of the business, i.e., the non-display side. We will continue to grow significantly in the next couple of years given we have a very strong backlog or our orders book.
Next page is our income statement and also the balance sheet. I think in this page, I will just quickly highlight that last year, we have totaled about TWD 212 billion total revenue. Despite it still a deficit year, the overall performance indicates that we are heading upward. Our cost, COGS, has done 9.5% YoY, which contributes to our gross margins improvement of 4.6%. In the last two quarters, we have been seeing the positive EBITDA and the gross margin. That's actually very encouraging. We expect a similar trend this year to have the quarter-on-quarters improvement in 2024. On the revenue side, on the P&L side, I think the major improvement contributes from our effective cost management and also the cost efficiency or the operating efficiency upgrade thanks to the whole team's efforts.
On the balance sheet side, again, I think we are running at the net cash position. Our debt to equity has ranked about 17%. Our current ratio of 153% all are among the best of the whole global panel players. I will stop here and hand over the next part of the presentation to Eric on the InnoCare side. Thank you.
Good afternoon, everyone. Thank you very much for joining InnoCare's investor conference today. I'm Eric Lee, the President of InnoCare. Oh, sorry. Actually, InnoCare was founded in April of 2019, and we achieved this status in March last year. Despite the global crisis, COVID, from 2019 - 2022, our company has been steadfast in its commitment to innovation. Today, we are very honored to have our first-time investor conference with our parent company, Innolux. Here, I would like to address the market trend including the different application, and what is InnoCare's strengths and what is our strategic approach for our customers. This slide presents the forecast of the market size of X-ray digital detector from your data. The primary application of X-ray detector remains in the Medical field. We can expect the CAGR to be the steady growth.
However, the higher interest rate during these years has impacted the economic slowdown and the suppressed demand in the Medical sector. Our major product is a TFT photodiode sensor for X-ray inspection. The pandemic brought the change on X-ray inspection market. InnoCare is also facing the challenging and opportunities during these years. Actually, there are different kinds of the technology for X-ray digital detector, including CMOS image intensifying and the TFT, which require the spec from the static to dynamic. I think TFT-based detectors have already established dominance in the static market. Right now, we are trying to penetrate to the dynamic market due to the IGZO technology. We are leading the position in IGZO technology. Many applications require the dynamic detector, such as the fluoroscope for the Medical purpose, inline inspection for industrial use.
The adoption of the IGZO is driving the growth of the TFT-based detector. Here, I want to have a summary for the Medical market for X-ray detector in this year. First one, return to growth. I think inflection cooled. Period of rate hike is over. We can have an optimistic market outlook. Good news is that recently, we engaged with a very big customer for long-term agreement for the supply and shipment. The second one, the challenge. Of course, the struggle with the Chinese maker. China market is still a very big market. Actually, recently, the uncertain economic factors for China market and the higher competition are influencing this market. We need to do some actions. First one, we want to improve our cost structure. Second one, we need to leverage our long-term relationship, brand customers like Japan or U.S. customers to provide better solutions.
Third one, where is opportunity? First one, targeting the emerging market. I think the emerging market has the higher growth, maybe larger than 10%. Actually, there are still many countries for the emerging market. They are still using the film type or CR type detector. That's our potential, and that's our opportunity. For example, India has the biggest population, and their government also encourages to enhance the ecosystem from the Medical, especially after COVID. Actually, right now, we are evaluating our local-for-locals plan now. Next one, how to keep our position in leading for dynamic. More dynamic product using IGZO. IGZO is gaining increasing feasibility in the dynamic market. InnoCare is leading supplier for bringing IGZO technology to the dynamic market, not only for Medical but also for the industrial application. We will enhance our innovation with our customer continuously. Here is kind of an outlook for the industrial market.
The application of the X-ray inspection is expanding, and the demand for inline inspection is increasing. I think EV car industry should shift the NDT from the laboratory level to factory inspection because the battery inspection is the safety requirement. AXI means the Automotive X-ray Inspection. It's like inline NDT can ensure the quality of the production. AXI can cover the application from the traditional industry but also to the semiconductor or the LED or even the car used EV car. We expect the AXI will grow rapidly like AOI's growth history. The integration of AOI and AXI will elevate the industrial inspection to new heights, enhancing overall inspection effectiveness. Next one, we want to address our strategy. We want to deliver the comprehensive solution and the value to the X-ray inspection market. We can provide different beams models from the device OEM module and ODM solution based on customer's need.
First one, on TFT device because IGZO has the faster frame rate, super low dark current. InnoCare has worked with our customers and led the market to adopt the IGZO TFT solution to enter the dynamic market since 2022. Also, we develop a higher hardness performance IGZO for AXI inspection because AXI needs a very strong dose and continuous operation like a 24/7 operation mode. This innovation has extended our reach and the business from the static use to dynamic like dental, surgical, C-arm. Right now, we are actively evaluating its use in cardiovascular purpose. With thousands of the ongoing IGZO projects, it has significantly contributed to our increased shipments. On FPD module, InnoCare is the sole global provider supporting a one-stop solution from TFT manufacturing, CsI coating, and FPD assembly.
We extend our solution and the service for our customers to ensure the best quality and cost-effective supply. Additionally, the emerging market has the higher growth rate but very price sensitive. Therefore, right now, we are developing our TFT device solution from generation four to generation five factory now. We plan to go to mass production from the second half of this year. I think this approach can improve the cost structure significantly and ensure our leading position of the market share. InnoCare remains committed to delivering the cutting-edge technology and cost-competitiveness solution, ensuring our customer receiving the best in-class offering to meet their evolving needs. Regarding the AXI, with the cooperation with our strategic partner, we are aiming to provide a diversity solution based on the customer's need from the key component plus the software and the system integration for the different applications.
Actually, we have installed our system solution for X-ray inspection such as TV set package and the sports industry, agriculture, or even the PCB SMT for car from 2021. I think this installation marked the beginning of our journey into diverse sectors, and we anticipate substantial growth in this year. We're looking forward to the further advancement and increased market impact in the coming years. More than hardware, maybe we can think that's our for InnoCare, more than hardware. InnoCare is kind of basically a hardware company. In these three to four years, we have built our different detector and assistant strengths, including software for imaging processing and the algorithm for AI.
As this slide shows, the AI for Medical use to assist the diagnosis is always the important and hot topic. With the cooperation with the strategic partner and the great support from the Medical doctor in hospital, we plan to apply the TFDA for our first AI for detecting hip fracture in Q3. Hip fracture is getting serious concern for aging society. The AI model sensitivity can achieve 93% like the doctor, and judging time just needs one second. Also, we are working with our partner to judge the osteoporosis by the PXR image. That means one X-ray exposure, double detections. Very key economic growth rapidly, and X-ray inspection for veterinary is quite an essential tool to diagnosis.
We create and develop the Veticle as our platform and the website for VET angle. Veticle is a website-based and can serve the veterinary with the AI resource, knowledge management, cross-domain learning, and even kind of the social interaction. We have been working with the NPUST to establish AI models with our FPD image from 2020. VHS and NHA are two kinds of AI models. That's for measuring the critical dimension for heart and the hip for the early detection. Using this kind of AI model can reduce the workflow time from two minutes to 15 seconds. That means 10 x faster. We plan to launch Veticle from Q2 this year. We are integrating our FPD with AI for value-added solution.
Anyway, this platform not only showcases our commitment to the technological innovation but also demonstrates our dedication to meeting the specific needs and the preference of end customer directly. Here, I want to hand over to our chairman, James Yang.
Thanks to Eric to explain InnoCare's short-term, mid-term, and long-term strategies. Please come to the statement of our comprehensive income. Thank you. First, I sincerely apologize that we missed our financial target in last year. Even we suffered a minus gap on the net sales. About the OP and net profit, actually, there is a big gap. Finally, maintained is an EPS of $3 of profit. Again, after Eric's explanation, we have a confidence level to deliver significant growth in this year, not only revenue but also the profit. Next page, please, about the balance sheet. That means for the consolidated balance sheet highlights, we actually current ratio is improved from the 180% to higher figure, 218%, to secure and stabilize the short-term operation in two years. That is our final highlights. Above is all my wrap-up of InnoCare's operations. Thank you.
Thank you, gentlemen, for the corporate report. Now is the Q&A session. You will have two parts today. In the first part, you will answer the questions collected from investors in earlier time. After that, you will take questions from the floor and online participants. The first collected question for Innolux is about corporate strategies. What will be Innolux's strategy, target revenue share, and gross margin for the new non-display domain?
Okay. I will answer for that part. I think on the Q&A, I can answer both in Mandarin and English. Since I've been saying that similar things in English, so I'll probably switch to Mandarin now. [Foreign language].
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[Foreign language] definitely turn single quarter break even and then be more profitable in 2024.
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Thank you. Now let's take a question from the floor. You may raise your question in English or Mandarin. Please state your corporation and name before question. For online participants, you may enter your questions in the dialogue box. [Foreign language].
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However, [Foreign language] Innolux will move as a new player on semiconductor on the advanced packaging [Foreign language].
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Thank you. This comes to the end for today. The replay of the conference will be available at Innolux and InnoCare company websites within an hour. Thank you everyone for joining us today. Goodbye and have a great day.
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