Ladies and gentlemen, hello everyone. Welcome to the investor conference of Primax Electronics. We will explain the company's operating results of the fourth quarter of 2025 and future strategies. First of all, let's introduce our Chairman, Mr. Jack Pan.
Hello, everyone.
Our General Manager and CFO, Mr. Ying-Yi Hsiao.
Hello, everyone. I am Ying-Yi Hsiao.
And our Investor Relations Senior Director, Ellen Tseng.
Hi, everyone. Thank you for joining us in the quarter's investor conference.
Okay, we will invite our Chairman to say a few words.
First of all, today, I wish you all a happy New Year. This is the second time for me to participate officially in the investor conference. Last time it was three to four months ago. Regarding our overall strategy, it has not changed. After all, it is usually unlikely to change the strategy massively. I'm not going to do any presentation today to explain our strategy. Last time we mentioned that our three-in-one sensory fusion technology. It has three parts: interaction, vision, and audio. We have enjoyed rapid growth.
At the same time, we have added two items. One is robotics. The other one is our additional new investments. Altogether, we have a three -plus -two strategy without any changes. We're still moving forward in the direction we have committed. Our CFO will give you an overall report on the business operation later. After the report, if you have any questions, please feel free to ask. I can answer some of them here. Let's discuss them together. Thank you for your participation. I'll leave it to the CFO.
Thank you, Chairman. Thank you all, our investors and friends from the press media. Hello, everyone. Happy New Year. Thank you all for coming to Primax Electronics, the fourth quarter 2025 investor conference today. First of all, I think we will still share with you the operating results of the fourth quarter of last year. We will share with you the financial reports of this year's operations, especially in the first quarter. I think you can actually see our overall operating volume in the fourth quarter of last year. I think 2025 was actually like a pirate ship ride to us. There were ups and downs. There were times that almost gave us a heart shock, and there were also exciting moments. Overall, I think the result was fruitful.
From the scares in the first half of the year till the end of it had a comeback because of the overall market value of the stock market and the stabilization of the NTD. We must say that there was a lot of uncertainty last year. I think at the beginning of this year, you can feel this kind of uncertainty again. I won't say why. I think it may be because of the judgments made by the justices. There are also various situations related to the current tariffs. I think for Primax, even under various external conditions, no matter how it changes, we can display a very high level of resilience, and the overall financial performance, our performance is very stable.
First of all, I will report to you that our overall revenue last year reached NTD 60.181 billion, an increase of 3.3% year-over-year. If you all know, I have a habit, which is I will provide a USD value. In fact, last year's USD value reached $1.923 billion. Compared to the previous year in 2024, it was $1.825 billion. In fact, we actually increased by nearly 5.4% year-over-year. Last year, you also know that NTD had been through highs and lows in the first half and then gradually stabilized in the second half of that year. We're both in terms of USD and NTD. We're all growing very steadily, and you all know that Primax has always attached great importance to profit over scale.
In terms of revenue, our performance will not frighten you, but I think we have always maintained a very stable profit margin. You can see that from the perspective of gross margin, the gross margin in 2025 rose to 17.3%, up by 0.3 percentage point year-over-year, which basically made a record high for the company. You can see from the chart that in the past five years, we have continued to promote transformation and the optimization of the product portfolio. The gross margin has been going all the way up, especially last year, as I just shared. The overall appreciation has been substantial under the stability of the central bank's exchange rate. In the second half of the year, we have also done a good job of relative hedging.
We have not ignored the hedging outside our original operation merely because of our focus on it. We must say that this year, it seems to be actually challenging. In fact, there are still some challenges ahead of us, especially the RMB. I think at the beginning of the year, it was probably still RMB 7.0 to RMB 7.05 per USD. Today it has appreciated to around RMB 6.86 per USD. Before Lunar New Year, it had probably risen above RMB 6.91 per USD. I think this is another challenge of this year. I will cross-compare the fourth quarter, the whole year, and the first quarter of this year so that you will not feel that there is a breakpoint. The information behind can be combined with the data given previously. I tried to mingle them together for a wholesome observation.
Of course, the recent NTD is also from this year's NTD 31.6- NTD 31.7 per USD, and then back to NTD 31.2 per USD. I think regarding this year's NTD fluctuation, I personally think it may not be that big. I think the life insurance industry should know better. The current government has sufficient resources. My personal opinion is that as long as there are no particularly unexpected things in terms of tariffs, then, in fact, what we need to pay attention to is that this year, a new Fed chairman will be elected. Topics related to interest rates and the new fiscal policies remain uncertain. It might be more visible after this May. I think basically, this year, it may be affected by the appreciation of the RMB, and there will be some challenges to Primax's gross margin, just like what I just shared.
Because in fact, in the first quarter of last year, the exchange rate of the NTD was probably stable, about NTD 32.6. The RMB was at RMB 7.21. What you see now this year is at the end of February, when the NTD had risen to NTD 31.2, and then RMB had risen above RMB 6.9 to RMB 6.86. I think this part, of course, it might have a slight impact on our revenue, but we still think that we should have a slight increase in the number of USD and NTD this year compared to last year. Next, we can see our operating margin. The operating margin was maintained at 4.7% this year, which was the same as last year.
I think you can actually see on this slide that our EPS for 2025 last year was NTD 5.71, a slight increase of 1.8% compared to NTD 5.61 in the previous year. I think this is also the second-highest in the company's history, and our highest was around NTD 6.1 in 2022. I believe that the past few years should be the basis for us to gradually maintain around NTD 5. At any time, I think we have the opportunity to challenge the past high. ROE was currently at 13%. In the past few years, I think we still have to find a way to increase our numerator. Basically, the average ROE in the past five years was about 14.5%.
This is the part that needs our continued effort. Next, we can see the next slide. We can look at the part of the operating highlights of the fourth quarter. Our revenue in the fourth quarter reached NTD 14.9 billion , up by 13% year-over-year. The main growth still came from AIoT and AI smart surveillance system product shipment strength, adding the contribution of our consumer audio new projects. You can also see that in the fourth quarter of last year, our gross margin reached 17.6%, which is also the highest gross margin in a single quarter since the establishment of Primax Electronics, and also set a new quarterly high for the company. Of course, it was mainly due to AI smart surveillance system product portfolio.
Gross margin went up by 0.6 percentage points quarter-over-quarter and up by 0.2 percentage points year-over-year. You can see that we have been focusing on new technology research and development. In the fourth quarter, you can see our overall operating expenses. Our R&D expense reached about NTD 967 million, an increase of 7.5% compared to the same period last year , which accounted for 6.5% of total revenue. Operating margin was 4.2%, up by 0.3 percentage points year-over-year, down by 0.7 percentage points quarter-over-quarter. EPS in the fourth quarter of last year was about NTD 0.95, down by 7.8% year-over-year, mainly due to the recognized non-operating loss from equipment impairments and investment loss.
The main part allows me to share with you, because we had some investments in injection in the past, as well as some lens module products with low gross margin. We discarded it in the fourth quarter of last year. This part is about the sum of the two. It was around over NTD 100 million because we have determined that we will not use these in the future. We did asset impairments at the same time. I will also explain to you the performance of the single quarter. The non-OP foreign exchange gain and loss is basically on a profitable trend, whether it is from this exchange rate or the interest income parts. I think when we should make a decision and make a move, we must deal with it decisively.
Even if we discarded these non-OP parts, our EPS is still the second highest in history, which is what we mainly want to highlight to you. Let's take a look at the overall performance on the income statement. As what we just shared with you earlier, the gross profit part from revenue to the fourth quarter reached NTD 2.63 billion, and the gross margin was 17.6%, which we have just mentioned. Of course, it is a new high in a single quarter, mainly benefiting from the product portfolio. We have been emphasizing that we will continue to strengthen the control of expenses under the premise of maintaining the necessary investments. I hope that in the future, for this operating expense rate, we are going to control it.
We just reported the net income for the fourth quarter, which was about NTD 440 million. Net margin was 3%, and EPS was NTD 0.95. I think next, we can take a look at the balance sheet of the fourth quarter. We are now at the balance sheet of the fourth quarter. Mainly, we can see that the whole year, you can see our cash reached NTD 12.289 billion. If we are to deduct our long-term and short-term liabilities, we still have a net cash of NTD 9.17 billion. We are very healthy in terms of the health of our overall financial structure , with an inventory amount of about NTD 10.8 billion.
I want to highlight this to you that the increase in our inventory and the increase in the number of days in stock are actually mainly due to the fact that we have two customers. They had special requirement for this so-called safety stock and needed special requirements. Last year, these two customers combined were roughly around $30 million. This year, I want to prepare you mentally. These two customers this year, because one company in particular is moving from China to Thailand, our safety stock will increase in multiple -fold compared to last year's $20 million. Probably starting from the second quarter, we will assist our customer with various material preparations, finished goods, and manufacturing processes to avoid any discontinuity in revenue after moving to Thailand next year.
You may see successively that our inventory this year is continuously increasing. The amount should continue to rise. Regarding this, around the end of this year, it should be safely and effectively digested. The so-called safety stock we do actually have POs as our supporting documents. This issue is not very big, let alone our client is also a well-known law enforcement company in the U.S. I want to explain this part to you, prior. You can see that the cash conversion cycle was 38 days compared to last year, 40 days, and last quarter, 39 days. It is improving.
I would like to explain to you that we still have one or three customers, some of whom are responding to the changing requirements of the entire market. Some of them are starting to integrate in China, for the integration tasks will be handed over to the Chinese company. Once the handover begins, our AR turnover days will increase from currently 120 days to nearly half a year. The proportion of this amount is very small, but they are gradually accompanied by the manufacturing in China policies. These are not the major top five, top eight electronic companies in Taiwan, as we said in the past. This scenario might bring some impact to us. We also have one gaming company, also adjusted AR turnover days from 90 days to 120 days last year.
You can take a closer look at our AP turnover days, because our AP turnover days, in fact, under our effective control, were about 124 days compared to the 121 days of the previous year. Our AP days had been extended by three days because we extended our AR days with our customers. We would also fine-tune our AP days. This is what you can see here. We can take a look at the statement of cash flow. I think from last year to this year, our overall cash inflow from operations was around NTD 3.2 billion, up by NTD 1.1 billion quarter-over-quarter. Compared to 2024, it was actually down by NTD 2.3 billion.
I think you have just heard that in my explanation earlier, the main thing is that the customer's AR days have been extended. About these two customers combined, it had extended about $30 million, as what I just said, especially in the inventory part. In order to assist our customer with our safety stock, this part also exceeds $30 million. Pertaining this, it will lead to our overall cash inflow from operating activities to decrease moderately. I think for this year, relatively speaking, the AR days will return to a relatively normal level. In terms of inventory, because I have already explained to you, there is a company with a value of $20 million, and their inventory will still grow and double this year.
I think these cash flows, we are well-prepared and ready now, whether it is with our own funds, or AR factoring, or our borrowings from the market for some of these activities. I also have to explain that the customer actually paid us the prime rate. It is a prime rate, in fact, the historical price difference is beneficial to us and will be better than if the borrowings. This is the overall cash flow aspect. The financial activity cash outflow was NTD 2.551 billion, mainly in the capital expenditure of NTD 2.3 billion. You should be pretty clear, in fact, in the past, our overall group was about NTD 1.2 billion to NTD 1.5 billion in the capital expenditure. We will still maintain it at NTD 1.5 billion this year.
Last year, I think you can see that, because last year we had a factory in Thailand, P2, also known as Primax 2, the construction of the second phase factory building, which was completed at the end of last year. Now, in the first quarter of this year, it should be completed in the first quarter. All the stationing of our business units should be completed. After the stationing, we actually invested about THB 160 million in steel construction this year, because we figured that there are still some problems with insufficient space in some of our operational activities in Thailand. We will carry out this steel construction, which is expected to start in February or March, because the subcontracting has been completed, and it should be before the end of the year. This steel structure will be finished.
This should be the only one item we have been so far in terms of capital expenditure this year because of the operating activities and production activities, the factory building and steel structure are needed to be built. Coming to the next, the overall capital expenditure this year, as I just reported, is about NTD 1.5 billion . I think the key point is that pertaining the Thailand factory, the other parts are probably our general so-called capital expenditures for this maintenance. I also want to report to you that the Thailand factory last year, basically its production capacity had reached accounted for 30% of the entire group. This year, it is still continuing to increase to 35%, which I think is conducive to our company's overall capacity, flexibility, and can also effectively diversify risks.
That is the overall output of the statement of cash flows. N ext, I think product portfolio and application, you should have a pretty good understanding of in the past already. We can see that. Let's look at it as a whole. In the fourth quarter of the product revenue breakdown, you can see that the overall proportion of Information P roducts reached 49% in the fourth quarter of last year. I think it was mainly due to the full bloom of the PC refresh caused by Windows 11 and driven by the year-end pull-in demands, resulting in 10% growth year-over-year. Smart Lifestyle maintained its revenue contribution at 19%, thanks to consumer audio new project shipment, which drove revenue and enhanced revenue return to positive growth at 21% year-over-year.
You can see the bar chart on the far right, our Automotive and AIoT mix, the proportion has risen to 31%. This is basically benefiting from the strong momentum of AIoT shipment, as well as the investment of new projects, achieving 44% year-over-year gain. I think our investors also known, and you can also see it in our first slide. In the past few years, our gross profit has continued to grow thanks to our whole company under the leadership of our Chairman. Our heart united and contributing to AIoT, particularly as the proportion is increasing year by year. Relatively speaking, the gross profit performance brought by this part is also very good. Next, after this revenue breakdown, we can take a look at the outlook in the first quarter of this year. I think there are actually a lot of challenges this year.
Of course, with many challenges, I have to say that there will be more opportunities. From what I just explained to you, in the first quarter of this year, I think in both the exchange rates from the USD to NTD or USD to RMB are both under pressure. I think for the profitability, I think we have to have some patience and wait and see now, because if the RMB is as the market predicts, it may soon reach RMB 6.8 per USD. We now know that from the end of March to the beginning of April, there may be a meeting between the leaders of the United States and China, then we cannot predict the trend of the USD after the meeting. What will happen to the USD to RMB?
From the current point of view, it seems that it should be in Asian countries as a whole. The appreciation of the RMB this year is relatively outstanding. We must say that it may be last year and the year before, but the RMB was , in fact , relatively weak. Now it is just returning from last year to the original trend this year. For the first quarter of this year, we are still pretty confident in terms of NTD. We think our revenue should have a slight increase on a year-over-year basis. My thinking remains unchanged, benefiting from AIoT and our overall consumer audio new project. Of course, you can already see the overall situation of the PC system. I think the first point is that, in addition to the exchange rate factors just mentioned, there are many important products, such as memory, that have increased in price.
Especially, I can still remember before the Lunar New Year when gold and silver were both rising. I saw that the executives of our business department probably didn't know what to do because the price just literally went up. Copper prices and et cetera have risen, so everyone didn't have a clue about what to do. We can only say that we are still working very hard to deal with it, because we also know that there are people in the industry who have shared with our investors that they have also raised prices. I think I hope that everyone can successfully raise prices, but behind the success, is there a possibility that it may lead to a decrease in consumers' demands?
I think in the first quarter of this year, we actually saw a lot of variables occupying our thinking, which seems to be a lot of challenges. We also hope to say that behind the challenges, it can also bring more good opportunities. We can see it here, although we believe that the first quarter of this year will increase slightly year-over-year, but because the demand for PCs has weakened, it may also offset some of our growth momentum. If we look at it separately, for Information P roducts, I just shared it with you. We also know that PC brand manufacturers have planned to increase the product price by 20%, which should put pressure on the overall demand for this product. We should have a double-digit year-over-year decrease for printers and multifunctional printers this year.
It looks like in this regard, so far, based on our observation, if it can remain flattish, it should be good news. It is estimated to go down this year. For Smart Lifestyle, due to the contribution of new projects, it should have a high double-digit increase. Because the party speaker may become a new growth driver and will expand the entire soundbar's customer pool. The consumer acoustic business in the past is more focused on the European and American markets than in the past two years. It has also expanded to the Asian markets, hoping to make the regional layout more balanced. In this regard, I still have to return to my previous point, which is that they are our excellent growth and profit drivers. However, I personally think that this year will not be too bad.
If we look forward to 2027 and 2028, I think we can ask the chairman for his opinion later. That is our development in the Automotive and AIoT sectors. What I look at this year, I think we are at a transitional phase of quality and quantity. The first changes is that the industry that we have engaged has enlarged. In the past, when we talk about public safety, we focus on community and campus safety, and we're talking about transportation safety, which is the safety of fleet management, and we talk about the law enforcement safety. In fact, we have mentioned in the past that we actually have entered the industry of waste management and workspace. In fact, we can see that among our customers, whether it is school buses or emergency rescue vehicles, its market share is very high, about 30% or more.
There are these so-called cleaning vehicles or in some bus systems. I want to emphasize that this year, because we have been working with our customers starting last year, we will produce this year, but the amount of production will not be large. The contribution should be visible in the next year or the year after that. The first point is that we have engaged in larger industry than before. The second point is that because of the input of these new customers, our customer base has also increased. In this part, I think because I will wrap up for now, because my report time should be half an hour. Today, our Chairman has more ideas to share with you. Above is my oral presentation to you on the entire AIoT.
I know that, in fact, in the next year and after that, we're focusing on the automotive industries, from acoustics to image applications. There are some different changes, different from the past. I think I will leave this to the Chairman. Let our Chairman, Mr. Pan, to share with you more in-depth information about the future development. I will leave it to you. I believe you have a lot of stories to share in your brain.
Okay, I'll go ahead. When the CFO was reporting, I also thought of one thing that is worth sharing. It is not directly related to the business. I don't know if you feel it or not, the current consumption pattern, whether it is young people or not, in this society of every market, I heard that the current sales volume of famous brand is drastically reduced.
That is the so-called boutique famous brand. The sales amount is drastically reduced. We see that many delicacies on the market are extremely expensive. Not to mention other countries, we just look at the kind of large-scale concert held in Taiwan from south to north and vice versa. How many large-scale concerts have been held in the past year? Various activities are almost full. You can't buy a ticket. The ticket price takes thousands of NTD. Like this Sunday, I will go to a concert hall to listen to a concert by European performer, and the ticket price starts at NTD 5,000 . This means the experience is the pursuit of feelings for today's human beings instead of material enjoyment. Because this discovery is directly related to the so-called X -IN-1 Sensory Fusion currently developed by Primax Electronics. Not to mention the indirect relationship, there is a direct relationship.
The so-called feelings are the various aspect that people can feel coming via a pluralistic way. Because humans are inherently multi-sensory animals, we integrate information from multiple senses. We will have diverse feelings in any environment. Whether it is hearing, vision, or even touch, and various other senses will be brought into human life. This is my own feeling in recent months, because I found that this Taiwanese concert had been constantly adding more sessions. Every concert is full, and after it is full, it is added more sessions. I recently read a report. Indeed, recently, the sales of luxury brand products have come down, but other aspects of life and spiritual satisfaction needs are increasing. How to use our AI technology and from cloud AI to edge AI will eventually be implemented in human life.
It would be useless to be in the cloud all the time. There is no way to help human life. For helping human, edge AI will definitely rise. The rise of edge AI is the most powerful time for Primax. We're on this path now. I will bring in such a concept today to share with you. Let everyone know why we are so confident in the development of the company for the technology we currently have with our talents and our customers, and we are all targeting this market. We're here to make a new update with you to see if you have any further questions. You're welcome to raise them, and we will exchange opinions together.
Thank you, Chairman. Next, we will enter the Q&A session. Please just raise your hand and ask the question. Thank you.
Hello, Chairman, CFO Ellen. I would like to ask two questions here. The first question is to continue what the CFO mentioned just now, the fleet management. Out of curiosity, I just want to ask, this year, because the automotive market has been weaker recently, what is the client's perspective toward fleet management? How are our clients' progress? The next year after that, when is the expected time for the ramp-up of the new projects? This is the first question. The second question is whether the project progress of the robotic business or our current strategic development will the primary focus be on components or on full system manufacturing? Have any customers already started a project? The revenue performance in these businesses. How do you view the gross margin of it in the future? Thank you.
Fleet management has always been the key focus for us in the past two to three years. What I just mentioned to you at the end of the report is that although we have crossed areas, again, because in the past, we were talking about the safety of transportation, we are now in the safety of transportation and we have crossed into the industries I just mentioned. Those industries basically belong to the medium to large-sized fleet, which has fairly high market share in North America. Of course, for our new and old customers, we are still providing them with our advantages because we are cooperating with some startups in the U.S. The startups, actually, as you know, they provide hardware. What the benefits of this is that they don't seem to feel the rising prices as the consumers do, because this is a B2B market.
They don't engage in the consumer market so that they don't feel that the price of everything has increased, because the main source they charge is the subscription fee, which will be the focus for them. We manage these fleets, and there is no such charge for us that leads to the quantity or fluctuation in volume because of some external changes we see. That said, other than the companies we've worked with in the past, we entered two new industries now.
This year, we have small amount of output at probably a single-digit value, but next year and the year after that will be increasing. It will be about three to four times the growth of a single-digit number this year. Why did I said that there are actually some things that we have been doing before, which are still stably growing, probably about 10% to 15% growth? These new inputs will bring us a larger growth in AIoT in the next few years. That is what I just emphasized to you.
To add a little more about the automotive topic, just now, the CFO specifically focused on the fleet management. The entire automotive market can be divided into two parts. One is fleet management. This is an ecosystem. In fact, the brand of these cars, how do we have a good direct cooperation with these vehicle brand companies, this is the focus of our subsidiaries. In fact, it has been rooted for a while. This is also what we think of the future. If we look further, I think the company's development must be sustainable, not just this year or next year, but for the next three to five years or even the next 10-20 years.
Automotive will be the key industry to continuous development of Primax and will even be our number one industry. Let's look at PC. From PC to mobile phones. Mobile phones have developed diversified cloud computing, and now they have progressed to intelligent computing. The automotive industry is different. Cars from 100 years ago, today's car and cars 100 years later, this tool that can carry people is absolutely impossible to disappear. Maybe the way of travel has become different, but it is still possible to have more cameras in the vehicles because its security, safety has become more critical. Even that, since today we assume to travel through flying, it is impossible to drive by yourself. You must have professional pilots to operate. The passenger in the vehicle would expect an experience. They would love to enjoy the experience in the vehicle.
This is another kind of experience which is absolutely related to all the audio, image, and interaction we have here. Very much as the CFO mentioned just now, our entire car market, including fleet management, including direct cooperation with car manufacturers, because we are not cooperating in an unusual way. Generally, there are so-called Tier 1 companies in the industry, such as Panasonic. Panasonic does not manufacture cars, but purchases a lot of camera modules and then integrates them with other systems and then sells to these very large car manufacturers in the world so that we call them Tier 1 . Most Asian companies cooperate with Tier 1 companies. Primax-Tymphany Group, including Primax and Tymphany, which is very different, that we directly cooperate with car manufacturers. Like what kind of car manufacturers? Toyota, Ford, Volvo, Škoda, Jaguar, Land Rover are direct car manufacturers.
We have been cooperating with car manufacturers in the past two to three years. We know that the general car iteration is four to five years, and there are major facelifts and minor facelifts in one generation. If our product can appear on the car, we must enter at the time of car lifts. During the period, our new product will be engaged. That is why I have been talking about the future development. Automotive will be an important growth agent that supports Primax . Now, we really can't feel it because the development time of each car is three years, three years minimum. That is to say, the project I got last year may not be shipped until the fourth quarter of next year.
Basically, there is around such cycle, and the customers in the examples I just gave are in fact, you can also say that they are the customers we are working with now. We are not working through Tier 1 and Tier 1 collaboration. In this model, we're only one supplier of Tier 2. Its specifications are well-defined. There are many factors to bid the request for quotation. Our approach is to discuss directly with the car manufacturer in a meeting. What are their plans for their future cars? What kind of different experience do users want in a car? What kind of total solutions can we, Primax Electronics, provide so that your car can be relatively differentiated from other cars? We know that electric vehicles no longer have the most important heart to the car, which is the engine.
In this case, you cannot rely on the engine to achieve differentiation. It depends on other experiences. This is why we have great confidence in the future development of the company. Not that I want to have confidence or that I have to say I am very confident, but that is indeed our future. However, we also want to be very honest with you. This does not mean that we will see any growth in the next quarter right away, or that our pickup in the fourth quarter of the year will be great. We must have a lot for businesses for these new cars. The project signed in the year will not be shipped in the same year. This is a fact, and I will not hide it from everyone.
Our investments in automotive is very, very positive for our future development and for the future of the company. Robots, okay, I mentioned last time that we don't manufacture vehicles, we don't produce robots, but we will make cars smarter, make robots smarter. This statement needs to be slightly corrected. Yes, we will not produce cars. The projects we are working on now are to make cars smarter because robots are not as complicated as cars, and its entire supply chain has not grown to a point where we can't handle it. In fact, we have completed robots in our company now because we want to prove that we can make robots smarter. Of course, we have to make one robot first to prove that robots can be smarter. We have the ability to design robots. We're now outlining an important thinking process.
That is, in addition to our modules to make robots smarter, do we, Primax Electronics, have the ability to cross the entire robot, the whole system? From the perspective of design, we have passed the hurdle. We have designed it. We are using MTK chips. That's not like NVIDIA and etc. It's not that we excluded NVIDIA, but because NVIDIA's chips are more powerful, we may have a different level of smart in the future. We will choose our chips as needed. We are currently studying this stage of using NVIDIA. With MTK's solution, we're also in a strategic collaboration in terms of robot collaboration. We're now using the whole robot solution with MTK. This is a mutual collaboration between us. We use MTK for development. MTK helps us so that the robots we develop are better. There are many ways to be better.
Maybe in the next investors conference or the one after that, if anyone asks me this question again, I can give you a very affirmative answer saying that, yes, we will enter the field of robots, but we are now on this path. I need another three months to do the entire study, and we are now capable. Our robot has also been verified by the robot's professional customer who think it is qualified. The quality is really good. Since our company's development is very diversified and there are many investment projects, should we invest in the production of robots? Give me three more months. I need the time to do the research to ensure that once the company committed, it's a forever commitment. Indeed, we're doing the study pertaining to robots.
Does that answer your question?
Yes.
Thank you. Are there any other questions on site? If you're still organizing a question in your mind, let me first share with you the questions we have collected prior to the conference, one of which is about this year's dividend payout ratio. We announced a blockbuster decision at the Board of Directors yesterday. I will have our CFO bring us more perspectives.
First of all, of course, I would like to thank the Chairman for his strong support. When I wrote this proposal, I specifically reported to the Chairman. His response was, "Isn't this something we have reached a common ground before?" I was so moved when I heard it.
Of course, I said that we passed the board meeting yesterday. The next step is to submit it at the shareholders' meeting in May. We will try our best to complete the task we have committed in the past year. Thank you.
I will recap on this. The dividend payout ratio was 80%. We actually proposed NTD 4.56 per share, which answered the first question. The other two questions, in fact, were mentioned by the CFO in his briefing just now, which are the recent company activities. We have just provided some outlook for this year, as well as the outlook for the first quarter. We will not repeat here. In addition, there is one question about our revenue, gross margin, and expense rate of the first quarter, which was mentioned in our briefings just now as well.
The capital expenditure plan, as mentioned by the CFO just now, this year's capital expenditure is NTD 1.5 billion for making overall plans. In the case of fluctuations in raw material costs and exchange rates, the outlook for this year's gross margin, the CFO just mentioned that this year is indeed a more challenging year, and we still need to work hard on this. We have many challenges for us to put more effort into responding. Another question is that we mentioned at the beginning of last quarter that AISF, which is AI Sensor Fusion, and some legal persons would like to ask us when related products are expected to start contributing to revenue and the specific product to apply AISF and its application scenario?
Our entire team just came back from the ISE Expo in Barcelona two to three weeks ago to participate in a very large global integrated system exhibition. The so-called integrated is for integrated system. AI Sensor F usion is close to this field. This exhibition is the first time that the group, Tymphany and Primax , are integrated because , since it is AI Sensor Fusion, the organization is also in fusion, and the technology is also in fusion. Our exhibition this time is also in fusion together, making a very important announcement. That is, our two companies, one group, have entered AI Sensor Fusion and demonstrated what kind of scenarios it will be applied on site. Our customers are world-class customers, and we did a very successful demonstration, which is to demonstrate the actual operation.
For example, in this conference, in one conference room, if someone wants to raise a question, they might raise their hands, and the microphone will detect their spots. You can see the size of the conference room. You may not be able to spot the microphone. It may be on the ceiling or on the wall. The microphone will detect who is speaking. Where is the voice coming from? It will retrieve the source of the sound, point the microphone at the person, get the best sound. Not like us. We have to keep passing the microphone. Who is speaking exactly? Let's say, for example, I think this voice comes from what I heard. If my eyes can see the person, they raise their hands and say, "I want to speak." The person who raised their hand, I hear it and I see it.
I can be certain that this is the source of the sound. If at the same time, one person is raising their hand and the other person is fiddling with their hair, both of them are raising their hands. Who exactly is speaking? At the same time, there must be a smart judgment between the action and the sound. This will have a smart application engaged through continuous learning. Know what kind of movement is defined as talking, how the lips move when someone is chewing gum. Such applications appear everywhere. This is in our daily life. Everyone can experience. Our company has one focus area, which is public safety, society security matters. We have the largest customer in the U.S. This is what we are doing.
It is basically using a camera, identify the place where there is a car crash, robbery, or the source of the gunshot, and the camera will capture this image and identify where the sound is coming from. The question is, if the camera finds the wrong direction, the evidence is either obtained or not obtained. It is either one or zero, black or white. In terms of microphones, we have recently developed a directional microphone, highly accurate. When this gunshot occurs, if the camera turns in the wrong direction, there's no second chance to capture it because the sound is gone. It turns in the wrong direction. The accuracy of the microphone need to be very high. What is real gunfire and what is not? There are so many sounds that AI needs to judge within.
It is a sensor fusion example, which is a very important fusion between a microphone and a camera, and is used almost everywhere. Why is that? We humans have eyes and ears, and the machines we talk to in the future also have eyes and ears. The feelings we get now through our eyes and ears will be presented in the products you will see in the future or on the human machine interfaces around you. It is doing fusion, making some judgments on me. This matter is just around the corner. Really just around the corner. Too many examples. What we are doing now is that the two companies have set up a central lab integrating the technologies of both parties in this lab and constantly launching various sensor fusion applications.
At the same time, the marketing team bring this proven technology to state to the customer in the customer's next generation products how to apply our AI solution. So far, we have marketing teams, customers who have confirmed on this. The development period of this type of product is not as long as that of automotive, but it is not as short as the mouse, keyboard, and speaker, which is medium-term development period, about 12 to 15 months. We expect AI Sensor F usion to be embedded in our products about the fourth quarter of this year to the fourth quarter of next year. This period is the time when the benefits can be seen the most. The most obvious time for the benefits will occur earlier than the opportunity of automotive, but it still needs a little development time.
This trend is the same as Primax Electronics because there are business opportunities brought by multiple sensors. This opportunity is certain, and our ability is also affirmed, which also gained very clear and positive recognition and confirmation in the recent ISE exhibition. Here is a reply to the question related to AISF. This is indeed Primax in the current market. Only we are mentioning AISF. We should register this term. I don't think anyone is using it so far, but it is not difficult to say the word. We're not to compare ourselves with others because if we do not have a strong technology base, we cannot provide customized services to meet the needs of capturing a certain sound from a certain angle to be so accurate. What kind of adjustments needed to be done to our parts, components, either for a camera or a microphone?
What kind of fine-tune needed? There are many types of microphones. There are directional and non-directional microphones. That is 360-degree grasping. Each has its own development. This is also related to the microphone company that Primax invested in the past. Due to this small investment, but a very critical investment, we have obtained microphone related technologies. This will have a key impact on our company's future. This is my further explanation.
Are there any other questions from investors or friends from the press media here? There is a question from a participant.
I would like to ask, although it is only the beginning of the year, this year's consumer market is relatively uncertain. Can you provide your views on each business unit's performance?
Among the three areas, the one with the highest growth should still be the automotive IoT part. That is Automotive and AIoT. We can look at it with a high double-digit performance. This year in Smart Lifestyle, there are some new consumer projects, acoustic project cooperation. This year will return to double-digit growth. We look at the first quarter, it is like this. The whole year does not seem to be on a growth trend. It might be more challenging for Information Products. Of course, we're still expecting it internally. It still needs to achieve growth. The first quarter seems to be a decrease year-over-year of high single digit. Maybe in the second half of this year to see if we can make a more positive update. Probably the overall distribution is like this.
Are there any other questions?
Now, no one really asks questions about tariffs? We do not take a passive position on this topic. What we are really doing for this matter, in fact, we are changing at any time. We are actually not afraid of change, not for Primax. I think we have become faster than anyone else in regard of change than our peers or faster than Trump. There are many changes which can be done but may not be exposed because it is not necessarily related to business. It may be related to the technology, or it may be related to the organization. It may also be the company's future development plan.
We are constantly challenging ourselves, not just how to keep the company growing, but to grow sustainably. Since I became the chairman in 2024, this has not been changed and will not be changed. If you ask me, what is the most important to the company? One is growth.
Growth is to be responsible to our shareholders, to give employees a good future. This is not a short-term goal, but a sustainable goal. Sustainable operation is equally important. All our development, technology development, talent development, business development, and et cetera, all development revolves around this core. We use this core as an example. What we should change on our own initiative, we will make change first and will not passively wait for others to urge us to change.
Hello, Chairman. I would like to ask you one question. That is, you mentioned that we are now collaborating with car manufacturers directly instead of working through Tier 1 . I would like to ask, what is our competitive advantages?
Okay, there are two advantages. In fact, our group is in the United States, Europe, and overseas. We have a very different setup from our competitors. We have many non-Taiwanese, non-Asian colleagues in the company. In this group, there should be dozens of non-Asian colleagues, many of whom are Americans and European colleagues. They are all in my team specializing in automotive industry. They have been working in the automotive industry after graduating from school their entire lives, worked in the U.S., worked in Tymphany at the time, and then joined Primax Electronics.
We led such an elite team directly representing the group, whether it is for camera vision or audio acoustics, to directly operate with car manufacturers in the U.S. and Europe on behalf of the group. We can confidently say that they are willing to give us the opportunity to enter this industry, the key is because we can create differentiation advantages of their cars. I will give my own example.
I have bought two cars. One is a BMW 530 and the other is a Volvo. These two cars are not fair -price cars, and they are for audio players like me. I have been in Tymphany for 10 years, and I care about the audio performance of this car, not just the standard equipment. I want to choose the optional equipments as well. I want to choose the Harman Kardon, et cetera, after buying these two cars. All the sounds I hear, I see the position of the speakers. I start the software user interface. 100% is the same. One is a BMW car and the other one is a Volvo car. What you can see and hear, the location of the logo, everything, the amplifier inside, the power performance are exactly the same. Why? Because this whole system was developed by Harman.
Harman is a Tier 1 company. The automotive business is their number one business. Few people may think that Harman is only an audio company. In fact, there are many opportunities in the automotive industry for cars to use their add-ons. They are a subsidiary of Samsung Electronics. Harman makes audio products sold to Ford, sold to Honda, sold to anyone. The product enters the car. Your music enjoyment experience is exactly the same. We also know that for the drivers and passengers, music is very important for driving. How did I change from this car to that car for wanting to enjoy better audio, but the result is still the same? Since we control all the components in it, so we can provide customized services. We ask our customers, "What is the user experience we want to achieve?
What is the experience with this sound? The user experience may be, I want to prioritize the passengers in the front seat. Sound enjoyment is the most important thing for people in the front. I am a businessman, I basically have no one in the back seat. What should I do with my voice configuration? The car manufacturers said that the biggest bottleneck is that this speaker is installed on the door, which is a difficult task, because if we are after sound quality, the vibration may be huge, and it will cause the vibration of the car. This is a shared experience if you have driven a lower quality car. This is not easy to solve. The car manufacturer's requirements are, can you use a smaller number of speakers to produce the same quality?
We will think about what kind of acoustics to use, what kind of acoustics can be placed on the front seat dashboard through the use of software, the methods of refraction and reflections, so that the sound heard by the front seat passengers and the back seat will feel that, hey, this sound has a surround effect. As a matter of fact, there is no speaker in the back. Among them, of course, within the investment of software, so it can be customized to meet customers' requirements. This must appear in the new generation vehicles because the existing car will not change the platform architecture for minor facelifts. Such a concept, we have actually been doing it for a while. In fact, in 2019, we spent three years doing market research. We worked with American market research companies. We looked for Ford and General Motors.
We were in one workshop, 35 different car models, and there were external consulting companies. We were discussing what we could do for you as an Asian manufacturer. We have these technologies. What can we provide? We worked on doing some prototypes for customers and then go to proof, and then they also have to verify this to see if they need it and keep making progress. Until this year, we see that slowly these projects are coming to one after another, but we have to wait until the car is launched. We can tell you which car you can listen to and feel the sound performance. We are in this process now. I don't think in Asia today, or let's say focus on Taiwan, there are any companies doing similar things.
Most of them are still cooperating with Tier 1 companies because it is not easy to cooperate directly with car manufacturers. I don't know if I have your question answered.
What about the volume? Is it possible to provide a number?
Okay. I can't provide it directly, but I can give you an example. We had an American car manufacturer a while ago, and they have a new car. This car has speakers, microphones, and cameras. All of them are provided by Primax Electronics. I'm talking about one real case. When it is launched, our turnover in that year is about NTD 100 million. This car manufacturer launched a small car. They are not a Tier 1 company, not a Ford, GM, Toyota, BMW -level of size, not that size.
We know all the microphones, all the cameras, all the speakers in the entire car. The contribution will not be seen in the next two years. It will take two to three years to be launched. I can only answer indirectly like that because this has always been dynamically changing.
I would like to ask one more ESG question because the Financial Supervisory Commission, FSC, requires some financial institutions and some listed companies to have some ESG engagements, especially for sustainable economic activities. When we compile the sustainability report, will we base it on actual references of economic activities?
Certainly, because there are different categories. There is a distinction between the size of the share capital. We have already converted this part; we will carry out these affairs between us and the accountant. The rules made by FSC must be followed.
Will we see it in this year's new sustainability report?
We will compile it according to the government's requirements.
Thank you.
Because of limited time, our investor conference today will end here.