Earnings Call: Q3 2020

Nov 11, 2020

Welcome to e Memory Third Quarter 2020 Webcast Investor Conference. Today with us, we have Chairman, Doctor. Charles Shee, President Doctor. Rich Stenk, Vice President of Business Development And Stockton, Mr. Micah Ho, Director of Investor Relations, Ms. Liqing Chen. And Director of Finance Department, Ms. Theresa Cole, the format of today's event will be as follows: 1st, EMEA's Chairman, Doctor. Charles Xu will begin his remarks. Afterwards, MMA's President, Doctor. Rixin, will summarize our operations in the third quarter of 2020 followed by our future outlook. Next, Chairman, Doctor. Toshi will introduce how powerful works in AI security. Then we will go into the Q and A session where our management team will be ready to answer your questions. Please feel free to submit your questions in the input box on the webcast window throughout the conference. As a reminder, this conference is being recorded and a webcast replay will be available within 2 hours after the conference is finished. Please visit the company's website at www.emari.com. TW, under the Investor Relations section. As usual, before we begin, we would like to remind everyone that today's presentation may contain forward looking statements that are subject to risk factors associated with the semiconductor And IT Business. Please refer to the cautionary statement as shown on page 3 of today's presentation. Now, I would like to turn the floor over to EMEA's Chairman, Doctor. Cao Okay. Good afternoon, everyone. I hope you are all healthy and are doing very well. As mentioned in our previous conference calls, we are entering a multilayer growth cycle with strong set of tables in the pipeline. We expect the momentum of our growth to continue for license activities and also royalty revenues. In addition, our parts based solutions have gained many interest as higher security requirements have been become a indispensable. We are actively engaging with the leading companies for the design of our new parts into their security architectures and they expect more design wins in the future. Next, I would like to, invite Rick to report our third quarter operating results and the future outlook of our business. Look, Rick? Thank you, Charles. Good afternoon. Good afternoon. Everyone. I will 1st begin with our 3rd quarter results. So quarter revenue was RMB441 1,000,000 a sequential increase of about 4.2% and a 31.1% year over year. Or up 5.7% sequentially and 38.2% year over year in U. S. Dollars. The operating expenses were $244,000,000, up 7.3% sequentially and 23.6% year over year. Many attributable to expected credit losses of $11.23,000,000, affecting the operating ratio by 2.54%. The reason is that Chinese foundry delayed remittance due to the tax exemption approval flow deferment. This is expected to be deferred to the fourth quarter of this year. And the expense will be reversed then. This brings us to the operating income of 100 and $97,000,000 with an increase of 0.7% sequentially and the 41.8% year over year. Therefore, the operating margin declined by 1.6 percentage points sequentially, but increased by 3.3 percentage point year over year to 44.7%. Overall of third quarter EPS was $2.26 and the ROE was 38.8 percent. For the 1st 3 quarters of 2020, the revenue was 1200 and $80,000,000, up 22.1 percent year over year and grew 26.8 percent in US dollar. The operating expenses increased 18.1% and the operating margin was 40 5.9% with an increase of 1.8 percentage points, EPS up 24.5% to $6.9 to $20 and ROE gained 6.2 percentage point to 39.5 percent. Now, let's move on to the revenue contribution by licensing and arodi. Licensing in the 3rd quarter accounted for 25.2 percent of the revenue, down 5.9% sequentially up 7.2% year over year or down 4.8% sequentially and but up 12.9% year over year in U. S. Dollars. Realty in the 3rd quarter contributed 74.8 percent of total revenue increased 8.2% sequentially. And the 41.8% year over year or up 9.8% sequentially and 49.5% year over year in US dollars. For the 1st 3 quarters of 2020, Now, total revenue grew by 22.1 percent year over year in $20 or 26.8% in U. S. Dollar. Licensing and the royalty grew 6.8% under 28 point 7% respectively or 11% or 33.5% respectively in U. S. Dollars. In terms of the revenue contribution by technologies, the results are as follows. Nielbeck, accounted for 22.4 percent of total licensing revenue in the 3rd quarter licensing revenue in the 3rd quarter. Down 80.2% sequentially, but up 42.7% year over year. Its road increased by 11.4% sequentially and 128.2 percent year over year due to the continuous production of the existing new applications. This brings the royalty of new fields to contribute 32.4 percent of our total ROAD Our top a security IP contributed to 5.6 percent of licensing revenue in the 3rd quarter. Although, this technology has not contributed to any road yet, engagement with industrial leaders is still actively ongoing. As for MTP Technology, net sensing revenue increased 3% sequentially but decreased 14.9% year over year to accommodate to account for 10.3 percent of licensing revenue in the third quarter. ROWD from MTP increased 26.9 percent sequentially and a 45.5% year over year. To contribute 3.4% of the total ROAD. Currently, our MTP team is working with partners on developing MRN are erent and AI Memory. Both are erent and the AI memory has been verified with proven results. In the 1st 3 quarters of 2020, O'Neil, it Now licensing revenue decreased by 8 by 17.5% year over year, but the royalty increased by 6.7% accounting for 53.2 percent of our total revenue. For new fields, Licensing and RODI revenue grew 27 0.1% and 133.7% year over year, contributing to around 41.3% of total revenue. For power based security IP Licensing revenue increased 14 times fourteen times year over year, contributing to about 0.7% of our total revenue. For MTP Technology, the licensing and ROCE revenue declined 41.9% and a 0.3% year over year accounting for 4.8% of total revenue. Now looking at the reliability from 8 inches and the 12 inches wafers. 8 inches wafers which accounted for 50.2 percent of the ROCE increased 1.7 sequentially and 27.6% year over year. 12 inches wafers contributed to 39.8 percent of the ROADY increased 19.8 percent sequentially and 70.5% year over year. For the first three quarters, 8 inches wafers accounted for 52.7 percent of the ROADY, an increase of 15.9% year over year. 12 inches wafers accounted for 37.3 percent of the railings, with an increase of 55 percent compared to previous year. There were 136 product tables completed in the third quarter. A record high quarterly number, reflecting increasing demand for our IPs. We will provide more information in the management report that will be released later today. In the next section, I will address our future outlook. We expect the growth of our revenue to continue in the fourth quarter and beyond. For licensing revenue, the main contribution will be from new fields and the new path as we continuously build technology platform among foundry partners and increasing demand for design license activities. For royalty revenues, we expect both 8 inches 12 inches to continue layer growth momentum In 8 inches royalty will grow due to PMIC content increase in 5G smartphone and the demand pickup for automotive and IO applications. Turbine loyalty will have strong growth as partners are ramping up production for ISP, OLED driver, networking related such as WiFi SIPs, multimedia related, DRAM SSD controller and others. For new business development, our new applications are centered on the security business development. Newfuels in advanced techno in advanced process is adopted for secure key storage to replace conventional e fields, we expect this will be the trend for security requirements. Business activities of POP based security solutions are in progress in the applications of IoT industrial IoT, AI, blockchain, FPGA data processor unit, mobile storage that is a unified fresh storage UFS and Automotives. Partnership with a processor IP vendors that is on and the risk file related continue to extend our cloud based security solution platform and bring in more customer adoption. For new IP technology development, we are developing 6 nanometer and 5 nanometer plots and 5G. Technology was already in Foundry Partner and have already demonstrated 6 nanometer silicon resource successfully. In Q3, we have announced a crypto processor top IoT, which integrates our route of trust that is a top IoT with crypto engines. Top IoT is targeting to provide the IoT and AI chips with comprehensive but easy to use security solutions. We will continue to develop our POP based solution to implement HSN, that is a hardware security module, which can be embedded in chip to provide security function for network applications. Now, I will pass the time to Charles. Okay. Thank you, Rick. Please turn to page 14. Let me take a few moments of your time to introduce to you. Outpark based road trust can secure AI. Recently, many industrial developments on AI has significantly advanced the operation efficiency of many industries, such as the factory automation, medical applications, autonomous driving and etcetera. However, there are also many, reports that show a double effect as a serial compromises on AI applications, particularly with edge devices. Where the comprehensive security is unlikely due to insufficient computing power and the low cost of the device deployed. In an AI system, the security concerns are protect the, device at the rest has shown the this, figure this, page, 14 to protect the device and the rest to protect data in transit, to protect data integrity, and to authenticate authorized party and to sign the authorized software. Okay. Page 15. Okay. This page can we I would like to explain the foundation of AI Securities, which is the role of trust. I know that to perform this security functions cryptographic operations on data by a secret key become indispensable Therefore, to generate a key and to store a key and then performing the cryptographic, using this secret key becomes a foundation of AI security. And this is to refer as the root of trust. Okay. So that is also shown in the page 16, okay, basically actually, essential, problem, we would like to solve and, from our IPs, how to generate keys, how to store the key and how to use the crypto engine, to protect the data They are all the 3 major steps, which is the foundation for the AI applications. So please turn to page 17. So by using our top technologies, we can to the usage for the key generation, key storage and the building of trust and that integrate these functions with cryptographic to perform the security operation to protect AR applications. So in page 18, which is a PAP R. D. And you can see that inside the PAP R. D has a function of unique ID It has a 2 regular number generator. It also has the the key storage and the in page 19 which came to page 19 for the top IoT inside the box. You can see that Hub IT is actually integrated hub RT, which is on the, the lower corner of right hand side. Which integrates the parking and with the quicker engine, which is on the left hand side of the bus. To perform secure port encryption and authentication in addition to the key generations. Okay. So please turn to page 20. So as illustrated in this table, so, for the, IOT on the in this table, on the right hand corner right hand corner, which is operation procedure of the IoT, in the IoT operation, which you have to, put up the device Okay. Then, second step is then you, when the system is up, then you start to input the data for model training. And after the model training, then you deploy this model into the edge device. So the edge device can use the model to do the inference. So when the H2S received the input data and because there's model there, So, you can use this model to do the inference and to do the judgment for the subject, you want to you want to influence, okay? So, that card is the operation procedure. And on the table, which shows the same model of this during this operation and then we also shows the content manager to take care of this straight model and then we will show the security functions which implement here to, secure the operations. And then finally, we list solutions, which uses our IP to as a solution to take care of the security of this operation. Okay. So in these tables, okay, you can see that, for each operation, the path based, role of trust for the 1st, 1st role, you can see that the path based a row of trust can provide key provide key and unique ID to protect the food program and also the authentication during the full process and also the device to server authentication. And for the 2nd row and the 0 in this table, you can see the top IP IoT which integrates our RT with the cryptographic engine can encrypt data in transit and the data and the rest to provide and provide the signature for the software and also provide the unique IP and also provide the temporary resistance function for the model training and the inference operations. Okay. So please turn to page 21 So in summary, for AI applications, Nearpower based hardware, a role of trust provides unique ID security storage, to run the number generator and the anti tampering solution to protect ai assets and operations. In addition, our solution is very highly manufacturable with ultra low cost so our technology can provide very high value proposition for secure applications. And in page 22, in these figures, I also demonstrate that we also demonstrate that our solutions, PFS, the crypto processes, PAP IoT, can perform, unique ID generation, secure storage, protect data in the software, secure authentication and also secure communication and the secure update over the air and the anti counterfeit to set up products throughout the entire life cycle. So it's not only in a AI application, But therefore, our path based solution, it can also apply to any other electronic device, which needs securities. Okay. So this concludes my introduction on the AI security. Thank you, Charles. This concludes our prepared remarks. On the webcast window and you will answer a queue. Should you wish to raise your question in Chinese, we will translate it to English before our management answers your question. We are now going we have a question for Mr. Chen. Regarding our PAS solution, in Chinese that allows to translate English. You mentioned, okay. NearApp is currently the only path manufacturer that meet the existing requirements of the U. S. Department of Defense, the perfect resident number generator. Does this have a significant impact our future global information hardware security. Okay. Regarding these questions, I think the the requirements basically that's different for different categories. One is the with our up mid air, the spec and the second is up, it's up, manufacturable. So, it's the, it's up, reliable. I think, you have to meet all these requirements. So such that it can be applied to the, the products So, our power is amidst all this requirement, a 16 requirement, the litigator. And because the public is a very new technology. And I think for the security application, I think the it just began to be to get notice from those customers who need the securities. So I think that we have started to promote our PAP based technology in the North America And I think we get very well, associated on our, the features are up I think both basically on the reliability and also stability and also particularly the availability on many countries. So, if the, because this is loud, we just start to promote our technology, the big company in North America. I think eventually give those a big company also accept our path for their new generation of the product. I think basically all the other customers. They see that this becomes a popular technology to take care of the security. I think it will be very important and also very it's also become very significance impact to the worldwide securities applications and also security standards. Another question is regarding the the application side, okay? The business of the our subsidiary talked to and the new employee are both developing and increase increasing rapidly. And, innovative business model was looking forward. Can you explain this core technology and your business progress in area of key management in the cloud and the internet of things? And a digital signature inflection and the security authentication in financial transition. Okay. I think for the application I mentioned in the questions, I think our solution can all be applied to this applications because our solution is very fundamental, rural trust. And all these applications the they do need a very high secure of trust as the basis for their security applications. I think for example, the key management, as I mentioned a few times, our past point of the our past IP recall it's a profitable trial basically can generate the key and also store the key and also we can provide the to render number generation and which is basically the, which is basically, are basically can used in the key management and also Rob Chen's signature and also the authentication of the transaction in the financial financial business. Another question, from David, okay, there is currently tight knit in funky business. And so we could do discuss the trend wafer pricing for 8 inches and 12 inches. Pricing. Okay. Regarding the trend of wafer price for the 8 inches 12 inches as you know, that the capacity in foundries now is quite tight. So as we learned from our customers, the layers are more than double digit percentage of the wafer SP increase in age as well as 12 inch So, because we are, as you know, that the there's over 70% of the revenue confound loading. So we expect the wafer ASP increase will contribute to our RoTE income growth. So, because our RoTE growth is the first so the per wafer royalty we collect percentage of wafer price. So proportionally, we will benefit from the increase of wafer price. Thank you for the weekend's remarks. Okay. And the second question is regarding NeoPAP. Currently, it's around 6% of licenses. Revenue in Q3. So do we have any guidance about the licensing revenue in a year time and when your property can contribute to our royalty. Okay. This is a very good question. As you know, like, the default for the Q filed the email for years and you will find that to be in general, we took 5 to 6 years to roll out our new technology tool market. So the new POP start to contribute contribute the license revenue from last year and we see the more and more customer adoption with our new POP IP. So, we expect the license revenue in next year will grow further. And we're already from new pop. We expect to have the contribution by the second half of next year. So, because we already have several customer adoption in its product and they are doing the verification. So we expect the production will be happening in next year. Okay. Another question is on half. Can we talk about the progress in the advanced to know I think it's below our denominator and what's our target application. In the with a new country or when we special, the fast way. And the other one, share gains in China Foundry, okay? And the other one is our DRAM progress. I think he mentioned about the licensing and the royalty post. And the the other one will be power management related, okay? What's our I think we want to ask is what the content increase compared to 5G and the 4G. The other, I think we just answered regarding the foundry presence, which will be benefit. For the 3rd pricing in the RoTE, okay? So Okay. Let me answer the question 1 by 1. For the first one is the the progress on advanced 12 inches notes, the target applications. So, currently, as I report, we already already moved into 5 nanometer process node. And and we are and the 47 nanometer we already qualified 2 years ago. So So, in the best note, we now we are now engaged in the customer in several fields. Included in the AI chips, automotive and the multimedia and the FPGA related applications. So, as to the revenue contribution now in the 12 inches, principally is mainly from the OLED and TDDI and some multimedia chip including DTV and the set of box and we expect the FedRAMP will come from more adoption in OLED. And the Wi Fi and the SSP. ISP related product application So, we already observed our customer in the ISP product application already moved into the production stage. So I think the ISP related product will contribute ROE very quick. Another question is about a share gain in the China foundries. For the China founders, in terms of the revenue contribution, there's less than 10% of our revenue. So, we closed it. The, Shawna found this deal walk in the legacy or A engine. Related does legacy process. So the contribution to EMEA on the percentage is quite low. As to a DRAM related, progress, in the 25 nanometer of Kosmark, during customer already moved into the production and the thousands of wafer produced, every month. And we now also work with our customer in 20 nanometer and we believe the project will start soon. So, the royalty contribution will be happened in next ye/ar. As to the power management related question, when the smartphone moved from 4g to 5g due to the more complicated system requirements. So more PMIC will be needed. So in terms of the contents, the numbers of chips that will be 3 to 5 times compared with the previous generation. But in terms of the aerial the wafer area, we believe they are around 3 times wafer consumption compared with the 4G. So it is my answers to the questions. So, can we talk about the reason, of the increase in our operating expense? Is this because of higher spend of opportunity in top? Okay. So in terms of the operating expenses, of in the third quarter SM report previously. There is a test exemption approval flow deferment caused by a channel foundry. So if we exclude this structure. I think the expenses expense is remaining caused by the Manpower increase for the path and the path security related RDE development efforts. In the when it comes from Peter, okay, it's the same topic of gaining good traction. Can we talk about how big a percentage of our total addressable market because, potentially, we'll adopt the solution. And I think that we confirmation the first royalty will come from next year. 2nd half. So, Charleston talked about how big opportunities go fast. Okay. I think the our properties will be mainly used for the securities. So, in the future, market size for security will be very huge, but the real number I cannot tell actually, it's from very low end, like, HD device of IoT to the very high end like a CPU data processing unit and CPU and also the automotive. They all need the securities I think if you have noticed the United States government has start to from our so called current network. So so so called current network, they require every devices in order to connect it to the network has to be secure and it has to have the some level of security and also the devices also need to be certified as a secure devices. So I think with the also U. S. Government and also European common source of community community community also promote this security requirement. I think the the market size will be very big. We have a question called health. Can we talk about the competing technology, like, in good, threat to our business, chop can talk about in good. Okay. Think the, Ambrand, we have a corporate with, U. S. Company on this, embedded MRAN Technologies. So MRAN, there are 2 different applications. 1 is the embedded application and 1 is stand alone applications. So the, I think the current value for embedded MRAM is basically to in order to replace, embedded fresh beyond process 28 nanometer because of the young 28 nanometer has not embedded, not both can be used. So MRAM is targeting to take the position on that. And another is stand alone MRAM, which will be taking the position to provide the so called persistent brand for the network applications. And I think now there's another application to try to use MRAM to replace SRAM. So, because the sram as the technology gets scaled up, the sram starts the leakage all the power of SME become big because, SME is very difficult to be scaled, but the MRN will be much easier to scale and also the sales size is much smaller. And that's the power consumption is much smaller. So in all this uh-uh in the stand alone and also replacing S-ray, which is not our competing technologies. But the embedded for embedded because we are also working on the embedded And so, I think that embedded, if we have the embedded MRAM Technologies, then we will expand our applications into the embedded fresh applications. So far, we have no applications in the embedded fresh application. But if we successfully deliver our embedded MRAM technology, then our market application, we will have additional market application that's in the embedded fresh applications. Okay. So in short, Charles just mentioned, we are not competing with MRN, but actually MRN will represent an opportunity for our company. Because, we have the partner working with us right now. And in addition, it will actually require our OTP for repair function. Which we are licensed to 1 of the very big companies in U. S. For their immune solution. So for us, actually, represent additional opportunity. And another question is, okay, from from from Mr. Cook. Okay. What are the current alternative to securing electronic device? Do we expect a skill solution that can compete with Nearpod in the next 3 to 5 years? On what challenge do we say is when convincing? Customers to use our new power security as a solution, okay, Charles. Okay. So the current, I think the security is there's a evolution on the securities. I think basically in the past, most of the company use the Efuels they store the key in the infuse. They burn the fuse and they put the key, store the key in the infuse. And but that is not secure at all because if you reverse through the reverse engineering, you can clearly see the data on the burn fuels. And so that's why our OTP neofuse has in the Advanced Power has started to gain the market on the securities. And Also in the, in the, the next application in the in the evolution. So, for the second evolution is, you can, encrypt your keys in the dense, but there's now still burn still in the burn fields that again, it's not very same. So, now it's moved to if you store the key into the near fields, then given you do the reverse engineering, you cannot see the key. So that's, now I think that a lot of many companies start to move toward these directions. The security, beyond the storage in the OTV is to have the, because if I install the key, actually the key it's injected from the outside. Okay. So it's not very safe. But beyond this label of security, then if the company use the key generated internally by the chip, such as in our path actually you can generate a key by the chip itself, which is the fingerprint of the chips. So each chip has its own secret. So that's I think that will be the highest rule of trust. So this is the highest liabilities. So, we would expect that gradually the security as the security demands and also the higher high level security required, then it will move to the to use the path as the security origins. Okay. So, the second question is, the security solution that can be competed with New York Park in the next 3 to 5 years. And actually, we are not the first one to propose this path concept actually the path concept is provided in the 2008 And then now the in the market, the first half producer in the commercial is the SRMPA. But because the SRMPApper has it's, very, I think it's a significant problem. It's, the sram up, it's not stable. So that means if your chip has swamps as your fingerprint, but the most likely your fingerprint will change with time with different environments. So that will cause the your systems become very unstable and very insecure. So I think as we start to promote our Nearpod, I think many customers are very interested in our new path because our new path is very secure and very stable and which is indeed required for the use in the left hand So, but in this current next 3 to 5 years, I think we still need to convince that a customer to use our path instead of a certain path. I think we do, we are very, I think we have a confidence that this will happen, okay. And another question is, when we convince the customer to use, your power security. Okay. So I think the, the most we have to the most challenging we are facing is a customer always asked us to show the track record. So you know, this is just like a near fuse, because it takes a time to educate customers Okay. This is the new technologies and then you can use new technologies to provide the higher securities. So I think the, I think the customer usually would like us to provide the, our path. Although they know how path is the most secure path, but they're still concerned about the how do we provide the evidence on the anti tampering. So but because this security is kind of more customized design solutions. So, recently, we have many discussions with customers on their demand on the anti tampering, which is because security is very different from selling the OTP the ODB, everybody knows the for the storage functions, but for PAS is used for the security functions. Every company has its own security functions. So, the other question comes from Mr. Cho. Do we have any idea for what is the tailwind production rate booked up to 50% of the total revenue. And how about the gross rate of the total revenue? Okay, this is a very interesting question. Yes, so when the 12 inches product ratio leads up to 50% it means that we will have more product usage in the segment. As I mentioned that the income that we now are working with customers in the OLED ISP and the multimedia and the connectivity product applications. So it means that at that time, the growth rate will be accelerate further compared with what we are now. So, So I think when the child inter wafers reality take more than 50% of the contribution, the growth rate will be bigger compared with our current situation. Okay. We'll collect your questions and we'll get back to you. Please hold on. Another question from, Mr. Chen regarding the company vision. As we mentioned, in local conferences, say, we are transforming the company as a security, security as a service. Can we talk more about this chart? Okay. I think as you know that We continue to develop our park based security solution and from a rural trust and PAP IoT and then a PAP secure element and then uh-uh the coming quarter and then also the next year, we are in our roadmap, we will develop the so called park based hardware security margins. And for power security modules, which are used in many, server and also big, big systems to provide the security functions for the network applications okay. So I think as a roadmap in the as we continue to make our, puff based security more comprehensive and also the, we have to also develop the, application software and also application software interface So to make the customer or to make any individual to use the securities very easy and very convenient. Then at that time, we will be going to the security service So, for example, now there are many, small company or big company. They provide the security service such as encryption service, data encryption service and also the signature services. I think in the future as the IoT becomes very popular and also the blockchain becomes popular. Then many individuals and also many companies, they would like to request such kind of service. So I think that is our goal, eventually in the future. We, our solution should be able to provide, very high security, but there was very low cost to this kind of, for this kind of service. To the customers in other questions, I'll say this regarding the weather pricing. As we just mentioned, double digit wafer price increase last year. So what's the age of wafer price increase for the Q3? The second quarter? No, I think that regarding the wafer price, most of our boundaries will discuss with customer for the wafer price at the beginning of every year of the end of the every year. So So the wafer price increase is that to be happened from last year. So it means that the wafer price increase contribution to e memory will be happen in I mean that in terms of a royalty contribution will be happen in in next year. Okay. Another question regarding the expense, we mentioned about the payment deferred in Q3 and that will be reversed in Q4. Can we explain that? I think this is just account receivable, okay? We take a very conservative a practice, okay? It's the account receivable. We didn't receive the cash flow. On time, then we will put on the, as a expense. So, because this is the largest foundry in China, and the the the money for them is quite small. So they took us it's just the the the practice, postponed, but we still put down the expense. So once the the the the the money, you know, into our account will be reversed, which we will expect will happen this quarter. So, okay, the the the effect is going to be reversed back. On the current quarter. This is answering your question. Another question regarding, okay, we are working with on the, Crystal Island, which is the highest tender, for armed solution. So why armed, not not produce their own security IP and working with in memory. Okay. Okay. Regarding this question, let me answer with 3 aspects. So, for the first one is, EMEA OTP offers a patient security label compared with the traditional issues approach, as I mentioned in my report previously. So such as customers to work with EMEA, to adopt these higher, secure storage OTP solution to protect their their keys. Secondly, it's EMA. It's a pure play memory providers. So compared with the others, e memory will be more neutral and can be support can be a supporter to, in its crypto island solution. 3rd, Customer, and we'd like to work with eMerritt and the POP Security solution because of POP R. D. Perform much better compared with some function in the trust room. So, customer and the strongly request on to what we see with a public solution to enhance its product performance. So, this is the reason why we're always in memory for the security related settlements. So should you wish to raise the question? Please submit your questions in the input box on the webcast window and you will answer your queue. We'll collect your questions and we'll get back to you. Please hold on. The total size answer team, okay, the total size of the The credit loss is 11.23. The actual asset dollar total account receivable. This is just the amount they didn't get into our account. $20. $20 is $11.23 $50. Okay. We we took it 100% as an expense. So the amount is is, as I mentioned, 11 point this remedial NT dollar. Another question from Jason, Bruno has that Korean Samsung is planning to launch live fresh food form early. This email will continue to cooperate with the Korean brand on the meat product. Okay. Currently, we see what was the customer for the new product development. And not only the product development, we also support customer for their product production. So, the project was the Korean customer release unchanged and we will keep ongoing. To support and with more projects. Okay. Actually, we have more than 1 product chip solution using email IP for that company. Not only for their, smartphone, but we also work with their foundry. So, so foundry, manufacture is our customer, but also, the chief company, Samsung FIs, also our customer. And we'll spend more and more application to engage with our IT in the future. We will collect your questions and we'll get back to you. In the interest of time, we now begin closing comments. Charles, please proceed. Okay. Thank you again for your patience and the support for e Memory. We will continue to work hard on innovating IP and security solutions for our customers and bring higher returns for our shareholders. Thank you. Coding of today's conference will be accessible within 2 hours from now. Thank you everyone for joining us today. We hope you will join us again next quarter. You may now disconnect. Goodbye and have a good day.