Welcome to eMemory's Third Quarter 2020 Webcast Investor Conference. Today with us, we have Chairman, Dr. Charles Hsu; President, Dr. Rick Shen; Vice President of Business Development and Spokesman, Mr. Michael Ho; Director of Investor Relations, Ms. Li-Jeng Chen; and Director of Finance Department, Ms. Teresa Kuo. The format for today's event will be as follows. First, eMemory's Chairman, Dr. Charles Hsu, will give his remarks. Afterward, eMemory's President, Dr. Rick Shen, will summarize our operations in the third quarter of 2020, followed by our future outlook. Next, Chairman Dr. Charles Hsu will introduce how PUF works in AI security. We will go into the Q&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 two hours after the conference is finished. Please visit the company's website at www.ememory.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 three of today's presentation. Now, I would like to turn the floor over to eMemory's Chairman, Dr. Charles Hsu.
Good afternoon, everyone. I hope you are all healthy and doing very well. As mentioned in our previous conference calls, we are entering a multilayer growth cycle with a strong set of breakouts in the pipeline. We expect the momentum of growth to continue for license activities and also royalty revenues. In addition, our PUF-based solutions have gained much interest as higher security requirements have become indispensable. We are actively engaging with the leading companies for the design of our NeoPUF into their security architectures. They expect more design wins in the future. I would like to invite Rick to report our third quarter operating results and the future outlook of our business. Rick.
Thank you, Charles. Good afternoon, everyone. I will first begin with our third quarter results. Third quarter revenue was TWD 441 million, a sequential increase of 4.2% and a 31.1% year-over-year, or up 5.7% sequentially and a 38.2% year-over-year in U.S. dollars. The operating expenses were TWD 244 million, up 7.3% sequentially and 23.6% year-over-year. Mainly attributable to expected credit losses of TWD 11.23 million, affecting the operating ratio by 2.54%. The reason is that a Chinese foundry delayed their remittance due to the tax exemption approval flow deferment. It is expected to be deferred to the fourth quarter of this year. The expense will be reversed then. This brings us to the operating income of TWD 197 million, with an increase of 0.7% sequentially and a 41.8% year-over-year.
Therefore, the operating margin declined by 1.6 % points sequentially, but increased by 3.3 % points year-over-year to 44.7%. Overall, our third quarter EPS was TWD 2.26, and the ROE was 38.8%. For the first three quarters of 2020, the revenue was TWD 1,280 million, up 22.1% year-over-year and grew 26.8% in US dollars. The operating expenses increased 18.1%, and the operating margin was 45.9%, with an increase of 1.8 % points. EPS up 24.5% to TWD 6.92, and the ROE gained 6.2 % points to 39.5%. Now let's move on to the revenue contribution by licensing and royalty. Licensing in the third quarter accounted for 25.2% of the revenue, down 5.9% sequentially, up 7.2% year-over-year, or down 4.8% sequentially, but up 12.9% year-over-year in US dollars.
Royalty in the third quarter contributed 74.8% of the total revenue. Increased 8.2% sequentially and 41.8% year-over-year, or up 9.8% sequentially and 49.5% year-over-year in US dollars . For the first three quarters of 2020, the total revenue grew by 22.1% year-over-year in TWD or 26.8% in US dollars . Licensing and the royalty growth, 6.8% and 28.7% respectively, or 11% or 33.5% respectively in US dollars . In terms of the revenue contribution by technologies, the results are as follows. NeoBit accounted for 22.4% of total licensing revenue in the third quarter. Total licensing revenue in the third quarter, down 18.2% sequentially but up 42.7% year-over-year. Its royalty increased by 11.4% sequentially and 128.2% year-over-year due to the continuous production of existing and new applications. This brings the royalty of NeoFuse to contribute 32.4% of the total royalty.
Our PUF-based security IP contributed to 5.6% of the licensing revenue in the third quarter. Although this technology has not contributed to any royalty yet, engagement with industrial leaders is still actively ongoing. As for NeoMTP technology, licensing revenue increased 3% sequentially but decreased 14.9% year-over-year to account for 10.3% of licensing revenue in the third quarter. Royalty from NeoMTP increased 26.9% sequentially and 45.5% year-over-year to contribute 3.4% of the total royalty. Currently, our NeoMTP team is working with partners on developing MRAM, ReRAM, and AI memory. Both ReRAM and AI memory has been verified with proven results. In the first three quarters of 2020, for NeoBit, the licensing revenue decreased by 17.5% year-over-year, but the royalty increased by 6.7%, accounting for 53.2% of the total revenue. For NeoFuse, licensing the royalty revenue grew 27.1% and 133.7% year-over-year, contributing to around 41.3% of the total revenue.
For PUF based security IP, licensing revenue increased 14 x year-over-year, contributing to about 0.7% of the total revenue. For NeoMTP technology, the licensing royalty revenue declined 41.9% and at 0.3% year-over-year, accounting for 4.8% of total revenue. Now looking at the royalty from eight-inch and the 12-inch wafers. Eight-inch wafers, which accounted for 50.2% of the royalty, increased 1.7% sequentially and 27.6% year-over-year. 12 inch wafers contributed to 39.8% of the royalty, increased 19.8% sequentially and 70.5% year-over-year. For the first three quarters, eight-inch wafers accounted for 62.7% of the royalty, an increase of 16.9% year-over-year. 12-inch wafers accounted for 37.3% of the royalty, with an increase of 55% compared to previous year. There were 136 product tape-outs 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 sections, I will address our future outlook. We expect the growth of the revenue to continue in the fourth quarter and beyond. For licensing revenue, the main contribution will be from NeoFuse and the NeoPUF as we continuously build technology platform among foundry partners and the increasing demand for design license activities. For royalty revenues, we expect both eight inch and the 12-inch royalty to continue their growth momentum. In 8-inch, royalty will grow due to premium content increase in 5G smartphone and the demand pickup for automotive and IoT applications. 12-inch royalty will have strong growth as customers are ramping up production for ISP, OLED driver, networking-related, such as Wi-Fi chips, multimedia related, DRAM, SSD controller, and others. For new business development, our new applications are centered on the security business development. NeoFuse in advanced process is adopted for secure key storage to replace conventional eFuse.
We expect this will be the trend for security requirements. Business activities of PUF-based security solutions are in progress in the applications of IoT, industrial IoT, AI, blockchain, FPGA data processor unit, mobile storage, that is a Universal Flash Storage, UFS, and automotives. Partnership with a processor IP vendors, that is Arm and the RISC-V related, continue to extend our PUF-based security solution platform and bring in more customer adoption. For new IP technology development, we are developing six nanometer and a five nanometer +, and N5P technology with our leading foundry partner and have already demonstrated six nanometer silicon results successfully.
In Q3, we have announced a crypto processor, PUFiot, which integrates our Root of Trust, that is PUFrt with crypto engines. PUFiot is targeting to provide IoT and AI chips with comprehensive but easy-to-use security solutions. We will continue to develop our PUF-based solution to implement HSM, that is a Hardware Security Module, which can be embedded in chip to provide security function for network applications. 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 how PUF-based Root of Trust can secure AI. Recently, many industrial developments on AI has significantly advanced the operation efficiency of many industries, such as factory automation, medical applications, autonomous driving, and et cetera. However, there are also many reports that show the serious 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 rest, as shown in this page, 14. To protect the device at rest, to protect data in transit, to protect data integrity, and to authenticate authorized party, and to sign the authorized softwares. Okay. Turn to page 15. Okay.
In this page, I would like to explain the foundation of AI securities, which is the Root of Trust. In order to perform these security functions, cryptographic operations on data by a secret key become indispensable. Therefore, to generate a key and to store a key, and performing the cryptographic using this secret key becomes the foundation of AI security. This is referred as the Root of Trust. Okay. That is also shown in page 16. Basically, there are three essential problems we would like to solve. 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 three major steps, which is the foundation for the AI applications. Please turn to page 17.
By using our PUF technologies, we can do the usage for the key generation, key storage, and building the Root of Trust, and integrate these functions with cryptographic to perform the security operation to protect AI applications. Okay, in page 18, which is PUFrt, and you can see that inside the box, PUFrt has a function of a unique ID. It has a true random number generator. It also has the key storage. In page 19, please turn to page 19. For the PUFiot inside the box, you can see that PUFiot is actually integrate PUFrt, which is on the lower corner of right-hand side, and which integrates the PUFrt and with the crypto engine, which is on the left-hand side of the box. Perform secure boot encryption and authentication in addition to the key generations. Okay, please turn to page 20.
As illustrated in this table, for the IoT, in this table on the left-hand corner, which is operation procedure of the IoT. In the IoT operation, which you have to boot up the device. Second step is when the system is up, you start to input the data for model training. After the model training, you deploy this model into the edge device. The edge device can use the model to do the inference. When the edge device receives the input data, because there's model there, you can use the model to do the inference and to do the judgment for the subject you want to inference. Left column is the operation procedure. On the table, we show the threat model during this operation, we also show the countermeasure to take care of this threat model.
We will show the security functions which implement here to secure the operations. Finally, we list the solutions, which use our PUF IP as a solution to take care of the security of these operations. In these tables, you can see that for each operation, the PUF-based Root of Trust, for the first row, you can see that the PUF-based Root of Trust can provide key and the unique ID to protect the boot program, and also the authentication during the boot process, and also the device-to-server authentication.
For the second row and the third row in these tables, you can see the PUF IP IoT, which integrates PUF IP with the cryptographic engine, can encrypt data in transit and the data at rest, and provide the signature for the software, and also provide the unique ID, and also provide the tempering resistance function for the model training and the inference operations. Please turn to page 21. In summary, for AI applications, NeoPUF-based hardware Root of Trust provides unique ID, secure key storage, true random number generator, and anti-tampering solution to protect AI assets and operations. In addition, our solution is highly manufacturable with ultra-low cost. Our technology can provide very high value proposition for secure AI applications.
In page 22, in these figures, we also demonstrate that our solutions, PUF-based crypto processors, PUFiot, can perform unique ID generation, secure storage, protect data and the software, secure boot authentication, and also secure communication, and the secure update over the air. Anti-counterfeit to safeguard products throughout the entire life cycle. It's not only in AI application, but for our PUF-based solution, it can also apply to any other electronic device which needs security. Okay, this concludes my introduction on the AI securities.
Thank you, Charles. This concludes our prepared remarks. We now begin the Q&A session. Please submit your questions in the input box on the webcast window. You will enter 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 to collect questions. We'll reply you in a minute. Please stay with us. We have a question from Mr. Chen regarding our PUF solution in Chinese. Then I'll translate to English. He mentioned. NeoPUF is currently the only PUF manufacturer that meets the FIPS 140 requirement of the U.S. Department of Defense for true random number generator. Does this have a significant impact on the future global information hardware security?
Okay. Regarding these questions, I think the PUF requirements, basically, there are four different categories. One is whether our PUF meets the spec. The second is our PUF manufacturable? Third is our PUF reliable? I think you have to meet all these requirements such that it can be applied to the products. Our PUF meets all these 16 requirements, at least this case. Because PUF is a very new technology, and I think for the security application, I think it just began to get noticed from those customers who need securities. I think that we have started to promote our PUF-based technology in North America. I think we get very well accepted on the features of our PUF. I think both basically on the reliability and also stability, and also particularly the availability of many foundries.
Because this result, we just start to promote our technology to the big companies in North America. I think, eventually, if those big companies also accept our PUF for their new generation of the product, I think basically all the other customers, if they see that this becomes a PUFular technology to take care of security, I think it will be very important, and it also becomes a very significant impact to the worldwide securities applications and also security standards.
Another question is regarding the application side. Okay. The business of our subsidiary, PUFsecurity, and the new employee are both developing and increasing rapidly, and the innovative business models worth looking forward. Can you explain this core technology and the business progress in the area of key management in the cloud and the Internet of Things, and the digital signature in blockchain, and the security authentication in financial transactions?
Okay, I think for the application mentioned in the questions, I think our solution can all be applied to these applications because our solution is a very fundamental Root of Trust. All these applications, they do need a very high secure Root of Trust as the basis for their security applications. I think, for example, the key management, as I mentioned a few times, our PUF IP, we call it the PUF Root of Trust. It basically can generate the keys and also store the keys, and also we can provide the true random number generation. Which basically can be used in key management, and also blockchain signature, and also the authentication of the transaction in the financial business.
Another question from David. Okay. There is currently tightness in foundry business. Please could you discuss the trend in wafer pricing for 8-inch and 12-inch. Rick. Pricing.
Okay. Regarding the trend of the wafer price for the 8-inch and 12-inch, as you know, the capacity in foundries now is quite tight. As we learned from our customers, there is more than double-digit percentage of the wafer ASP increase in 8-inch as well as 12-inch. As you know, there's over 70% of the revenue comes from royalty, so we expect the wafer ASP increase will contribute to our royalty income growth.
Yes. Because our royalty rate is fixed, so the per wafer royalty we collect percentage of wafer price. Proportionally, we will benefit from the increase of wafer price.
All right. Thank you for Li-Jeng's remarks.
Okay. The second question is regarding NeoPUF. Currently, it's around 6% of licensing revenue in Q3. Do we have any guidance about the licensing revenue in a year time, and when NeoPUF can contribute to our royalty?
Okay, this is a very good question. As you know, if you follow eMemory for years, and you will find that, in general, we took five to six years to roll out our new technology to the market.
The NeoPUF start to contribute the license revenue from last year. We see more and more customer adoption with our NeoPUF IP. We expect the license revenue in next year will grow further. The royalty from NeoPUF, we expect to have the contribution by the second half of next year. We already have several customer adoption in each product. They are doing the verification. We expect the production will be happening next year.
Okay. Another question. Can we talk about the progress in the advanced 12 nanometer, I think it's below 16 nanometer, and what's our target application? When we expect the fast ramp. The other one, share gains in China foundry. Okay. The other one is our DRAM progress. I think you mentioned about the licensing and the royalty both. The other one will be power management related. I think I want to ask is, what's the content increase compared to 5G and 4G? The other, I think it was just answered, regarding the foundry patents, which will be benefit for the better pricing and the royalty. Okay.
Okay. Let me answer the question one by one. The first one is the progress on advanced 12-inch nodes, the target applications. Currently, as I report, we already moved into 5- nanometer process node, and the 7- nanometer, we already qualified two years ago. In the advanced node, we are now engaging the customer in several fields, including the AI chips, automotive, and the multimedia, and the FPGA-related applications. As to the revenue contribution now in the 12 inch, currently, it's mainly from the OLED and DDI and some multimedia chip, including DTV and the set-top box. We expect fast ramp will come from more adoption in OLED and Wi-Fi and ISP-related product application. We already observe our customer in the ISP product application already moved into the production stage. I think the ISP-related product will contribute royalty very quick.
Another question is about the share gain in the China foundries. For the China foundries, in terms of the revenue contribution, it's less than 10% of our revenue. Because the China foundries still work in the legacy or eight-inch legacy process nodes. The contribution to it on the percentage is quite low. As to the DRAM-related progress. In the 25- nanometer, our DRAM customer already moved into the production, and thousands of wafers are produced every month. We now also work with our customer in 20 nanometer, and we believe the project will be started soon.
The royalty contribution will happen in next year. As to the power management-related question. When the smartphone moved from 4G to 5G, due to the more complicated system requirements, more PMIC will be needed. In terms of the contents, the numbers of chips, there will be three to five times compared with the previous generation. In terms of the wafer area, we believe there were around three times wafer consumption compared with the 4G. That is my answers to the questions.
Can we talk about the reason of the increase in our operating expense? Is this because of higher spend of opportunity in PUF?
Okay. In terms of the operating expenses in the third quarter, as I reported previously, there is a tax exemption approval for deferment caused by a China foundry.
This sector. I think the expense is mainly caused by the manpower increase for the PUF and the PUFsecurity-related R&D development efforts.
The other one will come from Peter. Okay. It seems PUF is gaining good traction. Can we talk about how big a percentage of our total addressable market, because potentially we'll adopt the solution. I think we just mentioned the first royalty will come from next year, second half. Charles, can you talk about how big the opportunity for PUF?
I think our PUF will be mainly used for securities. In the future, market size for security will be very huge. The real number, I cannot tell. Actually, it's from very low-end, like edge device of IoT, to the very high-end, like CPU, data processing unit, and GPU, and also the automotive. They all need securities. I think, if you have noticed, the U.S. government has started to promote so-called Clean Network. So-called Clean Network, they require every device, in order to connect to the network, has to be secure and it has to have some level of security, and the devices also need to be certified as secure devices. I think with both U.S. government and also European Union also promote this security requirement. I think the market size will be very big.
Okay. Another question come from Harold. Can we talk about the competing technology like MRAM threats to our business? Charles, can you talk about MRAM?
Okay. I think the MRAM, we have a cooperation with a U.S. company on this embedded MRAM technology. MRAM, there are two different applications. One is the embedded application, and one is standalone applications. I think currently, for embedded MRAM, it's basically in order to replace embedded flash beyond process 28 nanometer, because beyond 28 nanometer, there's no embedded non-volatile memory solution can be used. MRAM is targeting to take the position on that. Another is standalone MRAM, which will be taking the position to provide the so-called persistent MRAM for the network applications. I think now there's another application trying to use MRAM to replace SRAM. Because SRAM, as the technology getting scaled down, the SRAM, the leakage or the power of SRAM become big because SRAM is very difficult to be scaled.
The MRAM is much easier to scale, and also the cell size is much smaller. Thus, the power consumption is much smaller. In the standalone and also replacing SRAM, which is not our competing technologies. For embedded, because we are also working on the embedded. I think the embedded, if we have the embedded MRAM technologies, then we will expand our applications into the embedded flash applications. So far, we have no applications in the embedded flash application. If we successfully deliver our embedded MRAM technology, then our market application, we will have additional market application that's in the embedded flash applications.
In short, Charles just mentioned, we are not competing with MRAM, but actually, MRAM represents an opportunity for our company, because we have a partner we're working with right now. In addition, MRAM actually require our OTP for repair function, which we are licensed to one of the very big company in the U.S. for their MRAM solution. For us, actually, this represents additional opportunity. Another question from Mr. Gu. What are the current alternatives to securing electronic device? Do we expect a secure solution that can compete with NeoPUF in the next three to five years? What challenge do we face when convincing customers to use our NeoPUF security as a solution? Charles.
Okay. I think the security, there's an evolution on the securities. I think, basically, in the past, most of companies used eFuse. They store the key in the eFuse. They burn the fuse and store the key in the eFuse. That is not secure at all, because if you do the reverse engineering, you can clearly see the data on the burnt fuse. That's why our OTP, NeoFuse, in the advanced node, has started to gain the market on the securities. Also in the next application, in the evolution. For the second evolution is, you can encrypt your keys, but it's now still stored in the burnt fuse. That, again, is not very safe. Now it's moved to, if you store the key into the NeoFuse, then even if you do the reverse engineering, you cannot see the key.
Now, I think, many companies start to move toward this direction. The security beyond the storage in the OTP, because if you store the key, actually, the key is injected from the outside. Okay. It's not very safe. Beyond this level of security, if the company uses the key generated internally by the chip, such as in our PUF, actually, you can generate a key by the chip itself, which is a fingerprint of the chip. Each chip has its own secret. I think that will be the highest Root of Trust. That is the highest reliability. We will expect that, gradually, as the security demand and also the high-level security is required, it will move to use the PUF as the security origins. Okay.
The second question is, the security solution that can compete with NeoPUF in the next three to five years, and actually, we are not the first one to propose this PUF concept. The PUF concept is provided in 2008, and now in the market, the first PUF producer in the commercial is the SRAM PUF. Because the SRAM PUF, I think its significant problem is the SRAM PUF is not stable. That means, if your chip has SRAM as your fingerprint, but most likely, your fingerprint will change with time, with different environments. That will cause your systems to become very unstable and very insecure.
I think, as we start to promote our NeoPUF, I think many customers are very interested in our NeoPUF, because our NeoPUF is very secure and very stable, and which is indeed required for the usage in the laptop. But in this current next three to five years, I think, we still need to convince that customer to use our PUF instead of SRAM PUF. Okay. Another question is, when we convince the customer to use NeoPUF security. I think the challenge we are facing is, customer always asks us to show the track record. This is just like NeoFuse, because it takes the time to educate customers.
Okay, this is the new technologies, and that you can use new technologies to provide higher securities. I think the customer usually would like us to provide our PUF. Although they know our PUF is the most secure PUF, but they're still concerned about how do we provide evidence on the anti-tamper. Because security is kind of a more customized design solutions. Recently, we have had many discussions with customers on their demand on the anti-tamper. Security is very different from selling the OTP. The OTP, everybody knows, is for the storage functions. For PUF, it's used for the security functions. Every company has its own security functions. Okay.
The other question comes from Mr. Chu. Do we have any idea for what if the 12-inch production product mix up to 50% of the total revenue? How about the growth rate of the total revenue? Okay.
Okay. This is a very interesting question. Yeah, when the 12-inch product ratio is up to 50%, it means that we will have more product usage in the segment. As I mentioned that we now are working with customers in the OLED, ISP, and the multimedia and the connectivity product applications. It means that at that time, the growth rate will be accelerated further compared with where we are now. I think when the 12-inch wafers royalty take more than 50% of the contribution, the growth rate will be bigger compared with our current situation.
Okay. As a reminder, should you wish to raise a question, please submit your questions in the input box on the webcast window, and you will answer it. 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 you mentioned in local conferences, we are transforming the company as a security as a service. Can we talk more about this, Charles?
I think, as you know, that we continue to develop our PUF-based security solution, and from PUF Root of Trust and PUFiot, and then PUF secure element. The coming quarter and also the next year, in our roadmap, we will develop the so-called PUF-based Hardware Security Modules. For Hardware Security Modules, which are used in many servers and also big systems to provide the security functions for the network applications. I think in our roadmap, as we continue to make our PUF-based security more comprehensive, and also 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 security very easy and very convenient. At that time, we will be going to the security service.
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 IoT become very PUFular and also the blockchain become PUFular, then many individuals and also many companies, they would like to request such kind of service. I think that is our goal. Eventually, in the future, our solution should be able to provide very high security, but with very low cost for this kind of service to the customers.
Another question from David regarding the wafer pricing. As we just mentioned, double-digit wafer price increase next year. What's the actual wafer price increase for the Q3, the second quarter?
I think that regarding the wafer price, most of the foundries will discuss with customer for the wafer price at the beginning of every year or by the end of every year. The wafer price increase, we expect to happen from next year. It means that the wafer price increase contribution to eMemory will happen in terms of a royalty contribution 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. We take a very conservative practice. If the account receivable, we didn't receive the cash flow in Hong Kong on time, then we will put on as expense. Because this is the largest foundry in China, and the money for them is quite small.
They took this, it's just the practice postponed, but we still put on the expense. Once the money into our account will be reversed, which we expect will happen this quarter. The expense going to be reversed back on the current quarter. Does this answer your question? Another question regarding Arm. We are working with Arm on the CryptoIsland, which is the highest standard for Arm solution. Why Arm not produce their own security IP and working with eMemory? Can Rick talk about that?
Okay. Regarding this question, let me answer with three aspects. For the first one is, eMemory's OTP offers a better security level compared with the traditional eFuse approach, as I mentioned in my report previously. Arm suggest customers to work with eMemory to adopt this higher secure storage OTP solution to protect their keys. Secondly is, eMemory is a pure play memory provider. Compared with the others, eMemory will be more neutral, and it can be a supporter to Arm in its CryptoIsland solution. Third, customer and Arm would like to work with eMemory and the PUFsecurity solution because our PUFrt perform much better compared with the some function in the TrustZone. Customer strongly request Arm to work with the PUFsecurity solution to enhance its product performance. This is the reason why Arm work with eMemory for the security-related segments.
Should you wish to raise a question, please submit your question in the input box on the webcast window, and you will answer it here. We'll collect your questions, and we'll get back to you. Please hold on.
Okay. Answer, Tim. Okay. The total size of the credit loss is TWD 11.23. The actual dollar total account receivable. This just the amount they didn't pay into our account.
New TWD .
Taiwan dollar. It's TWD 11.23 million. Okay. We took 100% as an expense, so the amount, as I mentioned, is TWD 11.23 million. Okay. Another question from Jason. Rumor has it that Korean Samsung is planning to launch their flagship phone early. Does eMemory continue to cooperate with the Korean brand on their new product?
Okay. Currently, we still work with this customer for the new product development
Not only the product development, we also support customer for their product production. The project with the Korean customer is unchanged, and we will keep on going to support them with more projects.
Okay. Actually, we have more than one product chip solution using eMemory IP for that company, not only for their smartphone, but we also work with their foundry. Foundry manufacturer is our customer, but also the chip company, Samsung LSI is also our customer. We spend more and more application to embed it with our IP in the future.
As a reminder, should you wish to raise a question, please type out your question in the input box on the webcast window. We will collect your questions and will get back to you. Please hold on. In the interest of time, we now begin closing comments. Charles, please proceed.
Okay. Thank you again for your patience and the support for eMemory. We will continue to work hard on innovation IP and security solutions for our customers and bring higher returns for our shareholders. Thank you.
Thank you, ladies and gentlemen. Before we conclude today's conference, please be advised that the recording of today's conference will be accessible within two 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.