Good afternoon, and welcome to eMemory's Q4 2023 Webcast Investor Conference. Joining us today is our chairman, Dr. Charles Hsu; president, Mr. Michael Ho; head of IR, Ms. Lijuan Chen; and the director of the finance department, Ms. Teresa Kuo. The format of today's event will be as follows: First, eMemory's chairman, Dr. Charles Hsu, will give an opening remark. Afterwards, President Mr. Michael Ho will summarize our operations, followed by our business outlook. Next, Dr. Charles Hsu will give a talk titled, "Enhancing Security from AI Servers to AI Edge Computing." Then, we will give a demo of our improved IR website. We will conclude today's conference with a Q&A session, where our management team will 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 after the conference is finished. For more information, please visit our company's website 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 subject to risk factors associated with the semiconductor and IP business. Please refer to the cautionary statement on page three of today's presentation. Now, I would like to give the floor over to eMemory's chairman, Dr. Charles Hsu.
Thank you, Minnie. Good afternoon, everyone, and thank you for attending our conference call today. With a strong technology licensing momentum and the new processes and applications gradually entering production, our company has begun to enter the next multi-year growth cycle. eMemory's technology licensing is a platform-based business. We develop our technologies at the foundry's process platform. As customers use this process, we collect royalties by per-wafer basis. Over the past 20 years, we have established 621 process platforms, ranging from 0.5 micron to 3 nanometer in 25 foundries worldwide. The number of new technology license cases and the technologies under development and the verification last year doubled compared to the past. This indicates our new technologies, such as MTP and the PUF-based security, are rapidly advancing and contributing to the expansion of our technology platforms.
Consider these technology platforms as similar, similar to the concept of production capacities. That is, more technology platforms, more wafer running, and more royalties. Additional technology platforms and the process nodes will contribute and drive our royalty growth. The newly established technology platform, with an advanced process incorporating PUF-based or process involving MTP-related technology, will charge royalties per wafer much higher than the average, accelerating the growth of our royalties. Therefore, we are very optimistic about the future. Later, I will address a topic that everyone is very concerned about, the inquiry into whether our IP have been adopted in generative AI-related applications. Next, I would like to invite our President, Michael Ho, to share our Q4 performance and the future outlook.
Good morning, everyone. Now, let's begin with our 2023 Q4 financial results. The Q4 revenue was TWD 899 million, up 14.2 sequentially, but down 0.4% year-over-year. Operating expenses were TWD 359 million, down 2.9 sequentially, mainly attributable to the decrease in bonuses. Operating income was TWD 540 million, with an increase of 29.3% sequentially and an increase of 0.9% year-over-year. Operating margin increased by seven percentage points sequentially, and increased by 0.8 percentage point year-over-year to 60%. However, due to the strong appreciation of the Taiwan dollar at the end of December, our U.S. dollar fixed deposits incurred an exchange loss of TWD 95 million.
As a result, our net income, amounting for TWD 404 million, experienced a decrease of 0.5% sequentially and a 6.2% year-over-year. EPS for the quarter was 5.41 TWD, and the ROE was 53.1%. Next, let's move on to the revenue contributions by licensing and royalty. Licensing in the Q4 accounted for 30.5% of the total revenue, up 5.7% sequentially and 33.6% year-over-year. Royalties in the Q4 contributed 69.5% of the total revenue, increasing 18.4% sequentially, but decreasing 10.4% year-over-year.... Total revenue for the Q4 increased by 14.2% compared to the previous quarter, but decreased by 0.4% compared to the previous year.
For the full year of 2023, total revenue decreased by 5.2% compared to the previous year. Total licensing and the royalty increased by 24.8% and decreased by 14.1%, respectively. With that, I will comment on our revenue contribution by specific IPs. NeoBit accounted for 26.3% of total licensing revenue in the Q4, increasing 1.4% sequentially and up 97.9% year-over-year. Its royalty accounted for 21.9% of total royalty, up 17.1% sequentially, but down 41.1% year-over-year. NeoFuse accounted for 42.8% of the total licensing revenue in the Q4, up 18% sequentially and up 18.3% year-over-year.
In terms of total royalty revenue, NeoFuse royalties increased by 18.2% sequentially and 4.7% year-over-year, accounting for 75.5% of total royalties. PUF-based security IPs contribute 10.9% of licensing revenue, decreasing 47.9% sequentially and decreasing 29% year-over-year. Its royalties accounted for less than 1% of total royalties, up 87.2% compared to the previous quarter, but down 97.8% compared to the previous year. For MTP technology, accounted for 20% of the total licensing revenue, up 74.4% sequentially and up 99.1% year-over-year. Royalty from MTP increased 37.1% sequentially and up 51.5% year-over-year, accounting for 2.6% of total royalties.
For the full year of 2023, the licensing and the royalty revenue are as follows: NeoBit licensing revenue increased by 48.2%, while royalty revenue decreased by 39.8%, accounted for 25.5% of total revenue. NeoFuse licensing revenue increased by 4.3%, and the royalty increased 3.2% year-over-year, contributing to 63.3% of the total revenue. PUF-based security IP, licensing revenue increased 13.4% year-over-year, but royalty revenue decreased 87.1%, accounting for 4.3% of the total revenue. MTP technology, licensing revenue increased 88.4% year-over-year, but royalty revenue decreased 38.1%, accounted for 6.9% of total revenue. Now, let's look at the royalty for 8-inch and 12-inch wafers.
For 8-inch wafers accounted for 37.8% of royalties, up 23.4% sequentially, but down 28.5% year-over-year. 12-inch wafers contributed 62.2% of royalties, increasing 15.5% sequentially and up 5.9% year-over-year. In total, 149 product tape-outs were completed in the Q4. We will provide more information in the management report. In the next section, I will address our future outlook. For licensing revenue, strong licensing demand will continue to drive the growth momentum of licensing fees. For royalty revenues, we expect the royalties in the Q1 to be temporarily affected by a customer moving to a more advanced node, resulting in a single-digit quarter-by-quarter decline, but growth year-over-year. Overall, revenue will decline by single digits quarterly, but will increase by double digits yearly.
Moving to the new tech IP technology and the business development. First, specialty process like a high voltage, high-k/metal gate, embedded flash, and emerging memory, there will be more foundry technology licensing this quarter. The per wafer royalty ASP will increase due to the ongoing development into the more advanced nodes. The continued adoption of ReRAM by more customers will drive increasing application and contribute to royalty growth in the future. Second, advanced process. Last quarter, we successfully licensed our 3-nanometer OTP and PUF technology to a U.S. foundry customer, and we'll be collaborating on the development of the most leading process in the future.
Furthermore, our PUF-based security has been successfully adopted in a leading U.S. high-performance computing HPC customer's related applications. There are multiple projects in the 3-, 4-, and 5-nanometer under progress. This concludes my comments. Next, I will pass the time to Charles. Thank you.
Okay, in the next several minutes, I'm going to talk about the enhancing data security from AI servers to AI edge computing. AI has experienced widespread adoption across various computing environment, ranging from edge devices to servers. These AI systems comprise a multitude of essential components, such as the CPU, GPU, DPU, accelerators in charge of computation and the processing, as well as storage components like SRAM, DRAM, Solid State Drive, and hard disk drive, and the peripheral devices, such as sensor and actuator. Our technologies and IPs, including OTP, MTP, and the PUF-based root of trust, have been deployed on all the mentioned components, enhancing the overall functionality and the security of AI system.
Also, solution not only contribute to bolstering data security in memory components, but also prove instrumental in enhancing yield. There are different types of memory in the memory hierarchy of computing system, spanning from SRAM, DRAM, Solid State Drive to hard disk drive. For all AI and the high-performance computing, high-density SRAM and DRAM are needed, and our OTP IPs play a critical role in repairing the broken bits of memory to improve the yield. In addition, the CXL memory facilitates high-speed CPU to device memory access. Security is also required in the CXL memory controller. Our PUF-based security solution are deployed to enable security functions and ensure robust, secure data transmission. Another contribution to our IPs to the DRAM module is EEPROM or MTP, embedded in DIMM, DIMM cards, SPD Hub.
The EEPROM is used to store the configuration information for the DIMM, for the DIMM and the DRAMs. And for nonvolatile memory storage in the Solid State Drive and the hard disk drive, our security solution are embedded in the disk controller to ensure the protection of the stored data. All the aforementioned memories are used in AI servers, and our IP have been deployed into the memory system of this AI servers. And in addition to the memory system I just mentioned, the computing elements such as the CPU and the GPU will transition toward confidential computing to protect data used in computation and the processing.
As shown in this figure, Root of Trust security solution are embedded not only in the CPU and the GPU, but also in the memory controller, such as Solid State Drive and the hard disk drive, and the CXL controllers. For the fast response of IoT device at the network edge, AI are frequently used in edge device. Similarly, our IP used in AI servers also serve the same functionality in AI edge devices, as shown in this slide.
However, there are additional components in AI edge devices compared to the AI servers that will leverage our IPs, including actuators and the sensors and the embedded flash. Our OTP is used for trimming functions on analog circuit design for sensors and actuators. Additionally, our NeoFlash in the near future will be utilized to store the AI model and the program code.
So in summary, while eMemory does not directly develop AI accelerators, our IP plays a very critical role in AI servers and AI edge devices. Various components such as CPU, GPU, SRAM, DRAM, data storage, controllers, sensors, actuators, and more, utilize our IP to enhance security functions and improve yield. The wide adoption of the AI application will speed up the utilization of IPs and make, eMemory grows faster, for example, every AI chip needs SRAM repair, and it is a very big business. This concludes my remark. Next, I will hand the floor over to Minnie.
Thank you, Charles. This quarter, my team and I have been dedicated to improving the IR website to ensure that all of our resources are accessible. We want to make our information transparent to all investors, so we have prepared a website demonstration to show you some of the improvements we've made, and we will show the video. The main enhancement on our IR website is the Q&A page. The purpose of this page is to address investor concerns and answer questions that I'm sure you've all had. As part of the improvement, we've divided the Q&A page into two sections.
The first is the Commonly Asked Questions page, encompassing questions gathered during investor meetings that revolve around high-level aspects of our company, business model, and technologies. We'll continuously add more questions to this section as they arise to keep everyone on the same page.
The second page, titled More Questions, houses questions mainly asked during our earnings calls, which are more specific and categorized for easy viewing. Notably, we've improved our search function, located at the top right corner. This enhanced search allows you to enter any keyword, such as PUF, and all the relevant materials will be displayed in the search results. Questions from the Q&A section will appear first, so you can see if your questions have been answered already, followed by other resources, including product pages and articles. More importantly, scrolling down reveals resources from PUF Security's website, offering a comprehensive search result for any keyword that you enter. If you have questions or suggestions for our website, we encourage you to visit the bottom of the Q&A page, where you can fill out the form to ask us anything.
Questions that may benefit other investors will be periodically added to our Q&A page. Many investors also inquire about our tape-out numbers. I'd like to take this opportunity to explain that we disclose our tape-out numbers and their corresponding applications each quarter in the management report. You can access the report through the Financial Reports page or the Management Report button on the IR homepage. Lastly, if you're not already on our mailing list, we invite you to subscribe to our newsletter using the button on the right to stay updated on our company news. We're actively working on further improvements to the company website and welcome any suggestions and feedback. Please feel free to fill out the form or contact me with any suggestions, and we will do our best to implement them.
I hope you find this information helpful and take this opportunity to utilize all the resources on our IR website. Thank you. That concludes our prepared statement. Next, we will enter the Q&A session. We will now begin the Q&A session. Please submit your questions in the input box on the webcast window. All of our questions will follow the format of answering the Chinese version first, followed by the English version. We will now collect the questions and begin our Q&A session.
[Foreign language]
Our company's OTP in mature processes has the largest applications, like display driver, PMIC and various kinds of such sensors. Currently, they all have become a standard configuration, so basically as long as foundries want to expand production, they will come to do technology licensing with us. So we expect it will bring more of this technology licensing revenue. Then as for after capacity expansion, causing supply exceeding demand, and to foundries' this foundry price producing price-cutting this pressure, this part will follow existing customers moving to more advanced processes, to drive per wafer royalty's growth, and offset its impact.
Then existing wafer fabs for survival can only develop high added value some special processes, for example adding our MTP, Embedded Flash and PUF etc. Then like the situation now happening, that MTP and security related royalties in fact are much higher than OTP, that plus high unit price advanced processes start to have some contribution, that we think average per wafer royalty still will go up. Then plus geopolitical some considerations, that in Europe, United States, Japan also synchronously expanding capacity, that not only China, that causing our big customers future need local production, that also because each region's factories all synchronous, will step build our IP, convenient this chip's customers use, will make our IP's stickiness higher, that our business's moat will be deeper and broader. Thank you.
The question that was asked was: the aggressive expansion of Chinese foundries may put severe, severe downward pressure on wafer prices. How will this affect your company? Michael?
OTP Technology is now a standard for applications like a display driver, PMIC, and various sensors in mature process. As foundries expand, the need to license our technology is expected to boost our licensing revenue, while the industry faces oversupply and pricing pressures due to the foundry expansion. The effect it has on our company will be offset by the increase in royalties per wafer, as existing customers move to more advanced process. In order to survive, existing foundries are focusing on developing specialty process with high value add, such as MTP, embedded Flash, and PUF. As is happening now, our royalties for MTP and PUF based are much higher than OTP. Furthermore, the increasing contribution from the higher wafer price of advanced nodes leads us to believe that the average royalties per wafer will continue to rise.
Foundry expansion in Europe, the US, and Japan are driving the need for local production by large customers in the future. Deploying our IP simultaneously in foundries across each region will facilitate convenient adoption for customers, driving increased usage and expanding our business across diverse customers and applications. Thank you.
Now, most of the chip customers, roughly except for NVIDIA, the price pressure is very great. So, will they consider using this free eFuse to reduce costs? Michael.
[Foreign language]
The question was: Will cost constraints push your customers to use eFuse, which is free of charge, to reduce expenses? Michael.
Our customers developed their first generation products using foundry's eFuse. However, in response to competitive pressures and the need for improving cost and performance, they moved to transition to our IPs. Our OTPs offers improved yield and reduce the chip area compared to eFuse, and enable customers to protect their intellectual property, like algorithms stored in the chip. The success of this has led to continued adoption of our IPs in subsequent generation of products. Thank you.
[Foreign language]
Over the past year, discussions about the slowdown of Moore's Law have become more prevalent. Will this affect your rate of improvement in foundry penetration? And considering that many IP replacements occur during process upgrades, could the deceleration of Moore's Law potentially have a negative impact on your company? Michael.
Since 2014, we have been developing IPs for technology below 16-nm FinFET process. Typically, the foundry provide in-house eFuse for the initial customers for the most of the leading process. After the process stabilized, third-party IPs like ours are permitted for the technology verification, often occurring after the first batch of customers have entered in mass production. This means that third-party providers, like us, need to wait for those migrating from the previous generation to adopt our technology. As Moore's Law slows down, the launch time for the next generation extends, creating a longer interval of time, like current 2-nm and the 3-nm. This year, once we successfully verify the 3-nm OTP, we still can catch customers seeking for the most advanced process. Overall, this is positive for us.
Moreover, there are always customers migrating to more advanced process node, such as moving from the 7 nanometer to 5 nanometer, or 16, 12 nanometer to 7 nanometer. As long as we have completed process verification, there will still be many opportunities for customers adoption. Even with the mature process, these opportunities remain unaffected by the slowdown or change in Moore's Law. Thank you.
[Foreign language]
In Charles' talk just now, he mentioned that, our IPs play an important role in memory. Since memory is a huge market, how are we progressing in this area? Charles?
Our DRAM royalties will increase significantly, driven by the increase in production of existing customers and the new customers ramping up production.
Just now, as mentioned, this is the royalty we received in the Q1, which is the foundry wafer out from the previous quarter. There is a customer process conversion. Can you talk about which aspect of the customer application it is? Michael.
[Foreign language ]
The question was: you mentioned a customer moving to a different process in quarter one. Could you provide details on the specific application associated with this migration? Michael.
It's many major OLED DDI customers switching from the 40-nanometer to 28-nanometer, leading to a temporary decrease in the 40-nanometer shipment. However, as the 28-nanometer and other new process applications begin production, royalties will soon increase. Thank you.
[Foreign language ]
The chairman recently introduced the concept of production capacity, highlighting the increasing number of foundry capacity will increase our total addressable market. We have been actively establishing our technology platform at these newly built facilities. Can they directly transform to our royalties in the future? Charles.
Yes, our total addressable market will increase as the world expands foundry capacity and move toward more advanced technology. Our technology coverage in each foundry will increase as more technology process develop and the more fab are established. With each generation of technology, there is a need for the continuing continuity to move to the next generation. Therefore, our technology increasingly available in each foundry. Historically, our royalty income for each foundry have experienced an upward trend. Consequently, as the number of fab and technology platform increases, we anticipate a corresponding growth in license fee, NRE, usage and the royalties.
How much do you invest in R&D expenses? Because it seems like there isn't very much. OK, then please have Michael answer.
[Foreign language]
[Foreign language]
The question was, how much do you spend on R&D? Michael?
Over 70% of our expenses are allocated to R&D. These expenses are mainly comprised of employee salaries, software, other equipment, as well as application and maintenance costs related to the patents. Our R&D expenses are mostly subsidized by our partners, a key factor contributing to our high operating margin. The high cost associated with testing and the qualification, including the foundry shuttle, mask, test chip, and more, are fully covered by our foundry partners. They not only cover this cost, but also pay us license fee. A similar arrangement exists with the technology partner. Thank you.
[Foreign language]
In the past 10 years, your employees have increased by an average of 5% each year, while your revenue increased by an average of 20%. Additionally, your company also managed to develop many technologies. Why is this the case? And is the goal of increasing staff in the future still the same? Michael.
Main reason why we can keep developing new technologies by managing to keep our employee headcount relatively the same, is because our IP is reusable. Once we qualify our IPs on the foundry platforms and register it on our IP library, customers can use our IPs anytime, unless they require customization. This means that our R&D team can always focus on the developing the new technology and on the more advanced nodes. The other main reason is that, because our unique business model, since the 70%-80% of revenue is contributed by royalty.
A royalty-based business drives the revenue as more customers adopt our IPs without increasing the employee headcount. In the future, our hiring plan will mainly revolve around the advanced process projects and the special projects such as NeoFlash, RRAM, and security. We will maintain a similar hiring pace. Thank you.
[Foreign language]
The question was: The Forex losses in the Q4 of last year seemed to have an impact on your earnings. How do you plan to address this matter? Michael.
Foundry partners have suggested paying royalties in Taiwanese dollars based on the exchange rate at the payment date and time. Other customers directly pay us in U.S. dollars. We deduct necessary fees, convert the amount to NT dollars, and keep the remaining sum in U.S. dollar time deposits to gain the higher interest compared to put in NT dollar.... The foreign exchange losses incurred in December will be partially offset this quarter as the NT dollar depreciation depreciated early in this year. We will review our current currency accordingly. Thank you.
[Foreign language]
[Foreign language]
You mentioned that existing customer applications are moving to more advanced process nodes. Which applications have experienced the migration to advanced nodes? Michael.
Taking OLED DDI, for example, the main process node in recent years has been the 14 nanometer. However, this year marks a significant move toward the 28 nanometer production, with future plans for development in the 16- and 17-nanometer. In the case of PMIC for smartphones, which were previously mainly in the range, like a 0.18- and 0.13-micron generation, some will move to the like 90- and 55-nm production. Similarly, TV SoC used to be in the 12- and 14-nanometer. One of our customers took the lead to move to 6 nanometer to gain the market share from the 12- and 14-nanometer players. These transitions are all driven by the need for customers to incorporate additional features, achieving faster speeds and reducing power consumption to enhance the product competitiveness. Thank you.
[Foreign language ]
Yes, there are multiple customers currently proceeding. We also cooperate with EDA companies to put our OTP design in their SRAM compiler, allowing customers with high density SRAM repair needs to use it.
Is there any progress on SRAM repair? Charles.
Multiple customers are working with us, and we are collaborating with the EDA tool company to incorporate our OTP into their SRAM compiler to facilitate customers adoption.
Uh, what niche does the company have in developing embedded RRAM and MRAM? Michael.
[Foreign language ]
What kind of advantages does eMemory have in developing RRAM and MRAM? Michael.
Strengths lie in our strong circuit design and device development team. With years of accumulated design experience, numerous patents, and a profound understanding of customer needs, we excel in quickly assisting foundries in customizing specific specs for the RRAM and MRAM. Our expertise extends to design IPs tailored to meet customer requirements, and we are able to quickly complete the qualification on foundry process so that customers can use our IPs in their designs and move forward toward mass production. We have already completed the verification at the major foundries, and the customers have begun to adopt our IPs in their chip designs. Currently, we are moving toward advanced process. Thank you.
If a customer's product uses many of the company's technologies at the same time, how is the royalty calculated? Michael.
[Foreign language]
Is it possible for customers to simultaneously use different technologies from your company? And how do you charge royalties in that case? Michael.
Customers do have many products that simultaneously utilize different technologies from our company, such as OTP plus PUF, OTP plus MTP, or MTP plus MTP, to meet their spec, product functionality design requirements. When the product use the multiple of our technologies, we will charge relevant royalties for each different technology respectively. Thank you.
Uh, recently the Taiwan semiconductor industry has some merger cases. Does eMemory consider mergers, mergers to increase the breadth of products and technology, to drive the company to accelerate growth? If yes, what technologies or products would be considered? If no, what is the reason? Ma, Charles, please answer.
[Foreign language ]
The question was lately, there has been instances of M&A in Taiwan semiconductor industry. Have you considered expanding your technology portfolio through M&A to expedite your growth? And if yes, what technologies or IP products are under consideration? If not, could you provide more insight into the reason behind this decision? Charles, can you offer an explanation?
Okay, our company has many groundbreaking non-volatile memory invention and the technologies that surpass all those of other companies globally. As long as we continue to develop this innovation and the technologies along our roadmap, we can accelerate our growth rate. Currently, acquiring other companies is not under consideration.
[Foreign language ]
[Foreign language ]
The question was: eMemory has been working on MTP for a long time. What is the reason behind MTP slower takeoff? And why do you believe that MTP, MTP is now entering its growth phase? Michael.
The reason MTP faced a slow adoption is because in terms of memory, cell architecture, and the peripheral circuits, MTP is more complex. The complexity at a fundamental physical level result in a longer lead time between the technology development and the customer production.... To develop the best solution, the MTP technology specifications needs to be aligned with customer ICs, and the MTP technology itself should offer cost-effective and competitive advantages over the external alternative, alternatives. However, each automation in IP specification require re-qualification and development with the foundry process technologies, typically taking a few years before achieving significant customer volume shipments. Moreover, scenarios where multiple rewrites and embedded are imperative alternative solutions with a higher specification and maturity, such as e Flash, are available.
To choose MTP, there must be comparing reasons, such as the cost considerations or challenges in integrating eFlash into the specialty process, like a high voltage and BCD. However, MTP is gradually gaining momentum due to the shift in customers and market applications demands toward embedded MTP solutions. This shift aims to enhance in-house chip in terms of both the functionality and the cost effectiveness. Various mainstream, mainstream requiring MTP are progressively increasing.
Notable example including the DDR5 SPD, which require 100K rewrite times, making embedded EEPROM necessary. The enhanced complexity of the new SPD features makes external EEPROM use unsuitable, and eFlash is less fitting from a cost perspective, thereby providing a favorable entry point for MTP. Other applications, such as ePaper drivers, are leaning toward MTP due to the need for regular adjustments in more complex panels. Thank you.
[Foreign language ] Michael。
[Foreign language ]
Will you benefit from the 12-nanometer project between Intel and UMC, Michael?
UMC is our second-largest foundry customer. We also license our technology to Intel 3nm in Q4 last year, and we can keep up with their technology development in the most leading process. We are optimistic about the cooperation between two customers. Thank you.
Samsung is the largest customer for the company's mid-end chips. May I ask if the S24 AI phone launched by Samsung will use the company's IP? Will the cooperation expand to the memory-related field? Michael.
[Foreign language ]
Samsung is your largest end-chip customer. Does Samsung's S24 mobile phone use your IPs, and will their memory-related products also include your IPs? Michael.
Currently, our IPs are adopted in the ISP and OLED DDI. In the future, more applications will also adopt our IPs, such as PMIC. Memory related has already adopted our technology for the DDR5 module related chips in the SPD Hub and the PMIC. In addition, we are developing the embedded memory-related technology in their own FAB, which will gradually move its way into more products. Thank you.
In the interest of time, we will ask our last question.
[Foreign language ] Charles [Foreign language]
eMemory [Foreign language ]
What security problems does your NeoPUF solution solve? If not NeoPUF, then what is the alternative? And why will NeoPUF be increasingly adopted in the future? Charles.
NeoPUF is eMemory's NeoPUF solution leverages the unique physical and comparable variation that occur in the silicon manufacturing process to solve multiple security issues, such as device authentication. NeoPUF generates a unique identifier for each device based on its inherent physical and comparable variations. This unique identifier can be used for the device authentication, ensuring that only legitimate devices are authorized to access a system or network. The second is for key generation. NeoPUF can be used to generate private keys that are unique to each device to enhance the security of cryptographic protocols such as encryption and digital signature. And the third is for the anti-counterfeiting. The uniqueness of the NeoPUF can be used to detect counterfeit or cloned devices.
By verifying the password stored in the NeoPUF during the authentication process, it becomes challenging for attackers to replicate the device identity. And the fourth is for the anti-tampering. NeoPUF generates a private key and a public key pair, enabling the signature function to prevent files from being tampered with. And the fifth function is random number generation. The inherent unpredictability of NeoPUF can be used to generate random numbers, which are crucial for various security applications, including cryptographic protocols and secure communications. If the chip does not use PUF, random number must be generated by a random number generator, we call it the TRNG. However, TRNG relies on the computation between two identical circuit to generate random numbers and result in several problems.
First, the randomness will be insufficient, and the generated random number may not be unique. The second, the method for generating random number is easily influenced by surrounding variables such as temperature, voltage, and noise, leading to the result is inconsistent.
Thank you. We will now begin the closing comment. Charles, please proceed.
Okay, thank you for attending our conference. For more information about our PUF-based security IP and the technology, we encourage you to visit PUF Security website at the www.pufsecurity.com, and check out our articles and other materials. Thank you once again for your patience and support for eMemory. We will continue to work hard to on the technology and IP innovation and the PUF-based hardware security solutions for our customers and bringing higher returns for our shareholders. Thank you.
Thank you everyone for joining us today. Please be advised that the conference recording will be accessible later. You may now disconnect. Goodbye, and have a good day!