Welcome everyone to Parade Technologies, Ltd.'s 2003 Q2 webcast investor conference. Investor relations of Parade Technologies, Mr. Ji-Ming Chang, will present 2023 Q2 financial results first. During the presentation, all lines will be placed on mute to prevent background noise. After the presentation, there will be a question and answer session in English by CEO, Dr. Jack Zhao and Vice President of Finance, Mr. Kuo -W ei Wu. We also will remain last 15 minutes for those who would like to ask questions in Chinese. Please follow the instructions given at that time if you would like to ask the question.
Welcome to the Parade Technologies, Ltd. 2003 Q2 financial results explanation meeting. Today's meeting will first be hosted by Investor Relations, Mr. Yo-Ming Chang, who will report Parade's Q2 financial results for 2003. During this report, all phones will be in mute mode. After the report, we will arrange for CEO, Dr. Chao and Vice President of Finance, Mr. Kuowei Wu, to take your questions in English. Additionally, we will reserve 15 minutes at the end to take your questions in Chinese. Now I would like to introduce Mr. Yo-Ming Chang, Investor Relations of Parade Technologies. Mr. Chang, please begin.
Thanks, Jason. Welcome everyone to Parade Technologies 2023 Q2 webcast investor conference. Parade Technologies Q2 2023 consolidated revenue was $104.18 million, and the net income was $13.98 million. Its both basic and fully diluted after-tax earnings per share were $0.18 and $0.18, respectively. These results compared to consolidated revenue $216.7 million and a net income of $60.94 million, or $0.76 and $0.75, the basic and the fully diluted share in the year-ago quarter. In U.S. dollars, the Q2 revenue increased 4.19% sequentially and was down 51.93% year-over-year.
The gross profit in the Q2 of 2023 was $45.8 million, an increase over 3.98% from the previous quarter, and a decrease over 55.26% compared to the same quarter of last year. On May 24, 2023, Parade announced the availability of the PS8833 USB4 Thunderbolt 4 DP 2.1 retimer, and the PS8836 USB 3.2 DP 2.1 retimer for commercial and consumer PCs, host systems, and peripherals. PS8833 features full capabilities of USB4, DisplayPort 2.1, and Thunderbolt 4, with 50% reduction in power consumption. Its pin compatibility with the PS8830 USB4 Thunderbolt 4 retimer currently shipping in customer systems, greatly simplifies OEM design for product longevity.
PS8836 offers USB 3.2 Gen 2x2 with DP 2.1, is pin compatible with the PS8833. The PS8833, PS8836 pin compatible solutions allow OEMs to easily offer a full range of USB4 and USB 3.2 product offerings. On July 26, 2023, Parade has demonstrated the lowest latency in the industry with its new PS8936 PCIe/ CXL retimer solution. PS8936 retimer chip developed for PCIe 5 and CXL, supporting existing bidirectional lanes. In addition to supporting the 32 gigabits per second data rate offered by the PCIe 5 specification, it also supports all lower data rates to provide backward compatibility with earlier PCIe revisions. The promise of CXL is to enable scalable, high-performance, coherent memory, while CXL can rely on continued advances in PCIe to address its ever-increasing bandwidth needs.
At the same time, it's a core critical factor for memory performance. As larger CXL architectures are built, they will inevitably encounter situations where signal integrity places limits on both scale and flexibility, and the retimer will be needed. With Parade's patent low latency retimers, these systems can be built without compromising signal integrity or performance. Based on the current business outlook, Parade is providing the following guidance for the Q3 of 2023: revenue is between $107 million-$190 million. Gross margin is between 43%-57%. Operating expense is between $30 million-$33 million.
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本 公 司 二 零 二 三 年 第 二 季 合 并 营 收 为 美 金 一 亿 零 四 百 一 十 八 万 元 ， 税 后 净 利 为 美 金 一 千 三 百 九 十 八 万 元 ， 除 权 后 基 本 与 稀 释 每 股 税 后 盈 余 为 美 金 零 点 一 八 元 ， 相 当 于 新 台 币 五 点 四 四 元 ， 及 美 金 一 点 一 八 元 ， 相 当 于 新 台 币 五 点 四 零 元 。
而 去 年 同 期 合 并 营 收 为 美 金 两 亿 六 百 七 十 万 元 ， 税 后 净 利 为 美 金 六 千 四 百 万 元 ， 除 权 后 基 本 与 稀 释 每 股 税 后 盈 余 为 美 金 零 点 七 六 元 ， 相 当 于 新 台 币 二 十 二 点 五 一 元 ， 及 美 金 零 点 七 五 元 ， 相 当 于 新 台 币 二 十 二 点 一 八 元 。
二 零 二 三 年 第 二 季 合 并 营 收 较 前 一 季 增 加 四 点 一 九 percent， 较 去 年 同 期 则 减 少 五 十 一 点 九 八 -- 九 三 percent。 在 营 业 毛 利 方 面 ， 本 公 司 第 二 季 营 业 毛 利 为 美 金 四 千 五 百 八 十 万 元 ， 较 上 一 季 增 加 三 点 九 八 percent， 较 去 年 同 期 则 减 少 五 十 五 点 二 六 percent。
西 元 二 零 二 三 年 五 月 二 十 四 日 ， 普 锐 公 司 发 表 PS8833 USB4、Thunderbolt 4、DP2.1 重 定 时 器 和 PS8836 USB 3.2 DP2.1 重 定 时 器 ， 提 供 商 用 和 消 费 型 个 人 电 脑 、 主 机 系 统 和 周 边 设 备 应 用 。
PS8833 具 备 了 USB4 DisplayPort 2.1 与 Thunderbolt 4 的 完 整 相 容 性 ， 并 且 与 其 针 脚 兼 容 ， 且 正 在 量 产 中 的 USB4/Thunderbolt 4 重 定 时 器 PS8830 相 比 ， 降 低 了 五 十 percent 的 功 耗 ， 来 协 助 OEM 客 户 大 幅 度 地 简 化 设 计 与 延 伸 产 品 寿 命 。
PS8836 则 能 支 援 USB 3.2 Gen 2x2 与 DP2.1， 并 与 PS8833 针 脚 相 ， 相 容 。PS8833、PS8836 针 脚 相 容 的 解 决 方 案 ， 能 够 协 助 OEM 客 户 简 化 设 计 ， 并 提 供 全 系 列 的 USB4，3-- USB 3.2 产 品 。
西 元 二 零 二 三 年 七 月 二 十 六 日 ， 普 锐 公 司 向 业 界 展 示 了 有 着 同 业 最 低 延 迟 数 据 的 PCIe CSL 时 序 重 整 晶 片 解 决 方 案 PS8936， 其 为 针 对 PCIe 5 与 CSL 所 开 发 ， 支 援 十 六 对 双 向 传 输 通 道 的 时 序 重 整 晶 片 ， 不 仅 支 援 PCIe 5 规 范 所 定 义 的 三 十 二 gigabits per second 資 料 传 输 速 率 ，PS8936 也 向 下 相 容 更 早 期 的 PCIe CXL
CSL 的 宗 旨 在 于 制 定 高 性 能 以 及 可 扩 充 的 连 贯 记 忆 体 ， 而 当 CSL 持 续 地 仰 赖 PCIe 不 断 推 陈 出 新 的 规 格 ， 以 因 应 持 续 增 加 的 频 宽 需 求 时 ， 在 记 忆 体 效 能 的 范 畴 里 ， 存 取 时 间 也 成 为 一 项 同 ， 一 项 同 等 关 键 的 因 素 。 而 ， 而 随 着 大 型 CSL 架 构 的 建 制 ， 不 可 避 免 地 会 面 临 到 讯 号 完 整 性 限 制 的 系 统 和 规 模 与 弹 性 ， 因 而 需 要 导 入 时 序 重 整 晶 片 。
普 锐 科 技 在 时 序 重 整 晶 片 上 有 着 基 ， 基 传 输 延 迟 的 专 利 技 术 ， 能 协 助 系 统 建 构 ， 呃 ， 能 协 助 系 统 建 构 时 ， 呃 ， 兼 顾 讯 号 完 整 性 以 及 传 输 效 能 。
基 于 目 前 对 二 零 二 三 年 第 三 季 营 运 的 展 望 ， 我 们 预 期 合 并 营 收 为 美 金 一 百 零 七 到 一 百 一 十 九 百 万 元 ， 合 并 毛 利 率 为 四 十 三 percent 到 四 十 七 percent 之 间 ， 合 并 营 业 费 用 为 美 金 三 十 到 三 十 三 百 万 元 。This is my presentation for the two thousand twenty-three Q2 financial result。Now, I transfer to CEO Dr.
Jack Zhao to answer your questions. Jason, you may begin.
Thank you, Ji - Ming. Ladies and gentlemen, we will now begin our English question and answer session. If you wish to ask the question, please press star one on your telephone keypad, and you will enter the queue. After you are announced, ask your question, and every time, you can ask two questions at the most. If you wish to cancel your question, you may press star two. Thank you. Now please press star one on your keypad to ask the question. Thank you. Question will be coming from Jerry Su of Credit Suisse. Go ahead, please.
Thanks for taking my question. My first question is about the Q2 revenue breakdown. Can you provide some color on that? Then, I think you have provided a guidance of potential single-digit growth. I want to know how, if each different segment, you know, what is the growth outlook among the four major segments for the Q3 ? That's the first question. Then the second question is regarding the USB4 product line. Can you give us some more update and color about how is this progressing, and when should we expect to see a more meaningful revenue contribution for the USB4? Thank you.
Okay, thank you. The first question, I think about the DP product line in the Q2, is lower than 40%. Our high-speed product line or TS product line is higher than 40%. The Source Driver or TC product line is a slightly above 15%. Our TP or touch product line is lower than 5%. I believe the second question is clear on the growth Q3. Q3, we just provide a guidance, in Q3, the major driving force to have growth is mainly related to our high-speed product. We do experience the CMO, the main increase in Q3 for our high-speed product, and that's the major driving force. Along the way, we also see some of our TP product line as a uptick there.
That's the major theme for the current quarter, which is Q3. The next question is on the USB4, and we have been successfully developed and delivered to our customer our USB4 product line. Just as I announced, we also introduced our second generation USB4 controller for lower power and lower cost. I believe we are in today's we are dominated in market in the AMD platform or the Qualcomm platform. I believe that the we have a sizable increase Q3 2023 versus 2022, and we expect in 2024, we'll have a more increase on the USB4, the climate demand.
That's really because the USB4 is more product adopted in the notebooks, and in some notebook case, not only have a one USB4 port, and some of them have a two USB4 port there. We are pretty confident and pretty happy to see that our USB4 solutions got broadly adopted and help the customer to push their notebooks into the market. Yeah.
Okay, thank you. I just want to follow up on that. You mentioned that you're dominating the USB4 in AMD and also Qualcomm platform. May I just follow up, when do you think you can have a better breakthrough into other different platform, perhaps like the Intel and also your standard platform?
On the, in the Intel platform, Intel, in fact, use their own, and we all know OEM customer pushing Intel to adopt the other Intel solution, including the Huawei solutions, since we are completely incompatible. I'm not convenient to comment on our, the Synaptics customer and solutions.
Okay. For, for these two, perhaps in the, the next foreseeable future, this is something that we also have to keep in our current solution. We should be ruling out these possibilities.
Well, as I said, we are in the dominant position, for AMD platform as well as the coming Qualcomm platform.
Okay. All right. Thank you. I'll be back with you.
Thank you.
Next question from Danny Yen of Morgan Stanley. Go ahead, sir.
Hi. Good afternoon, Jack and Ji -M ing. Thanks for taking my question. My, my first question may be following Jerry's question on USB4. Could you elaborate... in terms of competitive base operate, your second generation USB4 retimer, where do you see you are better than your peers? Is it power consumption? Is it speed, or anything you can highlight? Also, you mentioned you have a prominent position in AMD and Qualcomm platform. Does that mean that you have more than 50% market share? How, how high it could be? Just like my first follow-up question after Jerry.
Okay, thank you. Our second, second, or just not the chip, actually, now has been designed to quite few the customer models and also into the, on the next generation or current generation AMD platform, so-called favorable list or so on, so forth. Then, of course, under our retimer, we support DP 2.1, and we have a much mature competition test and also have a much lower powers. USB4 is a pretty complicated protocol, because it's embedded DisplayPort, embedded Thunderbolt. You have to go through all the rigid tests in order to the serve for your customers.
Just basically, our solution is a lot more mature and testing gone through rigid test in the end platform, so as going through the Qualcomm platform, and not only the hardware as well as your software, your drivers, or your firmwares. It's a lot of work to go through this. In terms of market share, I'm not sure exactly the percentage. However, I do know the major customer, the major PC OE customer, has a significant model to point out to our using our USB4, either first generation or second generation retimer.
I see. Thanks, Jack. I'm still wondering, because for USB4 retimer, as you mentioned, it's a very complicated product in embedding a lot of different interfaces and power consumption is also a very important factor from a customer's perspective. On competition, do you see any new newcomer, especially...
I think, I can only say that all cost, all the competitor, the, is pretty much the, is high, right? For the all the competitor and we hear there are quite a few new competitors, but we have not seen in customer place, really pass through everything or into the market to sell it. We know we have many notebook carry our USB4 retimer on the market. We're not talking about $200K, we're talking about millions, notebook carry our USB4 retimer in the market.
I see. Another follow-up is that, like you mentioned, right now, Intel has their USB4 retimer. In the future, in the long run, will do you think Parade have the possibility to also tap into Intel's platform? It is not Intel's strength on this product, just wondering what's your view.
We know the major customer are pushing Intel to allow us on their platform, the OEM are pushing, I think we'll have the opportunity to do this. Plus OEM, what I mean is people like HP, Dell, Lenovo, ASUS are pushing. That's subject to Intel, whether they open up the, the platform to allow us to, to, to do. We qualify our Intel, what do they call it? Embedded system. Our retimer did qualify Intel embedded system. As commercial notebook system, they are just close the door despite himself. We wait to see, USB4 in coming years will move to the so-called USB4 part two or original USB5, and the significant will always again, and the significant thing will be have to support a, a multi-level, so-called PAM4 signal.
From Parade's standpoint, we already invest significantly, and then we also take out the first, our chips for USB4 2.0, 4.2, the retimer chip, and we worked with the CPU vendor, already started doing the setup plan for the broadcast for system validation. USB4 is not only the current generation, it will move on to higher speed, to higher bandwidth, and that kind of has its own life. We will see the USB4 future, the USB and the world into the many of the PC got adopted systems. It's pretty big size of market there.
I see. This may be my last one still on USB4. Could, could you give us your view, what's the penetration rate for USB4 on PC in 2023 and 2024? Do you have any SMA or assumption on the revenue mix from USB4 retimer in 2023 or 2024?
Let me see how to phrase this, the, the, the answers. From our perspective, we think the USB4 adoption rate from 2023 to 2022, the number of core adoption were doubled. I would believe 2024 plus 2023 will have another double in terms of how many ports or how, how many retimer ship. the higher or middle, middle end of 2024 notebook, most likely will adopt USB4 retimer or USB4 core, or at least one of them is USB4.
I see. It's very clear. Thanks. I'll get back in the queue.
Thank you.
Thank you.
Next question, Richard Chen from AIA. Go ahead.
Thanks, management, for taking my question. I have two part of question, so it might be a bit long. My first one question is for PCIe Gen 5 retimer. I think the overall concept is still quite new to investor. Could you share how many areas that we see the server could use your PCIe Gen 5 retimer, such as a current growing need for machine learning and AI, such as connect to switch or connect to accelerator, or it connects to SSD, or even connect to other FPGA? I would like to have better understanding that the total opportunity for Parade PCIe Gen 5 retimer in the server. Could you roughly share how many PCIe Gen 5 that we might need and potential dollar content? Thanks.
Okay. I, I could only the, the answer that question with what are we working with our customers. The current high percentage of our customers develop their server are type of, so-called larger car or machine learning-related systems, which is you have a motherboard and you will have likely of using 8 of the, the US, US, the PCIe Gen 5 retimer chips to, for 8 slots for graphics chips, a graphics card to insert. This, this is a pretty typical system, and you would have the, the, the, the, on a 1 system, and you, you will need to have 8 graphics card there, and each slot need one of PS8936, like my 16-channel chip to support this. That's the first application.
Then we have a second application, is using our, the retimer chip to talk to the switch chip, and, which means the fabric switch type of thing. This is the second application. We do work with memory vendor and, who are very, very keen or very in the development phase for so-called CXL, the memory board, which also need our PCIe Gen 5, the retimer chip, and, that's because the speed is significant second, and, the memory was directly, talk to the, the PCIe, and, and, we were told that that's the most efficient way to have huge amount of the memory to connect as a servers. They were called two out server, which means you have a memory, the box on the block, just many memory there through the CXL interface to talk to the systems.
Okay, those are the top with the major application or systems we are working with our customer, the application. If you start to have both on those AI machine or those, the servers with the switch and those CXL, the memories, yeah, that's quite a lot of application, especially the CXL become a new application for the retimer chip.
Could we have a roughly idea that if we consider that these two major parts that you have mentioned, share with us, is there's a roughly range of the how many PCIe we might have? I, I understand there might be some end or high-end server that might be different, but, could you share some roughly, that, that sort of thing?
We had a previously some estimation, not on the number of chips, which we think the market size with PCIe Gen 4, Gen 5 retimer, or is around $200 million. That's the what we initially estimated. In the coming years, when CXL for memory start to become popular or become a major force in the data center, you might see the total number will expand from the $200 million.
Got it. Thanks. Maybe one still follow up on the PCIe. Regarding the PCIe comparison, regarding the qualification, I think that previous period have mentioned that you mainly use in-house IP versus peers that use the outsourcing, third party IC, IP. Could you share that your current maybe technology advantage compared to peers and how is your progress among all major ODMs? The current seems that in the market only have one major peers are providing such products. Perhaps from a supply chain management perspective and potential lower cost or better technology, as you mentioned at your opening remark, I think you had a new inaudible that lowest inaudible in the industry compared to your first release in the beginning of the year.
How should we investors think the potential, roughly market share that Parade might have and the contribution in the longer term, maybe in 2024 or 2025? Thanks.
Yeah, we have been share to the investor for a long time. We view this high-speed IP is our core competence. Unlike our competitor, we develop all the IP, all the high-speed IP in-house. That provide us a lot of flexibility, also provide a lot of confidence when you support to your customer, because it's obvious in some way you have been dealing with a very deep in your design, and if you licensed IP from third party, you are not able to go into the inside to change or share your design with your customers. That's the huge advantage, and we think that's our core competence. Our PCIe Gen 5 retimer, all in-house design using our own IP.
This is the one of the reason we have achieved the lowest, the latency, and that appeared to be very critical for the CXL memory type of application, because memory, any latency at the memory interface. is the, the negative to the system performance. That's why our solution got so attractive with the, the memory vendor. I think that will be very critical and some, our low latency also, as we report, we have a pattern already planned associated with it, so we have a pretty high confidence. We are pretty unique to achieve this. That our confidence as we share with our investor for long time, that's where is the, the, the most critical technology.
Got it. Thank you. My second part of my question is for-
Excuse me. Thank you, Richard. We would like to move on to the next caller. Thank you.
The next question is from Michelle Chu, Hawawase Securities. Go ahead, please.
Hi, Jerry. Hi, Yo-Ming. There are two questions for me. The first one is regarding our auto business. Can you talk about the revenue contribution now, what kind of products will contribute to the auto segment? Maybe any color of the future trend of the auto segment? Thank you.
Okay, good question. We're glad to report. We have our, the chip, one of the most known EV cars. I think there are 2 chips there. If you're happy to be compared those cars, you will see our chips. We've already been told by the other EV cars to tear down those cars and saw our chips. They come ask, ask the same solutions, so on and so forth. In 2023, our auto, the revenue probably is around USD a few million. That's not big numbers because we just start to, some of them just start to ship. In terms of your next question is where you see our chips, where our applications, right? There are 3 areas.
The first area, we are very well-known, we have a converter chip, right? We have a DP to a HDMI converter, we have a DP to a LVDS converter, we have many different converters. We successfully used the display to replace some of the third solution. They're very popular in the auto, right? That saves customer profit and for display application. For the first one, the converter is for display applications. The second one is pretty popular, and the USB-C or Type-C is getting very popular in the car. At the beginning, it was for currently for charging purpose, and then more the EV car or advanced the car, we're using USB-C for video application.
That's why our USB-C solution has become pretty de facto for what do they call a video box. It's called a video box, and just put into the USB-C, and whoever has the phone, probably you will see the video, the back side of the chair have a display there, you can see it. That's the second application. The third application, we have our touch chip. In fact, designing one of the tier one Europe, the automotive, very soon it will be on the market, I think the MPS got the 2-4. Those are the current, our three areas, we look at the design opportunity, we have a design opportunity in the so-called mini LED controller. That's our DP720.
As our DDVI, working with our conversion together to achieve the displays. Those are in the design pipeline to work with customers. Having said that, the automotive has its own quality requirement, and then now because of geopolitical situation, and you will have a supply chain requirements. It's getting a little bit more complicated and take time to fulfill all the opportunities.
I see. That seems like there are several applications on it, but can you like, give us a picture or maybe quantify like the growth rate in the auto segment in, several years after?
You mean the several years?
Oh, yeah. I mean, the growth rate of all those things.
Yeah. So automotive, we ourselves, we call it initiate, initiative, initiative, and we spend a lot of time on this. Today used to be, or has to be, is a dominant PC, the vendor, PC area vendor. All the PC vendor know we are aware of who the I stand across the supplier. I think now we have been talking to most of automotive OEMs, and automotive OEMs now start to know Parade for our solutions. We hope it took the two years, and our solution can create a revenue, $10 million-$20 million, those kind of thing, or more. It's really depend on how quickly to be adopted. However, the auto design will take a longer time.
Think about what I just mentioned in the beginning, our auto solution already under one of, well-known EV car vendor, the car is already on the street. It took us four years from beginning to now. Automotive is not like a PC, so it take a longer time to achieve revenue. We do have a opportunity in the pipeline to getting on. Yeah, it's exciting to work with them and try to solve auto unique issues, and working with a set of customer who used to we do know them, and they don't know us, and now we know each other, and we are trying to solve their problem.
Okay, I see that very clear. The second question from me is from the margin side. Could you just share with us how are we seeing the pricing transform from our foundry supplier? Maybe some color about our near-term and long-term growth margin trend and the rationale behind it. Thank you.
Yeah. The, the, the You, you mean the price competition, right?
I mean, the cost, cost per, perspective from our foundry.
Oh, oh, from the cost perspective. Thank you.
Yes.
I think that if you look at a few, the back-end side, the process demand is lower in the back end of packaging and costing side, and the people are willing to lower the price to gain the business. So I would think the back-end side is pretty consistent and are rational to address the current low demand situation. On the front side, which is a wafer side, we experience a difference, and some of the fab guy are willing to cut the price to gain market share and quite aggressively, especially those fab, fab guy from the China side. There are other foundry and are not willing to change anything, and the price is pretty stable, and they don't want to change anything.
That make us very difficult. We try to explain to them that the, the market is getting very cold, and, and, you have to reduce the price and try to gain our business, right? However, this geopolitical situation make the things complicated. Maybe our product can win multiple fabs. However, some of our customer are willing to pay a little more to stay in some fabs. It's a complicated situation, and, and, we do have a little bit leverage because our product can win in the multiple fabs, and, and, so that's the way we control our manufacturing cost. Certainly, the public, you all were here.
If the market goes the, the downturn, as we experienced, the, you, you expect the gross profit less pressure, especially on the display side. That's the way we manage it, satisfy our customer. At the same time, we manage our manufacturing cost. That we, we, we think we will be manage our gross margin stably, and, and, We think we should be hold on our, the, the, the guidance and, and, and we like to keep our stable gross margin. We think that's very important, for the investor and for us.
Thank you. The next question will be coming from Caroline Chen of Francesca. Go ahead.
Hi. Thanks for taking my question. My first question will be, that, you just mentioned that you have been seeing an uptick in 3Q on TP. I was just wondering that, do you mean that it's an overall Tcon product, or is that means that your standards-plus customer is seeing a stronger point in the second half on your product? This is my first question. Also my second question would be the overall inventory suggestion. What is this the update right now that, what kind of product lines are you seeing above the normal inventory levels right now? Any expectation on when will be the end of your, the inventory correction? Thanks. Thanks.
Okay, I want to repeat what I said. On the Q3, we see more uptick on high-speed PS products there. We see some of uptick on the, the line, but not as strong as the PS. At PS high-speed, we do see kind of normal seasonality. The Q3 is strong. On the Tcon people, we don't see as strong as our PS line. We're not convenient to count the comment, our standards-plus, the customer, the demand. However, they just had a conference call, quarter conference call, last week. From the hardware side, whether they're pad, or whether they're notebook, or the mobile sales, they're not as well as people would like to. Certainly, we are very disappointed to see those numbers, especially compared with last year. That come back to our inventory.
Our inventory associated with the sort of mobile PC side, it's reduced quite well. However, the inventory associated with our standards-plus customer, because they had a pretty big forecast at the beginning of year, so that's still there. However, those parts are long life parts, those parts are just started new models, so we don't worry about the consumption, those parts. So that's the current situation. Just read the last quarter of our report, you will know where they, in the Huawei side, what they going through, we have a huge association with them, right?
Okay, great. Thanks. My last question would be, regarding to, what do you think, you have the rising adoption rates in the Windows notebook or any other applications, using more OLED TCON in the future? Is there any further upgrade from your customer side that they're start migrate, upgrading their AMOLED TCON into the next generation? Yeah, this will be my, my last question. Thanks.
Yeah. As we shared with the investor community, we have been shipping all OLED TCON for notebook, since two years ago with a tier one Korean customer, right? The, the OLED TCON for us has been many years. I, I would think that in the normal notebook, whether ASUS and the Lenovo, you will find out our DP809 there, and, and for those AMOLED panels. For 2024, I'm very sure you, we will ship a lot, lot more of AMOLED TCON, and, and, we have been developing this AMOLED TCON for many years, and, and, it has been there for a long time.
I think that, even with though, I don't know when the, what's happening in the market, but I believe, I hope that, that 2024 we are shipping a lot, and, and, those AMOLED TCON. Yeah, those are the, those are good things, because AMOLED TCON, has a big buy and has a higher ASP, and, and, and, I hope the end customer will like it. Yeah, we are, yeah, we, we do upgrade most, Tcon to AMOLED .
Okay, thank you. I will be back to the queue.
Thank you.
Next question, Vivian Yang of Nomura. Go ahead, please.
Hi, Jack. Hi, Ji -M ing. Thanks for taking my question. I just want to get an update on the OTC market for this year and next year. I think previously we are talking about a 10% unit reduction for this year. Are we seeing any changes? What's the magnitude of recovery are we expecting for next year?
For this year, I think that I view world PC market will have a sort of L-shaped recovery. Unfortunately, we had a view the PC market may have a V type of recovery, because we think that last year, Q4 we see significant reduction of the PC market. Now we expect the kind of L-shaped recovery and its recovery is limited. It's not like a 20%-30%. It's an L-shaped recovery. My view into 2024, there are a few things that happened. One is the last significant PC or consumer PC or commercial PC upgrade that happened in 2020 or 2021. That was a huge demand at that time in the pandemic. By 2024, those notebook are three years, is due for replacement.
That's what we hope on the, on the large scale, you will see the replacement cycle will start. That also is shared by, if you read a research report and the people start to say in 2024, you will see the PC mobile replacement. I think ourselves, we are getting excited, is really our PS parts as we previous question on the USB4 with timer, will be adopt significantly into the 2024 model. We're also excited to see that our HDMI 2.1, 2.0 with timer getting adopted in the large scale. That's why we keep the trajectory in the 2021. We think we're getting more opportunity and, and for us to, to, to, to grow. USB4 definitely is a one-off thing.
The retimer one-off thing to be, I think the market will have a strong demand there.
Okay, thank you. I will back to the queue.
Thank you.
Now, ladies and gentlemen, we will now move on to our Chinese question and answer session.
...
...这些的 high demand computation，可以说，做 high speed 来说，都是一个 positive thing to have a more 我们的 device into。那我们已经是看到，我们不光是在做这个 PCIe Gen 4, Gen 5 的 retimer，我们也有 PCIe Gen 4, Gen 5 的...
Driver, these are relatively low power, are relatively more friendly for the mobile phone. We have two solutions there. 要, I think your idea is correct. I also think this will get into another set of upgrade cycle for the PC.
了 解 。 因 为 这 样 子 ， 不 晓 得 说 在 display 会 不 会 有 尤 其 需 要 low power， 还 是 怎 么 样 的 带 动 ？
We see today's display side, they all prefer this high refresh rate, yeah, and even more prefer these 16:10 aspect ratio displays, and then comparatively, I think this is probably the main point there.
本 来 就 是 这 样 。
I don't know, 大 概 multiple display 会 变 成 一 个 trend, 因 为 做 这 些 AI calculation, you might need a more area to more display area to look at.
哦, 多工, 是不是?
对.
哦 ， 了 解 ， 懂 。 所 以 有 可 能 比 较 多 的 monitor 还 是 ， 还 是 比 较 大 ， 是 不 是 ？
对 对, 我 这个 也 不 太 好 说, 但 是 我 们 觉 得 这个 比 较 肯 定 的 是 high refresh rate 跟 16:10 的 这 些 display 会 getting very popular.
那 refresh rate 会 跟 AI 有 关 吗？还 是 说 其 实 本 来 我 -
我 觉 得 本 来 就 会 有 了.
会 有，了 解。
对，AI 的 更多 的 demand，high speed 的 calculation， 这 个 calculation 是 true， 在 interface 在 各 方面 都 会 有 higher demand.
会 比较 快, 了解. 那 我 第二个问题想要问一下, 就是刚才, 您在英文的 call 其实有提到说, 就是在这个, AI 的, 这应该是比较是 training 侧, 然后就说这个 memory 需要很多, 那 我们 在这里的话, 就是, 就是感觉到那个 PCIe Gen 4, Gen 5, 就是 TAM 应该会比之前认为的 $200 million 更高. 那, 就是我不知道说, 就是我们认为, 因为虽然说可能花一点时间, 因为我们自己做 IP, 从 IP 开始做, 就是可能明年会贡献比较大, 那我不知道说我们是不是还是认为说应该看个这个 $200 million, 就是 30% 的 market share 应该是, 或者甚至更大的, TAM 跟 market share 都有机会.
我 这样 说了，这 个 我 们 在 work very hard to achieve our goal. 当 然 是 越 高 的 market share, the higher market share is better. 但 是 我 们 internal 是 有 set 一 个 goal, 那 我 们 比 较 close 这 个 goal, 我 跟 大 家 去 谢. 我 刚 才 说 的 是 说，这 个 memory 有 一 个 special 的，就 是 based on the PCIe Gen 5，也 有 一 个 叫 CXL 2.0 的 standard. 这 个 会 become very important 的 driving forces for sort of AI type of application，因 为 training 侧 的 huge amount of memory，这 些 才 会 有 dynamic memory assignment or static memory assignment. 所 以 这 个 是 一 个 新 的 architecture, 这 会 demand 更 多 的 retimer 或 者 driver 的 chip.
It means originally on a general server, it might need, I'm telling you, it might be 2 颗, 4 颗, that is 的 retimer. On an AI server, it might have, because this memory 的 diagram, it needs maybe multiples more. Can I think of it this way?
我 觉 得 他 们 现 在 做 法 是 把 memory 放 在 另 外 一 个 box 里 面, 所 有 的 memory 放 在 另 外 一 个 box 里 面, 然 后 用 这 些 high interface 连 接.
需 要 这 个 retimer.
对.
我 们 自 己 有 自 己 的 IP. 当 然 自 己 有 自 己 的 产 品 就 是 卖. 因 为 现 在 其 实 还 蛮 流 行 basic, 我 不 知 道 我 们 会 不 会 在 这 方 面 的, 还 是 其 实 有 考 虑 license, 或 者 是 服 务 客 户, 帮 客 户 做 basic 呢?
我 们 一 定 会 帮 大 客 户 做 basic, 这 是 for sure. 我 们 不 会 把 我 们 的 IP license out.
给 license， 了解。
我 不 会 把 我 们 的 IP license out， 但 是 我 们 一 定 会 ， 只 要 客 户 uniform， 我 们 一 定 会 帮 他 们 做 basic。
嗯 。 那 您 ， 您 觉 得 会 有 这 个 需 求 吗 ？ 就 是 ， 呃 ， 在 high speed 里 面 有 客 制 ， 客 制 的 这 个 ...
一 定 会 啊 ， 一 定 会 ， 一 定 会 。
就 一 定 会 有。
一定会。
哦, OK.
一 定 会 。 这 个 ， 这 个 ， 所 以 你 的 IP 有 feature， 这 个 flexibility 去 做 这 些 东 西 ， 所 以 -... 我 刚 才 已 经 说 了 ， 在 ， 在 PCI-E 的 Gen5， 我 们 也 开 始 develop PCI Gen6 的 这 些 IP， 所 以 这 个 是 一 个 ， 是 一 个 long term 的 investment， 也 ， 也 ， 也 很 烧 钱 ， 这 个 ， 这 个 ， 这 个 也 需 要 很 长 的 这 个 ， 这 个 long term develop effort for 自 己 的 IP 的 。
嗯 ， 懂 。 了 解 ， 所 以 明 后 年 这 个 PCI-E 就 是 至 少 在 这 个 server 或 者 是 AI server 上 面 ， 我 们 会 比 较 明 显 感 觉 到 ， 呃 ， 第 一 个 是 贡 献 嘛 ， 那 再 来 是 说 ， 就 是 未 来 的 business model 也 许 会 像 display 这 样 子 ， 就 是 跟 standard and plus 这 样 子 。
我 们 希 望 ， 希 望 是 这 样 ， 对 吧 ？
嗯 ， 了 解 ， 那 就 可 能 晚 一 点 的 时 候 再 ， 再 -
对 啊 ， 我 们 ， 我 们 这 个 ， 这 个 是 ， 是 ， 只 是 我 们 的 希 望 啦 ， 对 吧 ？ 我 们 会 ， 会 ， 只 要 有 客 户 要 求 我 们 做 ， 我 们 会 去 ， 去 考 虑 的 ， 但 是 这 个 也 有 一 个 resource 要 求 的 这 个 东 西 ， 你 要 多 少 resource 去 做 这 个 ， 对 吧 ？ 那 ， 那 ，yeah， 这 个 ， 这 个 ， 这 个 我 们 希 望 ， 我 们 最 希 望 我 们 的 客 户 是 用 我 们 standard 的 。
嗯 ， 嗯 哼 。
因 为 像 这 一 类 chip 去 做 basic 真 的 是 投 资 很 大 很 大.
我 不 晓 得 说 ， 这 个 是 有 必 要 去 ， 就 是 运 算 上 面 ， 或 是 说 整 体 的 operation 是 在 高 处 这 边 去 做 一 个 ICC， 有 这 个 必 要 吗 ？ 还 是 说 其 实 直 接 买 ？
我 们 是 希 望 他 去 买 的, 希 望 他 直 接, 因 为 I said what, 就 是 spend a lot of effort 去 做.
好 ， 了 解 。 好 ， 我 没 有 问 题 了 ， 谢 谢 Jack。
好 ， 谢 谢 。 我 们 下 一 位 请 问 的 是 Goldman Sachs，Bruce Lu， 请 问 。
Jack 啊 ， 我 想 你 刚 刚 提 到 那 个 两 百 个 million 的 address market， 因 为 这 个 对 我 们 来 说 比 较 有 兴 趣 。 我 记 得 在 当 时 十 四 点 零 的 时 候 ， 你 有 教 我 们 怎 么 去 看 这 个 address market， 所 以 你 可 不 可 以 在 我 们 比 ， 比 或 者 是 PCI-E 五 点 零 的 时 候 ， 你 这 个 两 百 个 million 是 怎 么 算 出 来 的 ？ 是 多 少 的 server number， 有 多 少 个 port？ 这 是 怎 么 算 出 来 ？
我 现在也有点不是那么记得清楚。我们当时的时候，是我们的 OEM customer 跟我们一起去算的，所以我们就用这个 number，因为当时有一个 OEM 做 server 的跟我们一起，一起在板上去算的，那...
现在这个 number 大概就 make sense. 也许会, 假如你考虑 CXL 这个 memory 的话, 那大概这个 number 会更多一点. 实际上我的 understanding, 去年 的话, overall market 大概已经有到 $100 million 左右了, 是 2022 年啦. 对啊, 我们自己 shape 的, 跟我们听到的, 这个已经 close 到 $100 million, 所以我不记得 $200 million 是, 是...
会 有 一 些 出 入 ， 但 是 不 会 有 太 大 的 出 入 了 。 我 觉 得 CXL 在 2025 年 ， 雷 汤 和 2024 年 、2025 年 假 如 一 起 加 入 的 话 ， 这 个 大 概 number 会 更 大 一 点 。 这 个 我 现 在 没 有 办 法 去 exactly 我 们 当 时 跟 那 个 OEM 是 怎 么 算 出 来 的 啦 。
行 ， 我 是 说 看 这 个 数 量 听 起 来 很 怪 怪 ， 因 为 你 PCI-E 4.0， 去 年 都 是 4.0 的 东 西 ， 那 去 年 就 已 经 两 百 个 million， 那 你 如 果 五 点 零 上 来 ， 整 个 conversion 过 去 ， ASC 高 这 么 多 ， 又 是 一 大 生 气 ， 怎 么 会 只 有 double？
我 是 觉 得 你 的 一 个 price， 但 是 number for unit， 假 如 只 是 server 的 话 ， 会 比 较 有 限 嘛 ？Yeah， 我 当 ， 也 许 现 在 的 AI 的 push 会 更 多 ， 我 不 是 这 么 清 楚 ， data center 里 面 ， 会 不 会 增 加 很 多 的 AI related server， 那 这 些 原 来 的 这 些 $200 million 还 是 based on 我 们 过 去 的 这 些 formula 去 算 的 ， 没 有 加 上 现 在 的 这 些 新 的 driving force。
了 解 ， 我 想 这 个 目 前 还 是 我 们 投 资 人 比 较 关 心 的 问 题 - 这 个 数 字 。
因 为 这 什 么 时 候 应 该 出 来 再 算 一 算 。
对, 我 们 可 不 可 以 下 个 quarter 再 给 我 们 一 个 比 较 明 确 的?
我们 要 去 找 我 们 的 OEM 再 來 算.
了 解 了，谢 谢，谢 谢。另 外 衍 生 下 来，就 是 说 你 server 的 一 个 大 数，你 再 往 AI server 去 算，你 看 到 现 在 的 AI server 的 reference 里 面 的 上 面 的 retimer，有 的 有 8 个，有 的 16 个，unit 自 己 看 起 来 相 当 惊 人，这 个 是 真 的 是 在 practical 里 会 怎 么 大 吗？如 果 是 这 样 的 话，你 的 竞 争 对 手 现 在 如 果 market share dominate 的 话，他 应 该 看 到 超 级 大 的 order 才 对 啊，这 个 到 底 在 真 实 实 际 上 使 用 上，跟 他 reference 已 经 在 这 样 的 tuning lab 是 怎 么，到 底 我 们 要 怎 么 去 看 说 ......
哦 ， 有 什 么 东 西 在 ， 或 者 data rate 要 多 少 ， 我 们 就 需 要 多 少 ， 距 离 拉 多 远 需 要 多 少 ， 但 是 可 以 给 我 们 一 些 方 向 吗 ？
我 ， 我 只 能 告 诉 你 我 看 到 的 ，OK， 我 们 看 到 的 。
是.
8个我们是看到，你说的16个我就不清楚了。 really 的 game 是 说 这 些 machine 能 够 how many they will ship， 应 该 data center， 这 个 我 们 不 清 楚 ， 但 是 8个 我 们 是 看 到 ， 而 且 还 不 是 看 到 一 家 的 是 8个 ， 的 是 multiple 的 这 种 ， 这 种 8个 ， 就 是 说 看 到 大 家 customer design quite similar.
了 解 ， 因 为 能 是 几 个 AI server， 这 个 大 家 都 有 自 己 的 看 法 ， 反 正 很 多 人 确 认 H100 forward 的 产 能 ， 这 边 是 是 是 ， 这 个 是 我 们 天 天 在 看 的 事 情 ， 就 是 说 到 底 每 一 颗 chip 真 的 要 配 8 个 吗 ？ 这 个 才 是 真 正 的 关 键 ， 对 不 对 ？ 那 有 些 -
这 个 里 面 ， 这 个 的 一 个 ， 我 们 说 我 ， 我 们 只 是 说 我 看 到 的 啊 ， 我 们 看 到 的 现 在 是 ， 是 ， 看 到 的 是 一 个 server 里 面 ， 它 要 配 八 个 这 个 Grace card， 所 以 它 有 八 个 这 个 ， 这 个 在 上 面 ， 这 是 看 到 。
嗯 ， 这 个 跟 CXL 无 关 ， 是 不 是 ？ 就 是 说 它 ， 它 是 因 为 有 CXL， 所 以 被 它 打 开 ， 没 有 。
对, 这个 CXL, 这 跟 CXL 无 关 了, 一 点 关 系 都 没 有. CXL 我 们 有 个 memory vendor 在 design, 他 在 design memory card, 这 个 每 个 memory card 上 面 会 有 一 个 这 个, 我 们 的 这 个 chip 在 上 面, 呀, 这 个 也 是 我 们 看 到 的. 不 光 是 我 们 看 到 这 个, IS storage, storage 我 们 也 看 到.
了 解 。 好 ， 那 我 的 问 题 就 这 个 而 已 。
Storage, 我们 也 看到, 有 这样 的 这个 channel 的, 我们 也 看到.
好 ， 谢 谢 ， 谢 谢 ， 我 的 问 题 就 这 个 了 。 谢 谢 。
对 ， 对 ， 我 只 能 share 给 你 ， 我 ， 我 看 到 的 东 西 ， 对 吧 ？
非 常 感 谢 各 位 的 提 问 ， 由 于 时 间 的 关 系 ， 我 们 将 结 束 今 天 的 会 议 。 Ladies and gentlemen, we thank you for all your questions. That concludes our conference for today. Thank you for your participation in Parade Technologies 2023 Q2 webcast investor conference. You may now disconnect. Thank you, goodbye.
OK, thank you very much!
Thank you.