Welcome everyone to Parade Technologies Limited's 2023 First Quarter Webcast Investor Conference. Investor Relations of Parade Technologies, Mr. Yo-Ming Chang, will present 2023 First Quarter 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. Kuowei Wu. We also will remain last 15 minutes for the attendees who would like to ask questions in Chinese. Please follow the instructions given at the time if you would like to ask the question. 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 Q1 Webcast Invest Conference. Before my reporting Q1 2023 financial results, it is my pleasure to introduce our new VP of Finance and Accounting, Mr. Kuowei Wu. Kuowei joined Parade Technologies in 2015 and brings over 12 years of experience in finance management. In March 2023, Kuowei was appointed as the company's Head of Finance and Accounting, responsible for managing the company's finance, accounting, tax, treasury, and the general administration. Please join me in welcoming Mr. Kuowei Wu for his new position. I start to report our financial results. Parade Technologies first quarter 2023 consolidated revenue was $99.99 million, and the net income was $11.62 million.
Its both debt and fully diluted after-tax earnings per share were $0.15 and $0.15 respectively. These results compared to consolidated revenue $210.72 million and a net income of $59.919 million, or $0.75 and $0.73 per basic and fully diluted share in the year-ago quarter. In U.S. dollars, the first quarter revenue decreased 1.44% sequentially and it was down 32.55% year-over-year. The gross profit in the first quarter of 2023 was $44.04 million, a decrease of 1.42% from the previous quarter, and a decrease of 56.30% compared to the same quarter of last year.
On February 22, 2023, Parade announced a new opening in its high-speed connectivity product category, the PS5510, which is an updated version of the FL5500 USB hub controller, featuring ultra-low power operation and hardware-accelerated secure firmware updates. PS5510 is compliant with the USB 3.2 specification and offers five SuperSpeed+ ports, each capable of providing 10 Gbps data connectivity. The upstream port and the two downstream ports support the features required for USB-C connections, while all of the ports may be used for legacy USB Type-A connections. One additional USB 2.0-only port is provided for additional hardware device, often needed in the target applications. With its ultra-low power operation and on-chip RSA SHA-256 hardware to support secure in-field firmware upgrades. PS5510 is ideal for port expansion on USB4 and Thunderbolt docking solutions, as well as monitors and mini-dock dongles.
On March 22, 2023, Parade announced a new offering in its eDP Timing Controller with embedded driver product category. The TC3230 features support for higher resolution as well as the most advanced embedded DisplayPort features for power savings. TC3230 is compliant with the eDP 1.5 standard and support MSO Panel Self-Refresh, DSC 1.2a, ALPM, Advanced Link Power Management, and more. The TC3220 is configurable to support all panel resolution up to QHD using an 18-bit or 24- bits color format. Adding a second TC3230 in MSO plus DSC mode enables panel resolution up to 4K-2K. With support for the standard-based embedded video interface protocols offered by major CPU, GPU, and SoC vendors, system implementation is straightforward. The integrated source driver support up to 2,562 output channels with support for dual-gate or MUX2, MUX3 subpixel driving structures.
The TC3230 is designed for chip- on- glass application on LTPS, amorphous, or oxide- type TFT panels. It requires no external crystal or timing interface. The timing reference includes a programmable gamma buffer as well as Parade's exclusive Smart-Backlight feature for additional power optimization. The fully programmable role in the current driver timing enables the TC3230 to serve a broader range of panel types, and it provides synchronization signals that support a wide range of touch controls. On March 29th, 2023, Parade announced the ability of the PS8838 USB 3.2 DP 2.1 MUX and PS8839 USB 3.2 DP 2.1 DeMUX for commercial and consumer PCs, host systems, and peripherals.
PS8830, PS8838 features a DisplayPort 2.1 and a USB 3.2 Gen 2x1 MUX with retiming targeting USB-C host systems and docks. PS8839 is a DeMUX retimer device optimized for sink applications, including docks and peripherals. The PS8838 and the PS8839 are fully compliant with USB-IF, USB 3.2 specification, supporting up to Gen 2x1 or 10 Gbps and the VESA DP 2.1 standard up to UHBR20. The device is support low power consumption for standby and low power states, greatly extending the battery life of a mobile device and enabling system ENERGY STAR compliance. Based on the current business outlook, Parade is providing the following guidance for the second quarter of 2023. Revenue is between $98 million-$110 million.
Gross margin is between 43%-47%. Operating expense is between $29.5 million-$32.5 million.
每 一 port 均 能 提 供 10 Gigabits per second 资 料 传 输 。 上 行 port 与 其 中 两 个 下 行 port 并 能 支 援 USB-C 的 连 结 ， 其 他 则 可 用 为 传 统 的 USB Type-A。 另 有 提 供 单 port USB 2.0 only 固 线 连 结 ， 一 时 常 为 目 标 应 用 环 境 所 需 。 以 其 极 低 运 作 功 耗 与 晶 片 内 建 RSA SHA-256 实 体 设 计 ， 用 于 支 援 使 用 端 现 场 安 全 性 韧 体 升 级 。PS5510 为 USB4 与 Thunderbolt 扩 充 port 显 示 器 周 边 迷 你 扩 充 port 与 配 件 的 理 想 集 线 器 解 决 方 案 。 March 22, 2023, Parade Technologies 为 新 内 建 面 板 驱 动 功 能 高 度 整 合 的 时 脉 控 制 器 TED 产 品 ， 新 添 一 胜 力 军 TC3230。TC3230 不 仅 能 支 援 更 高 的 面 板 解 析 度 ， 也 支 援 绝 大 多 数 先 进 eDP 省 电 的 功 能 。TC3230 支 援 eDP 1.5 规 范 的 MSO 面 板 自 主 刷 新 功 能 、DSC 1.2a 影 像 压 缩 、 进 阶 连 接 电 源 管 理 、ALPM 等 各 种 功 能 ， 以 及 主 流 CPU、GPU 与 SoC 厂 商 的 各 式 传 输 讯 号 协 定 。 TC3230 支 援 18 或 24-bit 色 彩 格 式 ， 单 颗 TC3230 支 援 各 种 小 于 或 等 于 QHD 的 解 析 度 。 若 采 用 MSO 模 式 ， 两 颗 TC3230 则 可 支 援 解 析 度 到 4K2K。 TC3230 整 合 面 板 驱 动 功 能 ， 支 援 2,562 output channel， 并 支 援 dual-gate 以 及 一 对 二 MUX 或 一 对 三 MUX 的 次 像 素 驱 动 架 构 。 针 对 amorphous oxide 与 LTPS 面 板 应 用 设 计 的 TC3230， 采 用 COG 封 装 ， 无 需 外 挂 时 钟 振 荡 器 或 参 考 时 脉 ， 内 建 可 程 式 化 的 gamma 调 整 以 及 Parade's 独 家 Smart-Backlight 智 能 背 光 调 控 技 术 ， 同 时 优 化 影 像 色 彩 与 功 耗 表 现 。 TC3230 可 调 整 水 平 与 垂 直 驱 动 时 序 ， 强 大 的 调 整 弹 性 使 TC3230 都 已 符 合 各 种 不 同 形 态 面 板 架 构 的 需 求 。 此 外 ，TC3230 亦 可 输 出 同 步 讯 号 ， 支 援 各 种 触 控 控 制 晶 片 。 March 29, 2023, Parade Technologies 发 表 PS8838 USB 3.2 DP 2.1 MUX 和 PS8839 USB 3.2 DP 2.1 DeMUX， 可 供 商 用 和 消 费 型 个 人 电 脑 主 机 系 统 和 周 边 设 备 应 用 。PS8838 具 有 DisplayPort 2.1 和 USB 3.2 Gen2x1 MUX 与 重 新 定 时 功 能 ， 适 用 于 USB-C 主 机 系 统 和 扩 充 底 座 。PS8839 是 一 款 DeMUX 与 timer 设 备 ， 针 对 包 括 扩 充 底 座 和 周 边 设 备 的 接 收 端 应 用 进 行 了 优 化 。 PS8838 和 PS8839 完 全 符 合 USB 和 USB 3.2 规 格 ， 支 援 高 达 Gen2x1 或 10 Gigabits per second， 并 符 合 VESA DP 2.1 标 准 ， 支 援 高 达 UHBR20 影 像 传 输 速 率 。 PS8838、PS8839 支 援 待 机 和 低 功 耗 模 式 ， 大 大 延 长 了 移 动 设 备 的 电 池 寿 命 ， 并 实 现 了 系 统 符 合 ENERGY STAR 标 准 的 要 求 。 基 于 目 前 对 2023 Q2 营 运 的 展 望 ， 我 们 预 期 合 并 营 收 为 $98 million-$110 million， 合 并 毛 利 率 为 43%-47% 之 间 ， 合 并 营 业 费 用 为 $29.5 million-$32.5 million。
It is my presentation for the 2023 Q1 financial results. Now I transfer to CEO Dr. Jack Zhao to answer your questions. Jason, you may begin.
Thank you, Yo- 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, please ask your question. Should you wish to cancel your question, you may press star two. Thank you. Now please press star one to ask the question. Thank you. Our first question is coming from [Carol Run] of HSBC. Go ahead, please.
Thank you for taking my question. Could you provide the product mix in first quarter?
Okay, thank you. Good afternoon for everyone. For the product mix on the DP, it's about 40%. PS or our high-speed device is about 40%. PC that's our driver segment is higher than 15%. The TT that's our touch is lower than 5%.
My second question will be, seems that high-speed interface the product line was higher than the fourth quarter last year. Just wondering why, could there be more, was there any inventory correction in other product lines that make the gross margin still similar to the last quarter? Is there any potential upside into second quarter due to the end of inventory correction of your some of the product lines into 2Q this year?
Okay. Thank you. We are facing the market quite different from a year ago or even high, six months ago. Today's market remains challenging even though it has been improving. Just like [inaudible] said, we have some inventory and the write-off and so on and so forth. It's compared with our revenue is a small amount, but those will still impact our gross margin. On the other hand, as there are more IC supplier, especially on the low end, are quite aggressively using the price to compete. Those are the two factors, and we are managing it.
On the overall our gross margin, and we are happy for us in the such challenging environment, we can maintain our gross margin in our, the copyrighted target. That's the. I would like to say.
Okay. Thanks. Just wondering into 2Q this year, what product line do you think that will see the stronger growth into the rest of the year? Also, just wondering, in terms of high-speed interface, what which interface do you expect to see the most significant migration in this year or even next year? What kind of application you will see the faster migration?
Okay. Thank you. What we observe now, the notebook segment, has more general uptick of demand. We see the pocket of demand increase with a rush order and the pull-ins. More distinguishable is a demand for our high-speed devices and increase quite quickly and with a good amount volume. We're happy to see this. In terms of technology migration, we see the two kind of important trail. One is the notebook, adopt USB4 solution is increased. The speed of demand for the USB4, the timer, are increasing. The HDMI DisplayPort, HDMI start to move to the HDMI 2.1 with a higher speed. The DisplayPort are start to go to the 2.1 with a higher speed.
Those are the trends, and we have our device ready to support those, the advanced trends. Noticeably, the gaming market, notebook gaming market also has recovered nicely and demand our those high speed are increased.
Okay. Very clear. I'll stop here for back to the queue. Thank you.
Thank you.
Thank you. Next question, Daniel Yen of Morgan Stanley. You may go ahead, please.
Hi. Good afternoon, Jack, Yo-Ming Chang. Thanks for taking my question. My first question would be on your second quarter outlook. Jack, you just mentioned that you are seeing some upticks on notebook front and that increased demand for your high-speed interface product line. I'm wondering how do you think about your DP product line? Especially, could you also give a sense that what's the growth trajectory for your standards-plus versus your standard customers on the DP side into second quarter? That would be my first question.
Okay. Thank you. Yeah. The high-speed ports and our high-speed ports has benefited from the new trend, the notebook adopt newer device and the newer standard. Those previously in the market does not have inventory because it's a newer device, right? That's the trend, that's the right order to us, and that's we think we're happy to see it. Under DisplayPort side or on the panel side, you have mentioned basically on the TCON side, we observe a different trend. Different customer has a different phase of recovery. On the general notebook side, it has uptick and the panel solution, especially from the Taiwan panel vendors, are recovering very nicely. In some case, you have a more rush order or pulling orders.
On the other hand, and on the China side, I believe they had more inventory than the their counterpart in the Taiwan side. Their recovery seems slower. However, if you look at the recent few weeks, they are also recovering. Those are the general PC or general notebooks market. Other one of our customer, they are into the sort of reduction of their demand was later than the general market, and they are still behind the recovery than others as well. We believe those trend, probably they also will follow up with general notebook market, but just timing is different. Maybe one quarter earlier, one quarter later. Yeah, we think we're positive for their market strength, and we'll be patient to see how they will recover, and hopefully, they can recover quickly.
I see. Thanks, Jack. Basically for your guidance, you assume your standards-plus customer probably will not show significant recovery in this quarter. From your observation, I can say kind of last thing that, maybe the timing will be somewhere by 2Q or 3Q. Is that a fair commentary?
Yeah. That's basically is what we think and the scenario most likely.
I see. I see. Got it. Second, I want to ask about the inventory. I do notice that your inventory value, absolute value, it go down in 1Q the same as your inventory days. Could I ask, when do you think your inventory days, the DOI will be back to normal? Are we targeting either it's by 2Q or by 3Q? When you reduce your inventory, are you also trying to discuss the foundry wafer cost with your partner? That will be my second question, more on the supply chain management and inventory outlook.
Okay. In the Q1, we managed to reduce our inventory overall. Really, mainly contribution is for the general notebook demand increase. We would have to reduce more if our biggest customer did not change their forecast. Unfortunately, they did. They reduced quite a lot. I think in the general market, people already report it. You will see a lot of news sites report they are reduced of the output significantly. We still think Q2, our inventory will continue to reduce, and that's what we expectation. How much it reduce will be related to how much our biggest customer can pull. Okay?
Coming to Q3, Q4, and we think we are positive for business itself, but we also expect to see how significant improvement will be. We as a company are pretty cautious about the manufacturing side. Yeah, we don't wanna be caught another times. That's the.
Mm-hmm.
The current mindset. We are managing those things aggressively. In terms of the foundry price, as I explained the last time, there are two different scenario. Because of a geopolitical tension there, and that some of foundry would like to reduce their wafer price significantly. On the another side, you will see the people still, at least try to make the wafer price not change, or in some case, they want to increase. It is the challenge for IC company like us to manage it. The good thing is we have a multiple device, has both side support. We would like to balance out and depend on the customer to achieve overall our gross margin at reach our, the corporate, the target.
I see. Thanks, Jack. Just one follow-up, because you talked about some numbers for 3Q and 4Q. I think maybe it's still a little bit early. When you look at the full year to 2023, in terms of the quarterly revenue pattern, do you think we will likely to see more recovery in second half? Especially, you know, when, you know, when your data plus customer recover more new products USB4 into second half. How would you think about the seasonal pattern for this year versus the past years?
Historically, the Q2 for notebook or consumer business, second half should be better than first half, except last year. Last year we had a very strong first half, but had a pretty bad second half. I think this year, the second half will have a more recovery in the second half. First half, we are still in the sort of a bottom process to consume the inventory, to manage the inventory. We certainly hope the second half with our new device and with the customer, end customer, already gone through their inventory correction, so it will be more normalized. We clearly see a normal notebook guy already gone through that phase, and we hope our biggest customer will gone through that p hase as well.
As what you had said, our newer device, with a higher speed and a more functionality, it will stand out to occupy more market share. That will be we are exciting too for the second half of 2023 and as far as 2024. We think after that big correction in the second half of 2022 to the first half of 2023, we should be able to kind of move more smoothly back to the normal demand pattern.
Okay. Thanks, Jack. That's all my question.
Thank you.
Thank you. The next question is from Jerry Su of Credit Suisse. Go ahead, please.
Thanks for taking my question. Jack, just want to follow up on your previous comment about some segment you are seeing a pricing pressure. Could you give us some idea, you know, what which product segment is that? How will this impact overall margin into the second half of the year? I think most of the investor understanding is that Parade's more on, you know, premium segment. I'm just wondering why are you seeing competition, you know, on the pricing from some second-tier vendors? Thank you.
Yeah. A lot of our product are in the premium segment. We still have a similar product, in the sort of mainstream or the product line. The more competition we see on the first driver, more on the panel side of solutions. Probably you will be notice as well some of our big customer, a big competitor, they had gone through their gross margin all the way to 56%, then suddenly dropped to 30%. The market price with those kind of move will impact a lot of people. Right? So we have to, on that segment appear to be, well, still there, we have to compete. And that's the what I will refer to.
The second question is on the, you know, second quarter sustainability. I think you mentioned that consumer plus customer seems to be given the adjustment. I think based on some of the supply chain indications, there will be some new model launch during the quarter. I think the expectation for the consumer plus demands, you know, from our notebook side at least should be seeing some recovery. I'm just wondering why there's such a disconnection for Parade, you know, your DP versus what the market is seeing on the notebook side. Thank you.
You will see the... Yeah. I didn't know when our customer will announce new product or new notebook. I don't know. I think the things you have to notice whether their panel solution has a significant change. Right? If their panel remain use the same, our device, and we certainly hope the new notebook typical will certainly get a lot of sales, right? That we have a big hope. I didn't know when they will announce how much they will go. I can only say what do we experienced, especially the Q1.
As I had said, we had hoped the they would gradually improve and hopefully they will recover to normal and that's what we think. You have to observe their panel, how they do and which panel they kinda use. They introduce new notebook, not necessarily introduce new panels, right? That's what it is.
Okay. if there's no changes on the panel side, perhaps, the previous, you know, product you have shipped can continue to be, you know, adopted.
Yeah. That might be already in your inventory, right?
Okay. Got it. Thank you. Last question, can you give us some update on the PCIe 4.0 and also PCIe 5.0 retimer for the server market? Thank you.
Yeah. We announced our PCIe Gen 5 solutions. We are work with few big customer to design our Gen 5 retimer solutions. We are continue ship the PCIe Gen 4, the retimer. Yeah. That's the. We feel our PCIe Gen 5 retimer status is better at compare with the time, at that time we introduce the PCIe Gen 4 retimer. The solution is more solid and the customer kinda like it, our solutions. We will see how much the revenue could generate in that space.
Okay. Thank you.
Thank you. Next question will be Eric Chen of UBS. Go ahead, please.
Thank you and good afternoon, Jack and Yo-Ming. My first question is regarding the sustainability of the rush orders. I think during your prepared remarks, you talked about the, or during, you talked about the rush orders supporting the near-term, some new momentum. May I ask about what's your observation about the stability of rush orders? Are you seeing any shift to more stable order placement into Q2 or even second half of the year? How much is the rush order affecting your near-term guidance?
In the late of Q1 and the early of Q2, we observe a lot of queries. We've been asked to deliver the product with order placed like two, three or four weeks. We typically have a lead time. Before the pandemic, ask the customer 14, 16 weeks, right? In some case, we have to do high loss. We become behind the delivery. While we have a higher inventory on the other side, we are work very hard to deliver those rush orders, and especially on the high-speed side. I think the most rush order or pulling factor, one factor is our end customer are kind of shortened sort of behavior. Until they are very cautious about their business, until they see the market demand increase.
Otherwise, they don't want to place orders. On another side, their own end product inventory are about depleted, right? That is a positive trend. Typically, those kind of trend will developed, become a stable increase of business.
Got it. May I have a quick follow-up? Do you have any update regarding your, I mean, your deleverage ability? You simply talked about an extended inventory digestion into Q3. What's your observation about your inventory as well as the inventory at the customer side, and also for your own inventory level, versus the expected digestion by the end of Q2 based on your private expectation. What's the incremental difference versus what you guided in early February?
The I had on the early February, had a more positive view because I thought at that time our biggest customer could be follow the forecast and for this they made a big correction during the quarter, right? We still managed to reduce our overall Q1 inventory. On the Q2, we still think our inventory will go down. I don't wanna give another number there, but we think it will go down quite meaningfully. That's where we are. The second thing, I will hope our biggest customer will pull more products, and then our inventory will go down further.
Got it. Thank you. My second question is regarding, like, your high-speed interface. Could you talk about your position in USB4 and towards your latest observation about competition and penetration? Are you seeing a slower migration to USB4 given current, kind of slower sluggishness and on?
Yeah. The USB4 retimer, that's what you referred to.
Yes.
Yeah. We are designing to a sort of a predominant position on the AMD platform, so as on the Qualcomm platform. That's our first generation of USB4 retimer. We are about introduce second generation our USB4 retimer, which will have a much lower power and which will have a much lower cost. We already communicated or promote to the major OEM and ODMs, and the people are very happy to hear our solution. We are in the process to designing our second generation of retimer on the USB4 side. We knew there are competitor on the market. However, USB4 is quite complicated systems. You have to have a Thunderbolt 4 support. More tricky, you have to have a DP 2.1 support. I'm not sure our competitor capable do this.
Yeah. Besides this, we think our second generation is a lot more upper hand in the competition environment. Having said that, our HDMI retimer, DP retimer have fewer competition, I mean, less competition, or we have a huge market share on this market side, and we are very happy to support our customer on the HDMI retimer or DP retimer and those were doing very well.
Okay. Thank you. I'll back to you.
Thank you. Next question is from Bruno Chen of Alliance. Go ahead, please.
Hi. Thank you for taking my question. Check, can you hear me?
Yes.
Oh, okay. Cool. Thank you. My first question is regarding the margin guidance for second quarter. Just want to understand that, does the margin guidance range include any kind of further inventory write-offs?
I assume we already tucked it into.
Okay. So there is still some kind of inventory write-off go into the second quarter margin, right?
I think we already take into consideration.
Okay. Okay. Understood. My second question is regarding the new hub controller you just mentioned during the press release. Could you help to maybe describe the competition environment here and maybe what are the competitive advantage of this chip compared to our competitors, please?
Give me the, on the USB for the timer side?
Sorry. I mean the new USB hub controller.
Oh. USB.
Yes. Yes.
Yeah. USB hub, which is our extension of our physical logic, the USB 3.2, the hub, right? On the that, we have a so-called security, the update and improve the performance. That hub already designed to few of customer systems in the dock and also in the monitor side. More importantly, we are very busy to develop our USB4 hub, and that hopefully we'll announce in the second half.
Understood. My last question is regarding the automotive market. Could you give us an update on our product schedule or maybe some kind of design progress here?
We made a few of trenching to the automotive segment, mainly on the EV market. One of the thing we are feel exciting is the EV car on the Type-C connection now start to take video if beside as a charging port in the car. Our solution will have a PS8742V or PS8743V, is become a de facto solution for EV car, they call it video box. Basically, they have a Type-C in, split HDMI and the DisplayPort to go to a two-phase, and also that video box, they have to combine together to become a Type-C, right? We have a few of EV vendor, especially in the China, all start to adopt our PS8742V, PS8743V, plus our PS186V solutions.
We haven't shipped our PS186V, that's the DisplayPort to HDMI converter to the automotive on the EV SUV side. Then we have our DP to LVDS converter to the biggest of EV customer, and I think we have almost every car manufacturer will have it. We're also trenching our touch solution to one of the well brand name in Europe on one of their models, and that will be production MP in the Q3 or early Q4. Automotive is a segment we are very exciting and spend a lot of effort on it. However, automotive, each model, the volume cannot compare with the PC volume. That volume each month talking about 10K, 30K. Rather than the PC, we are typically talking about 200K, 300K. That's a difference.
Some of your model bigger has a more higher volume, some of them smaller, but we happy to see the automotive start to adopt those Type-C related high-speed device.
Understood. Maybe a follow-up question on the automotive side. Maybe can you share the maybe the potential sales mix, I mean, in maybe second half this year, or what kind of range are we going to see from this segment?
I think if we look at the runway for yearly, right? Runway for yearly. We expect to see TWD 5, 10 million type of thing. It will have more in 2024.
Okay. Understood. I'll go back to the queue. Thank you.
Thank you. Next one is Aaron Jeng of Nomura. Go ahead, please, Aaron.
Hey. Thank you. Hey, Jack.
Mm-hmm.
To clarify, by your different business product lines, comparing the outlook today versus three months ago, only one of your business product line, which is dominated by your largest customer, is weakening than you thought three months ago. All the other three or other few businesses are progressing better than you expected three months ago. Is that the right understanding of how your different business moving, over the last three months?
I think that if you look at today versus three months ago, the general notebook or the demand for our products are stronger and the pattern are getting better. If you ask that question and in general, we are getting better. Yes.
I'm not sure if this is the right question to follow up. If we can, you know, if we can exclude this largest customer from our comparison, just look at the other revenue, excluding the largest customer, what, I know, what's the growth rate for 2 Q compared with 1 Q?
I wish I can answer this, but I didn't have the data in front of me. I think you might want to talk to Yo-Ming Chang afterwards.
Yeah. Sure. Okay. No problem.
Yeah. I wish I had... I think the probably Yo-Ming Chang can. You can talk to Yo-Ming Chang about this.
Sure. Sure. Thank you. Another question is that you earlier mentioned that the status where you are at PCIe Gen 5 today is better than the status where you were, when you launched.
Right. Yeah.
in Gen 4.
Right.
Right?
Yeah.
Could you elaborate more? Because.
Oh, I mean
Yeah, sure.
Stability of our device on the customer system are perform lot more better. That's, that's what. The first generation at that time or similar time. We have a more technical question to resolve than today we have, much less, technical issues.
I see. Following up to this, your product today is doing better than Gen 4 product, probably like, four or five years ago.
I think.
Technically. Yeah.
Speaking of competition, we, a lot of companies are saying that they're going to enter Gen 5, right? In Gen 4 they were not being there. Yeah, you yourself is doing better, but how would you compare the competition landscape today in Gen 5 versus maybe three, four years ago in Gen 4?
Frankly speaking, in the customer system, besides Aste ra Labs, I don't see many people, really as many vendors as you had said to competing. Yeah. I don't know how many, how to comment on this. People probably knew and we hear people have a paper chip already promoted to the customer. Recently there are also customer come to us, and we wanna see where is it. [inaudible] , and we ask a customer, you go ask them to show you the demo board and show you the real work system. Eventually people walk back say, "Oh, they have a paper there. Paper chip is not real chip.
Okay. Thank you. My final question is.
Yeah, I heard a lot, but I don't think people real working silicon. It's not what people think. I knew there's a lot of people claim this thing.
Okay, that's clear. My second question is that would you have any thought on gross margin trend? I'm not asking the revenue trend, but in terms of margin trend, would you be more comfortable about improving into second half versus first half?
We certainly hope so. The situation now as I at the beginning said, when I started and the competition on the low end is on the price side is more. However, we do have our newer product on the high speed side holds reasonable well, I would say, and we also see back in the manufacturer side, what I meant is the packaging casting both place, manufacturing side are more willing to reduce their price than the client side. So it's a difficult thing to manage and but we are work very hard to manage the gross margin side.
No problem. Okay, I have no more question. Thank you.
I think I will add on one thing, you observe our some of our competitor and the gross margin changed dramatically, right? We definitely wouldn't do this. That's not our style. At a good time when the shortage we did not make a gross margin, like go to the very high either. We try to stabilize our gross margin and have the expectation that where they are.
Thank you. Thank you very much. Back to the queue.
Thank you. Ladies and gentlemen, we are now moving on to the Chinese section of the Q&A session. Thank you. 中 文 提 问 时 间 现 在 开 始 。 如 果 您 需 要 提 问 ， 请 在 您 的 电 话 机 上 按 米 一 。 当 我 们 读 出 您 的 名 字 后 ， 请 开 始 发 问 。 如 果 您 需 要 取 消 发 问 ， 请 按 米 二 。 谢 谢 。 现 在 请 有 提 问 的 来 宾 朋 友 在 您 电 话 机 上 按 米 一 。 谢 谢 。 中 文 提 问 第 一 位 来 自 于 Goldman Sachs, Evelyn Yu, 请 提 问 。
谢 谢。 这 是 我 的 问 题。 我 的 问 题 是 想 要 请 教 一 下 在 OLED 上， 我 们 可 不 可 以 就 是 先 我 们 听 过 了 一 些 color， 这 个 content increase 的 部 分， 还 有 客 户 的 这 个 adoption rate， 整 个 overall 现 在 看 起 来 这 个 revenue 的 mix， 就 这 个 TCON segment 大 概 是 怎 样 的 呢？
我 们 已 经 ship 这 个 OLED solution for few years. 今 天 OLED 在 notebook still 是 一 个 niche panel, niche market, 因 为 这 个 OLED panel 还 是 比 较 贵. general notebook customer reluctant to massive use OLED. 有 一 些 这 个 high-end customer, I believe 他 们 会 有 一 些 model 会 move 到 OLED 这 个 solution in the near future. 我 们 也 prepared for 这 些 customer to migrate to the 这 个 OLED solution for 这 些 high-end customer. expectations 这 个 things are move smoothly, move on time to deliver those kind of solution, 这 些 这 个 OLED necessary solution to the customer, whether for notebook or whether for tablet, 这 个 solution move smoothly.
了 解 ， 谢 谢 。 在 这 个 content increase 的 部 分 是 刚 刚 有 提 到 说 价 格 是 还 是 比 较 贵 嘛 ， 我 们 可 以 大 概 就 是 透 露 一 下 它 这 个 price gap versus 我 们 一 般 这 个 TCON 大 概 是 几 倍 呢 ？
OLED 因为 比较 complicated, right? 需要 每个 pixel 都 需要 memory to support, 那 比起 这个, 假如 我们 说 TCON 的 PSR based, 这些 TCON 我们 在 ship 的 whether eDP 1.4 PSR based, 那 OLED 大概 还会 有 1.5x-2x 的 gap, 我 认为 这样的 一个 range 里面. 因为 它的 die size 比较 大, 它 也 需要 用到 more advanced technology node.
了 解 ， 谢 谢 。 好 的 ， 我 第 二 个 问 题 就 是 想 要 请 教 一 下 ， 因 为 我 们 刚 才 有 提 到 说 ， 呃 ， 我 们 刚 过 去 三 个 月 看 起 来 好 像 overall 订 单 是 稍 微 有 比 较 好 的 一 个 trend。Right。 那 ND 这 方 面 也 是 有 improve。 那 我 可 以 请 教 一 下 ， 就 是 我 们 看 今 年 的 这 个 整 个 PC 的 shipment， 呃 ， 我 们 这 个 expectation 还 是 在 降 ten percent 左 右 的 这 个 shipment 的 outlook 吗 ？ 就 是 今 年 。
我想我们大概也在 talk to OEM 的 customer。就在上个礼拜我们也 talk to one of biggest OEM customer。我们也看 research analyst report，那我想 TrendForce and so on so forth 我们都在看。那我们相信这个大家的 projection 还是说跟 2022 会有 up to 10% unit reduction。这个是我们听到我们的 customer，或者说那些这个 research report 说。但是我们自己还是有一些不一样的地方，就是说我们的 high-speed 有些 parts 是 newer parts，这个 ASP price is different。那我们就来看这个最终是一个什么样的 situation，但是这个 dynamic does change，是 change 很快，然后我们 hope，当然 hope 这个 number of unit of notebook reduction，可以比较少一点，不希望是 10% 或者多。但是 let's wait to see。因为现在的有蛮多的这些 order 都是比较 rush order，这个是 plan 以外的这些 order，是吧？Yeah，我希望这个 stabilize，那我希望这个 at least 我们可以再 within 10% reduction with 2022。
谢 谢 ， 谢 谢 。 好 ， 不 好 意 思 ， 我 最 后 一 个 问 题 follow up。 不 好 意 思 ，excuse me。 我 们 第 一 季 的 这 个 GM，gross margin write off impact 大 概 影 响 多 少 啊 ？ 在 我 们 的 margin 这 边 。
你 说 gross margin 被 什 么 影 响 多 少?
就是 inventory write off. 刚刚 提到 second quarter 会 有 一 些 嘛, 那 而 这 种 也 就 是.
有 一 些 write off, 我 没 有 一 个 specific number. 这 个 大 概 也 没 办 法 去 exactly 卸, 因 为 这 个 还 蛮 complicated. 这 个 有 一 些 write off, 也 有 一 些 过 去 这 个 已 经 write off 的 我 们 又 卖 掉 了. 这 个 是 比 较 complicated 一 个 model. 我 prefer 你 跟 这 个 叶明 去 discuss.
好 的 好 的, 谢 谢. 谢 谢 Jack.
嗯 。
谢 谢 。 下 一 位 提 问 的 是 Goldman Sachs Bruce Lu， 请 提 问 。
Hey, 不 好 意 思, 又 是 我 们 Goldman. 我 刚 才 那 个 数 字 有 一 点 听 得 不 是 很 懂. 因 为 你 们 公 司 今 年 上 半 年 的 YoY 是 down 了 将 近 50%.
对.
如果 PC shipment 是 down 10% 的 话， 当然 你们 公司的 业务 不是 只有 PC， 但是 PC 还是 占 比较 多的 部分， 就算 把 Apple 扣 掉， 你们 PC-related 的 business 应该 也是 down 一个 meaningful 的 number， 应该 是 significant higher than 10% decline. 表示 如果 就算 你的 库存 清 完了， 所以 你的 下半年 要 一个 super strong 的 recovery， 这样 才有 办法 凑到 这个 10% decline 的 overall 的 PC shipment， 这样的 逻辑 是 合理 的 吗？ 如果 是 这样 的 话， 你的 Q3 就是 要 看到 一个 非常 非常 强劲 的 recovery 才 可以。
我 这样 说 。 这 前 面 的 comment 我 再 强 调 蛮 多 的 ， 这 个 是 这 些 research report 跟 我 们 ， 跟 OEM 谈 的 这 个 number of unit， 对 吧? 我 没 有 在 point out to 我 们 自 己 的 business。 我 想 前 面 那 位 女 士 的 question 是 说 这 个 number of notebook， 我 没 有 point out to 我 们 自 己 的 这 个 business， 那 我 想 这 个 ， 把 这 个 explain clearly。 那 对 我 去 年 的 -
两 种 可 能 嘛。 一 种 是 research report 的 数 字 有 downside， 或 者 OEM 跟 你 讲 的 数 字 有 downside。 要 么 就 是 你 们 下 半 年 要 非 常 强 劲， 对 不 对？ 这 只 有 两 个 这 个 可 能 性 嘛。
那 去 年 的 我 相 信 有 一 个 蛮 大 的 ， 大 家 都 知 道 ， 这 个 去 年 大 家 都 很 crazy， 实 际 上 有 很 多 overshipment， 是 吧 ？ 那 这 些 overshipment 就 是 我 们 在 做 inventory correction 的 过 程 ， 很 多 东 西 是 这 个 overhang 到 了 今 年 。
嗯 。
是 吧？ 这 个 是 一 个 这 个 过 程 。 let's see how the thing goes. 我 相 信 ， 有 一 点 是 ， 就 比 较 有 信 心 的 ， 就 是 说 second half 一 定 不 会 比 first half 来 得 好 。
对, 这 我 再 follow up 一 下, 就 是 说, 我 可 以 理 解 去 年 有 一 些 crazy, 有 一 些 问 题, 可 是 你 们, 刚 刚 也 讲 Q2 的 库 存 应 该 会 再 更 下 降 嘛, 我 想 离 comfortable zone 应 该 不 会 特 别 远, 所 以 理 论 上 你 的 下 半 年 的 revenue 就 应 该 是 跟 着 end demand 比 较 正 相 关 的, 比 较 就 因 为 你 的 correction 应 该 在 Q2 应 该 就 会 比 较, Q2 应 该 就 比 较 结 束, 所 以 下 半 年 还 是 应 该 要 看 到 一 个 非 常 强 劲 的 recovery 啊.
如 果 这 次 let's wait to see.
了解，了解。第二个问题我还是要 follow up 一下，这个就是你们现在在 total 的 server revenue contribution 是多少哦？我们看一下这个 PCIe 4.0 为例，这个 retimer 的这个部分，我们看到了，就我们之前讨论的 retimer，其实这个数字都比较大哦，可是这个真正 adoption 的时候看起来反应还是比较慢一点，整个 market 的 penetration rate 也没有这么快的起来。
我 同 意 的 ， 我 kind of 同 意 你 的 看 法 是 说 这 个 data center 跟 server 的 adoption rate 不 像 我 们 原 来 想 的 那 么 快. 我 想 大 家 都 看 到 ， 无 论 Amazon， 无 论 Google 或 者 在 大 陆 的 这 些 data center 的 adoption speed， 特 别 是 在 去 年 下 半 年 以 后 有 一 些 reduction， 或 者 说 没 有 像 大 家 想 的 那 么 快. 我 们 也 ， 我 们 还 是 positive 在 这 一 方 面 的 说 ， 不 光 是 在 server adoption， 实 际 上 现 在 有 一 些 architecture，for example， CXL 的 newer application，hopefully will bring more business. Of course 从 来 没 有 去 take into consider CXL segment 是 吧 ， 都 是 newer segment，hopefully will get it more. 我 相 信 你 observation 是 有 quite reasonable， 就 是 说 the second half last year， 有 一 些 adoption rates 在 reduce.
我 们 可 以 给 一 个 指 引 ， 比 如 说 这 个 的 penetration rate 大 概 在 今 年 底 或 者 是 明 年 底 大 概 会 是 一 个 什 么 样 的 range？
我 觉 得 还 是 蛮 difficult 的， 我 觉 得 还 是 蛮 difficult 给 出 一 个 clear 的 guidance 出 来 的.
了 解 ， 因 为 这 个 东 西 其 实 是 一 个 很 大 的 swing factor 哦 ， 就 是 说 我 们 在 做 。
蛮 大 的 一 个, 我 懂 你 的 意 思, 蛮 大 的 一 个 swing factor. 这 个 从 overall 的 技 术 角 度 来 说, 这 一 部 分 会 determine system 的 performance. 这 些, depends on 的 这 个 大 家 对 这 个 how urgent to upgrade 这 些 system. 这 就 是 变 成 一 个 factor 在 那 边 了.
好 ， 我 就 想 说 像 今 年 这 个 Intel， 这 个 ， AMD 都 有 新 的 platform 出 来 ， 它 至 少 有 些 新 的 design win 上 面 看 到 的 penetration rate 有 一 些 meaningfully 的 增 加 吗 ？
我们有跟这些 customer 在一起做 design, hopefully 他们会有一些这个 penetration more, right? 现在的这些 data center 很多的 customer 都在用他们自己的 platform, right? 我说你去跟 Intel, 跟 AMD 做 design, 这个有多少 after all 的 benefit 也有一些我们也不完全 understand, 因为现在很多都有自己的 solutions, 自己的 silicon.
了 解 。 不 知 道 最 后 一 个 问 题 是 这 样 ， 就 是 说 现 在 有 另 外 一 个 说 法 是 说 我 们 因 为 retimer 比 较 贵 嘛 ， 我 们 就 用 redriver 来 做 这 件 事 情 ， 那 有 些 又 说 是 这 个 redriver 的 performance 不 够 ， 这 个 可 能 给 我 们 一 个 比 较 清 楚 的 picture， 说 我 们 什 么 时 候 需 要 用 retimer， 什 么 时 候 要 redriver， 这 个 各 各 的 market segment 跟 penetration 大 概 会 是 怎 么 样 ？
我 们 ， 我 们 也 在 做 ， 我 们 也 introduce PCIe Gen4 的 retimer， 我 们 也 会 introduce PCIe Gen5 的 retimer， 也 会 introduce. 我 觉 得 在 一 些 mission 不 critical 的 platform 上 面 ， notebook， 或 者 说 desktop. 因 为 price 的 原 因 ， 大 家 可 能 比 较 希 望 用 redriver. 在 mission critical 的 地 方 ， 特 别 是 这 些 system complicated 的 地 方 ， most of them 会 直 接 用 retimer 去 做 这 个. For example 我 们 会 有 16 个 channel 的 retimer 去 做 ， 这 种 chip 大 概 20 W， 这 个 一 颗 chip， 对 不 对 ？ 我 们 不 会 去 做 16 channel 的 redriver， 我 们 redriver 只 会 去 做 4 个 channel 的 ， power 也 是 limited lower， 对 不 对 ？ 这 个 talking about 比 较 friendly for notebook application， 所 以 这 个 是 两 个 比 较 distinguished 的 这 个 ， 这 个 application. 用 retimer 的 人 一 定 会 是 这 种 heavy user 的 system， 因 为 他 一 定 会 要 用 这 个 heat sink， 也 一 定 也 要 用 这 个 ， 这 个 cooling system. Redriver 就 very friendly for everything， 但 是 它 的 performance 也 是 limited， 它 线 不 能 走 得 太 长 ， 也 不 能 用 cable 来 做 这 种 system 的 ， 是 吧 ？ Retimer 那 些 很 多 都 是 拉 出 这 个 system 有 很 长 的 cable 在 上 面.
了 解 。 比 如 说 ， 那 像 你 比 如 说 以 2023 年 来 看 -
Bruce.
发 展 差 距 比 较 大, 还 是 比 较 大.
好 ，Bruce， 谢 谢 您 。 那 由 于 我 们 时 间 的 关 系 ， 我 们 的 QA 阶 段 就 到 此 结 束 。 那 也 谢 谢 Jack。 我 们 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 。 非 常 感 谢 各 位 参 与 谷 瑞 科 技 股 份 有 限 公 司 2023 年 第 一 季 线 上 法 说 会 。 我 们 今 天 的 会 议 将 到 此 结 束 ， 您 现 在 可 以 离 线 了 。 谢 谢 ， 再 见 。
Okay, thank you everybody.
Thank you.
Thank you.