Welcome everyone to Parade Technologies Limited's 2022 fourth quarter webcast investor conference. Investor relations of Parade Technologies, Yo-Ming Chang, will present 2022 fourth quarter and fiscal year 2022 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, Jack Zhao, and CFO, Judy Wang. We also will remain less than minutes for those attendees who would like to ask questions in Chinese. Please follow the instructions given at that time if you would like to ask a question. Now, I would like to introduce Yo-Ming Chang, investor relations of Parade Technologies. Mr. Chang, please begin.
Thanks, Jason. Welcome everyone to Parade Technologies 2022 Q4 webcast investor conference. Parade Technologies fourth quarter 2022 consolidated revenue was $101.45 million, and the net income was $14.48 million. Its both basic and fully diluted after-tax earnings per share were $0.18 and $0.18, respectively. These results compare to consolidated revenue $194.26 million and a net income of $52.6 million, or $0.66 and $0.65 per basic and fully diluted share in the year-ago quarter. In U.S. dollars, the fourth quarter revenue decreased 32.83% sequentially, and it was down 47.77% year-over-year.
The gross profit in the fourth quarter of 2022 was $44.68 million, a decrease of 34.66% from the previous quarter, and a decrease of 52.46% compared to the same quarter of last year. For the fiscal year 2022, the consolidated revenue was $679.92 million, representing a decrease of 4.82% from $714.33 million in the prior year. Gross profit was $316.18 million, and the operating income was $180 million. Net income was $167.25 million, or $2.09 per basic share, and $2.06 per fully diluted share.
This result compare with the net income of $187.44 million, or $2.37 per basic share, and $2.32 per fully diluted share in the prior year. Based on the current business outlook, Parade is providing the following guidance for the first quarter of 2023. Revenue is between $90 million-$105 million. Gross margin is between 43%-47%. Operating expense is between $29 million-$32 million. On January 18, 2023, Parade introduced the new PS8936 retimer chip developed for PCIe 5 and the CXL, supporting shifting bidirectional lanes.
In addition to supporting the 32 gigabits per second data rate offered by the PCIe 5 specification, it also supports 2.5 by 8 and 16 gigabits per second for backward compatibility with earlier PCIe revisions. The PS8936 is the PCIe 5 retimer, addition to Parade's PS8926 and the PS8925 PCIe 4, 16-lane and the 4-lane retimer family currently in production, and the PS8570 PCIe 4 4-channel linear redriver in sampling stage. The PS8936 is in full compliance with the PCIe 5 specification and has been successfully tested in multiple OEM systems and the PCIe 5 CPU platforms. It is designed for use in enterprise systems, including servers and the data storage and in high-performance workstations. On January 25, 2023, Parade announced a new offering that in its eDP Tcon with embedded driver product category.
TC3222 provides a single-chip display driver solution as an alternative to the traditional multi-chip solutions, eDP Tcon plus source drivers. The TC3222 provides a lower cost alternative to the TC3210 by eliminating the frame buffer required to support panel self-refresh. Both versions feature narrow COG package dimensions to support new generations of sleek LCD panel assemblies. TC3222 is compliant with the eDP 1.4b standard and support a mix of dynamic refresh rates and more. The TC3222 is designed for free chip on glass application on both amorphous and oxide type TFT panels. It requires no external crystal or timing reference, include a programmable gamma buffer as well as Parade's exclusive Smart-Backlight feature for additional color and power optimization.
The fully programmable row and column driver timing enables the TC3222 to serve a broad range of panel types, and it provides synchronization signals that support a wide range of touch controls.
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相 较 于 去 年 ， 税 后 净 利 为 美 金 一 亿 八 千 七 百 四 十 四 万 元 ， 除 权 后 基 本 与 稀 释 每 股 税 后 盈 余 为 美 金 二 点 三 十 七 元 ， 约 当 新 台 币 六 十 六 点 二 九 元 ， 及 美 金 二 点 三 二 元 ， 约 当 新 台 币 六 十 四 点 七 九 元 。 基 于 目 前 对 二 零 二 三 年 第 一 季 营 运 的 展 望 ， 我 们 预 期 合 并 营 收 ， 营 收 为 美 金 九 十 到 一 百 零 五 百 万 元 之 间 ， 合 并 毛 利 率 为 四 十 三 percent 到 四 十 七 ， 四 十 七 percent 之 间 ， 合 并 营 业 费 用 为 美 金 二 十 九 到 三 十 二 百 万 元 。 西 元 二 零 二 三 年 一 月 十 八 号 ， 普 瑞 公 司 针 对 PCIe 5 与 CXL 所 开 发 支 援 十 六 对 双 向 传 输 通 道 的 时 序 重 整 晶 片 PS8936。 除 PCIe 5 规 范 所 定 义 的 三 十 二 gigabits per second 资 料 传 输 速 率 ，PS8936 亦 向 下 相 容 更 早 期 的 PCIe 版 本 ， 包 含 了 二 点 五 gigabits per second、 五 gigabits per second、 八 与 十 六 gigabits per second。
普 瑞 科 技 所 提 供 的 PCIe 系 列 产 品 包 含 量 产 阶 段 的 PS8926 与 PS8925， 分 别 为 PCIe 4 双 向 十 六 通 道 与 双 向 四 通 道 时 序 重 整 晶 片 ， 以 及 目 前 正 在 送 样 阶 段 的 PS8570， 为 PCIe 4 单 向 四 通 道 的 线 性 中 继 器 。目 前 增 添 之 PS 八 九 三 六 完 全 符 合 PCIE 五 规 范 ， 并 已 在 多 数 OEM 客 户 系 统 与 CPU 平 台 上 完 成 验 证 。 西 元 二 零 二 三 年 一 月 二 十 五 日 ， 普 瑞 公 司 推 出 全 新 内 建 面 板 驱 动 功 能 ， 高 度 整 合 的 时 脉 控 制 器 TED。 相 较 于 传 统 上 需 要 数 颗 显 示 驱 动 晶 片 与 时 脉 控 制 晶 片 方 能 点 亮 面 板 ， 现 在 仅 需 一 颗 高 度 整 合 的 TC 三 二 二 二 即 可 ， 是 一 个 相 当 有 效 益 的 替 代 方 案 。 与 普 瑞 已 量 产 的 TED 产 品 TC 三 二 一 零 相 比 ，TC 三 二 二 二 不 支 援 PSR 面 板 自 主 刷 新 功 能 ， 拿 掉 了 缓 冲 记 忆 体 ， 让 产 品 各 具 价 格 优 势 。TC 三 二 二 二 与 TC 三 二 一 零 一 样 ， 采 用 COG 封 装 形 式 ， 符 合 新 一 代 洗 练 的 面 板 设 计 需 求 。
TC 三 二 二 二 支 援 EDP 五 一 点 四 G 规 范 的 MSO 动 态 萤 幕 刷 新 率 ， 以 及 各 种 主 流 CPU、GPU 与 SOC 厂 商 独 有 的 传 输 讯 号 协 定 。 针 对 Amorphous 与 Oxide TFT 面 板 应 用 设 计 的 TC 三 二 二 二 ， 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 ， 呃 ， 普 瑞 独 家 Smart Brightlight 智 能 背 光 控 制 功 能 ， 同 时 优 化 色 彩 与 功 耗 表 现 。TC 三 二 二 二 可 调 整 水 平 与 垂 直 驱 动 时 序 ， 强 大 于 调 整 弹 性 ， 使 以 符 合 各 种 不 同 形 态 面 板 架 构 的 需 求 。 此 外 ，TC 三 二 二 二 亦 可 输 出 同 步 讯 号 ， 支 援 各 种 触 控 控 制 晶 片 。It is my presentation for the two thousand twenty two Q4 and year two thousand twenty two financial result. 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. In every time you can ask two questions at the most. Should you wish to cancel your question, you may press star two. Thank you. Now please press star one on your telephone keypad to ask a question. Thank you. Now first question is coming from Carol Run of HSBC. Go ahead, please.
Hi, thanks for taking my questions. My first question, some quick questions on the results. Just wondering what is your product mix in the last quarter? Also curious about the gross margin has declined QOQ in the last quarter, and the inventory has increased a bit. Just could you provide more details on the margins and any product line seeing more inventory pressure in the last quarter? Yeah, that would be my first question.
Okay, good afternoon. For many people who are in Asia. The first question was what is the mix our product line? The display for touch line is about 40%. TSD in our high speed product line include the first driving part is above 30%. Our first driver or Tcon product line is above 20%. The TTcon, our touch product line is lower than 5%. The second question, I believe, is why would the gross margin are a little bit slow, a bit lower? Yes. I think our gross margin is well within our guidance. The gross margin mainly is due to our mix of our product sales in the previous quarter.
As we are going through the inventory correction, we took a little bit of conservative approach to roll down a portion of our parts to which are the kind of aging, and we have a rule there. Mechanically to roll down small portion of our the aging parts. That's another contribution for the slightly lower of our gross margin. I think the third question related with the inventory, the past Q4 was a very difficult quarter for many of us, especially we have operation office in China. As far as if we recall, with the zero-COVID policy there, our markers and the
People who are in the Shanghai office really closed the office for a couple weeks and followed by the total COVID opened up and many of our employees all got infected. So that within a quarter, probably you had 1 month of time, we are really dealing with those kind of issues. As our manufacturing customer surrounding the Shanghai area and the people in factory were not open or only partially open, and so they are fully took our parts than what we had anticipated. However, as we were trying to move through this COVID event and then how to recover and the manufacturer and our office both are totally open and we see the exploration in the manufacturing side or distributing side to take our parts to the factories. I guess that's what our explanation why we have we saw the inventory kind of increase as not as we had thought at the beginning of Q4 quarter.
Got it. Do you think that the inventory will continue to decline in first quarter? When do you think that the inventory level will get to the normal situation in this year? Any opportunities to see some of the high-speed interface products to have a better, faster suggestions compared with other display related product lines?
If I continue with what I had into the January, we saw or we experienced a lot of the rushes and the pullings so that the whole distribution channel, which are our 50, now shipping a lot more parts to go out than we shipping. We saw the consumption of our parts from the distribution channel accelerate. As far as our own inventory in the January will continue consume very quickly. As we modeled, we think by the end of Q1, the distribution channel inventory is no longer an issue, will become normalized. For our own inventory, we also think by end of Q1, we'll have a reduced quite a bit and by end of Q2 or mid-Q2, we think that the inventory issue should be behind us.
Okay. Got it. Very clear. My last question would be regarding the full year outlook. Have you been seeing any better momentum for any product lines or any visibility for each product line in 2023?
I think the larger we read and follow the research report from many organization and the people modeled the 2023, the PC, especially notebooks, will have about 10% of reduction from the 2022. That's a large picture and we made our awareness. However, reading that the contrast and we see the significant risk for our own new device, especially USB4 timers. We adopt in the 2 very significant platform and with multiple customers, and we had the shipment going to mass production in the last Q4, now is accelerate shipment for USB4 timer. We hope that will be a growth momentum for high-speed device.
We also would like to see our TV device with our new announcement, new device. We continue have a several our TV device. We are leading the market to have a better market share for the total solution to support panel industry, which will provide much better result and a complete solution for the IT panels. Our customer, our panel customer started, and in fact, we see 70% already into the mass production with the end customer there. That should cut quite a lot hurdles that we think will to grow our business. In 2023 and within the notebooks, the shipment, unit shipment will kind of 10% drop.
Okay. Okay. Thank you. I think it's pretty clear. I will be back to the queue. Thank you.
Yes.
Thank you. Next question, Aaron Jeng Nomura. Go ahead, please.
Thanks for taking my question. Just a follow-up on inventory first. By end of Q, your inventory will go back to normal or within 2Q per say. I wonder what you call the normal level inventory and target in the next cycle?
Yeah. Yeah. Yeah. We are... Our own inventory, when we before the pandemic, in the range of 65-60 days. That's where we consider as a healthy inventory level. That's where we like to take it.
Sorry, I didn't hear clearly. The range was 65 to which, how many days?
60-65 days.
Which means by end of Q2 you expect your DOI to come back to this level?
Yeah. Come back by the end of Q2 time frame that would be the standard level. Of course, this one essentially is two things. One is your opportunity inventory level. The second one is your business picked up and your numerator also play a significant role there. Thank you.
Okay. To add to this. I would presume that you are seeing Q revenue to pick up. I don't know how on the scale, but kind of from this number looks like it's going to be a meaningful double-digit revenue increase in Q2 from 1 Q. Is that a right speculation?
I don't wanna project the second quarter. We do see the powerful momentum in the current quarter with the rush order and the pull-ins. We do see our distribution channel ship out to the customer a lot more than we shipping to our distribution.
Okay. when you say.
Yeah. It basically, you're calculating the difference to kinda see what is the intrinsic revenue to your end customer, right?
Correct. Yeah. Last one. When you say you see the short and the pull-in, are you referring to the variety driver business and also high-speed business?
I think the start with the high-speed device. Now we see the panel industry also aggressive deploying.
I see. Okay. Over the last, say, two, I mean, like, maybe two months time, I think it's also been reported that your standard graph customer has reported quite low revenues, shipments for their and make product line. Okay. Is that already in your model projection in Q1? How does that impact your Q1 or Q2? Can we assume that the slowdown is already well captured by your model projection?
Yeah. Our standard graph customer working with us very diligently. We keep getting the and weekly by weekly the forecast and yeah, the whatever the you have said, we the forecast or guidance is already projecting the customer forecast.
I see. Thank you. Okay. Allow me to have my probably another one set of questions, which is on gross margin front. Because in Q4 you are reporting gross margin of 45%, which is in the low end of your guidance. In Q1 your projected, your guided gross margin is another 0.5% lower than the range of 40, right? But the other hand, you were saying that inventory will be going down in Q1. Okay. The question is that how much of one, two say, it has very much impact on Q1. How much is affected by the so-called inventory write-off, which is accounting related. How much is affected by real customer, yeah, customer?
I think the write-down portion is quite small. You might want to talk with inaudible offline, and we have a certain write down actually we quantify. We think probably some aging device will ship to write off to be conservative. As we are moving to very different environments the competition getting heated up as well, that really not much significant impact our gross margin either. Because, in some way, if you want to push out more your inventory, you have to get some incentive to your customer to take your parts. I don't think that really the price to move that much is really the...
You provide some incentive to the customer to move your parts.
This happens more in space side or high-g side? I mean, giving in to customers.
more on the space side than the high-g side.
Okay. Thank you, I have done my question. Let me in. Thank you.
Okay.
Thank you. Next question, Harvey Chou of Credit Suisse. Go ahead, please, Harvey.
Okay. Hello. Thank, thanks for taking my question. Just a quick follow-up on the inventory and gross margin. In the previous remark, you highlighted that during this market downturn, there are some incentives you give to customer in order to facilitate better pulling. Could you also comment a little bit on your wafer cost? Do you think the overall cost to increase in the near term? What's the resulting impact to your gross margin guidance? You already provided a first quarter gross margin to be down by I think, the guidance sequentially declined by 25%, you point call down, I think. What's the overall impact from maybe the wafer cost to this gross margin assumption? Thank you.
Going to 2023, on the wafer side, frankly speaking, we really did not materialize the wafer price increase. Okay? We do see some of the foundry, because of the slow demand to cut their wafer price to, again, to increase the demand. This is a dynamically change and a different complement, different category people are provided different incentive to encourage, to use the capacity. I think that's pretty normal as we in high symmetry quarter had a downturn now passed to the on the foundry side. However, it's really depend on the which foundry, some of them, still you have to increase the price or just remain the price, no change. However, some of them significantly reduce price to weigh the business. This is a pretty dynamic.
Having said that, a lot of parts as we consume inventory, the newer manufactured parts with assembly reduction, the benefit, we wouldn't have, we won't come to the economy until I think Q2 timeframe, because Q1, they get a wafer supply, then they will move to Q2, and they will send the parts. That's like half years later.
Okay, thanks. Instead of potential negative impact from the wafer cost, you are actually seeing maybe potentially incremental support due to the in like likely decreasing wafer cost to your gross margin.
Depend on your mix. As I said, some of your foundry increase price. Some of the foundry price not change. Others actually significantly reduce the price.
Okay, I see. My second question is with regard to your the comment on incentive. You highlighted that in the past quarter, you provided more incentive, a bit more incentive in order to drive your display business sales. I'm just wondering because you also commented that toward the maybe 1st half this year, you are expecting that the overall inventory level for your, for the company as well as in the channel to see a ration optimization. I'm just wondering how... Should we also expect some kind of, like, incentive going on in the 1st quarter or into 2nd quarter, or will this all be out of the equation starting from the beginning of this year? Thank you.
We make a decision depending on the situation and the data. We certainly would like to get our inventory level to normalized. However, as we said, we always said we watch out our gross margin carefully. In the past the cycle and our gross margin has some change up and down, but we're not seeing the certain band that go widely like others. So we remain that kind of the attitude or management to try to stabilize our gross margin, and which we feel is very important to the investor.
Okay. Thank you. A quick follow up. Quick follow up on your comment with regard to the near-term outlook. You highlight, I think that previous, like investor also asked about your view on the second quarter expectation. I'm just wondering, could you just maybe provide some more detail, maybe just in terms of the second quarter momentum, do you expect the overall momentum to see a sequential rebound, potential sequential rebound into second quarter given the larger top line corrections since the second half of last year? Lastly, what's your expectation maybe for the first half versus second half momentum for the year? Thank you.
Okay, I have one more thing on the gross margin. The gross margin also very subject to your product mix. If you introduce more high value product and which in the large volume sales, your gross margin may also increase, right? In terms of the potential business on Q2, Q1 is a PC low season and a PC are lower season. In particular this Q, we had a consumption our distribution inventory, that's a larger will be carrying in the Q1. Which means once the distribution channel getting normalized or lower than what we would like to, then the distribution channel will buy a lot more device than we are. They are much healthier.
That's the one of factor we think that moving forward will be more positive and because the PC business, mobile business second half will be better than the first half. We also clearly see the behavior of large OEM. They are more willing to take the system, take the inventory and we think those are the positive trend. Besides the, the... You have China is reopen and start to be normal to consume those, the consumer device. Hopefully the thing will get a lot more normalized by the second half and the rest. The last year second half that was pretty much horrible and there was a zero COVID policy and the people don't move that much and you don't have a momentum to buy all the PC notebooks.
Thank you. Maybe one quick last one. Could you also please, comment on your current progress on OLED Tcon? Also maybe if possible, could you discuss the value add and pricing difference on OLED Tcon versus current TFT Tcon? Thank you.
Well, we have been shipping the OLED Tcon for sometimes with our customers on the notebook space. In terms of OLED Tcon and the price, because OLED Tcon requires the memory size similar to previously our PSR device memory. It's a large same buffer there, right? Recently we developed the internal OLED Tcon with our customer, and we hope those device We're producing quickly and offering the OLED to comprise, as we said, it must set a PSR for the device or more than PSR for the device. The price gap will give a. That's a pretty big price gap there. We will be benefited from that.
Okay. That's all. Thank you.
Okay, thank you.
Thank you. Next question, Fion Chu, Daiwa. Go ahead, please.
Hi, Jack. Hey, Yo-Ming. Like in last quarter result call, you mentioned that there will be, like, 3-4 auto projects entering into mass production this year. Could you give us some color about the progress of those projects and revenue contribution we could expect this year? Thank you.
Yeah, that's a good question. Yeah, we will have the wind parts and the other PS parts, and they're well into the... They're fully qualified. We're into the EV car and I think significantly into the second half of this year. With a good size of shipment. We have another program and we're into the Europe, the well-known name in the automotive car as well. We are working with several China EV cars, both on the high speed side and the touch side. We think that some of them will include the production later this year. Plus, we are continuous shipping our high-speed flag to one of the Europe car. We have been working with to continue shipping and I think volume are quite good there.
Okay, got it. My second question is, I think, there are more and more suppliers regard the first quarter at the bottom this year, as we're seeing, like, sequential recovery this year. Are we seeing any potential down coverage in the second quarter if we're not seeing, very good condition, as we're expecting now? Thank you.
I think the market may change and we are just talking about Q1, but part of the foundation for us to think we may have a better time is because our distribution channel now is shipping out a lot more parts than we should be. Which means by end of Q1, we are pretty much freed those distribution channel, inventory. Whenever distribution channel get a new order, they will direct it pass to us to buy the parts. If you are tracking those difference, you will know Q2 versus Q1, if the momentum continue, you will. This outing quarter will come in. That's basically just, you're looking at the distribution channel, how much they consumed and how much we're shipping, and, that's the calculation.
Okay. Got it. That's very clear. Thank you.
Thank you.
Thank you. The next question is coming from Jerry Su, UBS. Go ahead, please.
Hi. Could you hear me?
Yes, go ahead.
Okay. Hi. Thank you for taking my question. I have a question about in-car. I think previously you're talking about foundry not going to dynamic foundry pricing scheme. I think you mentioned that some foundries are willing to taking down their price. Given that, do you see pricing pressure to negotiate with your suppliers to a more favorable pricing?
We are price pushing almost every day, every week. Really, we put the communication channel out there. The good thing is, during the pandemic, we have established multi-foundry. One part we can manufacture in different fabs, they allow us to negotiate better cost, even though in some case it's very difficult to negotiate with the foundry. That's the part of our job to do this. The other thing is we also pass some benefits to our customers because during the pandemic, we have a path already to the multi-foundry, the capability.
I see. I see. Thank you. Another question I have is about your high-speed interface. I think previously you talked about your content increase in notebooks USB4. Could you talk about your position, USB four, the sort of latest observation about the penetration and competition? Is it possible for Ray to tap in on this mobile platform? The second question. Thank you.
I mean, yes, if a segment, in the tele segment, I think most of the investors know Intel platform has their own, even Intel, the industrial version, and that listens to our design for whatever the reason. Intel, the consumer space, they listen to their own. We are lucky and into the end platform. I think we are one of the primary parties. We also work with the ARM-based, and I think our ARM-based also refers to us. We also work on the Chromebook side. We have a first generation device. Very soon we will have a second generation device with a better cost, a better power.
We think that's our market, we have been playing on that market for a long time, we continue try to be the leader on this market and harvest the this market of benefit. We have a large customer or channel product portfolio that very easy to convince the big customer, OEM customers. Besides this, we're already now into the original called a USB five, now it's called a USB4 Version 2, 80 gigabit per second for the common device, which is much faster and depend much the advanced design in N3. We are invest heavily to develop those technology with a long set of long lead time for our technology.
Thank you. Could you talk about the penetration of USB4, if you could? Thank you.
The penetration, I think we are almost all the large OEM are using ours. We are now into the second tier customer. As to what do you say the ARM-based, a lot of our ARM-based customer are very bullish for their own PC solutions. We work with them very closely.
Oh, okay. Thank you, Jack Zhao . Operator, you.
Thank you.
Next question, Bruno Chen of Alliance. Go ahead, please.
Thank you for taking my question. Can you hear me?
Yes, go ahead.
Okay, good. Thank you. Actually, I have question regarding the ten of our retimer business. In the past, we have been talking about the ten for the PCIe 4 retimer. I'm curious, is there any update on our ten estimate, especially after the launch of new iPhone supporting PCIe 5? I'm just curious, considering if we put PCIe 5 retimer into consideration, what's our view on the market price?
I would think the last half year, the demand for server was not as strong as what we had expected. I think many people reported. However, those customers too would like to have a most advanced technology, just like what we announced, the PCIe Gen 5 retimer. I think I probably will remain similar in terms of ten there, and maybe the ten might be version lower than what we thought it was. However, we do see and we engage with other customer for more advanced the execution for PCIe Gen 5 and PCIe Gen 4. They are not the data centers. They are related to automotives, and we are engaged with them pretty heavily. Data center may not use them many, but you have another segment that's coming to use those device.
Understood. In the long term, can we say that the market size of automotive application could be similar to or even higher than the data center?
Oh, yeah. Yeah. If you consider this. That's right. That's right. We are working with the leading product system, the design and the demand, The follow of the PCIe 4 or 5, we do have solutions. We are lucky to work with one of the leader on this. However, automotive, you might imagine will take a longer time to materialize.
Got it. In terms of, maybe price and profitability, how's the price and profitability compares to the retimer for the data center customers? Is there any difference?
Similar. First, the advanced system, AR system demands huge computation. In the environment which it's pretty friendly to both the chips, so the Yeah, it's very interesting. We're working with them. That's very interesting, actually. Yeah, I'm glad that you asked me that question. If you consider both of them, definitely the market size is increased significantly.
Understood. I have a similar question regarding the USB four retimer. Since it has been... I mean, USB4 has been supported by the GPU vendors, since maybe two and a half last year. Could you share with us your view on the market size of the USB4 retimer? If we go beyond PC market, is there any other opportunities for us?
USB4 recliner eventually will terminate all of the PC, mobile PCs and the... It's massive and significant. That's why we invest significantly. We not only have our first device, we have a follow-up device, and we have a next generation device, and so on so forth. It's a massive. We also think both device, because it's capable to carry the not only the USB4 traffic, so as a Thunderbolt 4 traffic. It's wide use for many applications. Certainly we take advantage of our relationship with the customer or advanced customer. We are promoting to the peoples. For example, the automotive guy now we promote the USB 3.2. They start to accept that, right? USB Type-C in the automotive is a charging port, right?
Now, very soon, few years later, Type-C in the car is no longer charging port, but become a video port. They will pick up more of our device. We have to educate our customer on the USB4 and what is the benefit for them. I wouldn't be surprised if you will see the customer will, few years later will adopt those, the application in the various systems, because this is too powerful.
Understood.
I hope I answered your question. Whenever I say something and, I would like to have someone back me up and, if we see that people start to engage, I will let you know.
Understood. Thank you. Maybe could you help us to quantify the market size, say, maybe in the next 1-2 years? How big will be the market?
Do you include Intel or without including Intel? Because Intel will continue on the consumer space where usually they're on, but inside of the industry will refer to us, right? I would think that maybe half of PC will at least in the first three years maybe will all have those kind of product. Some of them will have two. It's massive.
Okay. Got it. Thank you. I'll go back to the queue.
Thank you. Ladies and gentlemen, we are taking the last English question. Last English question will be Jimmy Huang of JP Morgan. Go ahead, please.
Yeah. Thanks, operator. Hi, Dr. Zhao. Can you hear me?
Yes. Good.
Yeah. Thanks, Dr. Zhao. I just want to follow up. Can you share your PCIe, server PCIe revenue guidance for this year? This is my first question. Thank you.
I think that we are data center may not as lousy as we said previously in the 2023. We think the top we were lower than $10 million, those kind of range. We are continue shipping and working with tier one customers.
I got it. If I may ask, I think the $10 million revenue guidance has been for one to two years. I would like to know. What kind of revenue we can have in the coming maybe one to two years. Do you have any specific time frame that we can look up to like maybe $15 or $20 revenue or even higher?
Well, I think that the two things is that one is that the data center demand goes up, right? so up to the last half year, maybe 2023 was not as promising as we ever thought. now I think a very important is we've penetrated our USB 5Gbps into the data center. Those one was the ASP price continue going up and that I wouldn't think the unit will increase but the ASP price will go up.
Yeah.
I feel like the previous year people ask me for the application to the automotive. If you look at the 4, 5 years, if we are successful penetrating to make it become a production MP for the ADAS, that will be significant.
I see. Thank you, Dr. Zhao. Very clear. If I may have follow-up questions about automotive and smartphone, these two exciting applications for Powertech launch. What's the total revenue mix last year, and your thoughts about this year you would like to assess the potential upside from these two like more exciting applications for the company? Thank you.
I don't think we have a very big smartphone business.
Yeah.
Yeah.
Understood.
We focus on IT network business, we focus on the panel business, we are start to shifting automotive parts, mainly the PS parts. Yeah, I would think that the automotive in 2023 will have a good growth rate because the current revenues is few millions, might go to $10 million and those kind of thing. Plus the One of large customer is start to shipping our parts with high volume there. That's what we know and hopefully they won't delay and that's the way to grow us. The qualification to production all are pretty much complete.
I got it. Thank you, Dr. Zhao. Last question. Thank you.
Thank you. There appears to be no further English questions at this point. We will now begin our Chinese question and answer session. Mandarin 问 答 时 间 现 在 开 始 ， 如 果 您 需 要 提 问 ， 请 在 电 话 机 上 按 井 一 ， 当 我 们 读 出 您 的 名 字 后 ， 请 再 次 发 问 。 一 次 发 问 可 以 问 两 个 问 题 。 如 果 您 需 要 取 消 发 问 ， 请 按 井 二 。 谢 谢 。 现 在 第 一 位 请 的 是 Nomura Aaron Jeng 请 提 问 。
谢 谢 。 谢 谢 ， 感 谢 我 的 问 题 哦 。 我 的 问 题 是 关 于 2Q， 2Q 我 有 两 个 问 题 ， 一 个 是 关 于 存 货 ， 一 个 是 关 于 毛 利 。 存 货 的 部 分 刚 刚 Jeff 有 提 到 说 在 end of Q2 或 within Q2， 这 个 DOI 会 回 到 公 司 target range， 是 somewhere 60-65 天 ， 对 吧 ？ 其 实 这 个 是 一 个 很 大 的 improvement。 这 个 improvement ， 我 能 ...
就 是 我 ， 我 刚 才 不 是 只 做 了 计 算 ， 可 是 要 假 设 我 们 现 在 的 execute， 因 为 其 他 的 至 少 要 从 现 在 的 $4 billion， 其 他 的 要 一 半 以 上 ， 这 是 一 个 right assumption 吗 ？ 这 是 我 的 first 问 题 。
No. Okay, that's a good question. I think that the inventory reduction, there's a couple of things. 有 几 个 方 面 啦 。 第 一 个 我 们 的 生 产 的 速 度 有 点 降 下 来 了 ， 就 是 我 们 take 我 们 的 parts 从 wafer 跟 我 们 的 assembly line， 这 些 assets 从 去 年 开 始 到 今 年 是 force to win 的 ， 降 下 来 ， 所 以 这 是 一 部 分 ， 就 是 说 我 们 今 年 出 去 ， 我 们 可 能 take 很 少 的 这 个 ， 这 个 new parts， 因 此 。 那 另 外 一 个 就 是 the revenue 会 grow， 这 个 去 从 两 方 面 去 考 虑 。 我 希 望 , yeah, that...
我 觉 得 因 为 我 不 知 道 你 用 台 币 算 ， 我 没 有 算 这 么 快 ， 我 觉 得 最 少 ， 我 要 去 算 一 下 啦 。 我 知 道 我 们 的 现 在 的 美 金 的 是 多 少 ， 所 以 我 们 要 去 算 一 下 怎 么 样 去 算 是 达 不 到 ， 这 个 到 那 个 时 候 达 不 到 。
你 ， 第 一 个 ， 就 是 我 只 是 想 理 解 ， 呃 ， 六 个 月 之 后 我 们 的 inventory 会 比 今 天 这 个 P 少 一 半 以 上 吗 ？ 就 还 ， 就 -
我 不 确 定 到 一 半 ， 但 是 会 significant 降 下 去 。
就 是 -
我 想 Q1 已 经 会，Q1 已 经 就 会 降 蛮 多， 到 2Q 应 该 significant 降 下 去。
懂, 但 现 在 就 是, end of Q 回 到 60 到 65 天 的 这 个 range, 是 至 少 公 司 觉 得.
我 们 I hope so. 有 些 时 候你 也 不 能 降 得 太 快. 我 们 已 经 在 experience 到 有 些 parts 在 shortage 上 面.
No problem. OK, 谢 谢 您.
对 ， 你 always 有 一 个 problem， 是 说 你 有 些 parts 有 inventory 在 那 边 ， 但 是 你 有 些 parts 已 经 在 shortage 上 边 ， 所 以 这 个 里 面 就 有 一 些 你 mismatch 你 的 inventory 跟 你 的 这 个 customer demand， 是 吧 ？ 这 个 是 一 个 蛮 重 要 的 ， 所 以 你 也 是 不 可 能 说 我 降 了 ， 我 要 去 match 我 的 customer demand。
理解，理解您。 今年 Q 的 第 一 个 问 题 是 关 于 gross margin， 因 为 起 来 进 到 Q2 有 image writeoff 的 这 个 factor， 甚 至 Q4 我 们 就 会 开 始 看 到 reversal of image writeoff， 所 以 我 们 是 不 是 应 该 认 为 就 是 from Q onward gross margin 会 就 是 脱 离 现 在 的 这 个 margin， 这 个 margin range， 这 是 一 个 合 理 的 假 设 吗 ？
这 个 ， 你 说 margin 会 change， 对 不 对 ？ 你 是 这 样 希 望 ， 我 是 这 个 意 思 。
我 是 这 样 希 望 ， 我 去 follow 您 的 提 出 的 话 ， 理 论 上 二 次 开 始 我 们 要 看 到 margin 开 始 往 上 走 ， 因 为.
我 说 margin 要 从 上 面 走 是 靠 product mix, 是 靠 新 的 product 去 带 动 这 个, 这 个 gross margin up, 但 是 我 们 会 去 manage 我 们 的 gross margin, 不 应 该 有 significant 去 drop.
过去公司有给过一个 long term gross margin 的 guideline，意思是说 long term gross margin 其实要比 maybe 1 year ago 的那个水准还要再更高，但是是一个 long term target。现在公司对于这个 target 的看法还是一致吗？以及，有没有，可能这个很难问，就是什么时间我们比如说在 2024 就有机会看到公司做到这个目标？
Good question. 我 们 希 望 我 们 的 product mix 在 这 个 pulling product, 这 就 是 说 我 们 在 做 很 多 high shipping 的 product, include 像 刚 才 问 的 OLED Tcon, include USB4 retimer, include 这 些 automotive 的 offer. It 也 是 一 个 revenue growth, purpose 是 improve our overall gross margin.
还 行, 至 少 long term trend direction 是 没 有 改 变 的.
对，我想我们花很多精力来 improve 我们的 product 的 offer, to make 我们的产品更有它的价值，更有它的竞争力，在更有这个 high value 的 supply chain.
对 ， 谢 谢 ， 谢 谢 您 。 我 问 题 结 束 了 。
谢 谢 。 由 于 时 间 的 关 系 ， 我 们 将 接 受 最 后 一 位 提 问 。 最 后 一 位 问 题 来 自 于 Mike Chen， FengHe Asia 提 问 。
Hi, Jack, 你 好.
你 好 。
对。 Jack, 我 几 个 问 题 向 你 请 教 。 第 一 个 问 题 就 是 ， 我 们 在 过 去 几 年 的 这 个 bundle solution 的 这 个 strategy， 在 去 年 底 到 今 年 ， 这个 会 有 变 化 吗 ？ 会 有 因 为 客 户 要 cost down， 然 后 引 进 新 的 竞 争 对 手 的 变 化 吗 ？ 这 是 我 第 一 个 问 题 。
这 个，bundle solution 是 不 会 变 的，对 吧？
对.
因 为 我 们 CP 是 我 们 的 这 个 proprietary 的, 其 他 企 业 没 有 办 法 跟 我 们 work together.
对.
那 customer 要 做 change 是 change 这 套 solution.
对.
这 个 就 不 太 容 易 了 ， 因 为
对.
你 要 去 follow 一 些 qualification， 对 吧 ？
对.
那 我 们 continue 这 个, 这 个 strategy never change. 新 的 strategy 也 有 push the TD, push the TTD 的, 我 们 的 新 的 supply.
对.
Yeah。
对。OK，第 二 我 们 的 这 个 问 题，因 为 TD、TSD、TDD、TTcon 等 等 之 类 的 这 些 的，现 在 的 percentage wise 会 是 什 么 样 的 一 个... 我 们 怎 么 去 预 期 这 个 东 西 啊？对。
TD 的 market 对 我 们 来 说, 在 我 们 的 global panel solution 里 面 已 经 有 this percentage, the revenue 是 TD 的 contribution. 我 们 看 到 的 是 在 accelerate and customer, 这 个 adopt more. 我 们 也 很 happy, 在 CES show, 就 刚 过 去 的 CES show 的 private show 里 面.
对.
我 们 去 参 观 我 们 的 panel 厂 的 private show. 我 们 就 看 到 好 几 家 都 是 用 我 们 的 TD 点 的 panel. 我 们 也 很 happy to see it.
对。OK。像 之 前 讲 的 TTED 跟 TSD， 这 个 volume 跟 或 者 是 demand， 今 年 会 在 就 整 个 增 长 吗 ？ 因 为 想 到 一 个 问 题 就 是 说 整 个 行 业 ， 比 如 说 它 的 规 格 或 者 是 消 费 者 的 购 买 力 的 问 题 ， 这 个 会 不 会 影 响 就 是 这 种 端 端 整 合 产 品 的 promotion 或 者 是 英 文 ？
Good question. 我们 是 觉 得 customer 现 在 在 busy 他 今 天 的 solution.
对.
因 为 今 天 通 道 商 是 going through 一 个 big downturn.
对 对 。
对, 他 在 busy on 他 今 天 的 solution.
对.
怎 么 样 去 这 个 release cost 是 更 多.
对.
他 的 精 力 去 develop 新 的 是 没 有 as strong as 这 个 used to be. 这 个 大 概 是 这 个 现 实, 但 是 我 觉 得 这 个 本 身 的 parts 里 面 含 有 的 technology 含 量 很 高, eventually customer 会 come back to chasing 这 些 advanced 的 solution.
对 对. OK, 好. 还 有 一 个 问 题 就 是 在 spec 这 个 部 分 哦, 就, 过 往 像 比 如 说 3-5 gigabit per second 到 10 gigabit per second, 其 实 这 个 migrate 的 速 度 就 说 会 有 一 个 节 奏 性 嘛.
对.
也 比 较 可 预 测 性 ， 现 在 进 入 比 较 ， 就 整 个 trend 肯 定 比 较 往 下 ， 然 后 market 的 新 的 spec 的 接 受 程 度 会 不 会 放 慢 ， 就 反 而 这 个 10 Gbps 或 maybe coming for coming year 的 40 Gbps， 这 会 不 会 反 而 potentially 是 不 会 像 USB 3.2 的 时 候 那 么 快 ， 比 较 放 缓 一 点 ， 会 不 会 也 影 响 到 我 们 这 个 inventory 的 digest， 这 个 会 不 会 是 一 个 比 较 难 去 ， 难 去 想 这 个 问 题 ， 就 是 说 交 错 的 影 响 。 对 。
我 们 英 文 他 们 没 有 inventory。
对 对 对, 我 知 道, 我 的 意 思 是 -
没 有 inventory 是 旧 的.
这 个 没 有 inventory. 对, 就 没 有 这 个 问 题, 那 比 较 是 旧 的, 比 如 3.2.
你 说 customer 会 不 会 ， 像 过 去 一 样 的 momentum 去 going through 这 个 ， 我 觉 得 这 个 question 实 际 上 是 这 个 CPU 的 customer，AMD 啊 ， 科皇 啊 ， 或 者 others.
对.
他 假 如 说 把 CPU 已 经 在 那 个 port 上 面.
对.
那 customer more or less will take 这 个 advantage。 是 吧？
对.
是 吧 ？ 你 很 难 去 说 这 个 CPU 这 个 port， 你 不 用 去 做 一 个 USB， 这 个 suppliers 的 或 者 suppliers 问 的 ， 这 个 有 点 很 奇 怪 的 一个 东西. 我 觉 得 这 个 momentum continue. USB4 Touch D 的 话 ， 毕 竟 你 可 以 点 这 些 ， 这 个 high resolution 的 ， 这 个 HDMI 2.1 啊 ，DP 2.1 啊 .
对.
这 些 的 这 个 display, 我 觉 得 这 个 才 是 一 个 真 的 这 个 real demand. 看 起 来 people, user 对 display 的 appreciation 是 increase. 你 会 看 到 很 多 USB4 的 这 个 application, 现 在 key requirement 是 你 要 去 support DP 2.1 的.
对.
是 吧？
对.
这 个 真 的 是 一 个 ， 我 们 正 好 是 独 到 在 这 里 ， 所 以 ， 所 以 我 们 有 huge benefit. 这 些 ， 这 些 的 这 个 application 我 觉 得 会 continue. 我 想 这 几 年 时 间 里 面 ， 这 个 ， 这 个 应 该 会 large percentage notebook 都 会 走 向 USB4. 你 现 在 看 到 USB， 去 年 你 很 少 看 到 有 2 port 的 USB4 的 notebook.
对.
那 现 在 你 看 到 customer 去 买， multiple port.
对.
USB4 的，那 里 面 就 要 multiple 这 些 device.
对, 很好. 对.
That's very exciting. That's very exciting. 对 ， 所 以 ， 所 以 我 觉 得 这 个 momentum 在 那 边 会 continue 的.
对. 我 最 后 一 个 问 题 ， 就 on 那个 foundry 这边 ， 您 刚才 也 提到 那个 ， 大家， 同业 也在 问 到 这个 cost 的 问题 ， China 那边 的 foundry price 降得 significant， 就 我们 这边 会 allocate more to foundry 在 China 吗？ 还是
我 们 并 不 会 说 去 take risk, 我 们 也 understand 今 天 的 geopolitical.
对.
这 个.
对.
我 们 会 请 customer 或 有 different different place， 这 个 price differently. 你 会 告 诉 我 你 选 哪 一 个 parts.
OK.
We are neutral.
对, OK.
We are neutral. 我 们 在 这 个 英 文 后 面 manage 这 些 的 地 geopolitical issue, 对 我 们 来 说 是 一 个 new challenge. 我 们 今 天 的, 因 为 刚 说 这 个 pandemic shortage, 我 们 很 多 parts 都 有 multiple foundry 在 那 边, 我 们 来 custom 去 自 己 choose what he wants to.
OK, got it.
这 个 是 fair 的 一 个 做 法 ， 是 吧 ？
对 对 对 。 好 的 ， 很 清 楚 。 谢 谢 Jack。 谢 谢 。
嗯 。
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 譜瑞科技股份有限公司 2022 年 第 四 季 线 上 财 报 说 明 会 。 今 天 的 会 议 将 到 此 结 束 ， 您 现 在 可 以 离 线 了 。 谢 谢 。 再 见 。
OK, thank you everybody.