Good afternoon or good morning. This is Charlie Chen, Morgan Stanley Semiconductor Analyst. Today, we are very pleased to host this Q2 results meeting for Faizen. And we're very happy to have our company's Chairman, Mr. Kees Hua, with us to share their business outlook with this.
And for today's event, we'll start with company's briefing and then the Q and A session. So in any time of this webcast, please type your question in the ask question text box. So I will later on, we'll moderate the Q and A session for you. So without any further ado, let's welcome Mr. Hua, to share their Q2 results and Q3 outlook with us.
Thank you.
Thanks, Charlie. Thanks, Morgan Stanley. Good morning, good afternoon, ladies and gentlemen. This is K. S.
So let me start today's my presentation, then follow-up with the Let me share my file. Okay. So, yes, this is our statement. Take a few seconds to read, then we directly go to today's our presentation. Okay.
First question, I would like to again to share the Phison Business Transformation. For so many years, they have a lot of Invest the chip in their brand that Fisun is in consumer business. The answer was yes Many years ago, but in these few years, Baixa made a big transformation from the consumer market into the embedded design in Customization and Storage Business. So 2020, Faiza have a big growth in our revenue. The reason is we increased a lot of portfolio such as gaming and embedded system.
And we also great that this first half 2021, we hit the RMB1 1,000,000,000 in the half year business. So again, a lot of our business are coming from non consumer business. So please have a new image about Fisense. And this is Fisense, our business portfolio. Consumer, Last quarter was a 26% 30%, now it's going to 26% and controller will keep maintained at 20% plus And the embedded ODM is 14% and by revenue wise, this business 2 years ago was nothing.
Now we can see rapidly increased amount. And gaming module, we also increased this portfolio since last year And looks like this is a very strong demand and we play with a unique position in this business. Industrial module Since actually last year CQ2 when COVID spreading to the Western countries, the industrial demand suddenly frozen. But Starting from CQ4, the demand was good and still in the big undersupply at this moment. So around way about 70% of business are coming from non consumer business and more are related to the high investment in R and D and the highly customizations to the customers.
So this morning we just approved by Board members about our CQ2's financial results. Revenue wise, we hit close to 16B, QoQ was 23% and we met a record high in revenue. And the gross profit, BRL5.1 billion, which are Q o Q growth of 36% also we hit We got high in the gross margin. The reason of the revenue because of a lot of Controller and our modules, our products are under supply. And also we have as I mentioned, we have a high a big portfolio in the High margin business, which is all the quest for design in process.
And by margin wise, I think we are good because of again from a different portfolio and we also got a lot of design win project with the key customers and the key players. And this is some highlight here. Overall by CQ2, 20% revenue are coming from controllers And SSD controller YY growth is 50%, but PCIe Gen 4 plus Gen 3, the growth is almost 200%. So as 2 years ago, we started to invest lots of resource into the PCI JMPO. Now we start to see the return.
And by module wise, we have a 74% of our business are coming from modules. But again, this module is not consumer, okay? It's embedded design in Industrial and also gaming and automotive, which able to help Faison to increase our influence power in this industrial. And we also have a new product with so called the BG SSD mainly we shipped to the automotive gaming And some high end Chromebook, high end notebook and also from some Japan gaming systems, which we also can see the very strong demand and the growth is 78% YY. By industrial, Because last year Q2, the market was almost frozen.
We can see where they go strong unfortunately, the supply is under constraint, Including controller and flash in the tight supply. We keep seeing very strong demand coming from industrial Application. Just one thing to share with you, we made a design win into the one of already key robot makers in the Japan. The request, our system means controller with the fresh modules, we have to commit to supply for 30 years, 30 years. So anyway, this is kind of a niche in this market, but anywhere for 30 years, Of course, we have to commit, but we try to find solution to commit, okay.
But again, this is a good business. And by gaming, we got a big growth. And you can see in these 2 Gaming start to adapt the SSD to decrease hard drive and this will be our main business. And embedded OEM, the growth is 54 And by quarter by quarter, we can see a very strong growth. So, the revenue We call high close to 16B and we have a good 101.
And the gross profit, Gross margin is 32.5 percent and also we are in the all time high. The reason is because of supply constraint, demand was strong and also we have lots of new design with a high margin. Earnings per share by CQ2 is Close to $11,500,000 The first half this year is around $20,200,000 per share EPS. And again, it's also all time high by to report and almost all the EPS earnings are coming from our business. This is some highlight in the statement.
Revenue wise, because of U. S. Tend to weak NT, new NT, NT dollars is getting strong. By cost To the NTE, the growth is not that much, but by dollars, actually the YOY is 56%, okay, QoQ is 24%. And gross profit, YOY is 93%, I think it's already to me It's under my expectation, but also I think we've hit a good result to the employee and also return to the shareholders.
And the OP, YY is 134%. The net income It's YY 91%, QoQ 34%. So overall, first half this year EPS is empty. We hit the other all time high. And I'm happy and pleased, appreciate to my staff, my people, they are working so hard, Especially by the May June, Taiwan was attacked by the COVID.
We have over 7 weeks, Only 25% people come back to office, like 75% are working from home. A lot of schedule communication create a lot of problem, but anyway my people working We overcome the limitation and we hit the good business and I think this is our commitment to the shareholders. Okay. And balance sheet, I think you are more concerned about inventory. When you look at inventory last year was So 13B, this year we by end of June is 15B.
The reason We increased inventory because of a lot of material at the supply. Originally, like 4 ks is 3 times 4 weeks, Now turn to 40 weeks. Foundry is very tight. A lot of PCB capacity passive active component From 4 to 8 weeks going to 30, 40 weeks, so we have to increase our inventory level. And on the other hand, we made so many design wins into the system, especially for the industrial project, which they ask we have to supply for 3 to 5 years.
And if the component is going to EOL, We need to have a last buy to keep 5 years consumption. So this also increased our inventory. But increased inventory, I don't feel this is a heavy pressure because those inventory most likely already have a business, But we're not able to ship by tomorrow. We have to ship this month by month and that continues for a few years. So Inventory increase is helping Faison to gain more revenue and also increase our gross profit.
Okay. So the next year net value per share is NT 174 Because we just have a dividend, 23 NP will happen by next Tuesday, okay. The ROE is still able to maintain the 20 plus percent. Today, we also announced our July, our consolidated revenue is 5.4% close to 5.5%. We still under impact by the COVID in May June.
Our supply chain is still under with Cowenly. We still have many products ICs need for testing, still under cooling. We hire employee, we hire the tester. Faison, we take to get the people and send the people to the factory to support our supplier to test our chips. So I believe by end of August everything Back to normal.
And of course, we got a lot of complaints from our customers from June to last shipment. But anyway, after September, everything went back to normal. And revenue growth of 5.5% Y o Y is 42%. And we can see the NAND demand market still maintains strong. We still need to work hard, try to get more business by this year.
Okay. Fife has been public for 16 years. This morning, Board members approved we are going to issue the first Domestic unsecured convertible pump. You may surprise why we need to have a CV. This total amount is close to 3.5 bps, the reason we apply we have to apply to the competent authority to get the approval.
The reason for this issue, the CDR, you Already awarded foundry is very tight. 2022, still we're not able to get full supply. 2023, no idea yet, but we need to secure More supply in coming 10 years. So we have LTL with our BANG3 partner. We need to pay the deposit to them for many years.
So we need to collect some capital to make sure we're able to ensure our long term supply in the wafer, mainly in the 55, 40 and 20 nanometers. And Fiseng, we need to expand our business skill and you awarded the NAND market still growing. Fiseng will cover IP Design Service Business, Asset Business and also the module business, which module business may need more capital. But module business helping Fisun to get more market share, More revenue actually and more income. So we need to collect to get more capital to help us gain the business.
And this first half Faizan, we increased up to close to 350 headcounts in R and D. The whole year looks like we're able to hit the 800 plus new headcount in R and D. So we need to buy more equipment, Test the equipment, developing equipment for new people, new engineers. So that's the reason why we need to collect the capital through the unsecured CV. And our goal is to get the new capital.
We need to build the highest awards in the Technology, getting the new people, enable more projects, getting the more design wins and this is to ensure Faixin get more return in business in coming years. Based on our experience, if we invest new team members after 2 years, we can start to get the return from the business. And also we need to get more resources because we have the other 5 plus 5 growth strategy, which we need to cover this 5 segment business and to get more return from this industry. So this Board member also approved By end July, Faison Shareholder Meeting approved the dividend. At the past, the dividend only happened once per year, but After shareholder meeting approved that, the dividend will go to twice per year.
So our policy will be Every CQ1, we are going to pay last year first half's earnings, second by CQ3 paying the second half earnings. So approved NT10 per share dividend will happen by next year February to the shareholders. So we policy when we decide policy then we execute. So From now on, Faison is going to pay twice per year. Okay.
Some business highlights to share with you. This is by CQ2. We our Gen 4, the fastest PCI Gen 4 modules we start to ship to the market, but because of controller constraint, we're not able to get more shipping. But gradually, we are solving this controller problem. So I can see these products will go into the market as soon as we can.
And we have 2 NAND makers announced the PCIe Gen 4 SSD with our 5th with new controller solution and now start to make the design in testing qualification by the top 5 of PC makers. Also we have external drive up to 4 terabyte to our semiconductor partners now in the market and also our finished products OEM to our storage customers. OEM wise, our Gen 3 controllers, we got design win and shipping to the Chromebook, high end Chromebook Tier 1 customers. And again, the Tier 4 start to get all Tier 1 OEM design in qualification. By gaming, we already also got the design win into the cloud gaming platform.
This is the so called data center. We start to ship the products and the ramp up by next year's CQ1. And we also enable the new Highly customization gaming notebook with our high end controllers is the highest performance. So this product will go to the market by end of this year. And also we're putting our solution, the SSD solution into the portable gaming phone, okay.
And by datacenter solution, we keep investing a lot of resources gradually. We can see some getting some design win projects. But If talking to the development wise, I think this will happen only after 2023 because this is a long way to go and long investment, but we never give up and we keep investing. Industrial, as I mentioned, is a too strong demand and we are not able to fulfill the demand. And specialized I want to talk about the security products.
A lot of countries governments start to realize storage Security is important. We have a partner with our U. S. Customer sidechain to make very unique SSD for cybersecurity, We should start to sampling under qualification and start to ramp up by CQ4 this year. And also we got the design win into the robot company in Japan, the major robot company, which they're asking for 20, 30 years supply.
Okay. CQ3 business outlook. Retail was slow because of several countries still under trouble by COVID and the Western country, different country now people are enjoying the summer vacation. So we believe The retail business will be back by September, October. This now we are preparing to get those business.
And for OEM, we keep design in our Gen 4 controllers with our semiconductor partners, with our modules partners and also with our modules to the old tier of PC makers. And gaming, recently the new I mean the some TS5 is announced they are going to let the user to extend their SSD solution and Fisun, we are on the list, we are supported. And server wise, again, cheap, long way to go, cheap investment. Our silicon high end silicon CM4x4 controllers is silicon ready. We need to submit the samples to our customer by CQFO and my partner will deliver this to the Tier 1 data center company by next CET1.
So I believe, revenue wise, will start to happen on the business by 2023. That will take like 1 year for qualification. So almost 5th already after 2023, data center server business will become our main business. And again, industrial, a lot of design in, design win, customization keep asking and this will need a lot of R and D headcount. CQ3, they may have some special underscore light.
I think recently the news keep talking about the Sony PS5 and they have a slot. They are going to to upgrade their software to enable this slot. And Fisun, we have a few partners already made announcement, The products are qualified and confirmed going to apply into this business. So we can see some new business coming by When Sony start to release the upgrade, then we're able to get the business. And this CQ2, we put our SSD into gaming phone and that gaming phone become the fastest performance in the world.
And we also get some design win business into the handheld gaming equipment. So Sooner or later, you can see the progress in the market. And again, by the security now is very, very strong requesting And every country keep asking the different design. So Fisun, we accumulate over 10 years experience on the securities. So we believe this is Highly deployment in developing and also high mix, small volume, but definitely is a Super high ASP margin and this will become our test cost by 2022.
Overall, We still what I can define as a suffer about foundry supply, we still far than enough. We wish our partner able to gradually increase the wafer supply to us that we spend those huge amount of Money, people in the new business, we need to have more supply to fulfill our customers. And with the LTE with the foundry, I think this is to secure coming years of supply, but again still not enough. And NAND controller is in the constraint. We need to pick up.
First of all, we need to fulfill our customers' demand. We need to make sure our customer own second design win, they're able to get controllers. Also Fisun, we try to get our own controller to build to the modules to increase our ASP and also our gross profit. So we need to be very, very smart on this business and management. And anyway, Faison, keep working hard, increase our R and D people, increase equipment, to keep hiring more people.
The goal is that we need to prepare for coming 100 BNT revenue. This is our goal and I wish this happens soon. Our only headcount first half, we got the extra 300 by whole year, looks like we're able to get over 800 headcount. So space is not enough. We need to put in our facility and also to keep buying more the equipment for our new headcount.
The goal is to 2,500 by 2025, but I believe by 2022 second half, we already hit the 2,500 Hunter Heiko of R&D. The reason we keep asking to get more people because semicones, our partners Keep asking Faison develop more solution for them, which including the client, data center, automotive, industrial, Qiriti, imagine, I can't mention because all the systems in the NAND flash and those NAND flash solution Most likely went to the semicon, but also come to Faison. So that's why we need more people. Okay. We collect some Q and A, then if you need to speak to Q and A, then we go to the online.
Investors keep asking what is the impact of a weak USD to Fisun anyway. We have financed and prepared our explanation here. Overall, Fiserv is our material mainly in U. S. Dollars and our business also happened by U.
S. Dollars. So we are natural hedge. And by CQ2, the foreign exchange loss on the book is around RMB57 1,000,000, which is 0.36 percent of revenue. I think we are making the good management on this and the damage is well under control.
So we wish this we're able to balance by coming few quarters. So anyway, weak dollars impact to our revenue, yes, profit, yes, but not that big damage compared to some other business. Again, keep asking about how can we get more R and D. I think, again, we adjust our all the package, our salary, our benefit, our care about our employees, okay? And headquarter in June, we keep have extension, new building ready by end of this year able to to increase 1500 space for R and D.
In Taipei office, we also keep expansion from 300 to 500 headcount. We are going to also establish our Tainan office already start, going to operation, already got 30 headcount there. By 5 years, the goal is to get 500 engineers in Tainan and also the Zhubei, because a lot of science people prefer to work in Zhubei. So we also to establish our 2 bed office, R and D office by this month. And we try also to recruit more R and D from the world country, okay?
And keep working with the university, we sponsor the professor in the lab to have a co development project. And also we are increasing our R and D in the U. S, Japan and also China for local design in operations. Investors also asking, Faison has a very good success and also scoring at Gen 4. So how about Gen 5?
We repeat, we reuse our model, our strength on the Gen 5. So we already work with the 2 semi com And also with the CPU partners to enable our Gen 5 SSD platform, not controller, but also with the modules. So by Next year, 2022, when they are CPU platform ready, Fisun also ready with the Gen5 client SSD. On the other hand, we also going to have our Gen 5 data center controllers, co work with our very closest partner, to try to get the business in the data center by Gen 5. Gen 4 silicon is ready, system ready by end of this year.
Gen 5 controller will be ready by next year. So hopefully 2023, Fison will be the key player in the data center storage. One thing, half years ago, we announced Bison is going to participate into the Gen 5, the driver and retimer. We start to have R and D development on this driver by 8 months ago. After 8 months, we got the samples 2 weeks ago.
We test everything. Looks like performance is over my expectations. First cut, bug free, wow, the best performance right now according to my motherboard customers. And we are going to direct go to the NPE immediately. And after this week, we share our report to the Key player in the Taiwan, we already got the design in projects, 2 projects ongoing and start to talk about shipment next year.
So I feel happy, proud of my people. First cut, first design 5 months, Bakri, direct to the MP. So now we have a competence in the driver business and next year second half we will have a retirement ready to the market. So this will become our new business, but again, revenue wise, this is not able to contribute high revenue, But this will help Fisun to have a more influence power into this computing systems. Imagine, if I send we have a Gen 4 SSD, Gen 5 SSD, datacenter SSD.
If we're able to make the most service, Gen5, the driver retirement means Fisun, we are able to play with a good position in this ecosystem. And also CPU makers start to recognize Fisun not only in the storage, but also in the high speed interface solutions. So this will help Faison to gain more business in coming years. So I believe By next year, the driver, Fiseng will be the key player. 2023 retirement Gen 5, Fiseng will become the key players.
Again, lots of investors concerned about the inventory, but if we need to increase our revenue, our time line, we need to have managed on inventories. And when you look to the inventory level, right, the revenue keep growing, inventory definitely we need to follow. But because of the whole supply chain Out of control today. Components in the past, 3 times 4 weeks, 8 weeks now go to the 40 weeks, 50 weeks. In order to make sure customers able to get the products, we need to increase our inventory to make sure we are not facing the shortage.
So we need to build up the inventory. And I still believe my inventory today is still healthy. The reason is, I wish I able to grow our revenue through our well controlled, well managed inventory. The last about the ESG. For many years, Faison, we didn't recognize, we need to pay attention on the ESG.
So we didn't did a good job And especially in the MSCI, the rating, we've been CCC for many, many years. But Since 2 years ago, we recognize this is important. We start to invest, start to focus, build a committee. According to the OTC's ranking, Fison is the top 6 to 20 by 2020 and we are upgrade. And by the market value over 10b in Taiwan, we are also ranking from 60% to 20%.
By MSCI, now we're ranking to BB. I believe by end of this year, we're able to get the upgrade. And we focus to make the more R and D investment to get more business, increase our influence power in the market, to get a more profit return to shareholders and employees. Also, we try to invest and focus more into the ESG management. So this is all my presentation today.
We can go to the online.
Thanks, K. S. So in the meantime, if you have any questions, please use the ask question, text box and I will help you to read. And if you feel okay, I can also share your company name. So actually, I have some questions to ask Kees First, I'm very interested about your one of your slides about the R and D intensity.
So there are kind of a good way or kind of negative way to read this, right, because your R and D intensity is like 60%, It's much higher than your industry peers. So supposedly you should acquire a much better market share or much higher ASP given the more investment in R and D, but it doesn't seem to be the case today. So I know company has a potential, but Can you please justify that kind of very high R and D intensity in a consecutive 2 years? Thank you.
Okay. If you ask me today's my R and D intensity today, I'm hard to answer you, but just press the record. By 2016, 2017, you can see the trend, okay, hourly intensity we are increasing. Then you look to our 20 20 revenue business, The performance looks like we outperformed. So means we have to invest more in R and D then we're able to get return after 2 to 3 years.
So I believe with our hard working in the R and D, we get today with proof, we make it. But with today's our R and D intensity, by 2023, personally, I believe we're able to get a more Influence Power Business and Revenue. And again, I always think to my people, the goal is 100 bnT and we need to make more money to make sure we are good in the investment, R and D investment. And why Fisun keep investing that many resource because our semiconductor partners, our system partners, industrial partners, every partners keep asking Faison, they need new products, to continue products. Unfortunately, I talked to my R and D managers, they say, hey, not enough, overloading, our people is going to crazy.
So what can we do? We have to invest, we have to hire. But of course, if I do it today, the cost increase immediately. But if I'm not doing today, 2 years later, I won't get the new project new business. So but again, you trace to the Fisense, our business model, Fisense able to make a good profit through the business model, not only controllers, but also modules and the systems.
We have a good profit, then we invest this into the R and D to make sure after 2 years, Faison will be able to make more profit to this company, to the shareholders. So again, I'm hard to answer my investment here, what is going to happen, but you look to today's our results, 3 years ago, what we did, Then we got the return. So again, don't worry, we know how to manage.
Okay. Thanks. So it seems like you achieved the headcount targets earlier, right, 2,500 engineers. So are you going to change your targets, meaning higher given more than 2,500 people in the coming 5 years.
Actually from Early this year, right, Taiwan are facing the type of talent And TSMC is saying that they need to get the extra 6,000 engineers. But the population here, I mean The young student here, the number is there. So we don't believe in early this year, we're able to get 400 people. We do believe, but Just half years, 7 months we make it. I think we make it because Pfizer at least we have a good reputation in Taiwan.
Our result performance, I think the public they're able to recognize and our strength and our future, especially in storage, Lots of young talent looks like they agreed, they buy in. So we hit 400 in half years. I believe the other 400 by second half. So by 2022, mid-twenty 2, we definitely will hit the 2,500. Again, by next year, I still believe we may request by our partner, semiconductor to get a more design in project for them.
So That's why we prepare our CV. We got the other new land. We plan the other new building in 2 years. And this is to prepare for the other growth in the headcount. So I believe the answer is yes.
By 2023, we may hit to 3,000, okay. Not I'm driving the headcount, I drove by our partners to push me to get more people to service them. Yes.
Okay. That's great to know. So there are several questions several analysts. So maybe we start with CLSA, Brian. He is asking how does the PCIe, retryverretimer, can be complements to your exceeding solution?
And can you share the TAM? And also where you are going to expand your interface to assist to other interface, for example, USB and HDMI. Thanks.
Okay. Why Fisun, we jump into this the driver to the Timmer business? Actually, again, remind we are starting with Gen5, not Gen4, not Gen3. The reason we decided to go to this business just because Fiserv all the IP, high speed interface IP are doing in house. So we just reuse our IPs and reuse our know how.
And actually when engineer proposed to me, actually engineer proposed, they want to build the drivers, First, I asked what is a driver. I don't know what is so called driver. They said driver is needed in the coming Gen 5. Every motherboard, server, PC, they need the driver. I said, okay, they want to invest.
I said, okay, you do it. And they say, oh, this is they have I said, don't tell me confidence, show me the products. So they show me products after the product pick by mid July, 2 weeks It's a what I can say is a perfect. Then I leave these 2 meetings with the motherboard PC makers, There are also supplies. So now I have confidence to my people.
To be honest, I don't know what's the type of the driver, I don't know what's the retimer, but I just know All the new Gen 5 system, they need both the driver every timer, every, every, okay? And for instance, definitely we are going to participate All the Gen5 storage, not maintaining the server, PC, notebook, automotive, whatever. So I do expect seriously, I do expect the driver helping Faison to get the big revenue. I believe there was some certain revenue and good profit, But this is not my first goal. My first goal is we need to increase our influence power to our customers.
Means they need storage, we're able to collect storage, but we have extra offer, Extra service high speed interface solutions. With this kind of ecosystem supply to them, I believe more system partners they need Fisun. This also helping Fisun in the future to get more design win projects into the system, which is able to cover high speed interface and also the storage. So this is wondering. So again, I have totally no idea how big the market, who is competitors, but I know who is the customers, Okay, who can become?
Every PC maker, server maker are the customers. So we simple, pretty simple. We just send a message, talk to them, let's have a call, We present to them 1 hour, they supply their eye, compete when they see our test report, they ask for samples and by the way, actually We already got 2 design wins for next year, 2 design wins. And start, first cut, I see just pay for 2 weeks now we are discussed how to ramp up the production by CQ1MCR. So anyway, Good signal.
We get a good starting. So I have more confidence in the retirement. And the side story, my Business Development, a keeper of this project in my Tyson. He proposed me to buy a report from some consulting company A few $10,000 he need to study the report, I turned down. I said, not necessary, why need report?
We just go to talk to the system makers, computing makers. They can tell you what they need. We just go to their way. So maybe after 6 months, I can tell you how big a TAM, What is the competitors, how to do it? But right now, I only concern how to bring these first car products into the system makers.
But again, already 2 customers are surprised. So I feel good.
Okay. Thanks, Kees. Next question comes from, I think, should be Bank of America, Mr. Simon Wu. He's asking about whether you see foundry sourcing issue from TSMC, UMC or SMIC given the current shortage and which country do have a bigger exposure, you said that UNC or TSMC.
Maybe we start with these two questions. Thank you.
Okay. Faizeng, we are On working with the UMC and TSMC, but now we also have a partner with the Global Foundry, okay, it's our new supplier. Overall, we keep very close relationship with the UMC HSM and C. Unfortunately, they give us a good support. The wafer amount gradually increasing, but unfortunately the demand is too strong, so far than enough.
I don't know how to convince them, but I'm keep telling our Feng Shui partner, Faison has very unique position in the market. Okay. Now you see, we have the other new driver retirement to service customers, means customer in the future that need More from Faison. In Faison, we are also willing to invest the money into R and D to develop a lot of new system, new products. So based on this kind of a position, I believe foundry people, they may agree to support us more because We are willing to invest.
We are willing to expand the business and we are trying to build more products to the industrial. And at the end, they are going to benefit. So I believe we're able to get increased supply, but unfortunately, Demand still too far enough. We will keep doing our best at this moment.
Okay. And the follow-up question from Simon is about your PCIe to chip the geometry. He said 14 to 16 nanometer nodes are still at 28 nanometer, 30 nanometer range. Thanks.
23, mainly in the Gen 4, now we migrate to the 12. Looks like all the design is starting for 12. And we also have IP design today with 7 nanometers Gen 5.
Okay. Got you. So we have several new questions that I maybe speed up a little bit. Also question from Brian, CLSA. What do you expect ASP profile by segment in second half twenty twenty I guess, this means the ASP increase by segments.
And do you to think that SSD controller IC shortage will continue through 2023. And if so, do you expect the ASP trend to go up in 2022? That there's a question. Thank you.
So, Faiza, we have a different portfolio here, right. So you're talking about ASP, Consumer is the other story, okay. It's really a controller embedded system gaming module industrial, the SP are slightly increasing because of Cost increase the material shortage, okay. Overall, 5% of our business except the consumer ASP increasing. Talking about controllers, ASP, basically, Fisense, our controllers, We actually find some cover all kind of controller from the USB, EMC, UFS, memory card And the SATA, PCI Gen 3, PCI Gen 4, we cover full range.
Overall, every range we are in high supply, We are shorted. So this cover mainly 55, 40 and 20 nanometers. And you may not know, Phison also have an in house PMIC solution. All the SSD supplied by Fisun controllers and modules are using Fisun in house PMIC. So PMIC actually also in test supply, we know enough.
There is mainly in the 8 inches 180 nanometers. So next year, I still believe 8 inches 5540 definitely tight, 28, I think slightly tight, but 5 months is more than far than behind because we got so many design wins. So mainly in the EMC, we are key players. So foundry we keep talking to foundry, try to get more capacity. And by 12 nanometer, I think also under constraint, but Fisun is a mini Gen 4 is picking up so rapidly.
And this we also need our customers, our partners helping us to talk to the foundry to get the supply. And ASP wise, I believe next year because controller is too tight, so ASP able to maintain, I believe. Yes.
Thanks, LKS. So the next question comes from Randy, Randy Yevren from Credit Suisse. So he is asking how much capacity increase, have you secured for next year with the LTA? And how much higher price Would you commit to, I guess, to your foundry customers? And can you also secure your business with the LTAs with your customers.
This is the first question from Randy.
Okay. Yes, we have 2 +1 foundry partners. Sorry, I'm not able to share to you how many percent I'm able to increase because This is too competitive and I don't want to bring trouble to my foundry because everyone go to talk to them to increase the capacity. But For sure, for instance, our supply next year is increasing and I believe still keep gradually increasing. But again, still far behind.
That's why we have to work very close with them to see to convince them based on our position they need to help us to get the capacity. And talking about LTE, actually most of my key customers propose to make a prepayment to Bison And they asked to have LTA with Bison to secure the controllers. So this is the deal side. We talk to suppliers for LTA. Our customers also talk to us about LTM prepayment.
So we need to fully use our resource capacity to support our key partners. Once we made the design, we need to fulfill the demand. But what is challenging, demand is too strong, But I wish actually, I wish the semicon the market has some downturn, Then we are able to get some release capacity from others. I wish.
Thanks, Kees. 2nd part of Randy's question is about how is your view on NAND? Do you expect normal slow season in Q4. And Do you think the NAND market can stay tighter with the industry strength? So maybe I also moderate a little bit, if you can quantify the NAND price in 3Q and Q4 in both the raw NAND and module price.
That would be very helpful. Thanks.
The NAND supply already tight For over, I think it's 4 quarters since the last CQ3. Personally, I don't like to see NAND always in test supply because this is not healthy to the industrial. NAND's industrial actually The human keep asking for more capacity. If the supply is tight means the price is not able to go down, Means the market is not able to grow, especially the 5 gs start to penetrate to the life today. More storage is needed into the systems.
This quarter, basically, NAND still in the strong demand, high supply because of data center looks like start to picking up. And smartphone by CQ2 was slow, but looks like now still back to normal. PC, slightly like start getting Soft, but again the demand is still there. Next year 2022 according to the supplier, saying NAND still in High demand still good, but again, if the whole year skip the name, high supply is not very good to the industrial. So I wish But you can see that some more new fab is going to ramp up, some supply is going to come in.
I wish NAND can get to the In the future, the NAND price by annually cost down 40% plus in the past, Okay. So we wish the price able to by Cheek App, by able to cost down to get to attract more system to use a more high capacity business. This is much healthy. But overall NAND is strong. Price wise, I think a lot of report.
By CQ3, the component itself Supplier increased 5% to 10%, which I do not see this, but anyway supply is tight.
Yes. Okay. Thanks, Kees. So we still have like 4 questions and we have 8 minutes left. See if we can And so, Dan, if not, I will pass the question to the IR team.
The next question coming from Howard Wong from Dror Capital. How will the gross margin and OP margin evolve in the next few years when we shipped out our IFS in the new products.
Again, you can see, okay, Python have an IT, ASIC and Systems business. So The SAi Pison gross margin is 50%, but at the few our last call, our goal is 25% plus, but Luckily, coming the previous two quarters we hit 30 and CQ3 are still optimistic we're able to ship like 30 something. Faiza, we need to increase influence power. We have to increase our top line in the revenue. So my goal is, again, the margin is 25 plus percent.
The best is 28% to 30%. This is our goal, okay? But At the end, the earnings per share, we need to increase a lot, okay? This is what we have to do. So I'm not much afraid about my gross margin rate, because I able to generate more gross profit through our business model.
Okay.
Okay, thanks. And next question comes from Weibo Securities, Mr. Mette Griesen. So his question is roughly how much that Fisense business comes from industrial and embedded. And it seems like those business It's going through a period of acceleration.
And yes, so can you comment about this is potential there.
Yes, I think we have a portfolio here, right. Embedded now is a 14% of Of total revenue industrial 19%. And we can see this okay, this field, automotive is going to use a more high capacity product. So revenue wise, We can expect gaming modules, I didn't mention, is going to terabyte. Embedded, mainly we get into the PC computing server And also the smartphone, okay.
So this actually, actually if I can going to spin off either one unit, This can be one independent company and still able to grow, okay. This is already a big segment in the industrial Just because Pfizer today is still young and starting, give us few more years, I think we're able to grow these few segments ourselves. And again, Faizan is not going to spin off, okay. We need to keep everything into Faizan with our unique business model.
Okay. I will speak to give one supply demand of NEM flash question and jump to the follow-up question from Mr. Simon Wu. First of all, If you look at the controller IC market, can you comment about the market share this year versus last year? And also You talked about the controller price IC price hike over 20% Q on Q in Q2.
What's the trend into Q3. And yes, those are the key questions.
Okay. Again, this is difficult from Faizen side to tell you the market share because I read the other companies saying they have a market share, but we thought to Collecting the total amount looks like this is too far than what they can supply. I mean, we don't know how many piece are in house from Samsung from Hainan from others, right, we got no numbers. So I'm not able to tell you the number, but by unit wise, we are increasing. By the supply we're increasing, but again, unfortunately, still far than behind to ship to customers.
If foundry able to give us 2x of wafer, we're still able to ship immediately to customers, means the demand is very strong. So Faison, what we more care is about PCI Gen four investment. We are in a good position, 2022, 2023. This we are going to make more controllers for our semicon partners and also on the other hand, we are also able to build the modules to increase our gross profit. Again, don't get me wrong.
I'm not talking about gross profit percentage, I'm talking about gross profit. We're able to get the more dollars profit from the modules, industrial modules, gaming modules, embedded modules. So we look to Faison, right, That's why our finance is strong because again of our business model. So controller wise, it's our key business We need more wafer, but on the other hand, we enable the controller to semicon. We also enable the modules without any extra cost.
So that's why Faison is able to create more profit.
Okay, thanks. 2nd part of Simon's question is about the module ASP. He asked very specifically, Was your 2nd quarter module ASP up 7% or 15% Q on Q? And for the 3rd quarter revenue, Do you expect a quarter on quarter revenue can grow around 10% quarter on quarter?
Again, Fisense, we cover full range of modules. We are not only provide SSD or EMC, we cover everything. So It's difficult to me to answer how many percent increase average ASP, but the answer is ASP is increasing because of controller constraint, Okay. But not only because of price increase, but because of our content capacity increase. To be honest, 5% we don't like to see the same petabyte the same gigabyte storage price keep increasing.
This is not healthy, Okay. We hope we're able to slightly cost down quarter by quarter the modules, but We need to increase the content, means every half year and every 18 months, we're able to double the content to the customers. So overall, we increased the ASP, but the gigabyte, solar per gigabyte are declining. This is the most healthy industry.
Okay. Then lastly, I summarized 2 questions from William Song and also Meta Brisson into a simpler Simplify question. What do you think about the NAND demand supply in 2022? Also the IC or foundry demand supply in 20 20 2.
Foundry, no need to answer, it's tight, super tight. I wish this could be getting loose, but I am able to get more supply. NAND, okay, according to Semicom, they said very strong, they said what is this, what they said, From my point of view, I still believe next year they have some new fab coming. And overall, the COVID still is uncertainty. And the price increased too much in the NAND may also decrease The demand in the content, so it's hard to say, but anyway next year the NAND still in a good shape, good position, but price wise, Again, I don't expect the price to going up.
Okay, not healthy.
Okay. Thanks. Yes, so maybe we need to finish here. And I'm sorry if I didn't moderate your question very well. I will make sure I send your questions to the company management and hope them can answer you by e mail.
Since KAES and also thanks for your also patient. Have a good day. Thanks.
Thanks, Shai. Thanks to everyone. Thank you. Bye bye. Bye bye.