Good day, and thank you for standing by. Welcome to the 1st quarter 2023 MagnaChip Semiconductor Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your host today, Yujia Zhai, investor relations representative for MagnaChip. Please go ahead.
Hello, everyone. Thank you for joining us to discuss MagnaChip's financial results for the first quarter ending March 31st, 2023. The first quarter earnings release that was issued today after the market close can be found on the company's investor relations website. The webcast replay of today's call will be archived on our website shortly after. Joining me today is YJ Kim, MagnaChip's Chief Executive Officer. Shinyoung Park, MagnaChip's Chief Financial Officer, is on maternity leave. During Shinyoung's absence, YJ is the Principal Financial Officer of the company. YJ will discuss the company's recent operating performance and business overview. I will provide the financial results for the quarter. YJ will provide guidance for the second quarter of 2023. There will be a Q&A session following the prepared remarks.
During the course of this conference call, we may make forward-looking statements about MagnaChip's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today. Therefore, are subject to risks and uncertainties as described in the safe harbor statement found in our SEC filings. During the call, we will also discuss non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Are intended to illustrate an alternative measure of MagnaChip's operating performance that may be useful. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our first quarter earnings release in the investor relations section of our website. With that, I will now turn the call over to YJ Kim. YJ?
Hello, everyone. Thank you for joining us today, and welcome to MagnaChip's Q1 2023 earnings call. Before we proceed, I want to welcome Gilbert Nathan as an observer of the company's board of directors and ad hoc strategic review committee of the board. Mr. Nathan is currently the managing member of Jackson Square Advisors, as well as the CEO of KeyCon Power Holdings. With his extensive experience serving on the boards of multiple publicly listed companies, we are very pleased to have him join us. Following our annual shareholders meeting in May, Mr. Nathan will promptly be appointed director on our board and serve as a member on MagnaChip's strategic review committee. We are pleased to benefit from Mr. Nathan's deep knowledge and expertise in finance and capital markets as we strive to enhance value for our shareholders. Moving on to our results.
Our Q1 financial performance was within the range of the guidance we provided on our Q4 earnings call. Revenue was $57 million, and gross profit margin was 21.2%. As we indicated last quarter, our results are being severely impacted by several macro challenges that I will detail as I discuss each of our two main businesses. Beginning with our display business. Q1 revenue was $10.8 million, down 62.9% year-over-year, but up 43.5% sequentially. These results reflect the continued effects of last year's supply shortages of 20-nanometer 12-inch OLED wafers that impacted the second half 2022 design wins and the ongoing smartphone inventory correction. Consumer demand overall continued to be weak, but we have begun to see some market recovery in the premium tier where our display products play.
During the first quarter, we saw increased demand from our large Korean panel customer for a leading Korean smartphone model. We also commenced shipments of our OLED products to this customer for two new premium-tier smartphone designs expected to be launched in Q2 by a leading Asian smartphone OEM and a global smartphone OEM. We remain steadfast in our mission to turn around our display business and continue to execute our recovery plan during the quarter. I will summarize some of the key display business recovery initiatives for you. At our non-Korean tier one panel customer last quarter, we completed qualification for the first OLED DDIC project. This quarter, we began shipping initial volume and expect to accelerate shipments in the coming quarters.
In Q1, we also successfully delivered our second OLED DDIC project sample ahead of the schedule. Mass production is expected in the second half of the year. Our second OLED DDIC offers significant performance and feature upgrades from our first DDIC for this customer. We continue to have prospects with many of the leading smartphone OEMs. I also recently visited our new panel customer in their multiple sites, as well as our new foundry partner. Our strategic partnerships are stronger than ever. We are in active discussions with them regarding other projects that could tape out later this year and contribute to revenue growth in 2024.
At our large panel customer in Korea, we successfully completed the tape out of a high-end smartphone DDIC project and are now in the targeting to release sample to our Korean customer in Q2, with mass production expected to begin near the end of the year. For our automotive OLED project at this customer, the mass production shipment timing we announced last quarter is now expected in mid-May. We are optimistic about securing additional design wins in the upcoming quarters based on our automotive OLED DDIC. Moving on to our power business. Q1 revenue was $40.7 million, down 37.3% year-over-year and down 12.1% sequentially. Similar to last quarter, our power business continued to be impacted by a weak demand across our end markets, particularly in computing and consumer.
As a result, we significantly reduced production during the quarter at our internal fab to normalize inventories, which negatively impacted fab utilization, which was a primary driver of our lower gross margin during the quarter. Despite the challenging environment, the core fundamentals of our power business remain unchanged. Despite the market slowdown, the blended power ASP for product increased 3.4% quarter-over-quarter and 26.3% year-over-year in Q1 2023 by improving the product portfolio and focusing on premium markets. Our premium products continued to maintain its strong product mix and ASPs. In Q1, premium products represented 64.4% of total power revenue compared to 53.6% a year ago, and premium ASPs increased 6.4% year-over-year. We continued our record pace of design activities.
In Q1 2023, we were awarded over 100 design in and wins, driven by our strong product portfolio across automotive, industrial, and computing applications. While total volumes remain weak during this industry-wide inventory correction, we remain confident that we will see a quick recovery on the other side of this cycle due to these strong fundamentals. We also continue to innovate. This week, we announced 9 new 600 volt super junction MOSFET products featuring a proprietary design technology that improves on resistance and overall system efficiency. In the second half of this year, we will be introducing a full set of next-generation products that will have better performance or cost by at least double-digit %. Our power segment's automotive business continued to make solid progress in various applications within the XEV automotive market.
For example, we were awarded multiple design wins with our innovative power products for applications such as electric water pumps, positive temperature heaters, regenerative braking systems, idle stop and go systems, and electric vehicle charging stations with large EV automakers across Korea, Japan, China and Taiwan. Turning back to our OLED business summary. We continue to focus on executing on the near-term goals that we have set forth with our two major panel customers. We believe our OLED business is bumping along the bottom and is poised to ramp in the second half and expect to deliver revenue growth in 2023. With our cutting-edge OLED products, we are well positioned to make significant strides in the industry once the current environment improves.
Looking further ahead, we are highly optimistic about our OLED opportunities, particularly as we make headway internationally into the next major market beyond Korea, where our available foundry capacity is expected to increase few folds over the next few years. In our power business, our product design in win rate is stronger than ever, and we are rolling out next generation power products throughout this year. Looking ahead, the macro environment remains uncertain. We believe we hit the bottom in Q1, and we expect gradual improvement going forward as channel inventories are consumed. We expect sequential growth, especially in industrial, automotive, and computing segments. We recognize our recent market performance and results have been disappointing.
However, we want to assure our investors that we remain unwavering in our commitment to drive growth and maximize shareholder value, as demonstrated by our decision to bring in fresh perspectives with the addition of Mr. Nathan to our board. Further, we continue to execute our stock buyback program daily, and I am confident that the net purchases across the challenging market will provide accretive returns to our shareholders on the other side of this downturn. Thank you to our shareholders for all of your patience, and we appreciate your support as we work towards our goals. I will now turn the call over to Yujia Zhai to go over the financials in detail.
Thank you, YJ. On behalf of MagnaChip CFO, Shinyoung Park, I will provide the financial update for Q1. Total revenue in Q1 was $57 million, down 6.5% sequentially, and down 45.2% year-over-year. Revenue from the standard products business was $51.5 million, down 4.3% sequentially, and down 45.2% year-over-year. Revenue from our display business was $10.8 million, up 43.5% sequentially, and down 62.9% year-over-year. Our results continued to be impacted by the wafer supply constraints in our OLED business that impacted our design wins in the second half of 2022. Hence, lower demand for Chinese and Korean top-tier smartphone models as a result of the global downturn in the smartphone market.
Revenue from our Power business was $40.7 million, down 12.1% sequentially, and down 37.3% year-over-year. Our Power business continues to be impacted by weak demand environment across most of our end markets, particularly computing and consumer-related applications. Gross margin in Q1 was 21.2%, down from 26.4% in Q4 2022, and down from 37.5% in Q1 last year. The sequential decline in gross margin was mainly due to a lower utilization rate of our internal fabrication facility in Gumi, in response to the industry-wide slowdown and inventory correction and higher fab costs. The year-over-year decrease was primarily due to an unfavorable product mix and a significant drop in the utilization rate of our Gumi fab.
As a reminder, gross margin in Q1 last year benefited by 200 basis points from a one-time timing mismatch of lower cost 12-inch wafers that was purchased in Q4 2021 and subsequently sold in Q1 2022. We expect our Q2 2023 gross margin will continue to be impacted by lower utilization as well as higher manufacturing input costs such as electricity and wages. Gross margin is expected to improve as we anticipate higher volume and utilization rates in the second half. Turning now to operating expenses. Q1 SG&A was $12.2 million as compared to $12.6 million in Q4 2022, and $14.2 million in Q1 last year. Q1 R&D was $13.3 million as compared to $13.7 million in Q4 2022, and $12.0 million in Q1 last year.
Stock compensation charges included in operating expenses were $1.1 million in Q1, compared to $1.5 million in Q4, and $1.6 million in Q1 last year. Included in our OpEx this quarter was a one-time charge of $8.4 million related to the early termination subject to our voluntary resignation program that we executed during the quarter. Based on the number of employees that opted for this program, we expect to have annual savings of approximately $3.4 million. Q1 operating loss was $21.8 million. This compares to an operating loss of $10.1 million in Q4, and an operating income of $12.9 million in Q1 2022.
On a non-GAAP basis, Q1 adjusted operating loss was $12.2 million, compared to an adjusted operating loss of $8.6 million in Q4, and an adjusted operating income of $14.5 million in Q1 last year. Q1 adjusted EBITDA was -$7.9 million. This compares to a -$4.8 million in Q4, and a +$18.8 million in Q1 last year. Net loss in Q1 was $21.5 million, as compared with a net income of $3.0 million in Q4, and a net income of $9.5 million in Q1 last year. Our GAAP diluted loss per share in Q1 was $0.49, as compared with an earnings per share of $0.07 in Q4, and an earnings per share of $0.20 in Q1 last year.
Our non-GAAP diluted loss per share in Q1 was $0.24. This compares with a non-GAAP diluted loss per share of $0.36 in Q4, and an earnings per share of $0.28 in Q1 last year. Our diluted shares outstanding for the quarter were 43.4 million shares, which reflects shares repurchased as part of our expanded share repurchase program. Our stock buyback in Q1 2023 amounted to $11.9 million. Cumulatively, since the start of the program in September last year to the end of Q1 this year, we've repurchased 2.5 million shares or $24.4 million. We continue to exercise the stock buyback that was authorized by the board. Moving to the balance sheet.
We ended the quarter with $212.1 million of cash and no debt, down from $225.5 million of cash at the end of Q4 2022. The primary cash outflow in Q1 was the $11.9 million spent on stock buybacks. We expect to continue to draw down on our cash balance in the coming quarters, driven primarily by our buyback program, payment of termination-related charges subject to the voluntary resignation program in normal CapEx. Based on our forecast, we anticipate our cash could range between $165 million and $190 million between Q2 and Q3, depending on whether we choose to enter into a long-term supply agreement with a 12-inch wafer foundry.
We believe our balance sheet position is strong and positions us well during this period of macro uncertainty. Net accounts receivable at the end of the quarter totaled $32.1 million, which represents a decrease of 9.1% from Q4 2022. Our day sales outstanding for Q1 was 51 days and compares to 53 days in Q4. Inventories net at the end of the quarter totaled $36.4 million. This compares to $39.9 million in Q4 2022. Our average days in inventory for Q1 was 73 days and compares to 82 days in Q4. Lastly, Q1 CapEx was $0.1 million. As I mentioned earlier, for 2023, we continue to anticipate CapEx to be approximately $10 million, which is nearly 60% lower from the 2022 level.
That concludes the CFO section of today's prepared remarks. Let me now turn the call over to YJ for guidance.
Thanks, Yujia. We expect our results to remain soft in the near term, we believe both power and display are poised for recovery in the second half of this year based on our current customer feedback. Based on our current projections and assuming a steady-state global economy, we are cautiously optimistic that our key financial metrics have the potential to show sequential improvement in the both the third and fourth quarters of 2023. Moving to our second quarter guidance. While actual results may vary for Q2, MagnaChip currently expects revenue to be in the range of $58 million-$63 million, including about $8 million of transitional foundry services in our Gumi fab. Gross profit margin to be in the range of 21%-23%. Thank you. That concludes the prepared remarks section of our call today.
Operator, you may now open up the call for questions.
If you'd like to ask a question at this time, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you'd like to ask a question, please press star one one on your telephone. Please stand by while we compile the Q&A roster. That is star one one to ask a question. Our first question comes from the line of Raji Gill with Needham.
Hi, this is Nick Doyle in for Raji Gill. Thanks for taking my question. First question, just wanted you to talk a little more about the design momentum thing around your new DDIC chips. If you could speak about, you mentioned, a little bit of premium market recovery, if you could talk a little more there. Thanks.
Sure. Thank you, Raj. On the design win front, you know, we have one new chip that's supposed to deliver this quarter to a Korean customer. With that customer, we saw in Q1 recovery of some premium phone for the Korean customer, as well as two new product launches that's happening in Q2. We saw some of the improvement there. We also going to production with automotive this mid-May. Those are the key progress with that customer. Then in the non-Korean panel customer, we have qualified the first product last quarter. We shipped some, and we expect to increment the ship during the next few quarters.
Our second chip has delivered ahead schedule and that initial evaluation done. Now we are moving into the panel evaluation stage, and we expect that the product to do really well as we're seeing a lot of interest. That product is a much better feature and performance and power consumption than the first one. We are looking optimistic about that. We, as we said during today's call, we are also working on a next generation chip that we will tape out that will contribute to revenue next year as well.
Thanks. If we could talk about utilization, it was lower this quarter. Did you say that you expect it to go lower again next quarter? Hoping you could give more direction on that, further into the year. Is that completely tied to the power segment or was that in display as well? Thanks.
Yeah. We make the more 100% of the display OLED DDIC using external foundry, whether it's 8 inch or 12 inch. The utilization doesn't matter for that chip. On the Power, we make around 80% internally, so the utilization does matter, and that's one of the reason why Q1 Our margin was low on Power. We expect the Q2 utilization to be better than Q1, but without giving the details of the magnitude.
As a reminder, to ask a question, that's star one one. Our next question comes from the line of Sam Zediga Zandi with Oppenheimer.
Hi. I'm on the line. I'm calling from, for Martin Yang from Oppenheimer. First question. What was driving the ASP growth in premium tier power solutions product, and how confident are you at maintaining the premium tier?
You know, our premium products are co-composed of Super Junction, IGBT, and Power IC. We have been introducing next-generation products more. This week, you saw we introduced 9 more Super Junction products. We also alluded that we will be introducing more of the other series of Super Junction other than 600 volts. We will have a much better product portfolio that will be introduced. Our confidence on growing the premium products is very high.
You know, we're not gonna give all the other stuff, but I can say that the product portfolio roadmap looks really good, and you will see a lot of new product introduction, some in Q2 more and then a lot more in the second half this year.
Great. Sounds good. My next question is, can you talk about gross margin puts and takes? What needs to happen to drive gross margin towards high 20%?
That's a really good question. On the power, the utilization is key factor. Once we starting to fill the fab, that will drive the gross margin, because we have a fixed cost, and so you fill more fab with a better utilization, the gross margin will come. On the side of DDIC, that will be based on portfolio as well as the shift towards higher end devices like QHD and WXGA type of devices. And the brand new launches we expected towards the second half. That's how we'll drive the gross margins of each product line.
Got it. Great. That's all from me.
Thank you.
I'm showing no further questions in queue at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.