Earnings Call: Q2 2021

Aug 2, 2021

Ladies and gentlemen, thank you for standing by. Welcome to the Tower Semiconductor Second Quarter 2021 Results Conference Call. All participants are currently in a listen only mode. Following management's prepared statements, instructions will be given for the question and answer session. As a reminder, this conference is being recorded August 2, 2021. Joining us today are Mr. Russell Ellwanger, Tower's CEO and Mr. Ovein Shirazi, CFO. I would now like to turn the conference over to Ms. Noit Levi, Senior Vice President of Investor Relations and Ms. Levi, please go ahead. Thank you, and welcome to Tarot Semiconductor Financial Results Conference Call for the 2nd in the quarter of 2021. Before we begin, I would like to remind you that some statements made during this call may be forward looking and are subject to uncertainties and risk factors that could cause actual filed with the Securities and Exchange Commission as well as filings with the Israeli Securities Authority. They are also available on our website. SARA assumes no obligation to update any such forward looking statements. Please note that the Q2 of 2021 results have been prepared in accordance with U. S. GAAP. The financial tables and data in today's earnings release and in the earnings call also include certain adjusted financial The financial tables include a full explanation of these measures and the reconciliation of these non GAAP measures to the GAAP financial measures. Now I'd like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead. Thank you, Noe. It's a pleasure. We're quite excited to share with you our 2nd quarter results and business activities. Our revenue for the Q2 of the year was $362,000,000 a record for Tower, representing 17% year over year total 26% organic growth. In the order of revenue dollars, the year over year organic growth was mainly driven by RFSOI at over 40% year over year organic increase Power IC at 35% year over year organic increase Image Sensors 30% year over year organic increase and Power Discrete at 23%. To note, All business segments demonstrated growth in the 2nd quarter. We guide the Q3 of the year to increase to a mid range of $385,000,000 representing year over year 24% total growth and a 38% organic growth And breaking a $1,500,000,000 annualized revenue run rate. This should be driven by a further and large year over year increase in RFSOI and image sensors, with all business segments expected to demonstrate growth. Our customer demand and served markets are strong. Hence, we expect continued top and bottom line growth in the 4th quarter To support continued growth based on our customer demand, we continue to execute the previously announced capacity expansion plans as well are adding 200 millimeter new capacity, which will be addressed with more details by Oren. Towards specific large 300 millimeter growth, we signed an agreement with STMicroelectronics. In this partnership, we will join forces for an accelerated fab ramp up, a key factor to speedily reach a high utilization level and therefore a competitive wafer cost. Tower will install its own equipment in onethree of the total space, which should triple our current 300 millimeter foundry capacity. The fab is expected to be ready for equipment installation later this year and start prototype production in the second half of twenty twenty two. Our strong execution in advanced 65 nanometer, 300 millimeter based analog RF, power platforms, displays and other technologies will be significantly enhanced by this activity in our gratae. The United States Senate passed the Innovation and Competition Act of 2021 and appropriated $52,000,000,000 towards U. S. Semiconductor growth. The bill is now before the House of Representatives. Providing its passage, our target is to receive funding towards at the same time, and we are pleased to report that we are in the position of the company's position to be in the position of the company's position. Towards this end, during the past quarter, we've been strongly involved in activities related to this act. I've attended 3 industry leader panels on subjects of growing and or securing the U. S. Microelectronics supply One such panel was a CEO roundtable hosted by Senator Cornyn and Congressman McCall, both sponsors of the CHIPS Act and their respective legislative bodies, a visionary activity. And I attended a special session at the SelectUSA Conference hosted by U. S. Secretary of Commerce, Raimondo. I spoke of 4 imperatives that we believe are essential for foreign entities to qualify to receive incentives from the United States especially in a foundry model, enabling innovative entrepreneurial ideas to successfully move through concept and feasibility in transition into value add business. Secondly, all companies need to show a history of strong IP security, both external and internal to the company. All recipients should have a strong history of supporting U. S. Government initiatives. And lastly, there should be a legislative focus on differentiated analog technology, in the range of 8% to 85% of all system electronics by volume. We continue to work with the Congress of the United States, at the Department of Commerce, other U. S. Government agencies as well as other partners. Moving to our specific businesses. During the Q2, our RF mobile business was 25% of our revenues and is expected to show strong growth throughout the year. Estimates remain that 5 gs handsets will double year over year 2021 over 2020 to about 550,000,000 handsets out of a total of about $1,300,000,000 This shift, combined with the high content increase of 5 gs and our strong position in this market, Fuels our continued growth. Importantly, in addition to revenue growth, the shift to more advanced and higher value Demand is strong in both 200 millimeter and 300 millimeter, and the partnership announced with ST will help meet the requirements of our strong 300 millimeter design win pipeline. The RF infrastructure business serving telecom and datacom end markets with their industry leading silicon germanium technology maintains a high run rate due to data center strength and was about 12% of our corporate revenues. For Datacom, where forecasts remain quite strong, we build both high speed optical transceivers and high speed Hard disk drive preamps for storage. Our Power IC business was about 15% of our total revenues, with strength in automotive, industrial and consumer segments. The business is benefiting from a strong market cycle Like power ICs, growth is broad based, led by automotive applications. We expect this business to level off over the next few quarters, while we focus our CapEx expansion on other higher margin segments. Our imaging business represented 15% of our revenues, with main growing markets being the medical, dental X-ray and industrial sensors. In addition, we continue to grow in the cinematography and broadcasting market segment, being among our highest margin imaging applications. For the medical market, we see a recovery of the dental segment to levels that are higher than the pre COVID-nineteen levels with a present high growth trajectory. The main long term growth drivers stem predominantly from the transition from traditional amorphous silicon based flat panel technology to CMOS. Our customers who are either X-ray detector suppliers or X-ray equipment suppliers who design with us their own sensors are gaining more market share, and we, as sole supplier in most cases, are growing our share accordingly. In the industrial market, we see a steep growth in all of its segments, machine vision for factory automation, for traffic control as well as automatic data collection. On the display side, we continue substantial partnership developments for backplane silicon for micro at OLED, mainly for the VR display, which is a fast growing market and on silicon wafer based microLED technology for large starting this quarter, we will refer to the number of photo layers processed during the quarter per wafer size. Given the fact that we continue to increase the capacity of our manufacturing facilities with changing mix of at close. Pure utilization numbers do not represent the company's operational performance on a time comparative basis. For the Q2, foundry layers, all numbers given an 8 inches equivalents for 150 millimeter, at: 451,000 layers were processed as compared to 353,000 in Q2 2020, up 28% year over year 411,000 layers were processed in the previous quarter Q1 2021. For 200 millimeter, 5,921,000 layers were processed as compared to 5,115,000 in Q2 2020, up 16% year over year. 5,772,000 layers were processed in Q1 2021. For 300 millimeter, 1,404,000 layers were processed as compared to 903,000 in Q2 2020, up 55% year over year. 1,375,000 layers were processed in the previous quarter. Moving now to corporate sustainability. We are about to issue our 1st formal environmental, social, governance, or ESG, report. However, the core of ESG has long been embedded in the DNA of the company. For Tower, ESG is much more than papers listing activities and targets. It is our focus in being a good, Various elements of our corporate responsibility, sustainability and ESG efforts will be described in this report are well aligned into our value vectors with a mindset of excellence in each of the described areas. We are continuously evaluating our activities in order to improve and ensure that our commitment and actions toward a company that betters society and betters the lives around us are achieved, valued and sustainable. With that, I'd like to turn the call to our CFO, Mr. Oren Shirazi. Oren? Hi, everyone. We released today our Q2 2021 results, achieving record revenues of $362,000,000 reflecting a remarkable 17% year over year revenue increase and resulting in significant increases in gross profit, Operating profit and net profit. We are providing a revenue guidance of $385,000,000 for the Q3 of 2021, Representing an additional record revenue quarter. As discussed several times over the last few quarters, We continue to see significant customer demand and demand forecast. Hence, we announced in February 2021 $150,000,000 capacity expansion plan to increase our capacity in our 8 inches 12 inches fabs. We now announced an additional capacity investment of $100,000,000 to result in $250,000,000 total CapEx Begin to provide incremental capacity during the Q3 of 2021 and continuing into 2022. As mentioned by Russell, For enhanced 12 inches capacity on top of our existing Guozu Fab, STMicroelectronics and us entered into a partnership to I will now move to our 2nd quarter and then discuss our balance sheet and cash flow financial statement. Revenue for the Q2 of 2021 was $362,000,000 $52,000,000 higher year over year, reflecting a 17% year over year revenue increase. Looking at our organic revenue, which is defined as total revenue excluding revenue from Novoton Japan, previously Panasonic Semiconductor And revenue from Maxim in our San Antonio fab, revenue in the Q2 of 2021 reflects a 26% year over year Revenue increase. Gross and operating profits for the Q2 of 2021 were $74,000,000 $34,000,000 respectively. This gross profit is $16,000,000 higher or 28% higher over year over year and this operating profit is $12,000,000 higher or 54% higher year over year. Net profit for the Q2 of 2021 was $31,000,000 or $0.29 basic earnings per share And $0.28 diluted earnings per share. This net profit is $12,000,000 higher or 62% higher year over year. Looking at the balance sheet, we demonstrated again a strong and stable financial position. A few points to note, our Shareholders' equity reached a record of $1,520,000,000 as of June 30, 2021. Deferred revenue and customers advances balances under current liabilities and long term liabilities in the balance sheet have increased by $9,600,000 $6,600,000 respectively, to gate more capacity reservations to them to address their excess demand, offset by some scheduled repayment. Current assets ratio defined as current assets divided by short term liabilities is strong at the value of 3.7x. In regards to our cash and cash equivalents, in the Q2 of 2021, cash flow generated from operations was $93,000,000 Investments in fixed assets net mainly for manufacturing equipment were $56,000,000 We repaid $20,000,000 of our debt during the Q2 of 2021 and invested $17,000,000 in short term bank deposits and marketable securities. Our cap table consists of 108,200,000 outstanding ordinary shares and an additional 2,300,000 ESOP related shares, resulting in fully diluted share count of 110,500,000. Looking forward to the second half of the year, following the $385,000,000 record revenue guidance for the Q3 of 2021, The first question is from Mark Lipacis of Jefferies. Please go ahead. Hi, Mark. The next question is from Rajvindra Gill of Needham and Company. Please go ahead. Yes. Thank you and congratulations on the great momentum across all of the major business lines. That's great to hear. Absolutely. So Oren, just a question on the gross margins as we progress throughout the year. You had mentioned in your through in Q4 as some of those incremental costs related to capacity get have been absorbed. Wondering how we think about that upside to the 50% gross profit fall through. Without giving maybe numbers, but just are we seeing higher margin process flows in Q4 that would give you the confidence to say that we're going to be above the 50% GP profit fall through? I'll We have seen very, very strong increases in demand And for a variety of the increases in demand, in order to So a good portion of what's going on in Q4 is a result of Q3 starts that are now under POs that have a higher selling price than previous quarters, and it's driven off of customers that are working towards increasing demand versus previous run rates for the most part. And yes, as mentioned during the script itself, As we move more and more into some of the, for example, 5 gs driven activities, as we move into at higher gigabit per second data center as we move towards more large stitched die wafers, All of that are higher margin flows to begin with. So it's a combination of a richer mix And where we talked about the increase of another $100,000,000 of 200 millimeter investment, that really is for the main part to increase capacity for a richer mix for higher margin mixes. So Q4 is a combination of both. It's And have increased capacity, that those are coming in at this point or will be coming in off of purchase orders that had an increase in ASP. Okay, got it. That's super helpful in terms of the drivers for the margins. With respect to the STMicro partnership that you announced a few weeks ago, very interesting announcement. Wondering kind of the rationale for both parties, particularly STMicro, But it's allowing you guys to leverage your expertise and on 300 millimeter and 200 millimeter to really kind of maximize the foundry. I'm curious kind of what was SC Micro's thinking in terms of partnering with you and the value that you'll bring to the table. And maybe if you could just remind us And beyond, so we get kind of a sense of the potential scale of this partnership. Thank you. The fundamental drive was really stated by ST in the press release itself and that was to drive A faster ramp to high utilizations and a faster ramp of capacity, Which obviously then reduces the fixed cost per substrate. So the deal is a very strong, we believe and they believe win win for both companies. The specifics of the financial model has not been released, And I'm not sure that all the details will ever go out into the public. That's part of the confidentiality that ST and ourselves have. But the model itself is a very good model for both companies for many, many reasons. And I believe there's The major driver again from their side was what was stated in the PR and that is a faster ramp Thank you. The next question is from Mark Lipacis of Jefferies. Please go ahead. Hey, Mark. Hello. Can you hear me? Yes. Yes. Now we can. Oh, you can. Okay, great. All right. I don't know what happened there. Thanks for taking my question. Russell, on a GRATE, I think you mentioned second half of twenty twenty two prototype. I just want to make sure I had that right. When do you think you start shipping production revenues? Our target would be to start shipping production revenues in the first half of twenty twenty three. Got you. And when you talked You talked about, I think several capacity expansion plans. I don't think I heard silicon germanium mentioned there. Are you what is the is that included in the capacity additions? Can you talk about What you're doing with Silicon Jameanium from a capacity expansion standpoint? It is definitely included in it. The infrastructure activities that we're doing, we had mentioned are very strong. We have Growing demand consistently in data center. And yes, so the silicon germanium and silicon photonics are both parts of our expansion plan. Got you. And you mentioned the shift out The Now to invest in 200 millimeter differentiated platforms. So we thought 5 gs platforms are certainly one of our differentiated platforms. Got you. That makes sense. Thanks for that clarification. And then on the CHIPS Act and your view to kind of target San Antonio there, do you have a sense of when Tony, are there. Do you have a sense of when you would expect to get visibility on this? And To what extent would you expect this to be direct funding or versus tax credits? Expectation doesn't necessarily tie into what will happen. Our expectation is direct upfront funding And that's where we'd like to be. I think, city, county governments Do a lot and have offered a lot in areas of tax abatement and that I think is a very good thing for Ongoing margins and reduction of ongoing running costs. But the big issue of any greenfield activity is the upfront investment and the amount of years that it takes to bring that upfront investment into a net profit positive business and upfront grants are what really enables that. So For us, the important thing is to whatever works out or whatever might be worked out with us Is then to make sure that it really pencils well for the company and for our shareholders. And that's what our target is, is to have a deal. We'd love to increase capacity in the United States. Again, I think the San Antonio facility is a very beautiful campus targeted within. But certainly, it has to be something that pencils. And So that would be part of the discussions that we would have at a point that whatever committee would be ultimately used The next question is from Richard Shannon of Craig Hallum. Open. Please go ahead. Good morning, Russell, or I guess good afternoon, evening to you and to Oren. I'm going to follow-up on the gross margin question here. You talked about investment in differentiated flows and at the same time you talked about some of your power discretes maybe leveling I want to jump to that one a second. But how do we think about the longer term gross margin model of the company as you make all these investments, obviously, expecting to get a run rate utilization on those. And it'd be interesting to hear that answer in context to your past history in gross margins where you've About 3, 4 years ago, got into the mid-20s level here, and you're at the low-20s today. I'm curious to the degree to which you think you can approach those prior high levels. Yes. So hi, Richard. I believe I related to that a little bit in the So for Q3, we will see probably gross margin increase and all the margins will increase. However, not to the full 50% incremental model and from Q4 we expect it to be to exceed the 50 incremental model also as Russell explained previously because of some very good selling price increase trend in the improved mix. For the next years, if you ask, going forward, I think you should go from the baseline of the Q4 betterment on the margins. And then from that point in time To assume incremental model slightly above the 50%, if you want to be conservative or Not slightly above, but better than the 50%. If the trend in the market, which you know better than me will continue or as me Continue like now, because now it's a very good trend for us. Okay. And Warren, just to follow-up on this, since I don't have details on what dollar capacity you're expecting here. I'm not sure how far to take that incremental 50% gross margin and get to a hoped for level down the road here. Again, I'll ask if it's If we can get to near prior levels here as you fill up this new capacity, is that possible or can we approach that just any comments relative to your history would be great What is your question, the maximum revenue capacity? What was your question? Margin? No. Where we can go with gross margins over time given all these investments here. Again, relative to your history here where you've gotten up to the 25%, even close to at 26% level a few years ago, and now we're at the 20% level. And obviously, we've got some investments that will increase depreciation here. But over time, as you fill that up, can we get back up close or To that level that you see. Yes, of course, depends what outlook in the future you're looking into. But for the next year, yes, definitely we can achieve the 5 or even higher, slightly higher. Okay, perfect. That's helpful. Kind of a multipart question here on the power 1st of all, you said I think Russell you said discrete you're expecting to level off here over the next few quarters. I'd love to understand why there. If you could make some broader comments also on your power IC space where I think you've been gaining some share. It would be great to know what voltage levels you're seeing the benefit Yes. So Our power discrete market has been a little bit different than others in that for power discretes, We don't offer a foundry offering flow. For the Power Discretes, We have customer flows that we bring into the company, and we do, in many instances, co developments on additional flows or incremental flows or capabilities. The Power Discrete business itself is not the highest margin business in the company, But it's a very stable business for us by virtue of the relationships we have with those customers. The fact that It's very dependent upon each of these customers. We've reached levels of revenue that we think is very adequate in the company And the company is not presently taking the capital expenditure to put into those flows As there's others such as with the follow-up question previously, such as our silicon germanium, such as Both have a higher margin impact for us. And secondly, we own the flow, So we have much more freedom in the market as to who we work with. So that's the issue there. It's not that we don't have customers that would not wish or do not wish to grow with us in that area. It's at this point not our preferred area that we wish to grow our capacity in the Thank you. The next question is from Patrick Ho of Stifel. Please go ahead. Thank you very much and congrats on the nice quarter. Russell, maybe first off, in terms of I think you guys were very precious in terms of the capacity expansion plans to meet the market demand environments. I know you have a lot of customers today and obviously some of the capacity expansion is dedicated getting more share with the existing customers. But can you qualitatively maybe discuss how potential new Certainly. We are actually, in some instances, taking new customers on board, But those customers are coming in under different types of arrangements where potentially they'd be paying for certain capacity itself As it's all pure incremental capacity. When a customer would give money towards capacity, the model is 1 of 2. One model is that whatever the prepayment is would be amortized over time against wafers, typically and nominally with a And time date, so that capacities more or less are committed or money is forfeited. The other is that The money is just given with no amortization, which is more or less a guarantee for the company That does return on that incremental capacity and has one impact and that is it really does increase For the most part, at this point, we're working to support our present customers that all have increasing demands. And we think that that's very important that those people who really have made commitments to us and are relying on us that we're doing all that we can to enable their growth within the market. And I think one thing that is very, very indicative that we have A good, truly taxonomy of customers is the percentages of organic growth that we're seeing are good growth customers that themselves are increasing market share, and hence we're increasing market share in the respective end segments. Hopefully that answers your question. Thank you very much. And maybe as a quick follow-up, I know 200 millimeter tools are different from 300 millimeter tools, But we're hearing more from the equipment industry that they're facing supply constraints. And again, I know 200 millimeter, there are probably a little more Or there are probably more options out there to procure those type of tools. But have you seen any on your end trying to get deliveries of some tools or is everything still kind of on track on your end? For the most part, all the POs that have already gone out for equipment is on time on deliveries. What we're seeing now is just that the lead time on deliveries is extending for new POs. And that's particularly the case for 300 millimeter, But for 200 millimeter as well, but we've not seen a gating of any of our suppliers refusing to take a purchase order. Great. Thank you very much. You're very welcome. The next question is from Lisa Thompson of Zacks Investment Research. Please go ahead. Good morning. Good morning, Lisa, Good afternoon for me, I guess. Good morning. Yes, I guess. Keep forgetting. Okay. So you spent about 56,000,000 Hi. Can you hear me any better now? Yes. Okay. I'll just yell. All right. So this quarter you spent about $56,000,000 CapEx and you said it was going to be like $45,000,000 to $49,000,000 So do you have any different thinking on Q3, Q4 and Q1 from what you had previously said? We have a little bit different thinking because of what we said in the press release that we have announced an additional 100,000,000 So actually this is why I said in my script that I expect now, we announced in January in February 150 And we announced today additional $100,000,000 so total is $250,000,000 as I said in my prepared remarks will be paid in the coming 5 quarters. So if you assume it linearly, it's additional $50,000,000 to the baseline. Since we just announced The new $100,000,000 recently you may assume obviously that it will be below $50,000,000 extra from Q3. So I would assume lower than $50,000,000 for Q3 like something like $40,000,000 and then $50,000,000 a quarter and maybe sometimes $60,000,000 to capture for the full $250,000,000 and this is on top of the baseline that we had without those CapEx Which is like you mentioned $45,000,000 So if you want to know Q3, Q3 will be about $45,000,000 base plus Additional 40 from the towards the 250 and pretty similar for the upcoming quarters. So between 85 to 95 the next question is from David Dobie of Steelhead Securities. Please go ahead. Yes. Thanks for taking my question. Just out of curiosity, as far as the Panasonic business goes, is that capacity fungible to other customers? Just kind of curious if it's unique to them or if let's say Theoretically, Panasonic didn't exist. Could that capacity be transferred to other customers easily? Yes. So Understand the question. I just want to clarify, so I don't offend anybody. Nuvoton bought the Panasonic Semiconductor, right? So it's now the group is called, Nuvoton Japan Technology. But so I again, just don't want to offend anybody there. I think to a good extent, the capacity is fungible. To the extent that there's some specific flows that are used That are non fungible, that's the case as well. So there are some flows that really is pretty much dedicated to end markets that are served with certain products had previously been Panasonic, something like Doctor. Now or Nuvoton Japan, are serving Nuvoton as a whole, but a good amount of that capacity is funded. Okay. And then as far as the you mentioned the utilization rates and you just gave us layer counts that were processed at different Wafer sizes. Yes, sir. Did you give it I guess there's still a utilization rate number available, right? Because you gave us The total layer counts at 102 100 millimeter and 300 millimeter, we could calculate the utilization rates. So could you help us understand, You gave us the number of process. What's the total number available so we can back into the utilization rate? No, that's exactly why I'm using the at process layers. The exact amount of photo layers is not necessarily a relevant number as there's other constraints and bottlenecks are not necessarily photo related and we're adding photo as time goes on. So that's not an area that we'll be presenting at all anymore. We will just be presenting photo layers used and on a comparative basis, it's a good operational metric. And so then how do we tie that into utilization rates and efficiency of using your equipment That's basically one of the most important metrics of a foundry business is the utilization of your equipment. So Is there another metric that we can look at? Because when you just give us the foundry, the number of layers processed, it's not necessarily utilization rate driven. So is there any other metrics you'll be giving us to understand about how efficient you're using your equipment? You can certainly assume that presently we are fully utilized. That every layer that we can ship, we're shipping. Before the new tools are arriving. Okay. And then, Oren, what would we expect for Operating expenses in the Q3 and Q4, I know you've been adding people and capacity at various locations. What should we kind of expect on a dollar basis for operating expenses in Q3 and Q4? Yes, operating expenses should remain flat in the Future quarters because you're right that we are adding people, but they are in COGS. It's mainly technicians and the operators, Engineers to support the fab production, so that's in the cost that's within the 50% incremental model. OpEx, R and D and SG and A, we are keeping them flat. So we should see some nice leverage in the back half of the calendar year. Some what nice leverage. Some strong earnings leverage from operating expenses being flat in the back half. Yes, in percentages, yes. Yes. Okay, thank you. That's it for me. Yes. So just to follow-up on your question. In the prepared script, I had mentioned the Q3 guidance and then I said enabling further increases in high value flows. So I think somewhat intrinsic to the statement, If we're depending on new tools to be qualified, what we're running right now is running at full utilization. Excellent. Thank you. Very welcome. Thank you. The next question is from Richard Shannon of Craig Hallum. Please go ahead. Well, hi guys. Just a couple of quick follow ups for me. Just to be clear, I'm pretty sure the answer is no, but I just want to confirm, Russell, the new $100,000,000 CapEx addition here. That doesn't include any equipment that would be installed in the STMicro facility. Is that correct? You are correct. It does not include. Okay. That's what I thought. Quick question on another topic here, silicon germanium. Are you seeing much, if any, benefit 400 gig devices or I guess devices that go into 400 gig datacom modules yet or is that still a pretty small piece of business? It's a growing piece. I wouldn't say it's certainly not the biggest portion of the SiGe, but it is a growing piece. And We've press released a revenue customer, Inphi, For silicon photonics, you know that inphi does 400 gig, right? Yes. Yes. Okay. Are you seeing 100 gig components for 100 gig? Are those still growing at a decent rate? Or is that starting to plateau? So in the prepared remarks, I had mentioned that What's really up and moving right now is the datacom, not the tele The telecom is where we do predominantly the 100 gig, right? So telecom is not the 100 gig is not increasing usually in volume at this point. The Datacom is and those are typically 25 gig chips. Okay. There are no further questions at this time. Mr. Ellwanger, would you like to make your concluding statement? Certainly. Thank you very much. Thank you for your interest and for the good questions. For your reference, posted on our website On the quarterly release page on the Investor Relations section is our Q2 2021 financial results slide deck. Pleased access it as per desire and interest. To summarize the call and where we're at, We really were excited, are excited with 2nd quarter record revenue results and particularly the activities that have led to a 3rd quarter guidance of substantial continued growth and breaking a $1,500,000,000 annualized run rate. We believe that the $385,000,000 Q3 guidance, which represents a 38% Year over year organic growth is really extremely strong evidence that we're serving the right customers in the right markets. That type of a growth, I think, is quite substantial. We are really executing well on our expansion plans. Most everything is in place and on target. And hence, as stated in the script, we are looking forward and expect 4th quarter growth in both top and bottom lines, And we're very excited with the partnership with ST at the Agrate factory. And over the next years, expect and believe that we'll see very important and significant movement in 300 millimeter growth and 300 millimeter capabilities as we qualify our tools and install more tools in that facility. Other activities happening in the company are still exciting and look forward to meeting with you again for the Q3 release And possibly other interactions in the interim. So thank you very much for your interest and best wishes for health and happiness. Thank you. Thank you. This concludes the Tower Semiconductor Second Quarter 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.