Ladies and gentlemen, thank you for standing by, and welcome to Hua Hong Semiconductor's first quarter 2022 earnings conference call. Today's call is hosted by Mr. Junjun Tang, President and Executive Director, and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised that your dial-in is in listen-only mode. However, at the conclusion of the management presentation, there will be a question and answer session. At which time, you will receive instructions on how to participate. The earnings press release and first quarter 2022 summary slides are available to download at our company's website, www.huahonggrace.com. Without further ado, I would like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Thank you. Good afternoon, everyone. Thank you all for joining our first quarter 2022 earnings conference. Today we will first have Mr. Junjun Tang, our Executive Director and President, make some remarks on our first quarter performance. President Tang will address in Chinese, and Rachel Chan will be the translator. After that, I will discuss our financial results and provide guidance for the next quarter. This will be followed by our question and answer section. The call will be conducted in English, so please ask your question in English. I will now turn the call over to Mr. Tang. Good afternoon, everyone. Thank you for joining our earnings call. Facing a complex situation with pressure from COVID and the changing market, Hua Hong Semiconductor is adhering to its specialty IC plus power discrete strategy and delivered encouraging results in the first quarter of 2022. Our differentiated platforms, such as embedded non-volatile memory, power discrete, analog and power management IC, logic and radio frequency, and the CIS, made steady progress and continued to produce revenue growth. The company's first quarter 2022 revenue reached a record high of $594.6 million, a year-on-year increase of 95.1% and a quarter-on-quarter increase of 12.6%. Revenue from the twelve-inch fab accounted for 44.1% of the total revenue versus 17.9% in the first quarter of 2021 and 38.9% in Q4 2021. In the context of continued global chip shortages in fields such as automotive, electronics, and new energy, demand for specialty technologies has remained high, boosting the average selling price for all products. Demand continues to rise, assuring rapid growth of the company. We are now facing the urgent task of COVID prevention and control, and the world's economic recovery will be bumpy. Difficulties often come with opportunities, and challenges often lead to invention. The company has designed a pandemic prevention and control system, which is strictly implemented by all employees. As at today, the company has demonstrated effective pandemic prevention and control results, orderly production organization, and fully utilized the capacity with a highly motivated workforce. We have always believed the best way to deal with difficulties is to focus on development, overcoming challenges by innovation. As an indispensable part of the integrated circuit industry, we have opportunities in a vast market, including automotive electronics, industrial control, green energy, Internet of Things, and new generation communications. We will continue making greater marketing-focused, R&D-oriented investments, providing specialty IC plus power discrete platforms, delivering to our customers differentiated product solutions with better performance, lower power consumption, and enhanced reliability. In order to set a solid foundation for our development strategy, increase our influence in the global foundry space, expand our business scale, and strengthen our specialty IC plus power discrete platforms, we will expedite the next phase of construction for Hua Hong Wuxi's 12-inch production line at full speed to fulfill the ever-growing demand. I would like to thank all of our shareholders, customers and vendors for their tremendous support. All employees will earnestly implement full protections COVID-related requirements, stick to their positions, dedicate themselves to the company's future, and focus on high-quality development of our specialty technologies. I believe Hua Hong Semiconductor is on track to set a new record and create a higher level of achievement through our unremitting efforts. Now I would like to hand the call over to our CFO, Mr. Daniel Wang, for his comments. Thank you, Mr. Tang, for the inspiring comments. Now let me begin with a summary of our financial performance for the first quarter, followed by an outlook on revenue and margin for the second quarter 2022. We will move on to the question and answer session. First, let me summarize our financial performance as of the first quarter. Revenue reached an all-time high of $594.6 million, 95.1% over the prior year, and 12.6% above the prior quarter. Cost of sales was $434.6 million, 86.8% over Q1 2021, largely due to increased wafer shipments, and 21.8% above Q4 2021, mainly due to increased bonus and depreciation cost. Gross margin was 26.9%, 3.2 percentage points over Q1 2021, primarily due to improved average selling price, partially offset by increased depreciation costs, and 5.6 percentage points below Q4 2021. I will explain later, mainly due to an audit adjustment on government grants, increased bonus and depreciation costs, partially offset by improved average selling price. Operating expenses were $75.3 million, 26.5% over Q1 2021, mainly due to increased bonus and 136.2% over Q4 2021, primarily due to an audit adjustment on government grants and increased bonus. Other income net was $10.5 million, 47.2% over Q1 2021, primarily due to foreign exchange gains versus foreign exchange losses in Q1 2021, partially offset by increased finance costs and 62.3% below Q4 2021, largely due to decreased foreign exchange gains. Income tax credit was $6.9 million, 498% over Q1 2021, primarily due to a reversal of increased dividend withholding tax accrued for the prior year, partially offset by tax expenses. Profit for the period was $102.1 million, nearly four times over Q1 2021 and 25.6% below Q4 2021. Net, net profit attributable to shareholders of the parent company was $102.9 million, 211.4% over Q1 2021 and 22.9% below Q4 2021. Basic earnings per share was $0.079. 216% over Q1 2021 and 23.3% below Q4 2021. Annualized ROE was 14.1%, 8.9 percentage points over Q1 2021, and 5.1 percentage points below Q4 2021. Now I will discuss the operating results for both the eight inch wafer fabs and the Wuxi 12-inch fab. First, let's have a look at the three eight inch wafer fabs. Revenue was $332.6 billion, 32.9% over Q1 2021, and 3.1% above Q4 2021. Gross margin was 38.6%, 11.3 percentage points over Q1 2021, mainly due to improved average selling price and product mix, and 6.8 percentage points lower than Q4 2021, primarily due to an audit adjustment on government grants and increased bonus, partially offset by improved average selling price. Operating expenses were $40.6 million, 24.8% over Q1 2021, largely due to increased bonus and over 14 times above Q4 2021, primarily due to an audit adjustment on government grants. Profit before tax was $94.6 billion, 112.5% over Q1 2021, and 39.9% below Q4 2021. Now let's have a look at the performance of the Wuxi 12-inch wafer fab. Revenue was $262 million, 379.5% over Q1 2021, and 27.4% above Q4 2021. Gross margin was 12%, 4.7 percentage points over Q1 2021, and 0.1 percentage point below Q4 2021. Operating expenses were $34.7 million, 28.6% above Q1 2021, primarily due to increased bonus and engineering wafer costs. EBITDA was $88.4 million, 13% over Q4 2021. Now I will provide more details on our revenue from Q1 2022. From a geographical perspective, revenue from China was $451.6 million, contributing 76% of total revenue, an increase of 105.5% over Q1 2021, mainly due to increased demand for all technology platforms. Revenue from the United States was $58.1 million, an increase of 105.1% over Q1 2021, mainly due to increased demand for other power management IC products. Revenue from Asia was $54.9 million, an increase of 52.9% over Q1 2021, mainly due to increased demand for logic, general MOSFET, and MCU products. Revenue from Europe was $22.1 million, an increase of 49.2% over Q1 2021, mainly due to increased demand for smart card ICs, general MOSFET, and IGBT products. Revenue from Japan was $8 million, an increase of 30.7% over Q1 2021, primarily due to increased demand for MCU products. With respect to technology platforms, revenue from embedded non-volatile memory was $142.3 million, an increase of 50.5% over Q1 2021, mainly due to increased demand for MCU and smart card ICs. Revenue from standalone non-volatile memory was $58.5 million, an increase of 406.1% over Q1 2021, primarily due to increased demand for NOR flash products. Revenue from discrete was $181.3 million, an increase of 65.5% over Q1 2021, mainly due to increased demand for super junction, IGBT, general MOSFET products. Revenue from logic and RF was $95.3 million, an increase of 91.3% over Q1 2021, mainly due to increased demand for CIS and logic products. Revenue from analog and power management IC was $116.6 million, an increase of 200.6% over Q1 2021, mainly due to increased demand for other power management IC products. Let's now take a look at the cash flow statement. Net cash flows generated from operating activities was $195.6 million, 221.5% over Q1 2021. Primarily due to increased revenue, partially offset by increased payments for payrolls and materials. Capital expenditures were $124.1 million in Q1 2022, including $107.5 million for the Wuxi fab and $16.66 million for the three eight-inch fabs. Other cash flow generated from investing activities was $7.1 million in Q1 2022, including $4.4 million of receipts of government grants for equipment and $2.7 million of interest income. Net cash flows generated from financing activities was $2.4 million, including $47.4 million proceeds from bank borrowings, and $1.2 million proceeds from share option exercises, partially offset by $43.2 million of repayment of bank borrowings and $2.5 million of lease payments and half million dollars of interest expense for bank borrowings. Now let's move to the balance sheet. Cash and cash equivalents was $1,694.9 million on March 31st, 2022, compared to $1,610.1 million on December 31st, 2021. Trade and notes receivables increased from $181 million on December 31st, 2021, to $243.4 million on March 31st, 2022, mainly due to increased revenue. Property, plant, and equipment was $3,053.1 million on March 31st, compared to $3,116.5 million on December 31st, 2021. Total assets increased from $6,202.1 million on December 31st, 2021, to $6,316.1 million on March 31st, 2022. Our total bank borrowings increased to $1.595 billion on March 31st, 2022, from $1.590 billion on December 31st, 2021. Total liabilities increased to $2.532 billion on March 31st, 2022, from $2.518 billion on December 31st, 2021, primarily due to increased trade payables. Debt ratio decreased to 40.1% on March 31st, 2022, from 40.6% on December 31st, 2021. Finally, let me give you a very high-level outlook for the second quarter 2022. We expect revenue to be approximately $650 million, and our gross margin to be in the range of 28%-29%. This concludes my financial remarks. Now, we would like to start the question and answer session. Operator, please help. Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, please press pound or hash key. Please stand by while we compile the Q&A roster. The first question comes from the line of Randy Abrams from Credit Suisse. Please go ahead. Okay. Yes. Thank you. A good result, especially considering everything going on. I wanted to ask, maybe just the first question, if Daniel could go through on the audit for the grants, just explain what happened. It looked like the fourth quarter was restated higher. Then within that, if you could talk on the first quarter, gross margin was a little bit lower, and it looks like depreciation ran faster. If you could discuss first quarter, the impact, and then what will drive the bounce back or rebound in second quarter? Randy, I know you're gonna ask that question. As I said, a few things was the factors. We are really at the factors. Mainly it's because the audit adjustment, okay? There were three large R&D projects that were subsidized through the government grants. These projects were substantially completed before Q4 2021, but pending for final clarification documentation, which were completed in early 2022. We agree with the auditors that the government grants should be recorded in Q4 2021. Total amount of the adjustment was $64.2 million, of which $46.6 million was recorded as a R&D cost, and $17.6 million was recorded as cost of sales. I mean, you know, there were three elements that brought the gross margin down. It was, you know, the accounting adjustment, the overage on bonus and also depreciation expenses. They were offset by the, you know, improved average selling prices. Basically, if we didn't have this audit adjustment, if we didn't do it, you know, we instead of we did, you know, we make the Q4 actually better, two or three points better. So we adjust in Q4, we took down in Q1, okay. That was the right thing to do. We would, you know, the overall gross margin for the company will be at 30%, I think for the eight inch, for the 12-inch fabs. The P&L for the 12-inch fabs would be at 44% gross margin. So it was purely an adjustment, accounting adjustment. Basically. You know, you up on Q4 2021 on gross margin, and at the same time you took a adjustment, you know, downward adjustment in Q1 2022. Overall, you didn't lose any margin, huh, Randy? Yeah. No, I understand. That's why for second quarter coming back to the range that you said. Absolutely. If I could ask on the Wuxi, where based on the shipments, the 486,000, it would imply you're already at about 72,000 12-inch a month, if I did it right. Are you now fully booked or can you squeeze out more before the next phase ramps up? Is the capacity higher because of the discrete mix? You know what? I would, you know, let me just, you know, quickly, give you a color on that, and I will let Mr. Tang, you know, give you a full detailed answer on that. Basically, the Wuxi fab is running at, you know, I mean, at 100%. We have 65,000 wafer capacity at this point, okay? The loading is actually at the 67,000, 68,000. Okay? It's extremely high. It's above, you know, 100% utilization rate. This is gonna be the case, I mean, until we add more capacity. We're gonna be adding more starting this quarter. You know, I mean, the new capacity expansion plan to 95,000 is gonna start to happen, you know, this quarter, next quarter. You're gonna basically in Q3, start to see new capacity actually, you know, coming into play. Okay. Junjun. To follow on that, okay. Uh- Go ahead. Yeah, sorry. Go more. Would you please repeat your question again? You mean the increase? My next question was going to be on the next phase of expansion. So you'll have 30,000. It sounds like you'll get a little bit of that second half. Could you give an update, actually, on the new fab where you now have the approval, the size of that and the timeline to have the fab built, to do the tool move-in and when production would start for the fab beyond this next 30K? Thank you for your question. Phase 1 of the Wuxi project has received all the support from all our investors and has made tremendous achievements up to now. We have fulfilled all our targets of the task originally set for the $250 million investment. The first step, the expansion of the 65K project, was fulfilled last October. The capacity was released with all our efforts, and the output has already met our originally set target. We have implemented Phase 2 project of the expansion of the capacity expansion, which is 94.5K monthly capacity. Up to now, we have moved in four tools. The capacity allocation already meets our existing platforms, which is power discrete, embedded flash, power management. The capacity allocation is already meet our existing platforms, which is power discrete, embedded flash, power management. We are now working on the related work. Once we have any news, we will announce it as soon as possible. Thank you. Thank you. The final question I'll ask for now, the buyback. I think in April there was a proposal for a buyback. If you could give an update and is the intention more signal on what you're seeing on share price or is it to is it related at all to the new listing, to offset dilution? If you could go through the buyback, your plan or and reason to move ahead with that. Randy, I mean, at this point, we have no plan whatsoever to do any buybacks because, you know, I mean, basically it is very unclear with the market at this point. I mean, as you know it well. We have, you know, our, you know, overall I think we have limited outstanding shares, okay? Between the three major shareholders, you know, basically we're talking about, you know, 1.3 billion shares. 40% of that is amongst the international institutional investors. I think, you know, people are still, based on my understanding, people are very, still very excited about Hua Hong, okay? I think once the market start to recover, I think the share price will definitely recover. So there's no plan to do any buybacks at this point. Okay. No, I understand. Yeah, thank you, Daniel. Thanks a lot. Thanks. Good luck on everything. Thank you. The next questions comes from the line of Andrew Lu from Sinolink Securities. Please go ahead. Thank you for taking my questions. I have first one is regarding the customers. We kinda do the survey on many of the Chinese customers. The monthly inventory is over alarming level. Do you see any potential inventory correction in second half or next year? I will answer first, and I will let Mr. Tang continue to elaborate. I think you can see the momentum continues with us. We're gonna have a very, very strong year this year. I think our overall revenue will continue to grow. It's a combination of taking advantage of the additional, you know, capacity from the 12-inch fab, and at the same time, we're able to basically raise prices on all customers. We did that, you know, towards the end of last year, in November, December. Basically that got reflected in our Q1 results. I expect, you know, throughout this year, every quarter, you're gonna see a very stable rise in price, okay? Our customers still are very excited about, you know, Hua Hong Semiconductor. They want to continue to get more capacity from us. We expect this year all major platforms will grow, okay? Grow in a big way, okay? You know, we basically about 70% growth last year. We were virtually the top, you know, in terms of growth, we were number one. In 2020, we expect to continue to be a top player this year in terms of growth, okay? Andrew, I mean, I think, you know, this is gonna be a very, very exciting year. We will continue to have growth on revenue. At the same time, you're gonna see continued a very strong, you know, ASP improvement as well. Thank you. Council. Thank you for your question. In regard to the inventory issue, we have the Department of Risk Management to keep a close eye on the inventory issues. Since the year of 2020, we have already noticed the inventory issue, both in the customer side and ourselves. With the release, continuous release of our production capacity, I believe the inventory will be kept at a very reasonable level with a continuous and steady capacity growth. As Hua Hong has a very rich product mix, Hua Hong's product has a very good match with what the market demand. We already see a very strong demand from the market side. Thank you. My second question is regarding the CapEx numbers, because GlobalFoundries just announced they are adjusting 2022 CapEx from $4.5 billion to $4 billion. Many of the equipment company talking about the, like, semiconductor also, some components are missing, so they are delaying the product to the customer. Based on our first quarter CapEx numbers seems a little bit low, compared to the full year basis. Are we also adjusting our CapEx or remaining our CapEx the same? Thank you. Andrew, our CapEx plan has not changed at all, okay? For the year, the plan is to, for the 12-inch fab is gonna be about $1.2 billion. This is the new CapEx that would take us from 65K to 95K. There was also some leftover pay, you know, basically some remaining balance from the, from the last phase of capacity expansion, which is to get to 65K. It was about, I think it was about, you know, $140 million. Overall, for the 12-inch fab, we're gonna be spending about $1.4 billion, okay? For the eight inch fabs, where we, you know, some upgrades, some efficiency improvement, it will be around $180 million. Overall, I think the company is gonna be spending about 1.5, close to $1.5 billion, okay? Slightly over, okay? Around that number on cash flow basis. Okay? That is the plan. We have to continue. There's no, you know. I mean, our expansion plan has no change at all. We want to get this first 12-inch fab to 95K by end of this year or early next year. We're moving on with the second phase, as Mr. Tang said earlier. Thank you. My last question is, with TSMC recently sent a letter to almost all the customers, planning to raise the wafer price for next year about 6%. We confirm with some TSMC customer, kind of that's true. It's not fake news. Based on we check, TSMC raise next year based on the labor cost increase, electricity cost increase, and the material, and also equipment price increase, because currency devaluation. Are we going to do anything about it, to reflect the same thing for next year? You're making a very good point. TSMC absolutely is doing the right thing, okay? I mean, for the entire industry, the cost has gone up pretty dramatically this year, okay? We experienced the same thing, okay? Raw materials, indirect materials, gas, spare parts, virtually everything, especially on labor, okay? It is important, in order to make sure our margin continues to be stable and will continue to improve over time, okay? As I said earlier, our gross margin, our goal is to move, for the eight-inch business, we want to move from 40%. In about two years, we want to get close to 50%. That would take some effort to do it, you know. Now price increase is a very important part of that. I mean, we have done a lot of work in that. I mean, last year, I think overall, the company, ASP rose about 11%. I think this year, I expect that the ASP improvement will be much greater, much greater. I mean that what we did in 2021 is virtually what we did in Q1, okay? I would expect throughout this year, every quarter, we're gonna be moving up with the trend in that fashion. Yeah, I mean, absolutely we have to do that in order to make sure that our gross margin will continue to be able to improve. Thank you. Thank you. The next question comes from the line of Leping Huang from Huatai Securities. Please go ahead. Okay. Thank you for taking my question. The first question is about the impact of the COVID-19 control policy. It seems to me. I was quite surprised that you deliver very strong first quarter result, and then you still give a very good second quarter guidance, considering that most of your fabs are in Shanghai and Wuxi, both have very strict COVID-19 control these days. What's the impact of this policy on your daily operation, especially your customer and your. I think you need to buy a lot of equipment to expand your capacity. Thank you. Thank you for your question. Since January of this year, we have experienced a lot due to the COVID pandemic, especially since March, after Shanghai announced implementation of static management. We have seen some problems in the operation, especially in logistics. With the strong support we have received from the government departments of all levels, I mean the central government and the municipal government, we have resolved these issues with better results. I think logistics is on one hand. On the other hand, we have kept an eye on the stability of our workforce. After Shanghai's announcement, the company immediately launched an emergency plan to convert the three 8-inch fabs in Shanghai into closed loop operations. On the eve of static management, we have 1,600 employees rushed to the site. Nearly 3,000 employees occupied the fab as their home and stayed in the field for nearly eight weeks, making hard effort to ensure normal operation of the production lines. In the eight weeks, we have the nearly 3,000 workforce working, resting, and living a life in the fab. Really in the fab. They have made a great contribution to the daily operations. The management board are deeply moved by all the contributions the staff has made during their stay in the fabs. I believe we will see a very good quarterly results for the second quarter of this year. So far during the ramp-up of production, our utilization rate has been kept around 95%. I would like to take this opportunity to pay a high respect for all the efforts our staff has made during their stay in the fabs. I would like to send my gratitude to all the vendors, our partners in upstream and downstream, the industrial chain. I would like to thank you all, our investors and shareholders. Thank you. Thank you. The second question is that we're noticing news reports about the possibility that U.S. may tighten the equipment export to Chinese companies. Can you comment on the status of the equipment procurement, the status from the U.S.? I see you have a very aggressive capacity expansion plan, including the 30,000 wafers per month this year. What's the latest plan? Do you still stick to this plan considering this recent change on the macro environment? Thank you. Thank you. Thank you for your question. We have focused on the news. We have noticed the news and keep an eye on its development. As a registered enterprise, Hua Hong Semiconductor has a very complete operational regulations and policies. In regard to the export and import, Hua Hong Semiconductor has a very strong and robust export compliance control system and is also a VEU holder certified by the U.S. Department of Commerce. After 20 years of development, Hua Hong Semiconductor's specialty process technology has been well-recognized by the market. Our products are covered for all the markets from North America, Europe and Asia countries. In the first quarter, we have revenues generated in the North America market, which recorded a year-on-year growth of 105%, also a quarter-on-quarter growth of 8.5%. We will spare no efforts to have a continuous development in our specialty IC strategy. I also strongly believe that we will see, as usual, strong support from our vendors, which have over 20 years of cooperation with Hua Hong Semiconductor. Thank you. Look, just to add, there can be no impact on, you know, equipment procurement. Okay? There will be zero impact. As Mr. Tang just said, you know, we are a certified VEU holder by the Department of Commerce. Hua Hong Semiconductor has had and continue to have approval from the US government to receive exports. The rumors, if they are true, would not impact the company, would not affect the company. It was unfortunate, you know, our share price fell as a result of the rumor of more sanctions, but it's, in our view, it is completely inaccurate and baseless. Investors should trust and have confidence in the company. Okay. Thank you very much. Thank you. Thank you. Your next questions comes from the line of Szeho Ng from China Renaissance. Please go ahead. Hi. Good afternoon, gentlemen. I have two questions. The first one, on Q1, the revenue upside is actually pretty big, right? I just want to know where the upside was coming from. I believe it's coming from 12-inch mostly, but what products actually drove the huge upside? Szeho. Yeah. When you looked at, you know, I mean, when we look at a quarter versus quarter, compared to Q4, virtually, I mean, virtually all segments were up. Okay? Mm. I mean, smart cards was up more than 21%. MCU stayed virtually flat, but slightly up. You know, NOR flash was up 50%. Okay. We're talking about, you know, NOR flash. Hmm. You're up on IGBT. Super junction was up about close to 15%. Okay? Even for Logic and RF in particular, RF, CIS. Mm. was also up close to 33%. Overall analog and power management IC, particularly power management IC was up about 31%. Virtually when you look at, you know, all the segments were up. I see. Got you. You know, I. And then- We expect that trend will continue, particularly for MCU and power discrete and RF. Okay. Yeah, got you. Yeah, let me say that we are still conservative for our Q2 guidance. You know, this seems to be the company practice, right? Trying to be conservative in giving our guidance. Well, we're in general conservative. You know, we normally give something we will always reach. Okay? Mm-hmm. Let's see how it all goes. Okay. All right. Yeah. Thank you. And then in March. Right. The company. Yeah. Yeah, yeah. Second question, regarding the A-share listing. Yeah. Anything you can share with us on updates, like the milestones and the timelines, things like that? Yeah. Absolutely. You know, we'd love to give you guys an update from time to time. I think this is a good point. You know, we've been. Yeah. working on that for the past, you know, several weeks. On March 21, 2022, the company convened a board meeting to approve the preliminary proposal of the issue of RMB shares and listing on the STAR Market. Okay? I mean, you guys all know about that. Mm-hmm. Since March, since that point, the preparatory work related IPO on the STAR Market has been carried out in a orderly fashion. The company has engaged intermediaries such as sponsors, lawyers and accountants to conduct due diligence comprehensively and complete the acceptance of the so-called tutoring filing. Mm. in the Shanghai Securities Regulatory Bureau on March 29. Mm. Mm-hmm. Because of the epidemic situation in Shanghai, the progress of ongoing work, especially the audit part, has been affected to a certain degree. Okay. Mm-hmm. The company has actively promoted progress. We're basically moving forward with the cooperation of these intermediaries and strive to complete the preparation for the application as fast as we can and submit the application document to the stock exchange. Mm-hmm. The company will, you know, disclose the progress of the preparatory work to the market in a timely fashion in accordance with the requirements of information disclosure going forward. This is our plan. I see. Got you. Yeah, maybe one last question from me. Yeah. Definitely for us, right, as Hua Hong Semiconductor is a Validated End-User. But how about our sister company, Huali? Are they also on the VEU list? I think Huali is getting equipment through IVL, Individual Validated License. For any- Mm. critical tool to get the IVL, using the IVL Mm-hmm. getting approval from the U.S. government, that has been the way they're getting their critical tools. I see. Got you. So far, there are no issues at this point. Okay. We're getting, you know, everything we want from various vendors. Okay. Sounds great. Yeah. Congratulations. Very strong stuff. Yeah. Thank you. Thank you. Thank you. The last question comes from the line of Sunny Lin from UBS. Please go ahead. Hi, Tang Zong. Daniel, thank you for taking my questions, giving me. My first question is on pricing. Good to see your company continue to make good progress on pricing improvement. Q1 it reached, I think over $1,200. Now with your capacity reaching 95K, when commencing by second half of the year with better mix, how should we think about the 12-inch pricing going to second half? You know, I will start first. I let Mr. Tang to add later. I think, you know, we're making great progress on pricing, as you said. You know, we're already at that number, $1,200. You know, as I said, you know, we want quickly on the 12-inch, in the 12-inch facility. I think we want to move to $1,300. I think that would be a good point where we can reach profitability, okay? Even at the current capacity, you know, at the current capacity. That is something we're, you know, working very hard towards. I think that is something achievable within the next several quarters. I think the price improvement process will continue throughout this year. whatever we're gonna be doing, I think even with 1,300, that is not the goal. I think we can even do better than that, okay? Because there's only one reason, demand is very, very strong, very, very strong for us, and we have many different technology platforms to offer to our customers. With the expansion of our capacity, we have also seen a development of our process technologies. As people have been keeping a close eye on the specialty IC development of Hua Hong Semiconductor, our company's products has been adhering to the orientation of high performance, low power consumption, and high reliability. With the expansion of 12-inch capacity and the moving of more advanced tools, we will see the obvious advancement in the process technologies. In addition to the growth of our sales volume, we have also seen a wider range of the product application. We have been supplying continuously the IC products for the applications including Internet of Things and the new energy automobile electronics. Based on the continuous advancement of specialty IC, we are very confident in our selling prices. Thank you. Thank you very much. That's very helpful. My second question is on end demand situation. Through this earnings season, several semi companies have mentioned some slowdown, in particular in consumer applications and also China market. Wonder if you have picked up any deceleration on the end markets that you are facing. How's your book-to-bill ratio trending year to date? Thank you very much. Yeah. In the end market, we have noticed some change in the consumer electronics application, but I think it hasn't cast a shadow on our future market. Since we have a very wide product mix to meet all kinds of demand of the market applications. As I just mentioned, we have the products can be applied in all the applications including the new energy, the green energy, and the carbon neutral, and Internet of Things, and so on. So you can see the Hua Hong's specialty IC meet closely with the market demand. So we have a strong confidence in the future market. Thank you. Got it. Thank you. Ladies and gentlemen, that's all the time we have for questions. I will now hand back to the management for closing remarks. Well, again, I want to thank you all for joining us today and asking all the insightful questions. We hope you will join us again next quarter. Please continue to stay safe and healthy. Wish we could meet in person very, very soon. Thank you.