Ladies and gentlemen, thank you for standing by. Welcome to Hua Hong Semiconductor Ltd's second quarter 2025 earnings conference call. Today's call is hosted by Dr. Peng Bai, President and Executive Director, and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised that your dial-ins are in a listen-only mode. However, at the conclusion of the management's 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 second quarter 2025 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 for joining our Q2 2025 earnings conference. Today, we will first have Dr. Peng Bai, our Executive Director and President, share some remarks on our second quarter performance. Our guest will take you through our financial results in detail and offer guidance for the upcoming quarter. We will then open the floor for a Q&A session. With that, I turn the call over to President Bai. Thank you, Daniel. Good afternoon, everyone. Thank you for joining our earnings call. Second quarter 2025 sales revenue for Hua Hong Semiconductor Ltd reached $566 million, in line with guidance. Our gross margin stood at 10.9%, above guidance. Both sales revenue and gross margin showed sequential growth, with capacity utilization hitting a record high for recent quarters. Amidst global trade and funding market fluctuations, the company focused on enhancing core competencies in products, processes, R&D, and supply chain management. Initial progress has been made in cost reduction and efficiency improvement, leading to continuous optimization of key operational metrics. Facing a semiconductor market with demand fragmentation, we remain anchored to our specialty technology domain, striving for breakthroughs in key technology platforms to diversify our product portfolios. As a new 12 in production line in Wuxi steadily ramps up capacity, the company will achieve comprehensive upgrades from capacity scale to technology capability. Regarding market strategy, we align with domestic and international strategic customers' needs while embracing an international and open business development approach to expand our global client base. Hua Hong Semiconductor Ltd will continue to actively deploy strategic initiatives in the future to solidify the company's leading position in the foundry industry. Now, I would like to hand the call over to our CFO, Mr. Daniel Wang, for his comments. Daniel? Thank you, Mr. Bai, for your inspiring remarks. Now, let me walk you through a summary of our financial performance for the second quarter, followed by our revenue and margin outlook for Q3 2025 before opening the floor for the Q&A session. First, let's review our financial results for the second quarter. Revenue was $566.1 million, 18.3% over Q2 2024 and 4.6% over Q1 2025, primarily driven by increased delivery shipments. Gross margin was 10.9%, 0.4 percentage point over Q2 2024, primarily driven by improved capacity utilization and average selling price, partially offset by increased depreciation costs. A 1.7 percentage point above Q1 2025, primarily driven by improved capacity utilization. Operating expenses were $97.9 million, 8.4% over Q2 2024, primarily due to increased engineering labor costs and the depreciation expenses, and 0.8% over Q1 2025. Other income net was $10.6 million, 54% over Q2 2024, primarily driven by decreased foreign exchange losses and finance costs and increased government subsidies. Compared to other net loss of $8.3 million in Q1 2025, primarily due to decreased foreign exchange losses and finance costs. Income tax expenses were $7.1 million, 15.2% lower than Q2 2024, primarily due to decreased taxable income. Net loss for the period was $32.8 million, compared to $41.7 million in Q2 2024 and $52.2 million in Q1 2025. Net profit attributable to shareholders of the parent company was $8 million, 19.2% over Q2 2024 and 112.1% above Q1 2025. Basic earnings per share was 0.5%, 25% over Q2 2024 and 150% over Q1 2025. Annualized ROE was 0.4% flat with Q2 2025 and Q1 2025. Now, let's take a closer look at our Q2 2025 revenue performance. From a geographic perspective, revenue from China was $468.7 million, contributing 83% over total revenue and increasing 21.8% compared to Q2 2024, mainly driven by increased demand for other PMICs, superjunction analog and logic products. Revenue from North America was $53 million, an increase of 13.2% compared to Q2 2024, mainly driven by increased demand for other power management IC products. Revenue from other Asia was $28.6 million, a decrease of 1.2% compared to Q2 2024. Revenue from Europe was $14.7 million, a decrease of 14.2% compared to Q2 2024, mainly due to decreased demand for general MOSFET products. With respect to technology platforms, revenue from embedded non-volatile memory was $141.2 million, an increase of 2.9% compared to Q2 2024, mainly driven by increased demand for MCU products, partially offset by decreased demand for smart car ICs. Revenue from standalone non-volatile memory was $27.6 million, an increase of 16.6% compared to Q2 2024, mainly driven by increased demand for flash products. Revenue from power distribution was $166.7 million, an increase of 9.4% compared to Q2 2024, mainly driven by increased demand for superjunction and general MOSFET products. Revenue from logic and RF was $86.6 million, an increase of 8% over Q2 2024, mainly driven by increased demand for logic products. Revenue from logic and power management IC was $161.2 million, an increase of 59.3% over Q2 2024, mainly driven by increased demand for other power management IC products. Now, turning to our cash flow statement. Net cash flow generated from operating activities was $169.6 million, 75.1% over Q2 2024 and 238% above Q1 2025, primarily due to increased receipts from customers. Capital expenditures were $407.7 million in Q3 2025, including $376.4 million for Hua Hong Manufacturing, the second 12 in fab, $17.6 million for Hua Hong A inch, and $13.7 million for Hua Hong Wuxi, the first 12 in fab. Other cash flow generated from investing activities was $22.2 million in Q2 2025, mainly including $19.4 million interest income and $5.5 million receipts of government grants of equipment, partially offset by $2.8 million investment in associates. Net cash flows used in financing activities were $25.2 million, including $125.7 million in bank principal repayments, $38.6 million in interest payments, and $1.2 million in lease payments, partially offset by $138.1 million dollars received from bank borrowings and $2.2 million dollars received from share option exercise. Now, let's move to the balance sheet. Cash and cash equivalents were $3,846.9 million on June 30, 2025, compared to $4,079.9 million on March 31, 2025. Other current assets increased from $648.8 million on March 31, 2025 to $683.5 million on June 30, 2025, mainly due to increased value-added tax credit. Property, plant, and equipment were $6,102 million on June 30, 2025, compared to $5,967.6 million on March 31, 2025. Total assets decreased from $12,286.8 million on March 31, 2025 to $12,237.1 million on June 30, 2025. Total liabilities decreased to $3,363.4 million on June 30, 2025, from $3,406.1 million on March 31, 2025, primarily due to decreased payables for capital expenditures. Debt ratio decreased to 27.5% on June 30, 2025, from 27.7% on March 31, 2025. Finally, let's discuss our outlook for the third quarter of 2025. We expect revenue to be in the range of $620 million - $640 million, with a projected gross margin of 10% - 12%. This concludes my financial remarks. We will now begin the Q&A session. Operator, please assist. Thank you. Thank you. We will now begin the question-and-answer session. To ask a question now, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. We will now take our first question from the line of Ziyuan Wang from CITIC Securities. Please go ahead, Ziyuan. Okay. Thank you for taking my question. Congratulations on a very good result of this quarter. I think the gross margin of Q2 and Q3 guidance beats our expectation. My first question is, we think maybe there is some impact from export rushes and inventory replenishment in the second quarter. Based on the downstream demand, how can we assess the sustainability of the subsequent demand in the second half? Thank you. Okay. Thanks. Let me try to answer that question. First of all, I think the second quarter, the gross margin indeed exceeded our expectation a little bit as well. It's primarily driven by a few factors. One is the demand has continued to be robust. I think there are two big internal factors that drove this change. The external demand has been pretty robust over the last few quarters now. I think the Q2 results probably are primarily due to two internal factors that exceeded our expectations. One is our capacity transition. Capacity transition has Capacity transition has been a little bit better. Another one is our cost reduction effort has also grown pretty smoothly. I should add another third factor, which is the pricing erosion we've been seeing over the last few quarters has stabilized somewhat. I wouldn't say the price has increased, but it definitely has not continued to erode, especially on the 12 in side. Obviously, there's a lot of complexity there because we're dependent on different technology platforms. Some are doing better than others. The power of the speed, for example, is still under pretty tremendous pricing pressure. There are other platforms. There are two platforms that we have been okay. Now, to your second part of your question, on the second half of this year, the two internal factors that I just mentioned that for Q2, I think they will continue. You have to realize the second half, the fact that capacity will continue to come online and will give us more depreciation pressures. That's the factor that should be taken into account. Overall, I think our view is reflected in our Q3 projection, which is the gross margin. I think it's still going to be around 10% - 12%. Our visibility into Q4 is obviously less than Q3, but I think it's probably still going to be in that range. We should wait until we get close to Q4 to give you a more precise projection. Thank you. Okay. Thank you, Dr. Bai. I want to have a quick follow-up for this question. On the pricing side, we also see the ASP on the second quarter is stable Q on Q. Do you think there will be any ASP going up in the second quarter? If there are any price increases in the second half, which kind of products will it primarily focus on? I would say we would like to have a small price movement in the second half of the year, probably in a single-digit type of range. It's mostly being focused on 12 in and IC platforms. Okay. Thank you. Just to add, we basically start to do all the price adjustment in the second quarter. Most of that is going to reflect, you know, starting Q3 and Q4. I think in Q3, Q4, you're going to see a pretty clear price basically lift in the two quarters. Expect the adjustment we did in Q2 is going to reflect in Q3 and Q4. Going to be clear, but not too big. Just make sure we don't overestimate that. Okay, I got it. The second question is, I think about the anti-internalization. The current policy is guiding the industry, like some photovoltaics, to begin anti-internalization. Sorry, I think Ziyuan, you dropped off. Could you please repeat that question again? They seem to have lost him. Yeah, operator, we seem to have lost. Is there any, oh, sorry. Can you hear me? Yeah, we lost most of your question. Can you repeat that? Okay. Sorry. You know the current policy is guiding the industry, like photovoltaics, to begin anti-internalization process. In the semiconductor industry, especially the materials, in recent years, we can see the competition has been intensified. Is there any possibility of a similar anti-internalization process in the semiconductor industry? Is the industry still in a period of unregulated growth? Thank you. That's a good question. It's actually a question a lot of people are asking. I would say for the semiconductor industry, I think, first of all, the end market, the end market like EV and solar, they're going through their own dynamics. Maybe there's going to be less unhealthy competition there. For semiconductor, we certainly hope that will be the case as well. I think my personal take is that there are some market forces that will start to have an impact on that, meaning that the second factor is what is the market force? Another one is the policy direction, my reading of the policy direction, also pointing to the same direction that it's probably going to constrain some of the capacity increases over the next couple of years, which in turn will reflect into more stability in the semiconductor industry. If you ask what you're asking, I do think the next couple of years, compared to the last couple of years, we will see more stable, more stability in terms of the capacity increase. Overall, it should be a positive factor for industry. Okay. Got it. Thank you, Dr. Bai. That's all for my question. Thank you. We will now take our next question from the line of Zi from Guosun Securities. Please ask your question, Zi. Thank you for taking my question. [Foreign language] 。 I have two questions. First, I will follow up the previous questions about the demand first. Currently, we can see the regional differentiation in the demand. The domestic demand is strong, while the overseas demand is weaker. The differentiation exists among the manufacturers since our utilization is high, but some foundries are facing challenges. Many investors worry about the demand uncertainty of the longer term. Are there any details you can give us on the drivers in the following quarter or the longer-term growth, maybe from the department management or other sectors? Thank you. Okay. Thank you for asking the question. We got quite a few of them mixed there. Let me try to see if we can tease out each one of them and give you a more comprehensive answer. In terms of demand, I think we, as I said, for our we have been seeing robust demand, actually, over the last few quarters now. I think that will continue into the near future for as far as we can see. It's hard to explain in simple terms because our end markets are quite complex. There are some end markets probably not growing as robust, but some others are probably growing pretty fast. For example, all the AI-related applications are pretty healthy and also growing robustly. The consumer sector seems to also be doing okay, probably helped by the stimulus policy that has been going on. The consumer electronics, I think it's after some inventory adjustment, it seems to be back to normal. That's our reading. EV, that has also been driving some growth. Although the end market is also seems to be through a lot of changes, we'll see exactly how that will translate. With all the different end markets and the different dynamics, but all you got them all together, combine them, translate into our business, I think we do think that the near-term situation, the demand situation, is fairly stable and it's been similar, probably similar to what we had seen over the last three quarters. For Hua Hong, for both near-term and long-term, you asked about our long-term growth strategy. Many differentiate. The near-term, basically, we got to work with the capacity we currently have. What we will try to do is improve the efficiency, try to get more out of the current asset base, and try to get the technology better and also deploy into the areas where we think the pricing is better or the pricing is more and more robust and try to select from the area where there's more price erosion to areas where price can hold up a little bit better. In the near term, it's really basically what we have been doing over the last three quarters, which is improve efficiency, continue to drive cost reduction, continue to focus on technology development so that we have a better technology and better product offering to our customers. Longer term, the growth has come from an increase in our capacity. We are, we will be expanding our capacity, and just like we have been doing that continuously over the last few years now. We'll continue that journey. We will continue to expand our scale, increase our capacity, and we'll do so in a fashion that obviously needs to be efficient. We will target technology, especially in the specialty technology area where we think the growth potential is good. We have a competitive advantage. On that particular point, I'm sure in the later quarters, as we get some of the growth plan more firmed up, we can give you a more update. Thank you. Understood. Thank you. My another question is about the power devices. Since we can see the market is recovering while the margin is relatively low compared to other products, what's the target proportion of the power device in our overall capacity planning? I believe maybe there's a trade-off here. The power device, first of all, is a large market. I think the overall market is still growing, largely because a lot of new applications. I think our view is that the end market is very growing. The market is also large. There's a few growth factors for the end market, like EV, maybe eventually robotics, which have become a big growth factor for power devices. That is not an issue. Another thing that's positive is that with power devices, the technology continues to evolve. There are some of the technologies where we have a pretty comprehensive technology offering in the power devices. We also have some specialized areas that we're doing pretty well, like superjunction, because Hua Hong has been probably a leader in this area in terms of technology. That's one of the factors I want to also say. The less positive factor for power devices, frankly, is more of a supply-demand balance. I think over the last few years, one can argue that the capacity growth, let's say, from our competitor has been pretty fast. Those might have led to some imbalances between the supply and demand, although the overall demand is still growing. That has some pressure on the pricing, especially on the lower end of the market. We have clearly seen that Hua Hong has a pretty large power device capacity. We have a large space. We have that in 8 in, and we also have that in 12 in. You have a pretty large capacity. We will continue to basically use our competitive advantage there, including the scale we have, which is pretty large in the country market for power in terms of power devices. We will continue to use our advantages, our competitive advantages to make this market work for us better in the future. All the new capacity planning we're doing in the future, we do not expect to continue to expand the power device capacity. What we have is already pretty large when we put 8 in and 12 in together. I hope that answers your question. Yes. Understood. Thank you. We are looking forward to the better performance in the following quarters. Thank you. That's all my question. Thank you. We will now take our next question from the line of Lep ing Huang from Huat ai. Please go ahead, Le Ping. Okay. Thank you for taking my question. First, congratulations for the very strong result and also the guidance. I noticed that the percentage of sales from the analog and the power management increased again this quarter by 3.2%. Can you share some kind of what are the end applications of these analog you are increasing and what are the outlook of these analog segments looking forward in the next few quarters? Thank you. Thank you. Let me take the hear from you. I think you have a very astute observation. Indeed, that particular platform is the one that has grown the most. The biggest segment there is what we call BCD platform, which is used for power management chips. That's an area that's growing the fastest. This is where I think Hua Hong, we have done a pretty good job over the last two quarters because, frankly, the demand exceeded our capacity. Originally, we were planning a certain number of capacity for that area. Now, the demand almost doubled with the original what we planned. This is where we did a pretty good job using the capacity flexibility that we have. This is also our large scale in this area also helps us to be able to flexibly deploy the capacity to where the demand is the highest. In the end, it's a pretty, pretty good story there, I would say, that we continue to derive quite a bit of an increase in revenue from that factor. We expect this trend just from local, from Hua Hong's standpoint of view, this supply-demand balance, we should be able to get to a very good point by the end of this year or beginning of next year as we continue to increase the capacity in this particular sector. Thank you. Okay. Thank you. It's very clear. The second question is about your revenue by geometry. I noticed that North America still accounts for 9.4% of your sales. Recently, some news says that the U.S. may impose a 100% tariff on all the chip imports to the U.S. What are the potential impacts if this policy is implemented? Some of you say this will be implemented this week or next week too. Thank you. Oh, if they're going to be 100% tariffs, that's not going to be good for anybody. That's the first point. Second, I hope the impact to us will be manageable or minimum because even a lot of our North American customers, their end market can still be outside of the U.S. or in China or the rest of the world. There will be impacts for sure, but it's not going to be all 100% of the business will be impacted if you understand what I just said. I think that's the best way I can put it at this point. This 9.4% is based on the headquarters of the customer. It's not based on the destination you ship. Is my understanding correct? Correct. Correct. It's based on our direct customer, whether they are American companies or European companies or Asian companies. Now, once they manufacture their product at Hua Hong, they decide where to ship. A lot of them, I believe, don't directly. Some of them probably end up in the American end market, but a lot of them don't. They might end up in China and the rest of the world. Okay. Okay. It's very clear. Thank you. Thank you very much. Thank you. Thank you. We will now take our next question from Tony Shen from SPDBI. Please go ahead, Tony. Dear Management, [Foreign language], Tony from SPDBI. I've got two questions here. The first question is about the semiconductor cycle. How do we see the semiconductor cycle at the current stage for the whole industry? Do we have momentum to going up for the whole industry? For Hua Hong itself, how do we see Hua Hong's position itself in the semiconductor cycle? I've noticed that our gross margin has been going up from the first quarter into the second quarter and slightly up into the third quarter. Can we have a little bit more color into the margin into the fourth quarter alongside with the semiconductor cycle? This is my first question. Okay. You got some big questions there. First of all, I think I know why you're asking this question. I agree with you that in the past, for those of us who have been in this industry for a long time, we used to have this concept of cyclical growth. Semiconductor has been known to be cyclical. That cyclical thing seems to have broken down ever since the pandemic. Over the last five or six years, people haven't been talking too much about the cyclical growth. I'm sure this particular phenomenon is probably still going to come back to us. It's just very hard to know exactly when. I would say, for me, I would look at some of the secular growth drivers. I think I would say part of the reason the cyclical nature of the semiconductor industry has diminished over the last five years or maybe last decade is the fact that the semiconductor market has grown so big. We're getting close to, well, $800 billion total. Maybe in a few years, we'll be a $1 trillion industry. When the market is so large, it's not going to be driven by a single or a few end market dynamics. The thing seems to average out. Just like we learned in statistics, when you have too many different other factors, things tend to average out. It probably reduces some of the swings between the cycles. That's a positive reason that we don't notice so much. To your second question, Hua Hong's role in this overall market, there are a few factors that favor Hua Hong. One is, first of all, the overall market is still growing. Semiconductor as an industry is still a growth industry. It's still going to get to a trillion-dollar industry in four, maybe less than four years. The category right now, or the forecast, is still in the close to 10% overall market. That would obviously be a positive factor for Hua Hong's growth. Secondary is that even with the supply chain geopolitical difficulties, maybe the supply chain is separate, Hua Hong is still very positioned for China's domestic semiconductor industry. That's another factor that I think will favor Hua Hong's growth. That's how I look at the macroscopic level. I probably missed your third question. Can you repeat the third part of your question? Gross margin. Gross margin into the first quarter. Gross margin. Yeah. Gross margin, I commented earlier. I think the gross margin obviously mathematically comes from two things. One is the pricing. Another one is the cost. I think we are going to basically try to work very hard on both fronts for the second half. Danny already explained we did some price adjustment in Q2. That should be reflected in Q3 and Q4. It will have a positive impact to the gross margin. Another one will have a positive impact is our efficiency and the cost reduction effort that I think the company has embraced more and more with each passing quarter. The counterpoint to that gross margin story is our FAT9 capacity is rapidly coming online. That will bring into the equation more depreciation. Those are the three factors that basically work to give us the story on the second half of this year. We already give you the guidance for Q3 and Q4. We think it's not that we will wait until Q3 ends to look at exactly where it is, but it's probably not going to be too far away from where Q2 and Q3 start. Okay? Okay. Perfect. I have a quick follow-up. Could you have a quick update on the capacity expansion pace into the second half of 2025 and maybe a little bit more into 2026 and 2027? How do we see the capacity expansion? Thanks. Okay. In terms of the net capacity increases by adding, say, more equipment, FAT9 is still in that phase. Right now, I would say half of the FAT9 capacity is online. Another half will be realized over the next two to three quarters. I would say by the middle of next year, the FAT9 will be at a four. By the end of this year, FAT9 will be close to 80% - 90% full in terms of the capacity expansion. That basically is the one, by the middle of next year, you can think of that FAT9 capacity expansion as complete. Beyond that, we'll need the new FAT and new capacity. I think it's probably going to be in 2027, you will start to see some new capacity coming online. That's the current rough schedule. Great. That is very clear. Thank you very much. Thank you. We will now take our next question from the line of Timothy Wong from Oriental Asset Management. Please go ahead, Timothy. [Foreign language]？ [Foreign language]。 [Foreign language]? Yeah, go ahead. You can hear. [Foreign language]. I think our view is that there's certainly some of the early ordering going on. That's for sure. There are so many other factors. I would say on average, we think the demand will be pretty similar to the first half of the year. [Foreign language] 。 Yeah. For our revenue projection, first of all, the revenue is growing because we get more output from FAT9. We also squeeze a little bit more out of existing FATs, especially on 12 in FAT, FAT7, and FAT7. The growth in terms of technology platform will be across the board pretty much because the FAT9 comes online in the quarter mix of fairly similar to FAT7. [Foreign language]? You have to look at the end markets one by one. I think in terms of the, I can't say I have 100% visibility into each one of the end markets. I think consumers, it is an incentive. Maybe if the incentive stops, then maybe it won't grow as fast as the first half. Meaning, I think there might be, I don't think there is much inventory there. I think some of the consumer markets, the inventory might have come down somewhat. It's a complex picture of the different end markets. The way we experience all the end market fluctuation is we don't directly experience them. We experience them through our direct customers who are suppliers to those end markets. In the end, when it comes to us, it's a fairly averaged-out type of phenomenon. That's why we don't see, even if the end market fluctuation might be more drastic, we don't see that drastic changes, partly because we are pretty large now. We participate in so many different markets. Another thing is also it's a function of who our direct customers are and how much they are impacted by the market. It's all the end market visibility. You might have a better view of them than actually I do. They come through to us already kind of filtered out or averaged out into some intermediate mixing. We normally do not see that drastic of changes when it gets to the FAT, get the funding. I don't know if that makes sense to you. [Foreign language]。 Thank you. We will now take our next question from Jian Kuai from Orient Securities. Please ask your question, Jian. Thank you, Mr. Bai and Mr. Wang. My first question is about the opportunity from the AI server market. Because we know the data center is going to be upgraded to 800-voltage spec, many of the power device companies are talking about the huge opportunities for the silicon combined and other compound semiconductors. We work with some global companies working on the AI server solutions. Could you please give us more color about the AI server opportunity for Hua Hong? That's my first question. Thank you. Okay. Thank you. You asked a pretty technical question. First of all, the AI server is a huge growth segment. You are absolutely correct about that. By the way, that has driven a lot of our growth as well because our direct customers, a lot of their management, some of their management chips go into AI servers. We interactively participate in this AI growth story. That's the first point. Second point, you also correctly pointed out in the AI server, there are some standards. I wouldn't say standard changes, but there's a continuous optimization on how to do the management, power management, because for AI server, power management is a very important, very critical aspect of the overall server. Obviously, the most important one is that high-compute chip. Beyond that, the power, because it consumes so much power, all the power management solution inside the AI server is continuously being optimized. That translated to us, to Hua Hong Semiconductor Ltd, is that there's going to be a different type of chips because sometimes you step down from one voltage to another, the level of voltage level might change, might get optimized. It also translates into more power management chips in the AI server. That's the second point I also agree, and that's a positive thing for us. The third point you make is that some of those power management chips will be taken up by compound semiconductors as opposed to silicon. I would say that one, the compound semiconductor has established a position, not just in the AI server, but the overall power management solution. I think eventually it has its advantage, its disadvantage relative to silicon-based power management chip. I think that's where it's going to be a balance between silicon-based chips and the compound semiconductor-based chip. I don't think that balance is continuously to be established. We obviously are watching that very closely. I do not think that is a too big a factor because there's always going to be a need for compound semiconductors. There's always going to be a need for a lot of the silicon-based power management chips. I think the more important factor is the overall growth of the AI server in terms of its needs for power management chips. Very clear. Thank you, Mr. Bai. My second question is about yesterday GlobalFoundries. They announced they are going to cooperate with a local foundry. Could you comment on their working with what looks like a competitor? How do you see the energy behind their new strategy? Could you elaborate more about our local-for-locals opportunity? That's my second question. Thank you. Okay. I haven't seen the announcement. I do know that they have been looking for a local Chinese partner for quite a while now. I would say I obviously can't answer for them. You have to ask them about their thinking and their strategy. What I can say is that I think it's probably part of this overall China-for-China strategy, a lot of the international companies are trying to deploy. We are actually collaborating with European companies. As you know, we have a collaboration with STMicroelectronics, with Infineon, and others, mostly European companies, to serve as their China partner for their China-for-China strategy. You notice that most of our China-for-China partners tend to be IDMs. I think that is, frankly, a little bit easier for us to do that type of collaboration. GlobalFoundries being a pure foundry, just like Hua Hong Semiconductor Ltd, we are obviously open to collaborate with them, but I think we are definitely not, we don't have anything established. Our focus is to visit our existing. We already have quite a few China-for-China strategic partners that we're already working. Some of them already started to produce results, actually. With STMicroelectronics, our second half, some of those collaboration projects will start to contribute revenue for us. That's probably all I can say about your question. I got it. Thank you, Mr. Bai. That's all my questions. Thank you. Ladies and gentlemen, that's all the time we have for questions. I'll now hand back to Mr. Daniel Wang for closing remarks. This concludes today's call. Once again, thank you all for joining us today and for your thoughtful questions. We appreciate your continued support and look forward to speaking with you again next quarter. Wishing you all stay safe and healthy. We look forward to meeting you, many of you, very soon. Thank you. Ladies and gentlemen, thank you for your attendance. You may now all disconnect.