Greetings, ladies and gentlemen, welcome to Horizon Robotics 2026 Interim Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mrs. Xuan Jiang, VP and Board Secretary and Head of investor relations of Horizon Robotics. Thank you, Xuan. You may begin. Thank you. Good evening, ladies and gentlemen. Welcome to the Investor Conference call and audio webcast hosted by Horizon Robotics. On today's call, we have Dr. Kai Yu, Horizon's Founder, CEO and the Chairman of the Board, and Mr. Lei Wang, CFO and Head of the Capital Markets. We'll begin with Dr. Kai sharing our latest strategic and business development. This will be followed by Lei's review of the company's financial performance in first half of 2026. We will then proceed to the Q&A session. Before we start, we want to remind you that this call may include forward-looking statements, which are underlined by a number of risks and uncertainties, and may not be realized in the future for various reasons. Information about general market conditions comes from a variety of resources outside the Horizon Robotics. This presentation also contains some unaudited, non-IFRS financial measures that should be considered in addition to the company's financial prepared. I will now turn the call over to our CEO, Dr. Yu. [Non-English content] Dear investors, good evening. [Non-English content] I'm Yu Kai, Founder and CEO of Horizon Robotics. I'm delighted to be with all of you online on the last day of August to report on our operating results for the first half of the year. [Non-English content] Go ahead. Let's start with the industry. Frankly speaking, China's automotive industry in the first half of 2026 showed a clear structural divergence of domestic demand under pressure as well as high growth export. According to CPCA data, domestic passenger vehicle sales weakened significantly in the first half, with retail sales down by more than 20% year-on-year. As far as I know that for some domestic automakers, they have seen a decline by more than 30%. On the other hand, export figures were very strong, with vehicle exports by more than 65% year-on-year in the first half, setting an all-time high. Such a complex internal and external environment poses challenges to every company's operation. Against this backdrop, Horizon Robotics recognized the revenue of RMB 2.055 billion in the first half, up by 32.9% year-on-year, with gross margin and high level of 66%. While maintaining saturated R&D investment, we have also focused on steadily improving our operating efficiency. The combined growth rate of Horizon Robotics R&D spending and administrative expenses in the first half was 23.3%, lower than the growth rate of revenue and gross margin. This shows that our operating leverage is emerging as revenue grows rapidly. Mr. Wang Lei will walk you through more detailed numbers shortly. What I would like to share with you today is more about some of my recent reflections. [Non-English content] First, on the advanced intelligent assisted driving market, even though the overall auto market was relatively weak in the first half, the automotive intelligence penetration rate continued to rise. The data we see shows that the intelligent assisted driving penetration rate for passenger vehicles in China has already hit 76.1%, reaching yet another new level compared with 2025, up by 8.5 percentage points. Domestic brands are of course the primary driver of this growth. But you may not have noticed that this year, the intelligent assisted driving penetration rate among joint venture automakers hit an extremely high level of 80% for the first time, indicating that intelligent assisted driving has become a necessity in China's passenger vehicle market for the situation with joint ventures. I will talk specifically about our progress here a little bit later. As for the advanced system, the penetration rate of models equipped with an urban NOA function has reached about 23%. Please note that the denominator here is not the sales of intelligent assisted vehicles, but sales of all passenger vehicles. In other words, among all new cars sold in the first half of this year, nearly one quarter were already equipped with urban NOA function. Looking at the industry data during May and June, the penetration rate of advanced intelligent assisted driving already surpassed the peak level reached at the end of last year, showing that advanced intelligent assisted driving has a very strong growth momentum. [Non-English content] I think the capital market may make some confusion about the role we play in the advanced intelligence and driving during the first half of this year. In this arena, Horizon Robotics is on the offensive, not the defensive. We only began mass production of highway NOA solution last year, and did not start mass producing urban NOA solutions until the end of the year. But take a look. In just the past six months, in the first half of this year, our market share of computing platforms featuring urban NOA functions rose to around 23% among Chinese domestic brands, an increase of roughly 5 percentage points. Our ranking jumped from the third to the second place within half a year, now only after one U.S. tech company. Although this U.S. tech company stood at the first place, its market share fell by nearly 10 percentage points compared with the full year of last year. [Non-English content] Next I would like to share with you our business model. First is about our Intel and also our extension business model on plus Android. First of all, when it comes to Intel, we have our SoC and also our software. This is just like the sales model of Intel. That is our direct revenue. But in the software platform, we have some HSD and also have a full. The sales model is more like Microsoft. When we involve into L4 and L5, then we believe that our business model will become more of a subscription model. It means that in addition to the Intel, we also have the Arm plus Android extension business model. It means that we can use our IP to earn our revenue. That is our more indirect revenue. In that part, we have both direct revenue plus our indirect extended revenue coming from our IP licensing. In terms of the direct revenue, we have our SoC plus our software. Our market share will continue to rise. At the same time, we have our extension business model through our IP licensing, and it can help us to secure long-term partnership and stickiness from our customers. At the same time, we can continue to keep our extremely high competitiveness. [Non-English content] We believe that our competitive edge will come from both our direct market share and also our extended market share. We will continue to capture the market share from our competitors. I also believe that the growth rate will be very high. This reminds me of how share shifted in the ADAS market over the past few years. Do you know what our share was four years ago in 2022? Less than 5%. What about the first half of this year? It broke through 50% for the first time, and our market share is twice that of the number two player. Going from under 5% to 50% took us only four years. I think it will be the same in the advanced market. By next year, Horizon Robotics SoC, that is our direct market, plus they also make in-house chips that Horizon Robotics IP supports. That is our extension market share. We will continue to take the number one position in the advanced market. [Non-English content] In the short term, Horizon Robotics and other automakers will together capture more shares. In the long run, how will this industry landscape evolve? My observation is this: if an industry has a relatively low ceiling where the technology curve quickly flattens, and the leading players' technology soon approaches perfection, and it becomes hard to advance any further from the top, then that industry's ultimate landscape will most likely be fragmented. No one can build an effective moat, so everyone falls into cut-throat competition and ultimately can only compete on price. If an industry truly offers a long slope with thick moat, with a very steep technology curve and a very high ceiling, then the advantages of the leading companies will keep expanding. The reason is simple: the annual lead of the top companies multiplied over a longer period ultimately builds a deep moat that latecomers cannot cross. [Non-English content] I believe intelligent assisted driving is exactly such an industry. From 2019 to 2020, Horizon launched the Journey 2 and Journey 3 SoC, focusing mainly on ADAS products. Then from 2021 to 2023, we launched the Journey 5, our first SoC exceeding 100 TOPS, and began building AD solutions based on rule-based algorithms, with R&D expenses totaling more than RMB 5 billion. From 2024 to 2026, we have rolled out five Journey 6 series SoC and one integrated cockpit driving fusion agentic chip in rapid succession, along with the HSD 1.0 and 2.0, and our first agent, KaKaClaw, with R&D expenses totaling nearly RMB 15 billion. Look at where we stand today. L3 to L5 autonomous driving has yet to be realized, and the number of competitors has already dwindled. It means that it's not that highly competitive landscape. But in the long run, I believe that for an intelligent driving player to stay in the game, they first need world-class SoC and algorithm capabilities. Then every player also needs the stamina for long distance race, the strength for long term investment, and the ability to iterate continuously. Frankly speaking, this is far from easy. Horizon Robotics possesses all of these attributes, and I'm very confident that Horizon will capture larger shares in the endgame of the advanced market. This is my long term view of the industry. [Non-English content] Sorry, we have a disconnection with our interpreter. Please hold on. [Non-English content] Thank you. Our interpreter is back online. Please continue. Sorry. [Non-English content] Nicholas just mentioned that a leading company's progress curve must be very steep in order to ultimately win out over the long term. As you may know that the competitor with other in-house and third-party software and algorithm suppliers, Horizon was arguably the last to enter the advanced driver market. We entered late, but we have built up strength over time, and now we are delivering on the recent fourth. According to some third parties examination, we are already taking the leadership over other competitors. For example, in terms of the safe overload ratio, we are already better than our competitors. HSD version 1.0 released last November, and HSD version 2.0 released at the end of this June, have demonstrated powerful force scenarios and driving capabilities, competing with ease and delivering a very smooth driving and riding experience for our users. A while back, we organized a series of test drive events for our investors in Beijing, Shanghai and Shenzhen, allowing everyone to choose their route in the most complex downtown areas. I heard that some people picked the morning rush hour to drive to the busiest hospital. Some chose to make U-turns on very narrow streets, like Julu Road, and others go to Shenzhen's urban villages. I believe anyone who has experienced it can appreciate the difference between our HSD and other intelligent driving solutions on the market. I think the underlying reason is that over the past 11 years, Horizon Robotics has accumulated world-class SoC and algorithm capabilities, which are unique and a step across the entire industry. This kind of comprehensive capability combining software and hardware is perhaps matched only by Tesla. That's why Horizon Robotics is sometimes called the Tesla that doesn't build cars. [Non-English content] As for the collaboration with the different domestic international brands that everyone is very interested in, especially for HSD. What we can reveal now is that the progress is pretty good. By the end of the year, J6M will account for 70%-80% of the entry level AV shipments as the largest new energy vehicle manufacturer. Our high computing power SoC, plus the HSD, will also begin mass production and delivery on their advanced platforms within this year. Take this year for example, we have already seen that our HSD has been installed for Chery and also Changan. Actually our HSD is already available on the top five highest volume Chinese brands. Also for the joint ventures, you know that the largest two joint ventures are Toyota and also Volkswagen. Our HSD has also become the design win for these two joint ventures. By the end of this year, we are going to see the mass production and delivery in all these Chinese domestic brands and also the JV brands. We can see that today's result is the fruit of our input, investment, and also state-of-the-art technology. We also believe that this year, because of our HSD, thanks to our R&D investments and our high level SoCs and the software and also the design wins, will continue to bear more fruit going forward. It is also estimated that starting from next year, thanks to the mass production, we are going to see our scale up in more advanced markets. [Non-English content] Currently a lot of investors are also very concerned about the current price war. We have seen the selling price of the vehicles is also dropping, and also the profitability is also dropping. Under such circumstances, how Horizon can keep high quality growth? As a matter of fact, we believe that the current price war is providing a very good opportunity for Horizon. Because we have our cost effectiveness, and we can provide high performance technologies and also very excellent customer experience. We believe that with our SoCs and the software, the market will become more rational. We also firmly believe that in the end game, only 20%, or maybe less than 20%, of the leading companies can have their in-house R&D capabilities. The great majority of the OEMs will adopt the technologies or products from the independent third parties like Horizon. We believe that such trends will accelerate this process, which is beneficial for Horizon. [Non-English content] Next I would like to share about the JV and also overseas expansion. In recent years, as you know, JV has faced the fierce competition from domestic brands. But what happened received much attention is that the market share of JV brands has actually stabilized at about 35% and has held there for nearly two years. Among the existing JV brands, plus Tesla, roughly 75% are mass-market models, while all the JV luxury vehicles combined account for a little bit more than 20%. The JV brands also have an urgent need for intelligent upgrading. Unlike the past path of overseas technologies implemented in China, this round of intelligent technology upgrading comes largely from Chinese suppliers or Chinese partners. Horizon's partner ecosystem enjoys a very strong reputation in China and has already been the most thriving and active in the market. As we face opportunities with JV brands and overseas markets, we have likewise maintained our position at the king of the ecosystem. Now we are working with the former Continental, now Aumovio. We also have the partnership with other tier one suppliers like Astemo, and also Aptiv, and also Bosch, and also Carizon, that is the JV we established with Volkswagen, and also Denso. We believe that we are becoming the preferred supplier for many vehicle manufacturers. [Non-English content] Next, among these JV automakers, through Carizon, our advanced intelligent assistance driving solutions built upon Horizon's Journey 6 series SoC and core intellectual property will be deployed this year in seven all-new models from Volkswagen and FAW-Volkswagen, and will begin expanding more broadly to Volkswagen's mainstream CEA architecture next year. All together will be about 20 models. In the future, you will see that the models from Volkswagen with the price range in about RMB 40,000-RMB 50,000 will be using Horizon Robotics' Urban NOA. You can see even in terms of pricing, they are also going to be more competitive. Building on our foundation model, we are also empowering Carizon to bring level three and level four autonomous driving capabilities in the market next year. Some time ago, both sides also deepened our cooperation at the capital level. Horizon redeemed a portion of the convertible bonds held by Volkswagen, reducing equity dilution by 4.9% for all shareholders. Volkswagen, meanwhile, converted its shares early to become an important strategic shareholder with a 9.9% stake, and voluntarily agreed to a 12-month lock-up. You can see the depth and the breadth of our cooperation with Volkswagen continues to grow. [Non-English content] Our cooperation with Toyota based on the Journey 6, also entered mass production in the first half of the year, firstly launched on GAC Toyota's highest volume entry-level model. Going forward, through Denso, we will also serve its most mainstream vehicle platforms and deliver advanced intelligent driving solutions, which are expected to begin contributing to sales the year after next. Volkswagen, Toyota together with Honda, accounting for 50% of the sales volume of all JV automakers, and through partners such as Carizon, Denso, and Astemo, we have already opened up this avenue of growth. [Non-English content] Next, we can talk about going global, which may be a very important trend in the auto industry in the first half of this year. The top six auto groups by export sales are highly concentrated, altogether accounting for more than 70% of the total share. Meanwhile, there are basically only three intelligent driving suppliers capable of supporting these Chinese automakers going global, and Horizon is one of them. You can see this is an even higher level of concentration. We have already secured 24 brands and nearly 60 export vehicle models, covering the top six auto groups by export volume. In terms of scale, the new export models we have won over the past 12 months already account for a very considerable share of our future total exports. As you may also seen in recent announcements by Bosch and neueHCT, they have each introduced a brand new generation of entry-level products based on the J6+ and J6B SoC, gaining design wins in the tens of millions, in the millions of units respectively. They have also covered major global markets, including China, Europe, Australia, New Zealand, Latin America, Middle East, and Asia and Pacific. For the J6B, we have already secured the total number of the order of 20 million units. Why does Horizon place such importance on overseas entry-level intelligent driving market? Because in the overseas market, ADAS is still the mainstream. We want to secure this mainstream customer base. Also because technology ecosystems are also very sticky. We hope that by firmly capture the market with entry level intelligent driving products, we can gain the trust from the customers. Also we can establish a unified software and hardware foundation for the future upgrade of the overseas market to advance the intelligent driving. Then we can secure the core gateway for customer onboarding. [Non-English content] Also more importantly, people used to think that the overseas market has low advanced intelligent driving demand, but recently we have observed that this trend towards upgrading to advanced and intelligent driving or AD is beginning to emerge in overseas market as well. Our J6E and the J6M SoC have already been designed into multiple nominated models that are being sold overseas. Although in the overseas market they are relatively slower than that of the Chinese market, we can still see some overseas automakers are beginning to plan AD related vehicle models, such as in France, in Germany, and also in Japan. As one of the most international companies, Horizon, supported by overseas ecosystem partners, ranks the first in the cooperation lineups of many mainstream overseas automakers. This is the second part of my observations that I would like to share with you. [Non-English content] The third one I would like to talk about Wintel, as I mentioned just now, as well as the Arm plus Android business model. We would like to expand beyond the automobile based on such a business model. In terms of the Wintel, Horizon has both the SoC platform and the software platform that is more like the business model of Intel. We also have our HSD and also KaKaClaw for our software business model. That is more like the new generation operating system for automotive. That business model is more like Microsoft. Once HSD evolves to L4, L5 autonomous driving and KaKaClaw becomes the thoughtful assistant in car owners daily life, I believe the business model for automotive software will shift to charging users by mileage or on a subscription basis, just like licensing models of Microsoft 365 and other software products today. [Non-English content] Therefore, our Arm plus Android IP licensing model. Over the past many years, we have continuously licensed our technologies to a number of world-class automotive customers, supporting capable customers in their in-house development efforts. These include the world's largest new energy vehicle maker, one of the largest auto parts groups in the world, and China's largest JV automaker. This business model has very strong stickiness, which roots our customers' products deeply in Horizon's technology ecosystem. They keep working with us on new products generation after generation. For example, Carizon, our joint venture with Volkswagen, and the aforementioned one of the world's largest auto parts groups, have both continued to license algorithms, services, and software from Horizon in the first half of this year, and they remain among one of our top customers. I have always believed that the ecosystem should be for the strong, because we believe that we have very strong technologies which can help us to play a leading role. At the same time, equally important is the ecosystem, which should be open and also helping our partners in order to achieve an all-win result. Then partners are willing to work with you because you can genuinely empower them across chips, software, and this is the only way we can grow the pie together. [Non-English content] Beyond automobiles, we have found that the underlying technologies developed for vehicles have strong applicability and extensibility. They can enable all kinds of vivid real-world applications on terminal devices. For instance, we have helped embodied intelligence companies empower humanoid robots, wheeled robots, and also the quadruped robots, and more. Helped home intelligent agent companies create a household JARVIS. that becomes a true home assistant. We also help unmanned logistics vehicles improve logistics efficiency. To give you a more concrete example, through our associates, D-Robotics, we have already empowered over 100 downstream robot categories, serving over 400 customers and covering more than half of the embodied intelligence companies in China. Horizon Robotics focuses on the BPU and AI foundation models from automobiles to robots and licensing them externally under an Arm plus Android model. D-Robotics, meanwhile, faces customers across thousands of industries to achieve commercial monetization. Horizon Robotics and D-Robotics have rapidly become the greatest common denominator of domestic robot computing SoC plus model foundation. Our open-source embodied models have so far been tested or used by more than 100 academic institutions and companies, including NVIDIA, Meta, Microsoft, ByteDance, Alibaba, Unitree Robotics, Wuhan University, Zhejiang University, and Stanford University. Within six months, we will also release the next generation of brain and self-driving models that integrate a world model with a general-purpose understanding model. [Non-English content] Looking ahead to the second half of 2026, we are confident of reaching a 70%-80% share on our core customers entry-level AD vehicle models, and of completing mass production and delivery of high compute SoCs. Plus, HSD on their urban NOA models. The cockpit driving integrated solution based on the Starry chip and the KaKaClaw, we also enter mass production as scheduled in the fourth quarter of this year, maintaining our record from the very initial design to the mass production in a very few months. [Non-English content] Many friends are interested in the progress of the Journey 7 SoC, which is our strategic product targeting L3, L4 autonomous driving scenarios. On the technical front, Journey 7 has achieved several key breakthroughs in architectural design. Not only has its computing power increased substantially, but more importantly, it has been natively optimized for the local deployment of our next generation HSD intelligent driving model with a larger number of parameters, as well as our local LLM cockpit model. R&D is currently progressing smoothly, and we expect to complete the tape-out early in the second quarter of next year. Even though the product is still in the R&D stage, Journey 7 has already attracted tremendous attention in the market, with a number of leading automakers and tier one suppliers proactively reaching out to us to express their interest in collaboration. This indirectly confirms the market's high expectation for this SoC, which represents the most advanced level in the industry. We are confident that together with these partners, we can make Journey 7 the new world's benchmark for autonomous driving chips. [Non-English content] Actually in terms of L3 and L4 SoC, we are also working with another partner to test our L4 Robotaxi. We hope that we can continue to test the potential of the application of this advanced intelligent assisted driving software. But actually, when it comes to L4, whether it is a private car taking you from A to B or it is a Robotaxi taking you from A to B, it does not matter at all, because in terms of the underlying foundation, they are coming from the same source. [Non-English content] Even though the industry environment remains full of challenges, based on assessment of the business landscape in the second half of the year, we are confident of achieving full year revenue of more than RMB 5 billion. We will also build a solid pipeline for next year. Starting in 2027, that is next year, Horizon SoC, together with the automakers in-house chips supported by Horizon's IP, which means that direct plus our extended market share, will collectively rank first in the market share in the advanced segment. [Non-English content] Here you can imagine that Horizon's own advanced SoC, plus the extended market share, which is the automakers in-house chips supported by our IP, and also coupled with our applications going forward and the entire ecosystem put together, which means that Horizon Robotics will be even more influential in the market. [Non-English content] Thank you, Dr. Kai Yu. Sorry, go ahead. 11 years ago, we set out to found a very small idea, and having come this far today, we have proven that this pathway works. The road ahead of us is still very long, so we need to remain humble and open-minded and altruistic, and continue to do what needs to be done in a solid and thorough way. Thank you all. Next, we would like to invite our CFO, Mr. Wang Lei, to give us a brief overview of more detailed numbers for the first half of 2026. The floor is yours. Thank you. Thank you, translator. Thank you, Dr. Yu Kai. I will now present the key financial results for the six months ending June 30, 2026. To be mindful of the length of this call, I will focus on the main items in our discussion today. I encourage participants to refer to our earnings release, which was posted on our investor relationship website for additional details. Back in July, we published the preliminary range of our first half financial results. I am pleased to announce today that both our revenue and gross profit for the reported period hit the upper ends for the guidance that were previously provided. Specifically, for the first half of the year, we recognized revenue slightly less than RMB 2.1 billion, representing a year-over-year growth of 32.9% compared to the same period last time. Our gross profit for the first half came in around RMB 1.4 billion, also reflecting year-over-year growth of 32.9%. This implies that consistent with the same period last year, we remain and sustain a robust gross margin of 66%. Our revenue is composed with revenue from product solutions, plus license and services. Despite a 20.2% year-over-year decline in domestic passenger vehicles retail in the first half of the year, our shipment volume bucked this headwind, growing by 12.1% to reach approximately 2.2 million units, driven by our gains in the market shares. As a result, revenue from our product solution reached RMB 225.6 million, representing year-over-year growth of 14.8%. Turning to our license and service revenue, Carizon and one of the world's largest automotive parts company continued to license our algorithms and software, and both remained among our top five clients during the period of time. Our license and service revenue reached RMB 1.1 billion, representing a year-over-year growth of 32.7%. As we mentioned earlier, our overall gross margin stood at 66%. Breaking this down by segment, gross margin for product solutions was 36.2%, while license and service delivered a gross margin of 90.4%. As we shared with you before, in the near term, we have been bundling the sales of the Horizon Mono unit together with our core products in order to accelerate the mass production ramp-up for HSD at early clients. This bundling of non-core products has had a dilutive effect on our gross margin. However, this is a one-time impact. Excluding this one-time effect, the actual gross margin for our product solutions was 48.1%, an improvement of 3 percentage points compared with the same period last time. Now, let's turn to the major expenses. The R&D expenses include SBC, coming in slightly more than RMB 2.7 billion, total combined SG&A expenses were RMB 634 million. Together, three expenses amounted to RMB 3.3 billion, increase of approximately RMB 650 million compared with the same period last year. Essentially, the vast majority of this increase was driven by the cloud-related training costs. This resulted in operating loss of RMB 1.7 billion. If we add back non-cash items such as SBC, we arrive at an adjusted operating loss under non-IFRS measurements of RMB 1.3 billion. Finally, let's change to the bottom line. As we noted in our previous earning pre-announcements, the fair value change arising on the Chariot convertible loan resulted in a substantial gain for us. Under IFRS, the company reported profit of RMB 3.8 billion for the reporting period. If we exclude the fair value change from this convertible loan, adding back impact of SBC and deduct the one-time impact from the deconsolidation of D-Robotics, our adjusted net loss went to RMB 1.67 billion. This concludes our management's presentation. I will now turn the call over to the operator to facilitate Q&A sessions. Please. Thank you, management. Now we will start the Q&A session. If you want to raise a question, please press star one. If you want to cancel a question, please press star two. Please feel free to raise any questions. To participate in our written Q&A, just type your question into the Ask a question text area, then click the submission button. For the benefits of all participants on today's call, please limit yourself to two to three questions, and if you have additional questions, you can re-enter the queue. If you are a Mandarin speaker, please ask your questions in Chinese first, then follow with English translation. Thank you. The first question is from Tim Hsiao of Morgan Stanley. Please go ahead. [Non-English content] So my first question is about our project into second half, because with chip shipment rated to second half this year, could the management share a bit more details about the project range at the major EV new platforms that management just briefly touch on? In the meantime, could I also double confirm that which product trains would drive stronger revenue growth? Would it be like a Journey 6M range or the high end 6P? Any additional colors about the upside coming from the new design breakthrough would be highly appreciated. That's my first question. [Non-English content] [Non-English content] Thank you very much for your question, Tim. As we just reported to everyone, in the second half of this year, we will see the volume ramp up on the entry level AD platform of a leading NEV company. The J6M will be the main driver in terms of the volume. Sales volume growth is only part of our revenue growth. What further drives our high revenue growth is our higher value product. High compute Journey 6M SoC, and also 6P in particular, and also 6H, and also our HSD software solution. It is also related with our new design win. With high compute chips plus HSD, there have been exciting progress. We recently made a breakthrough with two leading Chinese automakers. Our HSD platform now covers the top five Chinese domestic brands and the top two joint ventures, covering almost all of the highest volume customer groups in this market. If you look at the entire industry, I believe no other company can achieve such positioning across both the leading domestic brands and top five, and joint venture giants, top two at the same time. Horizon is very unique. These design wins will begin mass production at the end of the year, and we expect them to deliver significant revenue contributions next year. According to the recent media, you can see Volkswagen has launched their U.S. Model ID.6, which is also equipped with our chip and also HSD software solution. If we put them together next year, and also going forward, we will see significant ramp up of our revenue. Thank you. [Non-English content] My second question is about return on investment and also profitability. As Horizon step up 2026 budget for higher spending on both on vehicle and cloud side large model training and the next generation chip development, how would you balance return on investment? When should we expect the visible inflection in Horizon's profitability? That is my second question. Thank you. [Non-English content] Thank you. Our interpreter got disconnected. Please hold on for a while. We are expecting the other translators. Thank you. Interpreter has reconnected. Please go ahead. [Non-English content] Thank you once again. Regarding the investment, we will continue to maintain our gross margin level. Our logic and our observation is that we need to continue gross margin at a very high level in order to keep our competitive edge, in order to lay the foundation for continued high investment going forward. This industry is a long cycle industry. Now we have seen our H1 revenue. That is thanks to our R&D investment and also our implementation. Today's revenue is a fruit by investment made over the past few years. The financial statement reflects the realization of past investment. Our R&D investment determines the ceiling of future statements. We must maintain high intensity and saturated investment. We have no illusion of luck when it comes to securing ultimate victory in the future. Because if we do not make a high level investment, in the future, we will be restricted. We will keep a very high level and saturated investment in the long term. It is not an easy job, but if we do not make a very high investment in R&D, for example, if we only make investment in terms of just RMB 1 billion or RMB 2 billion in R&D, we cannot see a very high bar or high threshold in this industry. It also means that it is going to be a very easy game for everyone. That is why we believe that our industry has a very steep technology curve. That requires resilience, strength, and iteration. For example, with R&D, if we only have low R&D, maybe it is not going to affect our P&L. Maybe it is very good looking in the short term, but actually this is a very fast moving technology. We need to make investment for our future. For example, with R&D, RMB 10 billion in revenue and a 60% gross margin. That means RMB 6 billion in our gross profits. If we make all these gross margins into our R&D for our SoC chips and also AI, then it is going to exceed that of the vast majority of other automakers. Is it good or bad? Of course, it is good for us, because if other automakers cannot bear it, then it means that the technology will be dominated by the independent third party like Horizon Robotics. That is beneficial and conducive for us. This is the first part of our investment. The second is about how to make improvements on our profitability. We would like to align based on objectives like before. We will continue to work hard to reach the breakeven in 2028. Thank you. [Non-English content] Thank you so much. The next question is from Yu Quindeng of HSBC. Please go ahead. [Non-English content] Two questions. First on HSD, with strong major OEM progress, how should we think about HSD volume in 2026 and 2027? What are the key milestones for that ramp? Second question is on Journey 7, scheduled SoC tape-out completed scheduled in second quarter next year. How should we think about the timeline and contribution from tape-out to customer SOP and the meaning for revenue and volume ramp? [Non-English content] Thank you for your question. Regarding the HSD, we can see that with the gradual mass production of HSD and the rapid improvement in its technological performance, HSD has already become Horizon Robotics' core industry name card for OEM customers, and the market reputation continues to rise. With the domestic Chinese OEM brands, we have already achieved the design win breakthroughs with all the top five domestic automakers, covering the majority of the domestic brand sales volume, completing full coverage of mainstream leading local automakers. Actually for one of the leading NEVs, we have already covered their entry level AD and their urban AD, so they have already entered the mass production step by step. At the same time, in the JV segment, we have also successfully secured core project design wins with two leading JV automakers, as I mentioned, the top two, further diversifying our customers mix so that we no longer only relying solely on local domestic brands. We have achieved a key breakthrough in the JV market. In terms of the chip shipment, I can give you a little bit of guideline. This year we are going to achieve around 5 million units this year. Also next year, we try to hit more than 7 million units next year. Thank you. [Non-English content] Regarding the second question, currently the R&D is moving forward very smoothly. It is expected to be launched next year in 2027. Currently, it has already attracted great attention from the leading automakers and also tier one and suppliers, and it is highly expected. Also we are very confident that we can work with our partners to launch Journey 7. Also some of them are going to launch their models in that decade. We hope that we can build it as the world's benchmark in the advanced market. Thank you. [Non-English content] Thank you so much. We are reaching the end of our conference call now. I would like to turn the call back over to the company for any closing remarks. Thank you. Due to time constraints, we will now conclude today's call. Thank you again for joining us today. If you have any further questions, please feel free to contact our IR team. Thank you.