Ladies and gentlemen, thank you very much for taking your precious time to attend this announcement, press release, press announcement by Renesas Electronics regarding the start of the acquisition process of Dialog Semiconductor. Thank you very much for your attendance. Today's session is participated by the CEO of Renesas Electronics, the President and CEO, Hidetoshi Shibata, and the CFO, Mr. Shuhei Shinkai, and also by the CEO of Dialog Semiconductor PLC, Mr. Jalal Bagherli. Those are the participants to today's meeting. From now, we will have words from Mr. Shibata regarding the acquisition of Dialog. After which, we would like to have a few words from Mr. Bagherli, the CEO of Dialog, and then followed by the Q&A session. We expect to finish the meeting in 1 hour and 15 minutes. Before we begin the presentation, please be advised that the explanations made during this presentation may contain forward-looking statements. Such forward-looking statements may include certain risks and uncertainties. Please be advised that the actual results may differ from those projections made in the forward-looking statements. Without further ado, I would like to ask Mr. Shibata, our CEO, to start the presentation. Once again, good evening to you. I am Shibata. As time is limited, I would like to start immediately on the explanation. One, the transaction summary. The equity value is estimated to be EUR 4.9 billion. This is calculated at EUR 67.5 per share. We have agreed to start the acquisition process together with Dialog because we have some cash on-hand. In terms of enterprise value, this represents EUR 4.5 billion or more than JPY 500 billion. This is going to be an all-cash transaction, we are planning to purchase with all cash. We are going to arrange a bridge facility. Of course, there are fluctuations in the exchange rates, due to regulations, we are going to prepare a hefty amount of cash. JPY 735 billion is the framework of the bridge facility. From that, through a course of procedures before the closing, we would like to finance a portion of this fund through equity issuance. Some of the cash on-hand will be utilized for the acquisition so that we can bring down the total borrowings of the company. The shelf registration for the equity issuance has already been filed. For finance, Dialog is a very revenue-driven company, therefore the non-GAAP gross margin and the operating profit margin is going to have an accretive impact immediately on our business. Of course, I will come back to this topic later. We have, just like the past two deals that we have conducted before, we are expecting a similar size of synergy out of this transaction. Finally, regarding the procedures that we are going to follow for the closing, we would like to seek the approval by Dialog shareholders. We also have to clear the regulatory clearance, including antitrust and FDI related, including CFIUS regulations. We have to clear all these regulations. After that, we have to have the hearings and the sanction by the U.K. court, and we expect to finish this and come to a closing by the end of the year of 2021. Now let me go into the details from here. This is Dialog overview. At the bottom left, you'll see the underlying basis to fiscal 2019. The non-GAAP basis financial results are presented at the bottom left. A revenue of over $1.4 billion, the gross margin, $700 million, the operating margin of over 20%, gross margin of close to 50%. If you look at the upper right, the pie chart, this is the breakdown of the application segments. As of 2019, the custom mixed signal accounted for a large bulk. On top of that, advanced mixed signal, as well as the long-sought connectivity capability are equipped with this company. This company possesses these capabilities, I'll come back to this topic later. Also, if you look at the bottom right, as you may know, Dialog previously had a large portion of their business coming from a particular customer. However, over the last several years, and of course, due to the leadership of Jalal, they have been reducing and have started actions to reduce the contribution from these large customers. In about two years' time, by the end of 2023, the dependence on these large customers will come down to around 25%. At this timing, one of the reasons why we have shown a strong interest in Dialog is because of this factor. Also, if you look at the pie chart on the bottom left. In responses to the charts above, currently, the direct customers account for a major bulk of 70%. Renesas, over the last two years or so, have conducted a drastic review of our channel strategy, and we are aligned with strategic channel partners and have established a good relationship with them. After the integration of Dialog, I think our large sales force, as well as our robust sales channel, can be leveraged so that we can expand the sales of many diverse products. The overview of the Dialog products are listed here. Of course, if I go one by one, it's going to consume a lot of time, so please review this slide when you have the leisure of time. Roughly speaking, in a nutshell, Dialog, power management related, including low power and battery management and AC/DC, they have strength in these areas. Of course, again, connectivity, especially low power connectivity, Bluetooth Low Energy, for example, and low power Wi-Fi, and also some audio capabilities. They have also a very strong product portfolio in these areas. In addition to them, also they have IO-Link for the industrial segment. They have very interesting suite of products, and therefore, but especially low power and power management and power conversion related products, as well as connectivity, are the areas that we think they have a very strong capability. Just let me step back a little bit and talk about the M&A strategy of Renesas and our track record of execution just very briefly. Let me review on this point. Over the last several years, we have a consistent policy for our acquisition. As you can see at the upper part of this chart, in the analog and mixed signal area, within our portfolio of products, there were some areas that we had a shortage. We focused on these areas to supplement our offerings. If you look at the far right, the application. For example, industrial applications, automotive applications, IoT. Those are areas of application we sought to achieve a well-balanced application to improve the balance and try to diversify our applications so that we can respond to those diverse needs with our portfolio. In the middle, the talent, especially engineers, and of course, non-engineer talents as well. With the acquisition, we have actively tried to promote these human resources and integrate them so that we can become more global and international organization so that we can reinvigorate our own organization. Those were the rationale behind our acquisition. For example, of Intersil, which was announced in 2016, and IDT, that we announced in 2018. Today, we are happy to announce our intent to acquire Dialog in 2021. With the addition of Dialog, in terms of products and applications, what are the areas that we can expect reinforcement? Of course, this is very difficult to explain, but I'll try to be as simple and brief and concise here in this chart. On the far right, you see the infrastructure and IoT. This is the business segment that we called IBU, and the vertical part represents the application, and the horizontal axis shows the product. Dialog. The products offered by Dialog in this segment is illustrated on the far right. With the addition of Dialog, especially when it comes to the IoT category, we can further reinforce our offerings. Of course, if you look at the bottom part, the connectivity, power management, and sensors to some extent. Those are the products we didn't really have in our portfolio. We can now add these technologies, so that we can offer a more comprehensive set of solutions, especially in the area of IoT and many other applications. That is going to become a reality for us. Other than IoT, if you look at the far right, industrial, in this area too, again, at the risk of repeating myself, I believe we'll be able to offer a very differentiated and competitive product with the addition of Dialog. We would like to combine them with our MPU and MCU, where we have strength in, so that we can further expand the sales of these products. If you look at the left-hand side, this represents the automotive business. The upper right is the high compute area, and the bottom half shows what we call the Winning Combo. Combining our compute device and analog, and in some cases, power. These are the solutions that can be realized through this combination, especially with the addition of Dialog technology and product. Of course, we will be able to reinforce many fields, but in particular, if I cite a good and easy to understand example, in the areas of body and interior, for example, the cockpit LED backlight, and also wireless key technology, and also there will be some interactions with the ADAS, such as the LED for the headlights. Those driver for the headlights can be incorporated as part of our offerings. We'll be able to expect the reinforcement of these products, which will allow us to have a more comprehensive and broader product range that we can offer an end-to-end comprehensive product set, especially in the area of automotive, as well as industrial infrastructure and IoT area. Now, talking about the portfolio from a different perspective, I would like to share this slide with you. The left-hand side shows Renesas' current portfolio by product on the upper side, SLC, MCU, and SOC from the dark blue parts towards the lighter colors. Then we'll be adding analogs and mixed signals significantly. The compute device, as you see on the right-hand side, 39% MCU and 11% SOC, MPU. They'll become a comparable size. The analog size will become a comparable size, as you can see there. If you look at the bottom half of this slide, this is the by market, the comparison by market or by application, if you will. If you look at the Renesas on a standalone basis on the left-hand side, with the addition of Dialog Semiconductor, of course, the automotive will continue to be the largest market for us. Of course, we are continuously committing ourselves to automotive. I think compared to before, we'll have a more better balanced market exposure, and the IoT areas will expand further compared to before. Talking about the balance from the perspective of our talents and human resources, just for the sake of simplicity, we have just focused on the headcounts of engineers. If you look at the upper right, it shows Renesas' human resources, and Japanese account for more than half of our total engineers. In case of Dialog, Europeans account for more than half of their engineers. If you look at the bottom right, with the combination of Renesas and Dialog, the two companies' integration, the balance between Europe and, I think, North America will become much better balanced with Americas and EMEA accounting for 16% each. There won't be any concentration only in a limited area. We'll be more well-balanced, and that will allow us to have a more well-balanced R&D activity going forward. Next, as for the financial benefits, I think this is self-explanatory, so I will skip this presentation. I think I just want to say this is financially accretive as well. Now let me talk about synergies. I'm just going to give you an introduction, and if you could look at the left-hand side, we have the cost-saving synergy. On the right-hand side, we have by growing the revenue, we will be able to see a revenue-driven synergy. On the left-hand side, with respect to cost synergy, as it says here, SGA would be the main synergy because the company is going to be integrated. Therefore, there will be some overlaps in functions, and they will be streamlined so that it will become more efficient. Compared with Dialog, Renesas, in terms of revenue, is five or 6x larger. Therefore, by integrating the two companies, there will be a scale benefit, and we will be able to reduce costs. On the right-hand side, after the acquisition of IDT, when we gave the update, I did touch upon this theme. The Dialog products and our products and distribution and go-to-market approach and our special applications are having a complementary relationship. By combining them, we will be able to provide solutions, and it is going to be very convenient, easy to use for the customers, and we will be able to provide very attractive solutions to the customers. In the case of revenue-driven synergy, it's going to take longer. However, in several years, we believe that we will be able to have a synergy of approximately about $200 million. This is just for your reference. With the Intersil and IDT transactions have generated synergies in the past. If you look back on the left-hand side, we have the synergy with the Intersil and the cost synergies that were able to be attained. The dark bar shows the actual, the light blue bar shows the announced plan. You can see, when we launched it, we had some difficulty. However, after 2018, we have been able to achieve the plan. In the same way, with respect to the transaction with IDT, through our experience, our organization learned lessons. At the time of the acquisition of IDT, from the beginning, we were able to have higher actual compared with the plan from the beginning. With respect to the top line, Intersil and IDT are all combined here. Next month is going to be a strategy update, but I'd like to talk about that more in detail at that time. In 2020, on a single year basis, acquiring new business is shown on the top right. In other words, the Winning Combo, including cross-sell, the top-line generating synergy that has created new businesses. Over the past one year, it exceeded more than JPY 100 million. Over the 5+ years, this can be realized steadily. On an annual basis, we will be able to generate about JPY 20 billion, and by accumulating this every year, we will be able to enjoy top-line synergies. The first step has already been seen. Now let me talk about finance. If there are questions, I'd like to respond to you, but this is expressed here, so if you have time, please take a look at it at your leisure. On the lower left, as I said earlier, part of the funding is procured in the form of issuance of equity. We have completed shelf registration of the equity issuance. This is leverage. Of course, we will be making new borrowings, therefore, the leverage would go up slightly. If you could look at the diagram on the right-hand side, the end of this year, when we anticipate to close the equity portion, would show the net debt EBITDA would be about 3.5x. From there on, of course, we want to do this actually before, but there will be equity finance and the annual free cash flow will be JPY 150 billion-JPY 200 billion. By doing this in a very short period of time, we will be able to reach a net debt EBITDA margin of 1.0x. This is the transaction milestone, is what I have just mentioned earlier, so I'm now going to skip this. Now looking back, I'd like to give you some key takeaways. Why are we going to acquire Dialog this time? The first point is like our previous M&A, we are going to implement our consistent acquisition strategy this time as well. This is a most important thing I want you to understand. The second point, I have been repeating myself, but in terms of products and go-to-market and offerings, Dialog and ourselves are complementary, and therefore, we can generate synergies in a very smooth way. The third point, for example, in terms of market exposure or a product mix or headcount composition in various ways, by having Dialog join us, we can have more well-balanced distribution of our resources. That's how attractive this transaction is. The last point, I may be reiterating myself, but as we have done in the past, we are going to have excellent talent join us. By them joining us in various geographies, we are going to have a more cosmopolitan business, and we are going to accelerate our business growth. Sorry for taking so long, but this is it for me for the time being, and I would like to turn over to Jalal to speak. Jalal, please. Hello. Shibata-san, thank you for inviting me to join this call. I'm happy to be here also to take questions from investors. I also want to extend my welcome to the Dialog investors and analysts who may have dialed in to this call today. For those of you who don't know me, my name is Jalal Bagherli. I am honored and humbled to be the CEO of Dialog Semiconductor since 2015. Sorry, 2005. In that 15 years, we have grown the small company of roughly about JPY 100 million to over a JPY 1.3 billion company with sales worldwide, with a very diverse set of mixed signal analog products, and with a culture of agility and flexibility and innovation. We are very happy to also have a very good set of leading top-tier customers in both mobile and consumer products already that we've been working on with for a number of years. Dialog is an innovative provider of integrated circuits that power mobile devices, consumer Internet of Things, and Industry 4.0. Shibata-san has already talked about the technologies that we have through his presentation. I just want to emphasize that we are really focused on power efficient and connected mixed signal products. I think this is a very sought-after capability in today's world. Also to help you understand our market positioning, Dialog solutions are integral to some of today's leading mobile devices and are the enabling element for increasing performance and productivity on the go. Our solutions do this by helping making smartphones more power efficient and also shorten the battery charging times. They enable home appliances to be controlled from anywhere, and they connect the next generation of wearable devices. We have also built a greatly skilled mixed signal engineering and technical talent pool in many locations, particularly in Europe and North America, but also a number of cities in Asia. That is, we believe, very complementary to Renesas R&D resources. For several years, we have successfully executed on a diversification strategy that positioned Dialog for high growth. We have extended our product portfolio and applied our technologies into new markets such as 5G, connected medical, and also industrial IoT. Renesas, of course, is no stranger to us. They've been an important partner to us in that journey. We have enjoyed a long and diverse collaboration already. In August of last year, for example, we deepened our collaboration even further by introducing our power management PMIC solutions for the R-Car M3 and R-Car E3 automotive computing platforms. I believe there's potential for two companies to create even greater opportunities for growth in today's increasingly connected world by combining Dialog's compelling low-power platform with Renesas embedded compute analog and power portfolio, thereby creating new system solutions, new winning solutions in the world market. From Dialog perspective, we recognize the benefits of this combination can bring to our business. We can build and utilize Renesas' extensive sales distribution and customer support facilities to put us in an even stronger position to provide innovative products for the markets and customers we serve. This also provides a greater career opportunity and benefits of a larger scale technology company to our employees. I believe, for these reasons, we are very pleased with the announcement today. With that perspective from me, I would like to hand back to Shibata-san, and I'd be happy to take any questions. Thank you. Thank you, Jalal. Now let's move on to Q&A. Now, I would like to explain to you how to ask questions. When you have a question, there is a button to raise your hand on the screen, and the moderator would point your company name and your name. When your name is called, please release the mute button and ask your question. We are going to ask you to ask up to three questions. We are going to start the Q&A session. First, from Merrill Lynch, Mr. Hirakawa, please ask your question. Please release the mute button and start asking questions. Thank you very much. This is Mikio Hirakawa from BofA Securities. Two questions, please. The first question is for Jalal. I'd like to know the mechanism. How you reduce exposure to the biggest clients to your 50%- 20% in three years while you increase the other sales? How does it work? That's my first question. I think we have been investing in diversification of our technologies for a number of years. It's continuation of bringing, if you like, bearing fruit from that investment. The investment is both organic, we invested in a number of new products. As an example, in our LED growth, or if you like, our low-energy Bluetooth, many other products. Also we've made a number of acquisitions. For example, we bought a company called Silego about three years ago, which provides customized mixed signal products. Last year we bought also a company called Adesto, which will improve our product range in the industrial IoT market. Combination of the growth drivers, both organic and inorganic, meaning through acquisition, will help us to reach that goal. We have a track record in doing this. If you look at our last two, three years, Shibata-san mentioned on his slide, we already reduced the reliance on our largest customer significantly. I can tell you as of end of 2020, because that data was not available at this point, we reached 55%. Where you can see the 66% last year, sorry, in 2019, is now reduced already to 55%. We expect by end of 2021 to be in the 40% region. It's a plan that we've executed by investment, by diversifying customer base and is on track. Just quick follow-up. Is there any volatility for you to reduce the exposure to the biggest clients into 2023? Do you believe that the exposure to the biggest client is steadily decreasing? Sorry, go ahead. What would be the risk? We have diversified in our largest client also. When we talk about diversification is both outside and also inside the largest customer, right? Sure. The type of the products that we are doing inside the largest customer are smaller ASP, and they are much more varied. In the past, we had a very big concentration in only one product category. Sure. Which was the main PMIC, and that was multiple dollar part. Since licensing that technology to our biggest customer. Yeah. We have focused on a number of smaller areas, for example, what we call sub-PMIC, what we call charging products. We have a product called CMICs, which are configurable. These are by nature lower ASP. It gives us more stability because there's many of them. There isn't one product that could destabilize our revenue. Oh, thank you very much. Very helpful. Thank you. You're very welcome. With respect to your second question, I would like to ask Mr. Shibata or Mr. Shinkai to answer this question. JPY 270 billion of equity issuance. According to our understanding, net debt to EBITDA ratio should be less than 1 time. This is your target. On the other hand, when we go to the strategic meeting, EBITDA ratio is 3x or 2x. Some of the management said that it should be around 2x or maybe 3x net EBITDA margin ratio. When you look at the future balance sheet and the seeking stability, how are you going to achieve this? Can you elaborate on this point for me, please? I think I've been talking about this before, so I think I may be reiterating myself, but in a nutshell, 3.5x, is it going to be too large? I don't think necessarily so. If you are generating enough cash flow and there is a pay down prospects, then I don't think you have to worry that much. Once the pay down target is to be set, what will be the target? That will be about 1x. I talk about that when I talk about IDT, but it's the same. This time, particularly, we are going to issue equity, and that's the reason why you're asking this question. With respect to a bridge facility, we are going to procure that from the financial institutions. In the future, when we become more global in the future and to realize more globalization, when it comes to different financing, we want to try to globalize financing as well. Through the capital markets, through issuance of bonds, we might be able to finance our business. From that standpoint, the credit rating is going to be a very important index. With respect to rating, we want to maintain investment grade rating so that we can continue our business. With that in mind, we have this plan. With the current credit rating, S&P and Moody's is BBB-. This is a very low level. I believe you're going to target a higher rating. Yes. We want to maintain, of course, at least want to maintain or to improve. Thank you. Okay, now we'd like to entertain the next question, Mr. Yasui from UBS Securities. Please start your question after unmuting yourself. Hello, this is Yasui from UBS Securities. Can you hear me? Yes, I hear you. Thank you. I have a question, three questions, actually. One is about, this is a question for Jalal. Okay., I think they participated in this acquisition bid, and Renesas won the deal at the end of the day. If possible, can you elaborate the reason why you selected Renesas as your partner over other candidates? Is there any particular reason why you have selected Renesas? My second question, this could be answered by anybody, but regarding the Sino-US relationship, there are so many political and geopolitical risks. Given the current regulatory environment, do you anticipate any delays or spending a lot of time to get regulatory clearance for this deal? Or is there any possibility of this deal going crashed as a result of regulations? My final question, this is a question for both Jalal and Shibata-san. Recently, the M&A activities in the analog market is still happening despite the very expensive surge of the stock prices. Both the large and the small scale deals are continuing. In this analog market, with these M&A activities becoming so active, in five years' time from now, what do you expect the market will look like in five years' time? Do you think competition will reduce and the profit margin will improve, or will there be a big giant controlling the markets and controlling the supply chains more strongly? What kind of market reorganization do you expect, or consolidation, do you expect in this market? I would like to hear from both of you for the third question. All right. Jalal, can you answer the first question? The second question, I would like to answer the second question. For the third question, I think I would like to give the microphone again to Jalal. Is that okay? Jalal, please begin. Okay. I hope that I follow the complex routine. In terms of the process, of course, we had multiple interested parties in acquisition of Dialog. As you know, the board has a fiduciary duty to look at the overall value of the offers, but also responsibility to all stakeholders. At least in the U.K. context, they will need to consider shareholders primarily, but also employees' benefits. Also suppliers and customers are considered in the overall scheme. I think the other considerations are normally the certainty of the execution, the reputation of the acquirer. When you look at that, quite a number of elements in that matrix. We decided that Renesas is the winning bid because of the reputation of prior acquisition, the reputation of how they manage their employees and the talent, and the extents of the technology platform, the distribution system that Renesas has built successfully over the years. I think this is a really good home for Dialog. This was our conclusion. I hope I answered your question. I would like to follow on with the second answer. For the second question, I would like to try to answer the question. Of course, in our interactions and with the meetings with the analysts, I have conveyed this message from time to time. The reason why we have tried to select Dialog was the point that you mentioned, Mr. Yasui. As you see on this slide right in front of you, for example, in the past, if you compare with Intersil that we have acquired in the past, very sensitive product applications, there are not so many in the case of Dialog. They don't have so many sensitive products in their portfolio. Of course, there are some mobile handheld related products in their portfolio. Those are the main product offerings of Dialog. In terms of national security, in that context, the hurdle for the integration of Dialog, I won't say it is zero, but I think the national security related hurdle is reasonably low that we are very well positioned to overcome. Also, the other major element is the antitrust related implications. Again, here, because we are having a complementary combination between us and Dialog. In a particular market or in a particular product range, we are not likely to own a significant percentage of the market. Therefore, we don't foresee a significant barrier for this integration. Of course, we are maintaining a cautious view. Of course, the points that you mentioned, we have conducted a multifaceted review and examination. As Jalal pointed out, the transaction certainty was also reviewed, and from our perspective, I thought that this combination is great. Okay. Regarding the outlook for the market consolidation, I would like to ask Jalal to comment first. Go first, Jalal. Thank you, Shibata. I think it's one of those areas where it's very hard to predict five years from now, right? One thing is the momentum for the consolidation continues because scale is becoming more and more important. Global reach is more and more important. The smaller companies cannot compete with the larger companies necessarily in all areas. That momentum continues. We may end up, I'm just predicting, I have no crystal ball beyond what everybody else has, but I think there may be bigger analog entities, of course, by combining smaller analogs. They become niche. I think there is a better case for system companies which have multiple solutions. This is what we also seen in our own business. We were very focused on power management ICs for a number of years, and it's been very good. In the last three, four years, our diversification meant that we could add charging or LED drivers or Bluetooth or other areas. When we go to a customer, they prefer to buy multiple components from the same vendor because of the setup on the system, because of the quality, because of relationship and history and track record. It's much easier than choosing five people to deliver the same system components, if you can buy from one. In that sense, I think companies are now striving to achieve this approach, which is how to combine. You cannot necessarily provide everything, but if you can do multiple key components for a particular vertical or a system solution, then that's the winning solution, I think, in the future. That's my view. Yasui-san, you talked about the competitive environment. I would like to comment in that regard. I'll try to take over that part of the question. Perhaps for the time being, for the near term, especially, the markets will be divided between the China-centric market versus the U.S.-centric market. When you look at the consolidation that is happening right now, these consolidations are mainly happening outside of China. For those markets outside of China, financially well-disciplined players are the consolidators, especially those companies that have a very robust financial discipline. Of course, the competition is quite fierce, but I don't think this is likely to translate into a margin decline and price decline immediately. As Jalal mentioned, because this is driven by the customer needs, and we are providing solutions based on the request from customers. When that happens, it's not that we are going to hamper each other just based on prices, because the solutions are different from vendor to vendor. I don't think the current consolidation will have an adverse effect financially on the company. It is rather considered to become a tailwind for us. That's all for myself. Thank you. Thank you. Now from Citigroup, Mr. Ishihara, can you ask your question? Please release the mute button and start asking questions. My name is Ishihara from Citigroup. I would like to ask you three questions. First question, from 2016, this is going to be the third largest acquisition. Mr. Shibata, as a company, as a result of this acquisition, you probably see an ideal company. Are you closer to the ideal, or are you going to say that still it's unbalanced, and you need to increase further in certain areas? If there are, what are some of the areas that should be increased? This is my first question. I often receive such a question. Mr. Yasui asked earlier. The competitive environment is going to change. It will never be perfect at a certain point. On the other hand, this is going to be one major step forward. That's for sure, particularly in the area of connectivity. A BLE low-power Wi-Fi can be internally produced, so this is going to be a big step forward. On the other hand, when it comes to connectivity as an example, we have collaborated with outside partners. We've announced them. Cellular-based technology used, narrowband technology and UWBs. There are other technologies that we cannot incorporate inside, such as the connectivity technology. Wi-Fi and low power is very strong in terms of the Dialog, but automotive V2X is going to further expand, and high-power Wi-Fi will be necessary in the near future. If you think of that, these areas that I have talked about would be the areas where we need to further make enhancements. I think I have mentioned this before as well, but the M&A that accompany scale is going to be important, but there is going to be another tuck-in technology focused as small transactions could be done in parallel. I've been looking for such an opportunity. In a certain way, that could be another way of strengthening our technology. For the time being, as a result of this transaction, we have been able to issue equity and borrow money. Therefore, we want to be able to deliver the performance that will satisfy our shareholders. I think that is going to be the responsibility for us at the time being. Thank you. Thank you. My second question is about cross-selling. As revenue increases, you enjoy certain synergies. The synergy as a result of cross-selling will be realized in about four or five years. That was announced. If you look at by different applications, I believe you have different timelines by applications. What are some of the areas that you can realize earlier, and what are areas that will be realized at a later date? This is going to be my second question. I think you're right in saying that, for example, when it comes to automotive, it does take time, no matter what you do. If it's four or five years, it will still be a small amount. In compared to that, our IoT, some include handheld ones, but this area has shorter cycles. Therefore, by focusing in this area for the time being, we want to generate synergies. Particularly in this case, in comparison with IDT or in comparison to Intersil, Jalal himself mentioned that our sales force and the channel can be utilized so that they can promote sales. I think it's going to be very effective. These are the areas, without us trying very hard, I think we'll be able to increase revenue very quickly. Thank you very much. This is going to be my third question. Now, going back again to M&A. This time, you're going to issue equity to acquire the company. Are you thinking of the possibility of issuing equity in the future in the short term? In the past, you have been using mainly debts, and I could imagine the size, but if you include equity financing, I think you will be able to target a larger company. Can you elaborate on this point for me, please? This is my third question. Of course, we don't know what's going to happen in the future, but as of today, I'm not thinking about what Mr. Ishihara has asked right now. There are two points. I may be reiterating myself, but today we are going to make an announcement in order to integrate Dialog, so we have to make this a success. I need to focus on this first. When we think about integration, a margin of equals could be possible, but to a certain extent, if we know the size, then we will be able to have a successful integration. From that standpoint, the integration of Dialog is very comfortable to us. Thank you. Okay, thank you. Thank you for your question. We would like to take on the next question, which is from Deutsche Bank. Robert Sanders, please begin your question. Please make sure you are unmuting yourself. Great. Can you hear me? I hope so. Question for Hidetoshi Shibata-san. Why do you want to go back into the smartphone industry when most automotive and industrial semicos are running away from that industry? Do you feel it's not possible to be successful in industrial IoT without being successful as well in consumer IoT? My second question is for Jalal. Were there other bidders above Renesas' offer price that maybe you felt would be too much of a risk from a regulatory point of view, or maybe they were not all-cash bidders? Do those losing bidders have the right to come back with another bid, or have they kind of forsaken their opportunity for now? Thanks a lot. I'd like to answer the first part of the question. We talked about the large customers of Dialog, and it's connected on the other side of the coin with that respect. As Jalal mentioned, the dependency on such customers, those large-scale customers, are likely to come down significantly and sharply over a short period of time. We're in the middle of that process. It's not that we are reentering the smartphone market. It's just that they're centered on the low-power connectivity products owned by Dialog, using those technology that has great affinity with the smartphones. The smartphone is just one part of those products that offer great affinity of the assets owned by Dialog. It's not that we dislike the smartphones, but in the past activities of the company, smartphone business had so much volatility, so we were not so aggressive in that area so far. Given Dialog's business and their relationship with the customers and the percentage to sales, we believe it's quite positive to have a smartphone's exposure to some extent, remaining to some extent. Also in a practical evaluation, it's not all black and white. It's about we have to consider in a continuity what would be more positive, and I think this decision is more positive in that regard. The second question is from Jalal. Can you begin? Yes. Hi, Robert. Thank you for the question. I think that as I explained, the range of considerations that our board considered for looking at offers, and I think what I will say is that Renesas' all-cash offer followed extended discussion between Dialog and Renesas, as well as discussions with a number of other potentially interested parties. Of course, the board is mindful of its fiduciary duties in recommending this offer. In second part of your question is, as you know, we are a U.K.-based company, and the acquisition can be done under UK Takeover Code, and that code has scope for future bids post any announcement. That's always a possibility, and if something like that should transpire, the board has to consider any incoming approaches. That's my comment. Thank you. Next. From SMBC Nikko Securities, Mr. Watanabe, please. Please lift the mute button and please ask questions. My name is Watanabe from SMBC Nikko Securities. I would like to ask you three brief questions. With respect to automotive CMIC, with R-Car, you are collaborating, therefore, I believe that there is considerable visibility in this business. If we currently look at, I don't know what the current size is with Dialog. If you think of the current business in the future, it's going to be a new cross-sell, but it is a current platform cross-sell. If you can tell me about what's going to happen in three years, if you could disclose this. It's going to be difficult to give you figures, but I don't think the size is going to be that considerable. Please forgive me with this answer. My second question is about producing Dialog products in Renesas. You're going to have in-house production so that you can reduce costs. Is it possible to do that? Of course, we will not exclude any possibilities to consider. Having said that, if you look at the current situation, our eight-inch fab has high utilization rate. There is some room in the 300 mm fab. The 300 mm fab is going to be used for analog products. There's going to be a considerable volume, or else it's not going to work. We have to take some time to consider that possibility. Thank you. Thank you. This is my last question about the retention of talents. I think it's good that you will be able to enjoy diversity. According to the way we keep Japanese talent, I think it's very difficult, and I think you introduced us already at the time of IDT, but in what way are you going to retain the talented people from Dialog? This is going to be my last question. I may be reiterating myself, talent is a very important element of acquisition of a company. We want to make sure that the talented people will be retained so that they will be motivated and willing to work. We need to have such an environment that we create. From the past, we have been really engaged in this in a company-wide basis. In the past, when we acquired Intersil and IDT, I don't think I should brag, but I think things went on very well. I'm not concerned about this at all. Particularly in this industry, the equity incentives, including the working level engineers, is applied to extensive talent. We already have the incentive that can be used overseas as well, and we want to upgrade them so that it will be much easier to use. The way of work. Japanese companies make decisions very slowly, and some people don't like that. They get fed up. That's not going to be good. I'll be talking about this next month as well, but Renesas already has a culture, and we want to make this a more innovative culture, and we are fully engaged in this. We are not trying to retain people with the financial benefits, but we want to make sure that people really enjoy working for our company and have the environment where people will really like to work. We are working in a full-fledged manner. I think this will be received well by the Dialog employees. Thank you. This is going to be a follow-up question. When it comes to equity incentive, this is an incentive to the Renesas equity? The equity price going up as a whole is going to be working as an incentive to the employees, right? This is from Mr. Maiko from Credit Suisse Securities. Please begin your question after unmuting your microphone. Hello, this is Maiko from Credit Suisse. I have three questions. First, regarding the equity issuance, INCJ is the major shareholder. What is their intention regarding the equity issuance, or what is their reaction? By 2023, they are supposed to sell off 33% of their ownership. In the next one year, you are going to issue approximately 11% of your outstanding shares as new equity issues. What is the reaction of INCJ? I'll go one by one. From INCJ, as you may know very well, we received one board sitting on our board, and one corporate auditor is sent also from INCJ to our auditor board. Including the issuance of equity, we had conducted a very extensive discussion during our board discussion and have decided on this equity issuance as a result of that. I think that will serve as the answer to your question. Okay, got it. The second question, regarding Dialog's situation, the future revenue prospects have been explained, according to which you said that the exposure to the large customers will decline. In relation to that explanation, what is the prospects that you have already for the designing? How likely is that going to materialize? In 2023, the percentage of large customers are coming down to 25%-30%. When that happens, the gross margin, can we expect that to improve from 50%-55%? Jalal, can you answer that question? I would like to ask you to answer that question. Fine. Yeah. This chart shows the percentage of the revenue. I just want to make one point. It doesn't mean the revenue is flat. The expectation is to revenue also to grow, by the way. Just because it is 25%, 30%, it doesn't mean it's 25%, 30% of today revenue. It's 25%, 30% of 2023 revenue, which is much larger than today. This is point one. Point two, of course, the fully custom, fully dedicated solution to any customer, because they're very high volume, typically attracts lower margin than more standardized product that you can sell to broader markets through distribution or to many different customers. Each customer then buys a smaller volume of that product, so therefore, their prices can be much higher. If you bear that in mind, then you can look and if you reduce the concentration of one large or maybe a handful of very large customer with very high volume, typically means that your margin over time, your mix will improve and your margin will improve. What it will be in 2023, I don't want to give a number because that would be unfair to Shibata-san, five years in advance to tie his hands. Certainly, that direction is given for me, that he will be able to achieve much better margin than today. Thank you. Thank you very much. My third question, PMIC, the automotive PMIC, how you roll that out. Of course, you are collaborating with R-Car already. When I look at the Dialog's homepage for MCA PMIC, importance is already explained there in your homepage. Dialog's PMIC technology, especially low power PMIC, I think that's been stressed in your presentations or your explanations. How can they be applied to automotive? Can you cover the whole lineup, or is it limited to only certain number of applications? Can you comment on that one? I would like to answer that question. Jalal, if you want to jump in, please do so later. Okay? Technology-wise, there's no problem. We can apply these technologies to automotive solutions. For R-Car PMIC, a reference board is already designed. Also, if I may add one more comment. On top of that, functional safety, if I talk about that one, when it comes to the MCU for the powertrain core, it has to be fail-safe. The circuits will have to become redundant and so that even if one fails, the other one will take over. In order to ensure functional safety, there are some procedure requirements that we have to fulfill. If we have been able to satisfy that today, it's not the case yet. This is an area where Renesas has expertise. Just like in the case of Intersil, so long as we have the core management core technology, we can utilize our own resources so that who saw add-on can be applied, and thereby we shall be able to make a very extensive product that can be applied broadly to automotive solutions. Of course, if you look at the track record so far, Intersil power management, at last, are now combined with our SOCs and the DIs, the Design-ins, are now making progress. Of course, for one thing, automotive takes times in general. The other thing is that we now need to have a lot of human resources for development. Intersil's power management capability has been strong, of course, especially when you look at the data centers, the power management requirements are so strong, it's just about a constraint of resources. We have to fight for the resources. When Dialog is added, we can immediately expand the talent pool for power management. When the pool is larger, the optimization is easier done. In terms of the resource allocation, I think we'll be able to have a much more efficient resource allocation, and that will accelerate our initiatives. Jalal, if you want to add any comments, please do so now. Okay, I guess that I will answer the question on the PMIC, but I'd like to answer it also a little bit broader with other technologies, if I may. On the PMIC, we have world-class PMIC library of IP blocks. That's when we bring that into Renesas to add to what Renesas already has. It creates really a formidable platform. You can design PMIC for any processes, because we've done so many PMICs for different application processes from many companies up to now. Of course, this then will be focused on the platforms of Renesas, and there are many, many different applications that require different MCUs, MPUs, and different type of power capability. We can address, for example, in the ADAS system, or we can, maybe in the future, address self-driving machines, et cetera. There's a lot of different opportunities that will come over time that the power management can be applied to. I just wanted to also mention, in addition to the power PMIC, we already have also products qualified for automotive in our CMICs, for example. These are configurable mixed signal products that come all over the automotive designs. We've recently won some nice brand names in that area. Of course, things like low energy Bluetooth, BLE, can be used, and we have already customers for tire pressure monitors using BLE. We have customers for key fob systems, new advanced key fob systems using BLE. The LED drivers, I think Shibata-san mentioned in his remarks. Also, we already have engagements for headlamp development for cars using our complex matrix drivers of LED drivers. All of these will bring in new technologies which are complementary to very, very strong platform that Renesas already established in automotive. Our issue in growth in this area has been that we are not a famous automotive supplier. We are not big, and we have a piece solution. I think when you put those critical pieces into a platform like Renesas, with the reputation, with the sales force, with the capability of the MPUs that Renesas has, it really become a very, very convincing solution for customers to adopt. I have no doubts that we can expand in this area also. Thank you very much. We look forward to your future developments. In the interest of time, we are going to have our last person ask a question from Asahi Shimbun. Mr. Suzuki, can you ask this question? Please lift the mute button and ask your question. Thank you very much. From Asahi Shimbun. My name is Takashi. Can you hear me? Yes, I can hear you. Thank you. I would like to ask you three questions. I'm going to ask you one question at a time. The acquisition of Intersil, they have a PMIC, which is their strength, and this time, your company has a strength in PMIC. Is this really an indispensable technology? I believe this is the reason why Mr. Shibata decided to acquire. In 5G for smartphone, you talked about this in a previous meetings. Can you elaborate on this point for me, please? In 2050, without waiting for carbon neutral, the power consumption is really explosively growing, so we want to make sure that the power will be used efficiently. In addition to not using fossil fuel, this is another important point. Highly efficient power management is important, and low power power management is also important. I think for a very long time to come, these are going to further expand in the future. Sorry for talking so long, but this is an important element for sure. Thank you. My second question, in terms of IoT, there are various products in relation to 5G. What are some of the products that you're going to be focusing on? I'd like to ask this question to Mr. Shibata. The definition of IoT is different by each individual. As was mentioned by Jalal, in terms of our new future, they will be related to wearable products and light healthcare products. This will be major ones. Particularly in our case, air conditioner and white electrical equipment, so we used to have very high share, but there was a lack of connectivity. As you know, the white electrical appliances are now connected to the internet, and by adding the connectivity This is irrespective of 5G, but in the area of IoT, the solution that we can provide is going to be even more attractive, and they will continue to increase. In the future, in the industrial area, particularly 5G becomes local 5G, and it is going to be used as a different current cellular mode and our PLC connectivity that we have. Time-sensitive- Time-Sensitive Networking technology. In addition to that, IO-Link can be added. By doing so, we will be able to provide industry IoT technology that will be needed in the future. This is going to be the market that is going to realize major growth. Thank you very much. This is going to be my third question. I'd like to ask this question to Mr. Shibata. You're going to issue new equities as part of your financing. The equity price is on a rising trend, including your company's share price. Did you anticipate that the equity price increase would be a tailwind? When you think of M&A in the future, do you intend to think of further M&As in the future? Irrespective of Dialog, we are maintaining and thinking about the acquisition candidates, about 10 of them. With respect to Dialog, from many years ago, they were already in the list of candidates. Equity price is one of the reasons. The change in the Dialog business structure and also the change of our business structure of our company, many things are combined to take this timing to announce this acquisition. The list of candidates for M&A is being maintained by us. As I mentioned earlier, at least for the time being, I have to really focus on integrating Dialog. Quite a sizable M&A is not in our mind for now. Technology tuck-in with small M&A is possible, however, to try to integrate with a major company, I do not intend to do that in the near future. Thank you. All right. We would now like to finish the Q&A session at this juncture. Finally, our CEO, Shibata, will say a few words before closing the meeting. Everyone, thank you very much for your attendance, despite the short notice. We thank you very much for your participation. A special thanks goes to Jalal. Thank you very much for attending today's press conference. As we said, Dialog and us have a very natural, mutually supplementary relationship to each other. I think the combination is very natural between us, so we would like to deliver results more than ever through this combination. That's the reason why I set up this meeting. After this, the results will speak for itself. Of course, you have to give us some time, but we would like to update you on the progress from time to time. With this, we would like to finish today's presentation. Thank you very much for your participation. That's it for today. With this, we would like to finish today's announcement. The materials and the recorded video will be made available on the investor relations section of our homepage. Thank you very much for your time today.