[Foreign language] Thank you all for taking the precious time to attend Renesas Electronics' 2024 first quarter earnings call. We thank you very much indeed. [Foreign language] Simultaneous interpretation services available. Please select the translation icon at the bottom of the screen and select the language of your choice. [Foreign language] Now, speakers, you are now requested to turn your video on. [Foreign language] Today's session is attended by our President and CEO, Mr. Hidetoshi Shibata, and our Executive Officer and CFO, Mr. Shuhei Shinkai, and some other staff of the company. First, Mr. Shibata will provide you with a few words of greetings, and then Mr. Shinkai will provide you with an explanation of the first quarter results, followed by a Q&A session. We expect to finish the entire session in about 60 minutes. The material to be used for today's session is the one that is posted on the IR site of our homepage. Now, Mr. Shibata, please turn the microphone on, and the floor is yours. Good morning, everyone. This is Shibata here. [Foreign language] Since the last several times, we again think that this is an earnings call that we don't have major news to share with you. But triggered by the internal organization change this time around, we have slightly changed the classification of segmentation, segment reporting, and this will be explained by Shinkai-san later. But still, that is not a major change. The Altium and Transphorm acquisition processes, so far we are making good progress, and nothing unexpected has really happened. [Foreign language] As for the first quarter results. Well, the last time we mentioned that the first or second quarter we will likely hit the bottom, according to what I recall, and that view remains unchanged as I speak today. The automotives. [Foreign language] It's not showing a very robust growth, according to our outlook, but steadily. We expect a full-year growth for this segment, a steadfast growth. And although this is not a major business in our company, but the AI and DDR5 transition, that is a tailwind for us, and data center and infrastructure businesses has been achieving a very strong growth, and we believe this will continue into the full year. For industrial, and again, mobile, which is not so large again, but I think the sluggishness of the market will continue for some time now, especially Japan customers, the inventory consumption will take some time, I believe, so I think they will need some time to eliminate the inventories. Therefore, when you look at the overall picture, the first quarter hitting a bottom, I think that remains unchanged, but when you look at the details, as I mentioned earlier, depending on the segment, there are segments where gradual growth is expected and the strong growth is expected, and sluggishness will remain in some other sectors. That's the current outlook that I have in my mind. Now I'd like to hand the microphone to Mr. Shinkai, our CFO, so that he can provide you with more details. Shinkai-san, the floor is yours. Thank you. This is Shinkai CFO. I would like to talk about the earnings results for the first quarter of fiscal 2024. I would like to use the material for my presentation, and the disclaimer on page 3. If you look at the very bottom there, as was mentioned by Mr. Shibata, from the first quarter onwards, we have changed the calculation method of the reporting segments to align with the change of the organization, change that took effect this first quarter. So previously we were calculating based on the products, but this time around we have decided to change this based on the actual customer and the actual application, so the revenues are calculated in that way. To give you more details, for example, if it's an automotive product. [Foreign language] If it's defined to be an automotive product, so no matter who the customer is and the actual application is, that will be recorded previously as an automotive product. However, going forward, we will actually base it on the actual customer and the actual application. If it's for automotive, that will be accounted for as automotive, but if it's used for industrial purposes, that will be accounted for as industrial. For the segment information for December 2023, we have reclassified them again and disclosed this material based on the new calculation method to align with the new policy. Previously we have mentioned that the ERP integration, that was actually scheduled to go live in the first phase, was expected to go live in May of 2024. However, we have decided to postpone this to 2025 or beyond. In order to ensure the quality of our product data and the consistency of that, we have decided to spend longer time for preparations by expanding the scope of system integration. Also because this is a new year, we have just slightly changed the sequence or the layout of the presentation slides. Now the next page, please. The overview, the snapshot of the results. The first quarter, if you look at the dark blue columns in the middle, the revenue JPY 351.8 billion, gross margin 56.7%, operating profit was JPY 113.5 billion, OP margin 32.3%, profit attributable to the owners or parent JPY 105.9 billion, EBITDA JPY 133.8 billion, and foreign exchange 140 yen to the dollar and 159 yen to the euro. Compared against the forecast, I would like to explain this in the following slide. First of all, regarding this is the company totals. Numbers are provided in the upper right. Revenue came in 1% higher compared to the median forecast number, but this was mainly due to the foreign exchange impact. For gross margin, the currency impact was almost flat. Product mix deteriorated slightly. However, the utilization improved and also expenses came down. Because there was no write-off of inventories, therefore that was the reason we were able to achieve positive results. For the product mix, relatively speaking, the low gross margin power product increased, and that was the major reason behind the deterioration of product mix. Utilization. I'll come back to this topic later, but compared to initial assumption, the utilization came in slightly higher than expectations. Operating profit margin, because of the decrease in expenses, a 2.3% increase compared to forecast. On a QoQ level at the bottom right, revenue was down by 2.8%, and if you exclude the impact of foreign exchange, down 2.7%. Gross margin, slightly positive. However, automotive increased and infrastructure IoT reduced, and therefore there was a significant deterioration of product mix. However, utilization increased and also the expenses for discard reduced, and therefore that's the reason why the gross margin improved. For the operating profit margin, because of the decline in operating expenses, we were able to achieve an increase. By segment, if you look at the left-hand table, automotives and the industrial IoT, if you look at all these columns there, if I just add one or two comments here, the gross margin, automotive basically remained flat. For industrial infrastructure and IoT, basically because of the improvement of cost, because we didn't have to write down the inventory, there was a significant improvement in OP, gross margin. For OP margin, automotive, especially because of the increase of R&D on a QoQ, the margin deteriorated. The next page, please. For 2023, segment revenues, which have been shown here, have been retroactively revised according to the new calculation method. Overall, in the first half, on year-on-year, there is a decline 2.2% and on Q 2.8% decline in overall sales revenue excluding forex impact revenue. There's a drop of 8.2% year-on-year and a drop of 2.7% quarter-on-quarter, and the breakdown is as indicated here. Excluding forex impact, there is quite a gap, so I'd like to comment on this, and automotive is +4% range and also IoT -18%, top of 18%. Going on to the next page. Here we are looking at the trend by respective financial indicator for reference and to the bottom right-hand corner in terms of the cash flow. First quarter, there is a decline. Corporate income tax as well as bonus payment have been incurred in first quarter. There has been a decline. Against previous year due to premium payments, there appears to be somewhat of a decline in premium payments. Thereafter, there are no extraordinary developments, and therefore we can expect to see a recovery. As far as inventory is concerned from this time around, we have decided to display both in-house inventory and sales channel inventory on a single side. For the sake of visual representation of inventory management, we have been presenting in-house and sales channel inventory separately. However, we believe that we have been able to achieve a certain level of success in downcycle inventory management, and therefore we have demonstrated ability to manage both inventories. Hence, in light of the situation, to ensure simplicity, we have decided to supplement by comments on segment trades. And Q&Q and change factors and future outlook is indicated on the right-hand side of this page. Now, when we look at the days of inventory, we are seeing QQ increase to 101 days. This is due to the enhancement of die bank, and also for the foundries, there have been proactive purchase orders, and therefore work in progress has increased. Thereafter, die bank accumulation is expected, and also in our foundries, we expect to see increase in work in progress. Also in WOI, channel inventory in QQ, there is an increase overall, more than 10 weeks of WOI, and as expected, increase in automotive and slightly up for industrial infrastructure IoT. Second quarter onwards, we expect to see a continued rise in sales channel inventory for automotive. However, for IoT, we plan on seeing somewhat of a decline. Moving on, this is in reference to utilization rate and CapEx on the same page. To the left, utilization due to the wafer, there are trends in front-end utilization rate on wafer input basis. First quarter, the wafer input was just under 60%. The expectation early was 59%, so it was somewhat higher than expected. Fourth quarter last year, we have bottomed out. As for the 12-inch, for the first quarter, the 12-inch utilization has increased and Naka plant 40 nm MCUs production has increased. There has also been die bank production increase as well, and these have been the contributing factors to the increase. Then second quarter, we are expected to see somewhat of an increase, and likewise, the die bank production is a contributing factor. Third quarter, there's a summer holiday that will come in where we expect a shortfall. In order to offset this, we are expected to see an increase in production in second quarter, and therefore that will be the explanation. To the right, this is the CapEx. In the first quarter, the decision to invest 3.9% of revenue has been made. Second quarter, R&D-related investment is expected a single digit, midway into single digit vis-à-vis revenue. Next page, this is the second quarter expectation. Let's look at the dark blue at the center. We are looking at the median in revenue, JPY 355 billion year-on-year, down 3.7% and up 0.9% Q&Q excluding forex impact. We are looking at the forex exchange as indicated here. In terms of the gross margin, as we can see on the right, 3.7% year-on-year decline. Further to the right, QoQ, 0.9% decline and accepting forex stage, 8.6% decline and 4.9% increase. Automotive is up and IoT somewhat of a decline is what we're expecting. In terms of gross margin, there is a deterioration due to product mix and also increased manufacturing costs, and therefore 1.2% decline on Q basis. In terms of operating margin, because of R&D, QoQ increase is expected. Hence, in operating margin, QoQ, 1.8% decline is expected. Let's move on to the appendix. Please turn to page 18. As I've indicated, we have changed the calculation method for the segments. To the left, we are looking at the old and new classification, and this will display the relationship. The thick line indicates the major change up until this point in time for automotive boarded power products and also MCU products. Recategorizing by destination, some have been shifted to industrial. Also, what has been looked at including in IoT, the smart home have been recategorized as a smart appliance under industrial. These are some of the changes to take note of. Overall, in automotive and also IoT, the structure has not changed much. However, as far as automotive is concerned, 2.3% is declined and shifted over to IIoT. And that is our expectations in terms of classification. To the right, we are looking at the revision made by a product. Power management IC, which used to belong to the analog category, has now been reorganized as it is generally observed as power, and therefore it has been reorganized into power. And therefore, in the new categorization, where it reads power, the power, semiconductors, discrete, and power management products will be reclassified into power management products. And moving on, this is a new segment. And here we are looking at the portfolio, and this is how it will appear for your reference. And moving on. Here are some of the highlights. Acquisition of Altium and also OSAT Joint Venture in India has been established. Also, Kofu Plant have resumed operations. These are some of the recent developments. I would like to conclude my presentation here. If you have any questions, please press the raise hand button that appears on the screen. From those who raised their hand, we would like to call out your name and if you have affiliation. If you are nominated, you will be able to speak. If you are nominated, please unmute by yourself and state your question. In the interest of time, we would like to limit the number of questions to two questions per one person. All right. We would like to move on to the Q&A from here. First of all, Goldman Sachs Takayama, please begin your question. Please unmute yourself and make your statement. Thank you very much. I have two questions. You said that it will be July, September period that you will be able to see a steadfast growth in the market, and the April, June period will be quiet, you said. And that, I think, remains unchanged as we speak today. After three months, what is your confidence about the recovery of the market in the July, September period? Do you think it is? Do you see any weaknesses or strengths depending on the segment and/or application of products? And because I think depending on that, I think the April to June performance will also be affected. So if you could just share with us your view on that, that would be appreciated. Well, the last time I mentioned that the second half, we have our outlook for the second half, but we're not really sure about that. That's what I meant the last time. But according to what we see today, the second quarter into the third quarter, I think we can only expect a slight increase. Nothing particularly strong, nothing particularly bad either. That is how we look at the market right now. It is possible to dissect by the segments, but the elimination of inventory, rather, according to how we see it, especially amongst the Japanese customers, and particularly they're not really big customers, I think those are the centerpiece of these efforts of eliminating the inventory. So previously, compared to the large companies, I think these customers struggled in acquiring inventory. So I think they are now delayed in the progress, and therefore I think they are currently working to eliminate the inventories. And I think the end demand did not increase as strongly as expected, and I think that is the reason why they are taking longer than expected time to eliminate the inventory. If I try to divide by application, industrial and some tier one automotive, this trend is quite conspicuous. But that may not be corresponding to the end-user demand at the very end because there's only so much we can see. But if I try to divide by segment, some portion of automotive and the industrial segment is conspicuous when it comes to inventory elimination and also the mass market too. So it's not really a segment view, but rather I think these are now happening rather in Japan, I think. That's how we look at it. All right. So it might be difficult to generalize by segment, but when it comes to data center infrastructure, I think the growth might be stronger today compared to three months ago. Smartphones, I think, had some seasonality as well. So is that the area that is currently struggling? Well, the driver of growth overall would be automotive and, of course, as you mentioned, AI-related and also DDR transition for data centers especially. I think these will be the drivers for the growth in the future. Thank you very much for that. My second question, this is a frequently asked question, so I'm sure you might be able to provide some answers to this, but the AI-related market size, I think previously AI was very limited, if any, and was not really significant as a size. However, going forward towards the end of this fiscal year or into the next fiscal year, the industry itself, this industry sector, I think is rapidly growing. So I think this could become a meaningful size of business for you. So if you could just share with us the size of that business in your company and maybe which product for AI, if you could give us a size indication of that around the end of the year this year. Well, I do understand where your question is coming from, but AI, and as you mentioned, how to divide, this depends on how you define AI in the first place. So we don't want to talk about inflated numbers. And the real hard, hardcore AI in the sense of our company, GPU-related power, I think that's the real AI, I think. So its contribution to total sales of the company would be only single digit. And the lower single digits, lower to mid-single digit, I think that is their contribution to our total company sales in the recent months. So I don't think this will change significantly. So as we move towards the end of the year, there might be a 1 percentage point or 2 percentage point increase, but then will it account for 10% of the company's total sales? No, that is not our expectation. We don't expect the size to grow to that level. And although this is not included in our outlook, and maybe this might be some optimistic view included in this, but the domino effect from AI, if you will. So by utilizing AI, there might be some ripple effects from DDR4 to DDR5. This transition is not really GPU. So this is not accounted for directly as AI, but the CPU will have to enhance. And because of these secondary effects, the DDR transition may accelerate. So that could be the potential case. So if that is the case, then as we've been talking from before, with the transition to DDR5, the content will increase significantly compared to DDR4. So that growth is something that we would like to expect in the future, but it's too early for me to comment any further. So that is not the reason why we have not included this in the outlook. Well, thank you very much for your comment. [Foreign language] [Foreign language] BofA securities. My name is Hirakawa. This is the first BofA securities. My name is Hirakawa. This is the first BofA securities. My name is Hirakawa. This is the first question. I know it's not a hot topic. It might diverge from the topic. Regarding Infineon 2023 onboard MCU sales, 44% growth has been registered and 23% share has been clinched. Now, when we look at Infineon and competing with you, do you have the notion that they have competed with you and have the upper hand? And how do you view your share of the MCU market? And that's my first question. In the capital market day come next month, I had been intended to speak over that topic, and therefore I've refrained from offering a comment today. However, we were also taken aback as we viewed the numbers. 6% share declined at our company. I'm talking about automotive applications within MCU. It's about 200 basis points in terms of dropping shares according to Gartner. And what is driving this? This is driven by automotive. 6% of a share decline is what we are seeing according to Gartner. And basically, half of this is attributed to Forex. And also, as we mentioned from early next year, last year, the NCNR or channel inventory perspective is also to account for this. And half is basically the apparent numbers, but then half of which reflects the reality, the reality being our decline in the share, market share. And that is how we look at this. As you have pointed out, in the compute in automotive from design into the actual numbers materializing, it takes quite some time, about five years almost. So the question arises as to, of course, what is the driver 2018, 2019, thereabouts? The seeds have been laid. And back then, the number, of course, we do not expect this with confidence. And we will look at the specification of our products. As a result, vis-à-vis the mainstream in the market, there were some diversions, and that is how we reflected on this. The transition to 4 nano and the transition to 40 nano, excuse me, we were taking the lead in the market. With this happening, we were the early mover, or the early mover advantage has been gained. This has pushed up our performance. However, developments thereafter have demanded different specifications, which Infineon has been able to address. That has been the major reason attributed to this. Also internally, 2018, 2019, here within our company, within the organization, the leadership have also been asked to move, and that has been responsible for some of the losses. In terms of analysis and retrospect, are we going to be able to bridge a gap, 3% gap over a single year? That will not be likely, and therefore it will consume several years down the road. And in order to provide you with some sense of security thereafter in terms of product specification, we have been able to take steps to expand the specification so that we are able to address the features that the market currently demands. And we believe that we are on top of that. However, when we look at the design and the result, and this will only materialize in five years down the road, ultimately in terms of revenue and also market share, until we are able to display the results, there is going to be a time lag. However, as of now, what I can say, and of course, we can only dwell on the results, and hence we will need to only accept the results. When we look at the lineup, we are not pessimistic about the future. Thank you very much. This is a follow-up question. We talked about some changes in the market trend, and those that are already on the mainstream. If you could just offer some comments about what is in the mainstream? Back then, we do not expect that there will be such a speedy acceleration to EV. And therefore, when we look at the early products, there was an emphasis on the environment. That is to say, to set us a high compute needs for the gasoline-powered vehicles. And also, we expected that zoning will also pick up pace. And therefore, we believe that MCUs will be used for cross-functional purposes. And therefore, various features have been integrated to provide high-end calculation in our product design. However, there has not been such an investment in powertrain, and there has been acceleration of transition to EVs. In terms of zone computing, unlike what we have expected, the heavy use of high compute has not made way in the market. If I may refer to as discrete, somewhat different, but the market has made a demand towards more diverse products, not just integrating the discrete. Hence, we have caught this information early on. Therefore, we introduced ARM Core so that there's an integrated MCU. Plus, on top of that, MCU for individual features and also using ARM to realize scalable design. This fared quite well. When we look at the current situation, we have been able to win traction. Therefore, we are not pessimistic about the future. However, as of now, we are quite surprised with a drop in shares as the results have informed us in the year ahead. And also, we will look at the Gartner research results. And if we understand that there needs to be somewhat of a change in our perspective, we will ultimately do so. Thank you very much. Now, we'd like to move on to the next question, which will be from Yasui-san of UBS Securities. Please begin yourself. Unmute yourself and make your statement. Thank you very much. This is Yasui from UBS. I also have two questions. The first is about the internal production for China customers, meaning that China customers are prioritizing Chinese vendors. I think that is a trend that we have been witnessing for the last 12 months or so. As far as MCU is concerned, I think, have you seen any moves like that in China? My second question, in the new segmentation, what about the percentage of China? I think it's about 25% to your total business. But if you could give us a higher visibility on China's contribution when it comes to major smartphones, if it's produced in China, are they accounted for as China? Because they could have been they could be categorized as America, but. [Foreign language]Because I just wanted to ask this because I would like to see if there's any possibility of the sourcing changing to China in the future. Right. That is a spot-on question, actually. The sales towards China, China sale, is the ship-to number. So of course, this could change over quarter by quarter, but 20%-30% is the local design in. Therefore, 25 multiplied by 25, 6% or so is their contribution to the total company revenue. That is the real local sales in China. Of course, that contribution does not really change between automotive and IIoT. For local sourcing in China, at this point of time, the embedded compute has not seen that trend as much as we had anticipated in the past. This is predominantly happening in the power discrete space. We'll talk about this in the capital market day next month and provide you with our updated view, especially the IGBT silicon. Our current pipeline and our current view is that compared to 1-2 years ago, it has changed significantly compared to 1 or 2 years ago. China, I still believe the situation will remain tough, but instead, we have been able to gain orders in Europe and other markets. So I think this China landscape will change in the future. MCUs, for example, again, at the risk of repeating myself, the initial feature, the original feature. [Foreign language] I'm not sure, but maybe we still have an advantage for the next two to three years in this space. And especially the stickiness of the ecosystem, mainly driven by software, is still the case. So it will be realistically very difficult to switch immediately. So towards 2030, which we've been talking about since two years ago, the aspiration for 2030, digitalization, I think those will be a very important milestone. That view remains intact. So by then, we would like to achieve differentiation by various elements, not only the hardware specification. If we are able to make that kind of transition, I think that will be a very good rephrase for us. So that view remains unchanged. Thank you very much for that. Thank you. [Foreign language] Thank you very much. [Foreign language] For Nikkei BP, Mr. Kojima, please present your question. Please kindly unmute yourself. [Foreign language] Thank you very much for Nikkei BP. My name is Kojima. [Foreign language] This is a very general question. I have two. The first of which is the following: when we look at the media coverage, EV to hybrid, there seems to be somewhat of a shift in that direction. And looking at it from your perspective, do you also observe the same? And if that is the situation, will that impact your revenue? [Foreign language] Or performance? And that is the first question. In terms of the direction, I would say yes to both. Such a shift appears to be happening, and that will have a positive implication on our performance. However, as I spoke earlier, when we look at the hybrids, in terms of the direction, that will be a positive for Japanese clients. Here in Japan domestic, this will be like tier one customers, not so large in terms of scale. They are struggling with elimination of their inventory, and hence there's a transient effect. Also there is, of course, a positive through the shift over to hybrids. That's a tailwind. The second question is regarding the chiplets, heterogeneous integration. For now, in your product lineup, the heterogeneous integration, chiplet aggregate products are not in your portfolio yet. However, is this likely in the days ahead? And if so, when will that happen? I would like to seek your comments. As I have spoken in the past, the situation remains unchanged. We are working on this. And not just attributed to, of course, our circumstances, but also the circumstances of the users. And hence it's very difficult to be exact as to when that is going to happen. But most likely 2027, that will be quite likely the timing by which we will be able to roll over into the market, and preparations are underway. Will this be on board when you're talking about 2027? Yes. Thank you very much. [Foreign language] Thank you. Moving on to the next questioner. SMBC Nikko Securities, Hanaya-san, please begin. Unmute and begin your statement. Hello. This is Hanaya from Nikko Securities. Can you hear me? Yes, I hear you. All right. So I also have two questions. You talked about the EV coming back to the hybrid. This trend is already happening. So can you talk about the business opportunity and its impact, especially in the area of power products? Like various companies and various countries, they are making a lot of investments for power-related products. According to my understanding, you were rather late in accelerating your investment in this space. So because of that, because of this, there's a shift back to hybrid. Can we consider that you were able to catch up because of this going back to the hybrid? And also for SiC, what is the demand and supply balance in the market? So can you also share your view on that at this current point? Will that be advantageous for us to catch up? I don't really think that is the case necessarily. So we're not really so optimistic about that in that context. However, as far as power is concerned, the silicon, SiC, to gallium nitride, we have a strategy to have a full lineup strategy, which remains unchanged. This relates to the timing and the size of investment, but how should I put it? [Foreign language] We're not in a position to address power in an all-in structure, especially when it comes to automotive. This relates mainly to automotive, but I think data centers will in the future. For those solutions, the indispensable piece will be this product. So that's how we view it. So to a certain extent, we would like to achieve growth and expand this business. But compared against our competitors who are really focused on power, that is not our ambition. We don't have that policy. The market correction in that regard could be considered, well, if I talk about too optimistic view, I will have to pay back later. So to be honest with you, we are relieved with this new recent trend. We thought that it was good for us that we didn't expand our capacity that significantly. So in terms of strategy, our initial view remains unchanged here again. So for us, we made a necessary investment for us, which was definitely needed. And if this is going to be needed in the partner, even if the expenses are high, we might have to align with external partners. So rather than trying to make profit only by power, we would like to also address power and strengthen our position with a combination of compute. So in the short term, therefore, tailwind may be too strong an expression, but maybe I should say the demand building up significantly, capacity building up significantly, that is not the case really in the market right now, which gives us a relief. Thank you. Thank you. My second question. The price negotiation with the foundries, once a year, I believe you have negotiations with them. So I think you have already completed negotiation for this year. Usually, I think it should be on the declining trend, and I think that will be contributing to your margin. But compared to usual years, have you seen any major changes? Or if you give us some color on that, that would be appreciated. Well, maybe Shinkai-san could add some words later. But for the short term, the situation remains very tough. Unfortunately, the price concessions that we received were not that significant. But over the mid to long term, if we talk about the price base needed for design-ins, the last several years of initiatives that we have implemented have turned out to be effective. So we are receiving a lot of expectations from the foundries. So I think they have been providing us with a certain level of good prices. But if you ask me if the price reduction was steep enough, that's not really the case for the front end. Back end, we have seen a good amount of price adjustment, but that's not really the case for the front end. Shinkai-san, do you have anything to add? Yes. The situation in the middle of COVID crisis, that situation is no longer the case anymore. Then did we return to the pre-COVID era? That's not necessarily the case. So that's the only comment that I would like to add. Thank you. [Foreign language]Thank you very much. Mr. Mukai, please. Finally, unmute yourself and present your question. [Foreign language]Thank you very much for designating me. My name is Mukai from Nikkei. There are two questions. So first, is it reference the trends in chip prices for onboard and IIoT? I'd like to inquire about the trends in price reductions that have been seen in the past quarter between, that is to say, first quarter, January to March quarter, if you could fill us in. It's very difficult to say. How should I put it? To say the least, from the investor's perspective, the situation is not so worrisome, as I've mentioned earlier. The wafer cost from the foundry side has not declined dramatically. As far as raw materials are concerned, the price has not dropped either. That has been, of course, accepted by many of our clients. Of course, not with enthusiasm, but has been accepted. Of course, in some areas, of course, demand has declined and adjustments have been made on the price side. ASP, as we look at it, has not been declining. ASP has not been declining so dramatically. In terms of pricing conditions, after the supply crunch during the COVID days, there has been a swing, which has been made from right to left. Now it's returning to normal. However, not to the extent it's been restored to the past. The market has hit bottom, as you mentioned. However, in terms of gross margin, it's topping 30%, more beyond expectations. And if you could let us know how you feel about this. And also, in the earlier first quarter, there has been a decline. And I would like to inquire as to what steps have been taken. I'm sure that Mr. Shuhei Shinkai will respond for the most part. But in reference to your first part of the question, on a Q&Q basis, of course, revenue has dropped. Therefore, this is nothing that we can really take pride in. However, to say the least, in the early days of COVID, when the numbers surged and when we spoke with investors, it has been pointed out that Renesas, the structure has changed. You're in good shape right now. However, what is going to happen at the down cycle? And that is a question we have received. And in response, we have mentioned that we have been able to somewhat win a passing score and with, of course, a measure of positive expectations. And if you'd like to add, and as for the first quarter, I believe that was your question, and vis-à-vis the fourth quarter last year, there is nothing to point out that is out of the ordinary. But generally speaking, as you can see in the analogy in the fourth quarter, R&D and SG&A, there have been expenses that piled up in the first quarter. And this is attributed to seasonality. [Foreign language] Thank you very much. [Foreign language] Now, since we are running out of time, this will be the last question that we are going to take during this session. NHK, Hishigata-san, please. [Foreign language] Please unmute yourself and begin your statement. This is Hishigata from NHK. Well, you've been talking about for some time that the slackening of the EV market is now happening around the world. So what is your view towards the electrification of the automotive market in the future? And how will that affect your power strategy? If you could comment on that once again, that would be appreciated. Electrification, I believe, will make progress by spending an appropriate amount of time. I don't want to preach on the Buddha, but everything converted into electricity, I think, is easier for manufacturing and, of course, easier for operating after production is finished. So I think electrification will definitely make progress in the future. However, this may take time. So I think it is necessary to spend an appropriate amount of time with a practical view. I think that is all that I can comment on right now. Thank you. Thank you. Thank you very much for answering. Thank you. [Foreign language] Any comments from Hidetoshi Shibata? The earnings result is not newsworthy. However, next month comes the Capital Day. We may be missing in terms of newsworthiness. However, as for the content that we have been communicating, there are not been major changes. However, we have upgraded the structure as well as the leadership. Hence, for those of you who will be attending, I do hope that you will speak with the members during the Q&A session with the members who are responsible for our business. This will allow you to hear more about what's not on the text, about our confidence level. I do hope that that will be such an opportunity for you. Therefore, if you do have time and if you're interested, I do hope that you will join. Thank you very much for having joined us today in spite of a very busy schedule. With this, we would like to conclude the Renesas Electronics Corporation, the 2024 first quarter earnings call. Thank you very much for having joined us on this occasion.