Good afternoon, ladies and gentlemen. Welcome to the conference call today. Our management is Jennifer. Jennifer, please begin your call and I'll be standing by for the question and answer session. Thank you. Hi. This is Paul Ying and Jennifer. Welcome everyone to the first quarter of 2023 Chroma financial release. I think we have already put our material on the website. The first page will be the first quarter condensed consolidated income statement. This is the first quarter Chroma started to using only the consolidated income statement, simply because our consolidated entity, Chroma New Material, that sector has been terminated after the first quarter end of last year. Without this new material, I think there's no need for us to show the parent-only financial statement. Well, from this page, you can see that the first quarter, our net sales amounted at TWD 4.388 billion compared to the last quarter of last year. It's a 28% decrease. Compared to last year first quarter, it's pretty much flat to last year first quarter. Again, the difference is due to the those battery related formation project, which is pretty much a turnkey site. In that part, we didn't deliver any of the sales revenue at the first quarter of this year, nor first quarter of last year. That simply will be concentrated on the fourth quarter of last year. In there, you also can see that consolidated sales of testing equipment business amounted to nearly TWD 4 billion compared to last year fourth quarter. This is a 30% decrease, but again, compared to last year first quarter, it's a 17% growth. For the MAS, it's amounted to TWD 283 million. Compared to last year fourth quarter, it's a 51% growth. Compared to last year first quarter, this is a 28% growth. As to the new material, again, you can see from here the final numbers will be the last year first quarter, TWD 618 million. Without these factors, you can see that our first quarter, for those core business of testing equipment, calculated by somewhere like a 16%, 17% growth compared to last year. As to the gross margin, we have a very good performance for the first quarter simply because we'll skip the low margin of the material business. First quarter of this year, reaching at the TWD 2.6 billion, represent a 61% on the gross margin. Compared to last year fourth quarter, 46%. Amount is a little bit decreased, like 4%. For the percentage-wise, it's a great improve. Compared to on a YoY base, NTD 2.1 billion, it's a 22% growth. If you look at the expense side, OpEx side, first quarter compared to the last quarter and also on a last year first quarter, well, we have a little bit increase but not comparatively growth by the sales revenue growing. In here, we have a very good operating margin, like 27% on a NTD 1.187 billion. Compared to last year fourth quarter, it's a 13% growth. On a YoY base, it's another 42% growth. Down to the net income, it's TWD 963 million, represent a 22% of net income ratio. Compared to last year fourth quarter, it's a 5% growth. Compared to last year first quarter, it's a 12% growth. That gave us somewhere like TWD 2.23 as the EPS. For the balance sheet side, if you look at our balance sheet, it seems that we have a little bit decrease on the cash. Again, we paid out the debt a lot. In here, you can see that Our ROE is 18% and ROA is 11%. And the net debt to equity is zero. I think we're improving that as well. And if you look at the operation page, you also can see our breakdown of our product mix, like the chart. The first quarter, when we said the parent company sales reaching somewhere like TWD 3 billion, it's composed by test and instrument and automatic testing system, which is reaching at TWD 2.33 billion. It's a 26% growth on a Q-over-Q base, and it's a 49% growth on a YoY base. For the semiconductor and photonic testing solutions, again, due to the headwind for those semiconductor industry, first quarter reaching at the TWD 388 million. This is a 28% decrease on a Q-over-Q base and another 56% decrease on a YoY base. For the turn-key, small, but again, it's 11% growth on a Q-over-Q and a 59% decrease on a YoY base. But again, if we look at the... Now, this is for the parent company sales. If we add up for all our overseas operation and subsidiaries sales revenue, it's reaching at the TWD 1 billion for the first quarter. On a Q-over-Q base, this is a 67% decrease and another 70% growth on a YoY base. For that compose the our consolidated test equipment business on TWD 4 billion for the top line. This is represent a 30% decrease on a Q-over-Q base, another 17% growth on a YoY base. That's pretty much the breakdown for the sales product mix. I think for the first quarter, we have a very good performance on the on the growth margin side, and also on the top line. Yeah, I think this is a typical and flat to the last year, first quarter. This is a typical, like, a first quarter kind of, kind of, behavior. All right. Turn to everyone to you, if you have any questions. Thank you. Okay. Sorry, Regina. Before we move on to Q&A, I just want to add a couple points regarding to the product mix. The first one is regarding to EV battery cell projects. In the first quarter, we only deliver very, very minimum, I mean, not very much contribution from the EV battery cell project. Actually, you can see that from the turnkey solution and also the pretty much standard rate from our sales of our overseas operations. Our EV battery cell projects remained the same, and will start to deliver from the second quarter. The guidance will not change. Also move on to second quarter. We think the semiconductor factors probably in the first quarter is sort of will be at lowest levels for this year. We start to see the HPC markets becomes more activated from second quarter. Overall, the semiconductors and the turnkey solution and also testing instrument overall, I think will be better than first quarter. Now we open for Q&A. Thank you, Jennifer. Ladies and gentlemen, we will now open for questions. If you'd like to register for a question, please press star one on your telephone. Thank you. Once again, ladies and gentlemen, that is star one for questions. Our first question comes from Jerry Cai with JP Morgan. Please go ahead. Thank you. Hi, Paul and Jennifer. I thanks for taking my question. Yes. My first question, I think obviously is, will be focusing on the ATS, which had a quite strong performance. I think, correct me if I'm wrong, I think it's the best you ever had. Yeah, that's. Just wondering. We hit a quarterly record height for the testing. Yes. Yes. Yeah, and also you shattered the previous record by a lot. I just wondering, can you give us, first of all? Yes. Can you give us the latest breakdown in terms of end application? What kind of visibility can we have for this particular business for the remainder of this year? That's my first questions. Yeah. Actually, I exempt our sub-sectors under testing instrument ATS. I think the biggest growth driver, first one definitely comes from the EV, okay, related, key components and combined with ESS demand. According to our current order on hand, we think we will have another year of, I mean, a pretty good year from the testing instruments and ATS, and mainly come from this continuous conversion from the EV industries and also increasing demand from the ESS. Okay. Maybe you can also comment a little bit on the competition landscape on this particular part for this ATS, which I believe is somewhat power related most of it. We didn't see the, you know, typical one biggest competitors for this industry. As this is actually is our brand by the factors, and we have been work on this kind of product for like almost 40 years. In spite of the, I mean, the patent numbers, I think we have quite a strength in the, on the development of our power related applications started from the consumer electronic goods and gradually move on to cleantech and EV and ESS lately. We pretty much growth according to market growth and combined, we actually see the picking up from this EV and ESS market. We actually start to prepare these markets like three or four years ahead. That's why we actually have quite a large market share from this, I mean power application. Yeah. Okay. Thank you. Maybe just one, maybe one or two questions about your semiconductor just quick and then I'll get back to the queue. Yeah. Sure. I think another question I have is the for your SLT tester- Mm-hmm. Do you have some idea of what is the percentage of the end market for HPC? Do you have some idea of the SLT, yeah, in applications? Actually, our SLT, we pretty much recover of HPC markets. Okay. Our customers are actually using our tester for all kinds of applications, started from the gaming related, and then gradually move on to sort of the green energy. I think later this five years, mostly related to data center servers and also. Sure. those AI related application. We also start to cover auto related. I see. Recent end demand thrust is the so-called ChatGPT concept. Actually, it's the main driver for our SLT products. Maybe the first quarter is kind of weak, could be the seasonality factors, plus the customers see the low sentiment from the overall semiconductor sectors. However, we do start to see customers sort of moving ahead of a quarter. Initially, they were considered to, you know, start to picking up on the mid of this year, which is the, they believe the second half will be better than first half. I think because right now people would like to plan the market ahead, we start to see those Americans HPC maker become more activated recently. It's possible we'll start moving those equipments from second quarter. I understand. The Chroma ATE system remain weak due to low sentiment from the consumer electronic goods. That's my next question, which is for the low frequency tester, of those things of those nature, what kind of, do you expect a significant decline for that market for this year? Currently, our customers did not cancel the order. They just put the order on hold. Okay. We cannot, you know, refer that as a whole indicator for whole years. As to say, we haven't seen any sign of picking up on the consumer electronic goods related. Okay. Thank you. Thank you. That's very helpful. Then let me get back to the queue. Thank you. Sure. Thank you. Our next question comes from Jeff Owino with Macquarie. Please go ahead, Jeff. Thank you. Great. Yeah. Thank you. first question. SLT, can you talk about your customers? Is it one large customer predominantly, or do you have several customers? We don't particularly highlight certain customers, so I will only say those are top HPC maker from United States. Okay. We actually cover all of them, so we don't need to specifically highlight with certain party. Yeah. Okay. Understood. Mm. For the cell business, obviously you had a very strong year last year and, you know, a weak first quarter, but you said they'll pick up in the second quarter. How about year-on-year for the cell business this year? You know, do you expect to be up, flat, down? You know, any thoughts there? According to our current order on hand, if we compare whole year versus whole year last year, I think pretty much the same. It's similar. Yeah. If you say the order visibility, yeah, we start to taking some order which is already moved on to 2024 and 2025. Yeah. If you say 2023, I think the order number is pretty much similar as the last year. Yeah. If I look at, if you assume kind of cell business is pretty flattish, you seem like your ATS business, you know, looks like it has pretty strong growth this year. I guess semi is the only one that's maybe more questionable about whether it can, you know, be flat this year or what's your thoughts on the semi business for the full-year? Pretty conservative. Yeah. Okay. Yeah. All right. I'll get back to the queue. Yeah. Thank you. Thank you. Thank you. Once again, ladies and gentlemen, if you'd like to register for question, please press star one on your telephone. Thank you. Once again, ladies and gentlemen, that is star one for question. Our next question comes from Jerry Su with Credit Suisse. Please go ahead, Jerry. Thank you. Thanks for taking my question. Hi, Paul and Jennifer. Yeah. follow up on the previous question about the semi outlook. I think previously in the result briefing earlier in February. Yeah. The guidance was semi to be flattish, around that kind of level. Mm-hmm. As you mentioned that you're turning a bit more conservative now, I'm just wondering, is it only because of the low frequency tester or, for the other segments, like photonics or SLT, there has been any changes as well? Thank you. No change. I think we still take the conservative view on the semiconductor sectors. However, I think the loss levels probably will be situated in the first quarter. We think the second half will be better than first half. We also start to see HPC markets sort of moving ahead compared to other semi sectors. Yeah. HPC related remains strong. It's pretty much conclude. Yeah. Okay. Thank you. A follow-up question on the EV battery business. I think in the past few quarters, the company has been providing the quarterly run rate. Although that you mentioned that one is very limited, could you still share with us, you know, the actual revenue for the EV battery? You mean our booking regarding to EV battery cell projects? Yeah. Yeah. We don't provide these numbers. Yeah. However, the overall this year regarding to EV battery cell projects, according to current order on hand, will be similar as of last year. This has remained no change. Because, you know, EV battery cell normally takes a long lead times. If you want to do this kind of quarter-on-quarter comparison, that would be very volatile, so we will not give you this kind of guidance. As I said, in the first quarter, we, you could say we are not really booking any of the EV battery cell projects. The second quarter, that will... If you really want to compare to first quarter, that is quite a big jump. Okay. Got it. I'm afraid we will not give you those numbers. No problem. Can we assume that, you know, the remaining three quarters, two, three, 4Q, we will see a, you know, a linear ramp up or it will be more, you know, for the EV battery project, it will be more a second half loaded? For this kind of a business, it's never presented as a linear list kind of delivery, because as I said, if we give this kind of total revenues numbers, that it actually come with several and multiple projects. Not to talk about actually our projects right now no longer just come from the China. We gradually receive the orders from Southeast Asia. Recently we also grabbed a new order from the Japanese battery cell makers. We also see the picking up the demand from the IRA, which is to build out the capacity in United States, which is rolling forward to, you know, 2024 and 2025. It's very hard for us to give you this kind of patterns. All right. All right. Okay, thank you. Yep. Thank you. Next we have a follow-up question from Jeff Owino with Macquarie. Please go ahead, Jeff. Thank you. Yeah. Hi, Paul and Jennifer. I don't know if it's me, but it seems like your outlook now seems a little more positive for the full-year than it was in February. Is that true or do I might get the wrong impression? We do our best. Well, I guess maybe it's the ATS number was surprisingly strong in first quarter. I mean, was that a surprise to you or is that pretty much in line with what you expected? Yeah, pretty much surprised. Okay. You, but like you said, you said you think you see the same, you know, good momentum into second quarter, so it's not like a one quarter jump and then slow down. You know, five years ago, we still have quite a big portion to come from the consumer electronic goods. End of the 2021, we end up with around 35% of consumer electronic goods. Maybe last year is around less than 35%, close to like a 30% come from consumer electronic goods. First quarter, I'm sure the consumer electronic goods will be later continue to decline. Overall, we still end up with quite a strong growth come from the test instrument ATS. You can assume that the EV and ESS is combined actually present quite a strong growth. I mean. Mm-hmm. the sales contribution for our overall ATS sectors. Okay. How about the solar LED, LCD portion of the ATS? Anything exciting there or that's not worth mentioning? If you learn from like a LED driver solar inverter, I think it's less than, around single digits only. Yeah. Okay. Overall, our cleantech, I think in the first quarter, our cleantech related definitely reaches about 50%. I'm sure if you combine, if you also include ES as a part of cleantech, I would say. Yeah. Okay. If you have cleantech 50%, consumer electronics 30%... Yeah. What's the other 20%? 5G power. What power? 5G. Okay. 5G server data center. Okay. One last question, maybe for Paul. We look at the gross margin last year, we had a nice, you know, I guess a 340 basis point jump. You know, I guess a good part of that is because the closing of CNMC at the end of the first quarter. You had a 51.5% gross margin last year. Obviously, a very strong start to this year with over 60%. Any thoughts on the full-year gross profit margin? We still think that that will be somewhere like 55%, around. 60% is a little bit surprise to us as well. I think one of the factor is the due to the elimination or the termination of the material business. That will be one of the dilution for our gross margin, definitely. Again, if you look at the overseas or subsidiaries, they've been doing very hard to grow themselves, and that will be a chunk of the contributions to the aggregated gross margin. I think that's somewhere that we're expecting. Again, everything is due to the product mix. This year, first quarter, I think we have a very good record. I think this is also the record high for Chroma as well. Okay, great. Oh, sorry, one quick last question. OpEx for this year, any thoughts on what type of OpEx growth? I think probably, we won't see any very strong growth on the OpEx, but just maintaining the quality numbers. We just finalized the salary survey and increase for this year, we're pretty much there. I think it's pretty much like that trend, yeah. Okay, great. Thank you. Thank you. Thank you. Our next question comes from Jerry Cai with JP Morgan. Please go ahead, Jerry. Thank you. Okay, thank you. Thank you. I think, sorry, need to clarify about the semi outlook for the whole year, because it sounds like some of the demands has been pulled ahead, but some of the demands still remain quite lackluster. How should we think about the full-year semi for this year versus last year? Do you think it's you see a stronger chance for it to grow YoY, or you think it's mostly likely gonna be ending up flat or even decline? Initially, we think the semiconductor sectors will have largely impacted from this slowing down from the consumer electronic goods, related application, which is impact to our ATE system. Overall, the worst we think will be lower than last year. Last year we generated TWD 4.5 billion, we couldn't give a, like, exactly the numbers. These two months we start to notice that the HPC makers become more activated. Maybe they want to get more market share, or they actually see the demand picking up from the AI development. We probably need to watch, like, a couple months to see how strong from the HPC market and also picking up the... I mean, building our capacity for these photonics sectors. However, even okay, we sort of acquire a conservative view to regarding to semiconductor sectors, but in general, we think the second half will look definitely better than first half. Sure. That's very helpful. Just some quick follow-up question on the battery formation. You mentioned about in the second quarter you will start to see some pickup. Can I ask, some of the order could either coming from, say, the new customers? Another way to ask questions, that do you expect some meaningful new customer contribution for this year's battery formation? For new customers, sure. Yes. I think we will definitely get, I think, few new customers other than China markets. I think we just want to highlight is the battery cell project will start to deliver from second quarter. Yeah. The pattern is very hard to forecast, you know, because every project, it actually link up with the customer's contract. They put on the deadlines for each project. Okay. I think end of the first quarter, we still have about TWD 1.6 billion, you know, cash received in advance, which is down payment. At the end of first quarter, right? Yes. Okay. Also wonder a little bit more longer term question about a battery formation. I wonder this IRA, do you feel it is positive for Chroma if you consider, you know, versus your competitor? Like if you think about the competition landscape in, for this battery formation, because you have, you know, some Korean makers, you have some Chinese makers also. You have some, maybe some American suppliers in this field. Like to know, what do you think, you know, when, it is becoming more and more important factor, you think if. Yeah. it's beneficial for you guys, or you think it's kind of neutral or negative? Yeah. I think we have a better market positions compared to the other similar peers because we are probably neutral, and then we can cover all kinds of different markets. If you consider geopolitics and also the nature of IRA, which is U.S. would like to build out their own ecosystem regarding to EV battery cell. Also develop the EV markets. Also, if you consider that recently just grant the new customer, which is Japan battery cell makers, this is actually a bridging for us to get into the II or become part of II projects. However, we believe that since the EV conversion already start to kick off and the demand continues to increase, we believe that they will definitely attract the newcomer to join these EV markets. R ecently we also working quite hard to grant the new customers of Southeast Asia. Okay. I see. Okay. Thank you. I'll get back to the queue. Thank you. Thank you. Thank you. Our next question comes from Kevin Wang with Mizuho. Just go ahead, Kevin. Thank you. Hi. Hi. Thank you. Hi. Hi, Paul and Jennifer. I have two questions. First of all, regarding your ATS, you mentioned because we have the record high for ATS revenue in Q1, you mentioned it's continuing to grow into Q2 due to the EV business strength. You also mentioned that semi revenue will grow in the second half better than the first half. Do you also expect that your ATS to be better than the first half versus your second half outlook? What is your current order visibility for your ATS going to the second half? Thank you. We actually see the ATS, the second half will be better than first half. I think right now just because we do have, I wouldn't say a lot, but few we consider it so-called long lead time components. You know, EV is kind of quite a strong areas. You know, we call it the strategic material, actually still under long lead time, which is actually our order on hand regarding ATS is continue to increase. We only could do our best to deliver as many as possible. According to our current capacity plan, we actually expecting second half probably will be better than first half. This is our current plan. Yeah. Thank you. Very helpful. Also second question also regarding SLT. People are very interested in this area, and you also mentioned it's Q2 is driven by AI HPC applications and US customers. I remember you also have some SLT business in foundries, and they, I believe they also have this kind of HPC product. Do you also see this demand also increase in the near term? When should we really expect this kind of the revenue contribution to ramp up in which quarter, maybe this year or next year? I think this year, because the market is already start to talk about, like, U.S. company, someone like Google and Microsoft will design the chip themselves. Mm-hmm. I think this is also part of the plan regarding to adopting SLT. I see. Is this in also already in Q2 or? I think it should be this year. Not sure. I think should not be second quarter. Yeah. Okay. Okay. Got it. Thank you. Thank you. Our next question comes from Wang Jiangcheng with HSBC. Please go ahead. Thank you. Hi, Jennifer, Paul. Thanks for taking my question. Just a follow-up on the ATS side. Was that driven in the first quarter by one customer or one particular customer or many customers? That's my first question. You mean ATS, right? Yeah. That's actually ATS is very fragmented market. Actually, come from multiple customers. Yeah. Okay. Got it. Okay. Got it. We only can give you like a broadly application breakdown. Yeah. Got it. For Southeast Asia, I mean, since I detect a slight shift in tone just in terms of contribution or rather your discussions for these projects, do you expect the contribution for Southeast Asia cell formation projects to be to pick up significantly this year, or is it more a 2024 story? We will have some, yeah. Okay. sure. I'm guessing it's, from one particular customer rather than many, right? I think should be multiple customers. Yeah. Far we only have one or two at the moment, but several projects under discussion, so I wouldn't say today, by today it is very significant. Not yet. Yeah. We start to taking some of this, the order from Southeast Asia, and we also see the demand. Got it. Thanks a lot. Yeah. Thank you. Our next question comes from Kevin Chen with Citi. Please go ahead, Kevin. Thank you. Hi, Kevin. Hey. Hello. Hi, Paul and Jennifer. Thank you for taking my question. I just wanna go into a little deeper, because you mentioned that for the battery cell formation business, we're getting some new customers. I'm just wondering, do we have an expectation of how much percentage of these batteries formation revenue will be coming from the new customer beyond China? Approximately, if their profitability will be, how is that compared to the ones we currently have in China? Thank you. Okay. We actually mentioned before, last year's, we start to see the global EV conversion, and the first trigger is actually come from European OEM. Due to this kind of energy risk, so most of those capacity were start to build in China. This kind of momentum sort of across for, from 2022 to 2023. If you say year-to-date, maybe I would say about, I would say definitely like over 80% is actually come from the capacity demands from China. The actual user is come from the European OEM. As I, just like our Chairman said, provide a guidance, it doesn't mean we were not taking any orders since from the beginning of the year, even we already have some order on hand. We continue to receive the orders. From February to now, we start to grant like a couple small project from Southeast Asia, and we also gain the new customers. You know, actually the, not the pilot route. It's a really a capacity build from this Japanese battery cell makers. We already start to move into some kind of sort of penetration of U.S. IRA projects. We do see a lot of opportunity come from this kind of EV industry. Yeah. Just a quick follow-up. 'Cause recently we're seeing some aggressive price pressure from Chinese automakers. Do you think this will impact in our cell formation from China business in any way? Okay. I wouldn't say this market was 100% no competition, but I think the competition mostly come from the EV battery cell spec. Of course, when your spec is more due to its complexity, you enjoy better gross margin, et cetera. Normally, competition is mostly come from standard model or mid to low-end type of EV battery cell. I would say we quite selective for the project when we go for bid or we go for proposal, but it doesn't mean we actually miss out all the opportunities. Yeah. So far we're still pretty much selective of those project according to the gross margin. Basically, you're already spending like five months, like a lead time, and then you're able to, you know, carefully to penetrate some opportunity not to dilute your, you know, margin overall. Yeah. You know, the project that we're dealing with in China, okay, we do everything. First, we do cost down. That's why I suggest to investors to look at our consolidated basis, because some of the capacity, or I would say majority of the capacity which is delivered to China, we decide to do final assembly in China to save the shipping cost and local sourcing some of the components to, you know, to balance our gross margin. Okay? Some area probably we were adopting different strategies. Right. Thank you. Thank you. Okay. I think there's no more questions. Paul, CFO, want to do the closing? Yep. Well, thanks for your attending this conference. I think we have a pretty good performance on the first quarter, and we'll keep on moving and trying to improve for the consecutive few quarters in the later this year. Well, thank you for your attending, and bye-bye. Bye-bye. Thank you. Thank you for participation. This concludes the conference. You may now disconnect. Goodbye.