Welcome everyone to Chroma's 2026 second quarter earnings conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask the question. For your information, a webcast replay will be available within an hour after the conference is finished. Please visit www.chroma.com.tw/investor/index under the investor relations section. Now, I would like to hand it over to Chroma's management. Please go ahead. Okay. Good afternoon, everyone. Welcome to Chroma's second quarter 2026 earnings conference. This is Jennifer, and I will be your host for today's session. As we held an on-site conference before this call, today's sessions will primarily focus on Q&A. I will begin with the remarks from our former CFO, Paul Ying, followed by the presentation of the second quarter financial results by our new CFO, Lawrence Wu. After the financial update, I will provide an overview of this quarter's product mix, followed by the question and answer sessions. All presentation material are available for download from the company website. With that, I will now turn the call over to our CFO, Paul Ying. Thank you, Jennifer, and all my old friends from the investor sectors. Well, time flies. Today will be my last time to step in here to talk with you. Starting from tomorrow, I will be retired from Chroma. Thank you for all your support and all your consideration and attention to Chroma. Please keep on. With very amazing and record-breaking records for the second quarter of 2026, let me introduce our new CFO, Lawrence, to present to you. Thank you. Hi, everyone. Good afternoon. My name is Lawrence. I've been charged as new CFO of Chroma, which is a pretty big challenge. Let's break the second quarter results for everybody. First, second quarter consolidated revenue reached TWD 13.53 billion, up to 40% quarter-over-quarter and 110% year-over-year, making another record high quarter. Gross profit was TWD 8.19 billion, with a gross margin of 61%. Compared with 63% in the first quarter, the decline was mainly due to the short-term higher cost of key components, including DRAM, passive components, and ICs. We remain focused on maintaining a stable margin profile and might be considering a price adjustment if necessary. Operating income was TWD 5.24 billion, with operating margin of 39%, representing a 139% growth year-over-year. Non-operating income totaled TWD 1.27 billion, driven by gains from the disposal of ADLINK shares and employee housing assets. Net income to shareholders reached TWD 5.12 billion, up to 162% year-over-year, while EPS was TWD 12.15, both record highs. Secondly, the first half of the 2026 performance. For the first half of 2026, consolidated revenue was TWD 25.39 billion, up to 91% year-over-year, which represents almost doubling growth. The gross profit was totaled TWD 15.61 billion, with a growth margin of 61%. Operating income was TWD 10 billion, which represents tremendous 130% year-over-year growth. Net income to shareholders reached almost TWD 9 billion, up to 120%, and EPS was TWD 21.27. Overall, earnings continues to grow faster than revenue, reflecting strong operating leverage and improved efficiency. Lastly, the financial position and cash flow. As of June 30th, 2026, Chroma maintained a solid financial position. Cash and short-term investments totaled TWD 13.68 billion, up to 65% from year-end 2025, while shareholders' equity reached TWD 33.71 billion. The company remains in a net cash position. Inventory was TWD 11.58 billion, reflecting preparation for future demand. Inventory turnover days improved from 224 - 177 days, indicating better inventory efficiency. Annualized ROE reached 54%, and ROA reached 32%. Operating cash flow for the first half was TWD 5.35 billion, with the major construction of our second manufacturing facility completed. Capital expenses are expected to moderate. As a result, free cash flow reached TWD 3.29 billion, up to 86% year-over-year. That's basically the financial performance of our second quarter and the first half of 2026. I will turn it over to Jennifer. Okay. Thank you. Please refer to slide nine for details on our product mix for the second quarter. For the second quarter, the biggest driver of the growth still comes from the testing instruments and ATS section, which saw a remarkable increase of 14% quarter-over-quarter and 129% year-over-year. This surge was mainly contributed from AI server power applications. Currently, the AI server power application accounts for over, I would say, 60% of this power business. The test instruments and ATS sales revenue for the first half already exceeds total revenue in 2025. In addition to AI server power, the battery sales project is ready to ship out from the third quarter. For the semiconductor sector, which achieved revenue of TWD 4.4 billion in the second quarter, representing 29% growth quarter-over-quarter and double year-over-year. We do see the growth momentum from the semiconductor section increase. The major growth drivers were coming from system-level testers and photonics, ranked by the sales revenue contribution. The semiconductors and the photonics will be the main contributions in the second half. We believe it will be outperforming the first half. The driver of system-level testers from the AI, HPC, and ASIC, and photonics is mainly contributed from the optical communication and the CPO. As of today, we already received the PO for the Insertion 3 and the Insertion 4O, which start to contribute from the second half of this year. Now we could move on to Q&A section. Yes. Thank you. We will now begin the question and answer session. If you have a question for any of today's speakers, please press star key and one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star key and two to cancel the question. Please press star one on your keypad if you would like to have a question. Thank you. If you would like to ask the question, please press star one on your telephone keypad. Thank you. Our first question will be coming from Alex Wang, Bernstein. Go ahead, please. Hi. Thank you, Paul, Jennifer, congrats on your new role, Lawrence. I have questions about different segments. First off, can you talk a little bit about your shipment progress for HVDC-related power testers? This will be the first question, right? Yeah. Actually, as you may read from our first half results, we delivered this AI power, I would say, almost every month. You see maybe, I would say, every month the shipment is pretty much the same based on the sales revenue. I see. I guess the testers for HVDC power rack could be different versus the testers for all these power components, like PSU, you shipped over the past few months. There's no difference between 400 V and an 800 V. Right. Do you mean that you already started mass shipments for both 400 V and 800 V HVDC power testers? Yeah, you could say that, right from the day one. Okay. You just need to consider conversion doesn't mean the shipment. We could ship to our customers how they conversion. You need to ask our customer. Sure. Is there a trend like you see the orders of these HVDC power tester become stronger month by month? Yeah, because, recently there's a rumor, there's a delay of the HVDC power rack. Delta just hold their course. They said the production will start, but in small volume. I'm just wondering on the tester side, in which quarter would you see a large volume pickup for your testers? The issue is every quarter is pretty much the same. This is not very much like a turning elbow turning down. I see. How about the order momentum? I'm now talking about your shipment or the order. They already block off the whole year. I see. Okay. They give you order for a full year, and do they adjust every quarter? They didn't adjust. They just keep pushing us. Okay Speed up the delivery. We have not seen why. I really don't understand how this related to how fast converting to their product shipment. You know, we actually deliver to all our customer almost every month. I see. Since the pattern is pretty much the same, I really couldn't highlight, okay, which quarter is strong or which quarter is low. I see. I think in the second half last year, when we talk about your ATS tester your power tester, you mentioned that there is some capacity constraint, like you can't fulfill the order. How about the situation now? Beginning of this year, our phase II already ready, so it's starting ramping up. Last year, our phase II show is not ready. I see. Got it. Yeah. Second question is about your ESS testers. I know this kind of project tends to bring the lumpiness to your quarterly revenue. I understand in the second quarter, there is one or two months that includes the ESS battery revenue. How about the rest of the year? May not be similar pattern as the last time. This is because we do see the battery cell demands continue to increase. It is very hard for me to give you this kind of a guidance saying will be certain locate at which months. You will see, very soon. Do you mean you got a new order or it is the same order? Well, I say increase, that means increase. Okay. Demand continues to increase, so the order is piling up. It's more than we guided in the beginning of the year. I see. Yeah. The last question is about the semi testers. In your earnings remarks, you said the semi momentum increased including SLT and photonics. When you say momentum increase, do you mean versus three months ago comparing to your initial expectation, it grow, or you mean quarter over quarter it's grow? Okay. You can detail. I'm sure you would build out a model of Chroma, then you definitely will notice that the growth rate, I mean, semiconductor growth rate in the first quarter versus second quarter. Actually, second quarter, this kind of growth rate is increase. We see the momentum continue to increase in the second half. We even give you a guidance that the second half will be better than, or perform than first half. This is very clear guidance. It's based on equipment vendor. I see. Okay. Thank you. That's all my question. Yeah. Thank you. Thank you. We are now in question and answer session. If you would like to ask the question, please press star key and number one on your telephone keypad. Thank you. To ask the question, you may press star one on your telephone keypad. Thank you. Next one, Alex Wang, Bernstein. Go ahead, please. Sorry, just one more follow-up question about the CPO. Just want to get some update versus three months ago. You said you have PO for Insertion 3 and Insertion 4. Any difference versus three months ago? Three months ago. Let me think about three months ago. We do see the order size is bigger. The order size is for this year, or it's like rolling 12 months? No, this year. CPO is very complicated in testing. I can tell you so far, customers only place order up to Insertion 4O. Not yet really rolling up to after Insertion 4O. I would say CPO is very challenging technology, and we do see, because due to its complexity and then the units to revise up. Okay, I see. Yeah. Over the past two months, there's also concerns on the market about the ramp-up of CPO. I know the key bottleneck is, well, that is on the testing side, and there's lots of challenges in the manufacturing. Y ou're saying that because of these difficulties, customer actually increase the order on your side? Yeah. We already received the PO. PO is, I would say, the best reference to prove this is actually an ongoing project. Do you see other competitors in Insertion 3 and Insertion 4? Insertion 4 is 100% initiated by Chroma, so there is no competitor. Insertion 3, we already mentioned before we join, there's actually existing peers. I see. Okay, you're competing with existing peers. Yeah. I don't think we compete. We actually have a better performance. I see. The PO is currently from a single customer, or you have other customers under engagement? Currently, if you talk about CPO, we do have, NV and Marvell. Marvell is not yet ramped, I think. Okay. Cool. Understood. They are actually adopting different technology and design is different. Okay. You are also involved in design for their testers? What do you mean by design their tester? We actually design the tester. It's 100% our own technology. Okay. I see. Maybe last question is about your FE handler for AI chips. I think you show the product in the beginning of this year. What's the progress on that tester? Doing so well. This is the first time we don't need to do debug, so I'm sure. Okay Next customer will adopt. Yeah. Okay. I see. Yeah, that's very clear. Thank you. Thank you. Thank you. Next one, Josie Yu, JP Morgan. Go ahead, please. Hi. Hi, Jennifer. Thank you for taking my question. I'm very glad to hear that semiconductor segment is going to see very strong momentum in the second half. Just want to shift the gear a bit to ATS. Do you also expect this kind of growth momentum? Is it fair for us to also kind of expect this segment to grow half over half in second half? Are you asking about the mature node? Which part? I think the ATS overall segment. You mean power business? Yes. Sorry, we don't provide this kind of guidance. Okay. Yeah, we already give a very clear indication regarding to semiconductors, and I already said that every month there's not very much difference about the shipment of the power business. Okay. That's very clear. Thank you. Thank you. Thank you. Next one, Jerry Su, UBS. Go ahead, please. Hi, Jerry. Yeah, thank you. Yeah. Hi, Jennifer, Lawrence, and Paul. Thank you for taking my question. On the mature or legacy semi testing tools. Can you give us an update on this one? I think, early in the year, I think you're more conservative on this, seems like the demand is turning stronger at some of your customers. I'm just wondering how should we think about your mature testing business going in second half of this year? Initially, our guidance regarding to the legacy FT is flat compared to last year. We do see the demand is increased, especially starting from the second quarter. We guess this is because some of their legacy makers are shifting their business to high-end AI application related. We do see a newcomer want to take over the traditional legacy parts. Since they are a newcomer, they need to buy new tools. Yeah, I do actually see maybe legacy start to increase by maybe 10% or 20%. For this year? Yeah. Okay. Maybe first quarter slow, but second quarter, actually, no matter compared to first quarter or compared to last year, second quarter is actually better. Okay, thank you. Then, on the final test handler business, understanding that you are doing pretty well and then, just wondering, when should we expect this business to see more meaningful revenue contribution? I am sure it should be from this year. If you talk about large ramp, maybe next year. Take a chance. Okay. Got it. Lastly, I think on the component cost increase that it's a headwind for your gross margin. I think Lawrence earlier mentioned that you're considering to raise the price. Is there a timeline that we should think that the price hike should become effective? Will this be second half this year, or it will be next year? I will let Lawrence comment on that. Price increasing? It's by product, actually. It could be this year, very likely, for price adjustment of 0.10%, maybe. Okay. Got it. Thank you. Just maybe. It's going to be this year. Basically, we couldn't pass on the cost for the current immediate price increase, especially we need to prepare the material by carry forward. I think, for the next product, of course, we definitely can reflect those components. Yeah, especially for the new products. Yeah. Okay. Very clear. Thank you. Thank you. Thank you. Jennifer, I'm sorry, we still have a next question. Alex Wang, Bernstein. Thank you. Go ahead, please. Thank you for squeezing my last question. I want to ask about the testing time for SLT. Now you've mass shipped the SLT for MI450 and for Vera Rubin. I'm wondering if the testing time becomes longer versus before. I know when you ship for Blackwell, the testing time actually increased after the mass production. I'm just wondering if there's a similar pattern here. H i, Alex. Yes. That's why I commented before, because MI300 is actually very high power density, which is equivalent to power density of the 300 W. Actually, initially, the customer's target ideally is four hours, but now it's running between six to eight hours. Recently, they actually revised out the orders units by, I would say, 70%, almost double. Since we already start to ship this MI300, so that is why we know the cycle time increase. The revising that will start to deliver from third quarter. As you could see, we also got the CST is coming out in the fourth quarter, then across to next year. I think recently we also got the customer's new CPU. We do see the CPU demands to continue increase, and we do have exposure to CPU. Interesting. You said testing time is six to eight hours. That's just the SLT or including burning? No, no burning, just system level tester. Okay. You need to understand because AMD is chiplet. It's very large panel size. Yeah. When you say CPU, it's referring to both AMD and NVIDIA or just one of them? We also cover Google CPU. Okay, great. The things I want to emphasize here is we already could do and are good at doing, dealing with the CPU. I see. I assume the SLT for CPU is kind of a relatively new business for Chroma for the next 12 months? Yeah. Of course. Okay, good. That's very clear. Thank you. Thank you. Thank you. Jennifer, there are currently no questions. Thank you. Okay. Yep. Okay. Thank you, Jennifer. Yeah. Thank you. Okay. Ladies and gentlemen, we thank you for your participation in Chroma's conference. There will be a webcast replay within an hour. Please visit www.chroma.com.tw/investor/index under the investor relations section. You may now disconnect. Thank you again. Goodbye.