Good afternoon, everyone, welcome to Advantech's first quarter 2023 earnings call. My name is Derrick Yang, the Tech Analyst at Morgan Stanley. It's our honor to have the top management from Advantech here joining us to discuss their first quarter 2023 results and also to share their views on the outlook. Today, we have three speakers on the line. The first one is Eric Chen, CEO and President of General Management. Second one is Linda Tsai, President of Industrial IoT Group. Last but not least, Grace Liao, Manager of Investor Relations. Without further ado, let me pass the call to management for the opening remark. Thank you, Derrick. Good morning and good afternoon, ladies and gentlemen. Thank you for your time today. This is Grace Liao, the IR Senior Manager of Advantech. For today's agenda, in the beginning, I will give few minutes briefing regarding our first quarter 2023 financial results. President Eric Chen will share overall business updates and second quarter guidance. During the Q&A session, both President Eric Chen and President Linda Tsai will answer the questions from investors, and also share the company outlook accordingly. As usual, please take a few seconds to read the safe harbor notice. For Q1 revenue reached NTD 17.4 billion, increased 8% year-on-year. Gross margin rate reached 39.7%, greatly improved from last year and also previous quarter. Operating profit was 3.5 billion NTD, increased 16% year-on-year. Operating profit rate reached 20.1%, also hit a new high since Q2 2020. Q1 effective tax rate was 19.7%. Net income reached 2.96 billion NTD, increased 15% year-on-year. Earnings per share in Q1 2023 was 3.8 NTD. Both top line and bottom line performance in Q1 2023 set company's second high records. For regional performance in terms of US dollar, Q1 2023 revenue reached $571 million, slightly declined 1% year-on-year. For the major three markets, North America and also Europe enjoyed year-on-year growth at 7% and 13% respectively. China market is still relatively weak, with 22% year-on-year decline due to reopening uncertainties and also ongoing inventory adjustments. North Asia markets, enjoy 18% year-on-year growth, while Japan market was the strongest performer with 39% growth compared to the same period last year. Taiwan and emerging market were double-digit decline in Q1 2023 due to low seasons between projects. SBG performance, the Industrial IoT declined 11% due to China market remain weak. Embedded IoT increased 18% year-on-year, driven by strong demand in automation, medical, and gaming projects. Applied Computing Group, ACG, slightly declined, mainly due to the high base from medical project last year. Industrial Cloud and Video Group, ICVG, enjoyed 26 year-on-year% due to the strong momentum contributed by enterprise networking and industrial surveillance projects. Service-IoT reported a double-digit decline, though fleet management project enjoyed positive growth. The major decline was due to shipping low seasons in medical projects. For the balance sheet, this is also my last page, let's see the debt ratio reached 43% due to the dividend payable increase in current liability in Q1. Those inventory, absolute dollar amount and inventory turnover days have significantly declined year-on-year basis. We expect the inventory level will gradually back to normal given the supply chain getting revealed. Now, I'm handing over the time to President Eric Chen to share overall business outlook and the second quarter guidance. Thank you. Thank you, Grace. Good morning and good afternoon, everyone. Welcome to join the conference today. This is Eric. I would like to comment on the first quarter results followed by the second quarter guidance. The assuming in the first quarter was slightly better than our prediction. It was mainly due to the current order, late delivery, and the ease material shortage. In addition, due to the Taiwan, New Taiwan dollar's depreciations, our top line in TWD terms was 9% ahead of US dollars. As to the region's performance, the US region was on track. The EU and Japan regions delivered outstanding results due to the peak streaming fall into the first quarters. For the product aspects, IIoT still suffered from the weak demand in China. The China region accounts for 50% of IIoT revenues, which led to a negative result. On the other hand, IoT and ICVG performance was good, mainly driven by the solid demand from the medical and the network computing sector. Regarding the gross margins, due to the ease of the material supplies and the drive costs back to normal, our gross margin performance increased by 1.5% year-on-year. We expect the gross margins in 2023 to have a great chance to keep at 39% above. Overall, with the better margin performance and the reasonable control in all parts, the operating profit end up with 15% growth higher than the top-line growth. This is my comments on the first quarter results. Let me going on the P/B ratios. Regarding the trend of the P/B ratio, as you can see on this page, the P/B ratio peaked at 1.26 in the first quarter of 2022, then went down to 0.92 in the first quarter. In 2023 quarter one, the P/B ratio was maintained at 0.82. If we look into the regions, The U.S. and Europe region had declines to 0.84 and 0.83, respectively, and the China region was 0.92. In the current emerging region was the lowest at 0.73. The lower P/B ratio mainly came from the low season of few medical projects in the Middle East market, with the P/B ratio at only 0.38. The reason for P/B ratio continue strong, mainly have two. The first is the inventory adjustments still ongoing in our general partner and the customers. The second is the conservative market demands. Customers tend to place rush orders instead of regular orders. Next page. Looking forward to the second quarter, even though the component shortage situation has improved a lot, the demand in global markets still has no solid signals for a rebound. We expect second quarter's revenue to be between $560 million-$580 million, based on the exchange rate assumption of 1 US dollar to 30.4 New Taiwan dollars. In terms of margin, the second quarter gross margin is expected to be between 37.5% and 39.5%, and the operating margin is expected to be between 17% and 19%. Next page, please. This is the pictures of our new US campus groundbreaking in the middle of April. The new campus location is in Tustin, Orange County, California, nearby the current Irvine office. The total expenditures for the phase one is around $70 million, including the design fee, hard costs, and the internal decorations. The new campus will showcase Advantech's brands, focuses on technology and vision, and support Advantech U.S. business growth to $1.5 billion. This concludes all my comments, and thank you for your attention. Thank you, Eric. well, Derrick, this is all the presentation from the company, and let's get to the Q&A section. Thanks, Grace and Eric. We have gathered a few questions before the meeting from our investors. I think management will answer those questions first. After that, we will take online questions from investors. The first question is regarding your guidance for the revenue and margin and also CapEx for 2023. Could you give us some rough ideas? Yeah. For, for the second quarter guidance, I just mentioned earlier, I don't want to repeat again. For a year guidance, we don't have a precise figure to release so far. Internally, we have a target to keep sales and profit growth growing year by years. This is our internal targets. Regarding the CapEx, the major spending will include Linkou phase three, the new headquarters project in The U.S., and then two new SMD lines set up for Taiwan and also Japan. The overall CapEx this year is around $60 million. Linkou Back Streets project will be complete in Q3, and our 2023 World Partner Conference will be held in this new building. We will have a grand opening in Q3. The U.S. headquarters project will be divided into two phase of constructions. Phase I include one six floors office and one, 140,000 square feet warehouse. The Phase One project is expected to be complete in 2021. These are my answer regarding the CapEx. Roughly we will have $60 million for this year's CapEx. Okay. Thanks, Eric. Maybe one follow-up question on this as well is, compared now versus maybe a quarter ago, would you say that you are turning a bit more positive on the growth outlook for the year, or are you turning less positive on that now versus a quarter ago? Just as I mentioned earlier, we don't have very precise figure to tell the situation whether become more positive or more negatives so far. We will release our guidance quarter by quarter. Yeah. Okay. Okay. Thank you. The next question is it reasonable to assume a 2023 gross margin to be higher than that in 2022, given the easing component supply? If so, is it possible to quantify the impact? I think yes, the assumption is reasonable. Several factors favors our gross margin performance this year, such as material cost savings. In the first quarter, the factors contribute around 1.8 percentage point to our gross margins and the decline of the freight costs. Freight costs normally accounts for 1.5% of our COGS. COGS means cost of goods sold. However, during the past two years, congestion periods, the freight costs even reached to 3% of our cost of goods sold. Now almost all freight costs in each region are back to normal. This is the second favors. The last is the inventory provision expense reverse, due to the inventory amount continuous decreasing. The previous inventory provision expense will be adjusted. On the other hand, the negative factors mainly came from the product mix. As you may note, IoT has the highest margins and the performance is not so good in the first quarter. Also, the demand in China market is still not a strong rebound yet. Therefore, it's negative impact our gross margin by around 0.5% as well. Considering the overall positive and negative factors, our gross margin performance has a great chance to be in pages, highest than last year. The assumption is reasonable. Okay. Thank you, Eric. The next question is regarding your P/B ratio. I think you have shared some color on the P/B ratio for each region. Could you share some color of the P/B ratio for each segment for your business segment? Okay. For the P/B ratio by segments, SRD was 1.16. It's the first one. EIoT was 0.87, and IoT was the lowest. The P/B ratio was only 0.73. The P/B ratios continue to drop. I just mentioned earlier, there are two reasons. The reasons that our channel partners and our key customers still are ongoing their inventory adjustments. The second is the conservative market demand. Customers no longer place the long-term orders, and they just place the rush orders. Yeah. Okay, thank you. The next question is regarding your new US headquarter. What products and industries will this campus be focused on? Will there be any color on the capacity in The U.S.? If so, what is the cost structure versus the corporate average? The US market mainly focus on the network security, medical, gaming, and the manufacturing sectors. The sales team in The U.S. is good at design in their spaces and the tier account managements. The new US campus will not set up any S&D production machines, but will enlarge the local assembly and the service capability by around 50% to support further business growth. Meanwhile, we will provide our customers with many value-added services such as product lifecycle extensions, document service, FDA and local integration, and et cetera. For the cost structure of local assembly and repair service, even though the manpower hour rate in The U.S. is slightly higher than other region, but the productivity is better than Japan and Europe in our internal comparisons. Overall, the cost structure of the local assembly and repair service in The U.S. is close to the corporate averages. This is my question, my answers. Okay, thank you. The next one is regarding your long-term growth forecast. Are you still expecting the long-term growth for this IPC and I oT industry to be around 10% in the next few years? We aim to reach $5 billion in 2030 through organic growth. This is one of our goals for the next era of globalization. If we use 2022, $2.2 billion as a start, the compound growth rate needs to maintain at 10%-11% to reach $5 billion in 2030. To answer the questions, our long-term organic growth will be held at 10%-11%. Yes, this is right. Please be aware that the external M&A is excluded from the 2030 $5 billion revenue goals. Okay. Thank you. Maybe a follow-up to that is, you expect the growth rate for Advantech to be 10%-11%. How about the overall IPC market growth in the next few years? Is that going to be similar to Advantech's growth or slower than your company growth? I think for the IPC growth market, my point of view is the overall IPC market growth in 2023 to 2025 is around 7%-8%. However, the growth rate in different regions and sector might have different performance. From the region point of view, the high growth area will be China, India and Vietnam. Japan and Korea are in between. The U.S. and The EU might be the lowest growth regions. From the second point of view, IPC in the EV cars or battery and the energy sector might have a higher growth momentum. On the other hand, for the semiconductor sectors, the growth rate will be aligned with the averages. IPC is a mature market, and Advantech has a high penetration rate in the global market. However, the global growth rates still dependent on each sector demand. Our 7%-8% growth rate is just my predictions and viewpoint. I want to emphasize that Advantech provides many IoT products and solutions from all system and softwares to fulfill different sector needs. The IPC overall growth rate does not equal to Advantech growth, because we provide more than IPC products. This is my answers. Linda in charge of IPC business. Linda can give some extra comments on these topics. I give some more like flavor on the IPC market. We talk about the PC, that's what Eric Chen has mentioned about. In addition to the IPC for Advantech, if you look at the IoT, Advantech actually starts from the very eighth level of the device for the data acquisition I/O module, industrial communication and gateway. I think that is the part that even though the revenue is small because of the ASP of the per unit is lower than the PC-based product, but there is where we see may have higher growth rate. In the IoT, we need more devices connect to each other through wire and wireless technology. That's additional comment, addition to that, people, the market view Advantech as a IPC company, but I think we are more than IPC as IoT company. Thank you. Our next question is more regarding your SBU and RBU. For Advantech's software business, I think the chairman once mentioned in the earnings call that it was progressing slower than expected. In terms of the revenue contribution, what is the status right now, and how is that compared to the original expectation? Is there any particular reason for the slightly slower than expected progress? How in this software business will Advantech differentiate with other peers providing similar offerings? Regarding these two question, for the software, I think I will, like, answer all together. Indeed, for software business, the progress is lower than our expectation. I think mainly it's because the software business really require last mile customization services. It's not that hardware product that we have the standard product and we sell to customer is ready to use. For each software business requires, again, the customization, the project lending is longer than expected. Which means that we need more design cycle than expected, and the fragmented business in manufacturing, energy, retail are all different. It's hard to duplicate the success on each other vertical. Yeah. Regarding the differentiation, I would say most of the software from our IPC peer mainly focus on IT type of software, which they provide the visualization dashboard for data management or device management in some of the selected applications. Of course, Advantech also offer the similar IT type of software. I have to say, however, I mean, what differentiate Advantech software than other IPC peer, I think it's more on the OT software and the middleware. What I mean here is that we, Advantech, not just only provide the IT type of application for the dashboard for the vertical use, we also provide the OT software solution that really help our system integrator to reduce their total cost of ownership, so they can easy for them to connect different POC, sensor or devices with efficient resource and still time frame. By using Advantech software suite, we are targeting at provide the end-to-end, the software services from sensing device to edge and cloud. Here's my sharing and comment for these two questions about the software business update and what the differentiation of Advantech product solution, especially on software service to other peers. Okay. Thank you, Linda. The next question is, could you share some color regarding the demand outlook by your business segments and also by region? Right. Okay. The demand outlook for business group and also for our regional, I mean by regional RBU. I think before I answer that, I want to share a little bit color about the vertical demand. As you may know, Advantech have focused on diversifying industrial markets. This year, by Q1, we see on the highlight on the perform well sector, especially on healthcare, gaming gambling, and it's related also network security, in fact, automation. We see there is the demand and demand is good, but they are still low lying that this year probably till, like maybe quarter two or quarter three, we see the low lying on the semicon and general industrial equipment requirement. That's general, the feedback for the market demand. In terms of our regional sales office, the three big regional office, USA, Europe and China. USA, Europe, as the number that Eric shared previously and also on our demand outlook, these two regions are highly benefit from healthcare and also gaming gambling and network security. Demand outlook is good. On the other hand, China, although, the quarter one booking is a little bit increased, but inventory at our customer side may not still come through arm until end of the quarter two. China, on the first half, still is conservative, but we are looking at the rebound probably on the second half. As for North Asia, I think Korea and Japan. Japan perform very well in all sectors, especially we have some new design winning of the ODM project in Japan business, bring a very good outlook. Korea also impact by our semicon because most of our semicon equipment and machine builder will ship to Samsung, LG and Hynix, those that local tier one companies as impact by their demand and high inventory. That's about the sharing of demand outlook for our regional sales office. In terms of the business group, it's quite referred to our business group. For IoT, the first quarter one we decline double digits. Look at the quarter two, because semicon industry, IEM is play the big important portion for the IoT. On the quarter two, we may still have the low demand on that but expect to recover quarter three and quarter four. That's why we are communicating with customer. On the embedded thing, EIoT and ICVG, more on the design end, there are many focus as I mentioned previously on healthcare, gaming gambling, also somewhat energy and ICVG is on the video related and also on the network security. Those design business ODM, we still see a good outlook. So far. SIoT, although we look at the quarter one, the number decline, but if you look at the booking, because part of SIoT, they are focused on medical application. They have good design, new good design wing medical application, bring good booking for SIoT. Yeah. Here is the outlook, demand outlook, share from different perspective from regional office and also from the vertical sector application, also from the business group. Okay. Thank you, Linda. Maybe one small follow-up question, 'cause Eric earlier mentioned that, the BB ratio in North America and Europe- Mm. -was, about 0.83 to 0.84 in the first quarter. Does that mean that the growth, from these two regions are going to be, slower in the coming few quarters? If you see the average of Advantech P/B ratio, I think USA and Euro probably is not lower than Advantech average. Especially I think for Euro and USA, we see a good booking, as I mentioned here, mainly from healthcare and gaming gambling. The booking will bring the future business in the coming quarter or coming two quarters. At this moment, I think USA and Euro, we have the highlight, as I mentioned that, but the lowlight is that the semicon is at the high part. Okay. Okay, thank you. The next question is for the emerging market, it seems that you have seen a quite significant decline... Mm. on the revenue in the first quarter. How is the order visibility in the emerging market? Right. I think the decline for emerging market, I think that's part of the comment what you mentioned previously, by Grace, is that they are the low season for one or two large medical project we have, so that result in the quarter one decline. Apart to that one or two medical project, other demand from manufacturing, from energy and from other sector, the booking and the demand is still there. The gap, of course, maybe still cannot fill up the decline from that one or two project because the low season for the quarter one. At least good thing is that other sector, the demand is still increasing. Yeah. Okay, thank you, Linda. I think we have answered all of the pre-gathered questions. We can open for the Q&A session to take questions from online investors. If you wish to ask a question, please type that in the text box at the bottom of the screen, and I will read them out for management to have comment on. Our first question is, I think it's also regarding the growth driver by the regions. What's the growth driver in The U.S. and Europe and in China? Do we see the IIoT demand recovery in China or do the service industry shows stronger demand overall? I'll welcome Linda to answer the question. Right. Yes. Okay. Because this combine several question over there. I think for U.S. and Europe, again, as I previous I mentioned that if you look at the global demand, healthcare is a big driver for us. The focus region for the Advantech is actually US and Europe, and also gaming gambling. In terms of our IIoT team, the market will focus on manufacturing and semicon equipment or industrial equipment. Those are the low light, no matter for which country we have, because the decline for the semicon and machine builder is quite a lot. I don't think it will get recovered until the Q3 or Q4. Also it will be impact on that there's a semicon... How do I put that? The semicon ban of U.S. and China. The other question regarding the China. In China, last year, the second half of last year is our low season. The quarter one we see a little bit rebound, but it's not yet to the high level we are looking at. We look at the China for IIoT team, we see the key driver for us will be on energy related, especially green energy. That's covering on the EV related, on the factory, battery related, is a very big market for Advantech, also for the IIoT team. The other part for the China machine builder, we do sell a lot of the product to machine builder. Economy-wise, also for some of the, that we talk about cell phone, for the iPhone, the demand is not as strong as before. Expect for China, for IIoT team, we will keep driver for energy related also from our general automation from the channel team, because our channel team play a strong sales force in IIoT team. Our channel team sell to general automation is a diversified automation market. Yeah. For SIoT one of our focus again is healthcare. SIoT can benefit a lot from U.S. and Europe, also partially some of the new project designing from the emerging country for the healthcare. Yeah. Okay. Thank you, Linda. I'll give some comments regarding the questions. According to Gartner's Market Opportunity Map, for the Industrial IoT, the high growth areas such as the IoT security, IoT software and solutions will enjoy around 30% of growth rate. Now for the certain high growth application areas such as the robots and the EV charging station, internally, we already set up dedicated product divisions to serve the particular demands. The product offers will cover from both system peripheral and even the third-party software. We are really focused on the high growth areas for the IIoT application to catch up the IIoT high growth application areas. This is what we are doing in the past 1 years. Okay. Thank you, Eric and Linda. The next question is there any potential impact from the ongoing bank issues and potential commercial property market default risk in The U.S.? The answer is no, because, for The U.S., just as mentioned earlier, we are doing very well for the clear account management. As the bank graph situation happens, our management team already will communicate and investigate our customers, the impact to our customers. So far, the answer is almost no impact for these situations. Yeah. Okay. Thank you, Eric. The next question is that, amid this, China reopening and global travel resumption, will this present any upside to the retail-related business, with more tourism demand across the globe, versus, during the COVID period? Welcome, Linda, to share more market views on China. Yeah. Thank you. Yeah. I think on China, indeed, I think on the tourism-wise activities become more and more, but our retail business in China is a very small portion for Advantech. It may benefit, but overall for Advantech China, maybe it's not that significant because the business is small for Advantech in retail. Okay. Thank you, Linda. The next question is, can you talk about the China localization? Is that impacting your opportunities going forward? I see it as not impact. I see it as opportunity for Advantech. Actually, not just now, I think start that three or four years ago, we already have our China product team that focus on China silicon. This is opportunity we are looking at because we have a strong design team in China and the manufacturing, also the ecosystem for the China supplier. In some of the industry that sensitive for like security, energy or the financial related, those industry will be in high priority for China government to request for the China-made product. Over there in China, we provide not just only standard product, also we have the flexibility to customization engineering product for customer. We see it as the opportunity for Advantech because the investment for China team has been for 10 years, and now is the time that we can grab the opportunity. Yeah. Okay. Thank you, Linda. The next question is whether or not we are seeing opportunities for Advantech amidst AI proliferation? Okay. To answer that question, I think the AI, we talk about industrial AI. We're not talking about consumer AI. We look at the industrial AI, the opportunity from the manufacturing and from the smart city wise. Advantech focus on AI opportunity, not position ourself as a software company. We provide ourself as the power of the ecosystem, provide the hardware and the driver SDK level and work with our ecosystem and to grab the AIoT business. At this moment, Advantech are working with different AI accelerator company that probably everyone knows. We are working because the solution is quite diversified for different vertical markets. We also have a dedicated team that in Taiwan, also in China, and to develop the AI-focused product line and working with our AI ecosystem, mainly for the software partner to provide the really like end-to-end solution to the end user. Yeah. Here's my sharing. Just share from the internal practice, we adapt the AI use case. We already applied AI in many areas such as RPA. You know, RPA, automatically a robot application tools to automatically generate a lot of the routine, to replace a lot of the routine job, routine manpowers in the factory, also in the finance areas. This is one of the use case for Advantech adapt AI. Another is we use AI to do the forecast, especially for the standard product forecast. The AI results is better than human touch around 10%. The accuracy rate is ahead of human touch at 10%. This is another use case for the AI. We are just trying to adapt ChatGPT to adapt as pre-sales tools. Right now we are under training progress because ChatGPT need some of the computation to do the training. We are just ongoing for ChatGPT internal use case. This is part of our AI adaptations in Advantech process internal process optimizations. Share to you notes. Okay. Thank you. Thank you, Linda and Eric. The next question is more of a housekeeping one. Could you share the B/B ratio by segment again? Maybe the investor joined the call late. Let me check the figures. The IoT versus the raw is 0.73, while the ERD is 0.87. SRD is above 1.16. This is the three major business units P/B ratio in the first quarter. Okay. Thank you, Eric. The next question is, during the last earnings call, the management mentioned that because of the component supply tightness, you have lost some of the orders from your customers in China. How is that the progress on that front? What strategy are you going to use regarding that last year loss? Also, does the market share loss lead to slower growth in the China business, maybe in the past few quarters and in the next few quarters? Yeah. No. Ask Linda to answer the questions. For the China market, just the price I showed you, we did lost some of the product to the competitor. At the start from actually not just beginning of the year, from the end of last year, we already did that, work with the team to depend, to work with our customer again. The strategy, of course, there will be different type of strategy. One is that we will provide our latest product, because most of our customer are required for the most updated product. That's where Advantech really good at, no matter from the IPC or other product wise. The second is that, because Advantech is not only provide IPC only, we actually use IPC plus and strategy. The end which means that we still product together IPC with the... Around the IPC, there will be a data acquisition, and there will be the IO, there will be communication. Try to have the total cost ownership lower to customer to buy from Advantech. The third one is that on the price point, some of the products, especially on the peripheral wise, on the memory wise, the market price drop. For that part, we will reflect and to the customer. With different strategy altogether that we have the working with our China team, working with the headquarter, the Taiwan directly, that for the name account, we are going to win with some of strategy I just shared. Yeah. That's what I sharing. Okay. Thank you, Linda. The next question is, do you expect the gross margin tailwinds from the falling component or raw material cost to sustain into second half this year, or eventually Advantech will need to pass the lower cost to your customers so that the gross margin might come down in the coming two quarters? In the gross margin, just as I mentioned earlier, there are a lot of favorable factors to Advantech. First one is the material cost savings. The second one is the price quotes are back to normal. Also, the inventory provision will be reversed. This is all the positive factors to Advantech. For the market side, we don't see the customers have a strong demand to ask us to lower down our price, especially for peripheral CPU memory and flash, something like that. We still can keep our decision set price to protect our gross margins. The only negative factors, just as I mentioned earlier, is the pro-product mix, because our IoT will rebound after maybe in the second half. For the quarter two, the challenge is the product mix, I believe. Yeah. Okay. Thank you. Thank you, Eric. The next question is, do you have any plan to raise your prices in view of inflation pressure? If yes, could you share the increase by segment and region? Far in the headquarters side, we don't have a plan to raise our price. I'm not sure for the business group side. Maybe Linda can share some comments on this topic. Okay. We will only increase the price because our cost increased and the freight cost increased. At this moment, I think the past 18 months, Advantech has already increased twice of the price due to the cost material is increased by our supplier. At this moment, the cost increase is not there. Regarding the inflation in Euro and in USA, at that moment, that may not be the reason we will increase the price due to the local inflation. Again, on the service level, because we still provide the local service to the customer and our labor cost is increased, and that part may affect, but at this moment the impact is not that significant. So far there's no plan for the further price increase to Euro for the inflation. Yeah. Just one issue we are reviewing is about assembly cost. We found some countries like Korea and Europe, their due to the labor cost is increasing, their assembly costs are still keep the same price as 10 years before. We just reviewed on the assembly cost recently. Maybe we can raise some service labor intense service charge for this kind of a service. Not the product cost, but the low assembly and value add service, yeah, to increase this part of price. Yeah. Only for this part of price. Okay, thank you, Eric. The next question is, Eric, you mentioned that the reversal of the inventory provision could be one of the tailwinds for the gross margin this year. Could you quantify the impact or the contribution from that from that part? Sorry, I don't have the precise figures, but we can provide, the, maybe the numbers, after the meeting, if the investor, want to, learn more details about these figures. Yeah, we can simulate. I don't have the, precise, figures on hand. Okay. Okay. Thank you. The next question is, regarding the growth profile for each of your SPUs. Could you share some color on that on the full year basis? Well, can Linda share, the outlook for the year for the SPG? Because we have a lot of SPG, but looking at the coming year, the trend for the market on the IoT era, I believe that edge computing, because the core business for Advantech will still have the better growth profile because it's driven by the green energy sector and healthcare is still growing there. They are the big driver still for our edge computer. The other growth profile we are looking at is that with all the connectivity required, all the data needs to be collected from the field through a sensor or the POC or the drive. The other portion of the business is on the device connectivity product from Advantech. For those, the revenue portion is low because our, as I mentioned previously, our average selling price for those product line is much lower than others. In terms of the quantity, it's much higher than before. To summarize is that I think the growth profile is still driven by the market demand and on the green energy wise and also on, as I mentioned on the healthcare, that was the big growth driver. Energy-wise, particularly will grow our device connectivity business. Okay, thank you, Linda. I think we have. Yeah. Sorry, go ahead. I'm sorry. Sorry, Derek. I think due to the limits of the time, maybe we can take the last questions from investors. Yeah, I think we have answered all of the questions online. Yeah, maybe I can pass it back to you for some closing remark. It's just a quick reply from the inventory provision reverse. I just got the figures from my teams. It's around 0.7 percentage points. If we can keep the DOH below 100 days. Last year we have a DOH around 115. This year we have a target to reach the DOH around two digits. If we can reach the targets and the inventory provision will contribute around 0.7 percentage point to our gross margin. Yeah. Okay. That's on a full year basis, right? 2023 Yeah. Versus 2022. Yeah. Okay. Okay, thank you. I think we have no further questions online. Okay. Any closing remarks from Eric and Linda? No, not from my side. Thank you. Okay. Thank you. I hand over the time to Derrick. Again, thank you for Morgan Stanley's arrangement for this. Okay, thank you. Thank you, Eric, Linda, and Grace for your time. Thank you everyone for joining us for this earnings call. Thank you. Yeah, we can disconnect right now. Thank you. Thank you. Bye-bye. Thank you. Bye-bye. Bye-bye.