Good afternoon, everyone. Welcome to Advantech's 3Q 2025 Earnings Call. My name is Derrick Yang. I'm the Tech Hardware Analyst at Morgan Stanley. Today, it's our honor to have Advantech's Senior Management with us to discuss the 3Q 2025 results as well as the outlook in the coming few quarters. With us on this call, we have the CFO and President of General Management, Eric Chen, President of Embedded Sector, Miller Chang, and Senior IR Manager, Grace Liao. In today's call, we will have the prepared remarks from the management, followed by the Q&A session. Without further ado, let me pass it to Grace for the briefing of the 3Q results first. Thank you, Derrick. Good morning and good afternoon, ladies and gentlemen. Thank you for your time today. This is Grace Liao, the Senior IR Manager of Advantech. Regarding our third quarter 2025 financial results, third quarter revenue reached TWD 17.77 billion. Increased 19% year-on-year and a flattish quarter-to-quarter. Gross margin rate reached 38.9%, slightly lower than guidance range due to material cost impact. Operating profit reached TWD 2.7 billion, with OP rate reported 15.2%. Q3 non-op items gained TWD 568 million. Mainly due to dividend income and disposal gain of investments. Third quarter effective tax rate reached 16.2%. Net income reached TWD 2.77 billion. Increased 22% year-on-year. Earnings per share in third quarter 2025 was TWD 3.2. In the right side, accumulated year-to-third quarter 2025 performance. Year-to-third quarter sales revenue reached TWD 53 billion. Increased 22% year-on-year. Gross margin rate was 39.8%. Operating expenses increased 11% year-on-year, which factored in always integration. However, expenses organically increased 5% year-on-year. Operating expenses remain strictly controlled. OP margin rate reached 16.5%, moderately improved year-on-year basis. For the three quarters this year, net income reached TWD 7.49 billion. Increased 18% year-on-year. First three quarters earnings per share reached TWD 8.67. For regional performance. In terms of U.S. dollar, year-to-third quarter 2025 revenue reached $1.7 billion. Increased 25% year-on-year. For regional performance, most of region reported double-digit increase, only North Asia year-on-year flattish due to political uncertainty in Korea market. For the major three markets. Accounts for 68% revenue contribution. For North America, year-on-year growth 23%, driven by semi equipments, robotic, and medical equipment projects. For Euro market, increased 22% year-on-year due to medical equipments, transportation, and gaming projects contribution. For China market, year-on-year increased 14% due to strong channel sales and automation and energy projects. For Taiwan market, year-on-year increased 24% due to strong optical and semi equipment projects and also transportation projects. For the sector performance, for the first three quarters this year, all major sectors enjoyed double-digit year-on-year growth. For IoT automation, year-on-year increased 15%, driven by energy infrastructure projects in North America and also China. And automation projects penetrated quite well in Europe and Taiwan markets. For intelligent system, year-on-year increased 34%. Outperformed in semi equipment. Video streaming, and also robotic projects. For embedded sector, year-on-year increased 11%. Strong demand in medical equipment, especially in North America, Japan, Europe, Middle East, and Africa market. Automation doing quite well in North America and also China market. Gaming sector doing quite well in Europe. Last one, intelligent service. Sector year-on-year increased 58%. If organic is 24% year-on-year. Besides always synergy, strong organic growth in healthcare, hospitality, mobility inspection projects. For balance sheet. Cash and cash equivalents accounts for 21% of total assets, lower than the previous quarter due to cash dividend payment in third quarter this year. Inventory under control. Inventory turnover days is 93 days, and the cash conversion cycle CCC is reported. 84 days, which is greatly under 99 days. The. Comfortable level for the management team. Overall, capital efficiency improved, and overall financial structure is quite healthy. This is my last page, so I'm handing over the time to President Eric. Thank you. Thank you, Grace. Good morning and good afternoon, everyone. Thank you for joining the meeting today, and this is Eric. I want to share some comments on our third quarter's results. In the third quarter, our top nine performers exceeded expectations in U.S. dollar terms. However, our gross margin and operating profit were slightly below guidance due to an increase in DDR4 component prices, which reduced our gross margin by around 1 percentage point. In the third quarter, operating expense grew by 11% year-over-year, 4.7% quarter over quarter. This increase is primarily due to the consolidation of Always and the one-time relocation fee and the declaration fee for our Japan Osaka office. If we include these factors, the organic growth rate for operating expenses will be 5% year-over-year. Regarding the regional performance, the U.S. and the European market showed significant rebounds, with growth rates of 23% and 22% respectively. In the U.S., strong demand was noted in the medical, video streaming, and semiconductor sectors. In Europe, just as Grace mentioned, the demand was primarily driven by the transportation, automation, and medical sector, and the gaming sector as well. The Chinese market grew by 14%, driven by the factory automation and energy sectors. The Taiwan market grew by 24%. In contrast, Japan's market posted single-digit growth only, while the Korean market declined 6%, largely due to political issues in the past few months. For product perspectives, the IT system and IT service sector performed well. IT system benefited from strong demand in video streaming, semiconductors, and energy. The IT service sector saw a remarkable 58% growth due to Always consolidation. Excluding Always, the growth rate was 23%. The other two sectors, including IT automation and embedded design sectors, continued to perform on track. This concludes my remark regarding the third quarter. Next page, yeah. Let's review the trend of our BB ratio across different regions. As indicated on the page, the BB ratio for the third quarter decreased from 1.08 in the second quarter to 1.01 only. In North America, the BB ratio peaked at 1.19 in the second quarter, but softened to 0.88 in the third quarter due to the issue with design-in project circle. Europe is showing sustained strength with a BB ratio of 1.18, despite the challenging pause by the summer vacation period. The Chinese market remained stable with moderate growth, and the ratio has consistently been at or above 1.8 throughout Q1 to Q4. In the third quarter, the BB ratio was 1.01. It is also worth noting that our shipment has consistently increased in U.S. dollar terms since the first quarter of 2024. I saw a few questions regarding the BB ratio, and I will expand more details in the Q&A session, especially for the October BB ratio. Next page. As we look ahead to the first quarter, we expect our revenue to be between. $550 million and $570 million U.S. dollars, based on an exchange rate of $1 to TWD 30.4. Regarding margins, we anticipate our first quarter gross margin will be between 38%-40%. In addition, we project the operating margin to be between 15%-17%. This concludes my guidance for the first quarter. Thank you for your attention. Thank you, Eric. I will pass the time to Derrick. Thank you. Sure. Thanks, Grace and Eric, for the prepared remarks. Now we will start the Q&A session, and we have already gathered some questions from investors in advance. Management will go through them first, and then we will take the questions from the line. The first question is regarding the preliminary colors into the 2026 outlook. Not sure whether or not Management can share some views on this outlook into 2026. Let me share my thought. Actually, we are currently in the target-setting stage for 2026, and the overall figures for each product group and regions will be more precise by the end of November. Preliminary feedback from the U.S., Chinese, and EU business leaders indicates that the three major markets are positive on automation, medical, and semiconductor sectors, and all set double-digit growth targets for next year. I met with our Europe business leader, Josh, who was very positive about the automation sector in Europe. The corporate goal is also to achieve double-digit organic growth next year. This is our goal to set a list of double-digit organic growth next year. As usual, we will provide official guidance on this every quarter. Okay, thanks, Eric. The second question is, how are the shipment and auto momentum so far as we enter into 4Q 2025? Also, can we share some initial colors on the BB ratio for each region? Okay. The BB ratio for quarter three remains stable. We have the BB ratio of 1.01 as a repeating base continued growth. For the entire fourth quarter, it's still too early to make predictions. However, I just give you an information. In October, the BB ratio was very aggressive, rebounding to 1.19. That increase was primarily driven by the end of summer vacation in Europe and the Chinese holidays, leading to an aggressive order placement. In October, the BB ratio was 1.23 for the EU, 1.20 for China, and 1.19 for the U.S., as we received a lot of design orders for the U.S. U.S. BB ratio did not perform quite well in the third quarter, but in October, it rebounded to 1.19. This is regarding the BB ratio. We just confirmed the figures in October. For the four quarters, it's still too early to make predictions. Thank you. Okay, thanks, Eric. The third question is, have you observed any impact from the tariff recently? Also, do you have any major plans to mitigate the impact? Also, what are your customers' feedbacks on those plans? Okay, let me explain this question. The U.S. market represents 31% of our total revenue. In the first half of 2025, 93% of the product we sold to the U.S. were imported from our plant in Taiwan, only 6% from China, and 1% from Europe. 93% import from Taiwan, only 6% from China. As a result, the high tariffs in China will not affect U.S. customers and their business. The majority of our customers, U.S. customers, need our products at our Taiwan production plant, which is currently under tariff exemption periods. The tariff rate for most of our products is forwarded to the U.S. and remains zero. The tariff rate, however, if Taiwan faces high tariffs, we will implement three key initiatives. I will expand. The first, expand our dropshipment service to our U.S. customers. I just gave you an example. One of our customers, key customers, very big customer, who previously maintained a single warehouse in the U.S.. In the past, we shipped all products to their warehouse, and then they distributed 40% of their customers outside of the U.S. Now we offer dropshipment service directly to their non-U.S.-based customers, enabling them to avoid high tariff imports by the U.S. government. We deliver the end-to-end service to avoid high tariff imports by the U.S. government. Second, we will increase the local assembly service at our U.S. production site. We have strong capacity in North America. We plan to ship the PCBA to the U.S. plant and complete the final assembly with high-end components such as CPU, hard drives, and memory locally. This will reduce the tariff impact since the import value of the PCBA is lower than that of the full assembly systems if the tariff is required. Third, adjust pricing based on our trading terms. Currently, 40% of U.S. orders are under ex-works terms, which means customers are responsible for paying the tariff by themselves. For the remaining 60% of orders, we will raise prices to offset the tariff impact, especially on standard products. For gear and project-based business, only a small number of customers are likely to seek tariff support from Advantech. In such exceptional cases, we might absorb 30% of tariff as a matter of principle, but subject to specific terms and conditions, including no postponement or adjustment to payment terms or shipping schedule. Overall, the tariff impact on the U.S. market now is limited. However, we are concerned about the price increase leading to a decline in demand, which could affect our business in 2026. This is what we are afraid of. If the tariffs are high, we will increase the price. Then the market demand will decline. This is my explanation for tariff and corresponding action for Advantech. Thank you. Great. Thank you, Eric. We will move on to the next one. It is regarding the component price hike. How much was the impact from the increasing component prices on your gross margin in the third quarter? Do you have any plan to raise your ASP? If yes, what is the estimated timing of that higher ASP in terms of the contribution to your revenue? Okay. The increase in material costs, particularly for the key components such as DDR4 and SSD, led to a decline of around one percentage point in our gross margin during the third quarter. If pricing continues to increase, the GP impact for the fourth quarter will be greater than in the third quarter. This is for sure. Since we prioritize secure raw material supply and ensure on-time delivery to our customers, there's always a time gap between cost increase and the completion of the setting price adjustments. At the beginning of October, we officially issued a price adjustment notice to our customers and worldwide business leaders, which increased 4% for both products and 8% for system products. However, for specific projects with long-term agreement, price adjustments are still under ongoing negotiation with customers. We expect the price adjustment to positively impact on new orders and standard products in the first quarter of 2026. For existing project orders, the margin recovery depends on the test of less pricing discussions. Take the U.S. sales team practice as an example. They try to collect a down payment and increase the selling price for most of the projects that will consume DDR4 or SSD. For existing projects orders, as mentioned earlier, they will negotiate with customers to revise the future price. We already made an official announcement for 4% four-level price increase and 8% for system-level price increase worldwide at the October. Yeah. Okay. Thank you, Eric. The next one is still on this increasing component cost. How is your inventory level for DDR4 right now? Do you have any issue securing them on the supply side right now? Since the second quarter, we have proactively met advanced procurement to align with customer demands at the market trend. However, due to a sharp increase in demand beyond our expectation for the over past few months, our replenishment has fallen short of demand. As a result, current inventory level remains low, and the overall market continues to experience a tight supply-demand imbalance. Given that major suppliers have implemented strict spot pricing and allocation control, we must now ask customers to make advanced payments before we prepare materials. This step is intended to secure mutual commitment and ensure the timely available of materials. To date, although we have faced challenges in procurement, memory, and SSD components, we have not encountered any significant supply disruptions. We do not encounter any significant supply disruption. This is very important. We anticipate this supply tightness and unstable price will dash into the middle of next year. So far, the inventory level is not high enough, but everything's still under our control. Yeah, this is my answer. Okay, thanks, Eric. We got another one on this component supply issue. How is the transition for Advantech from DDR4 to DDR5 for your products so far? Is DDR5 also seeing a tightening supply right now? The transition for DDR4 is in progress in line with our product roadmap, though the path varies by application segment, by different product groups. At the beginning of this year, our product division had already started the transition. For standard products, the transition is going more smoothly. For customer design products, transitions are mutually slower. Due to the lag involved, the qualification cycles, we usually need the customer approval for primary component change for the customer design products. This is what we are at our current stage. As for the creation of DDR4, it is also in short supply. We are not sure whether it is a part of major supplier marketing strategy or reflects the real situation. For this question, we have no comments on this part. Thank you. Okay, sure. Thanks, Eric. The next group of questions is regarding your regional and sector performances. The one we got is, what's the growth that we are expecting to see from each region, including North America, Europe, and China, and also their respective key growth drivers heading into 2026? Okay, thanks for the question. This is Miller speaking. About the region from three key main regions: North America, Europe, and China. We do expect that. Have a double-digit growth continuously in 2026 next year. About North America, as our direction. Aligned with the U.S. government, their strategy to focus on the automation, especially the semiconductor, move back to U.S., medical, military sector. Defense, and also the professional audio-video sector. Those sectors will continue to have strong growth. Talk about Europe. You know Europe is not an easy country to deal with, especially the cultural difference. Also the Europe government, they emphasize the protection of the employee works, right? However, we still see some sectors with strong growth momentum, such as automation, energy, oil and gas, agriculture. Military, which is expected to maintain a strong growth momentum until 2026. Talk about China. I believe China's situation is somehow unique. They are continuously developing their own technologies and component supply chains. Unfortunately, we established an R&D center at Quanshan, nearby Shanghai, in 2013, twelve years ago. Now, most of the demand in China's domestic market is supported by our China team in Quanshan. About the automation, semiconductor, medical, and also transportation sectors are projected very strong growth in 2026. This is the answer for the question. 3.1. Sure. Thanks, Miller. The next one is a bit similar, but maybe from the BU's perspective. What's your view for each business unit's demand outlook for 4Q? How are we looking at 2026 in terms of the relative strengths and weaknesses among these different BUs? Okay. From the sector point of view, I think the first three quarters and talk about the fourth quarter will be very similar too. The first three quarters. From the strong sector, I believe because of the AI technology will continue to drive the growth of the industry. Such as the automation sector, medical sector. Especially the semiconductor equipment is a great example. This year is quite good. We will foresee the continued growth in Q4 this year. Also the robotics sector, renewable energy sector, energy storage sector, healthcare, medical, are maintaining a very strong growth momentum. Moreover, our ruggedized edge computing system also have fully developed and continue to show a strong growth in the mining and also military defense sector. This is a positive side. Regarding for the weak sector, due to the consumer cutback, the spending as an income drop, that reflects some weak sectors such as retail and also gaming sector in some regions. This is the answer for 3.2. Sure. Thanks, Miller. The next one is regarding the Edge AI revenue contribution for the third quarter and also maybe for the first three quarters of the year. Also, any expectation for the outlook from this Edge AI business into 2026? What is the margin that you are making from this Edge AI product versus your corporate average right now? Do we expect that to be higher or lower in the coming few years? Okay, let me answer this question. Edge AI products account for 9.4% of our total revenue in 2024. In the third quarter of this year, revenue accounts for 17% of around $289 million, a surge from 9.4% to 17% in the third quarter. Internally, we divide Edge AI products into product level and component level. Component level means purely buy and sell, such as GPU card. The Edge AI product growth rate was an impressive 156%, accounting for 90% of total Edge AI revenues. In contrast, the Edge AI component grew by 118% and accounted for only 10% of our total Edge AI revenues. Regarding the margin of Edge AI products, the Edge AI product in automation, I service, is 4% above the corporate average. In ERT and ERG, it is aligned with its average. As for Edge AI component, just buy and sell, the margin is below average. This is my answer regarding the Edge AI. For 2026, we anticipate the Edge AI will have more penetrations and account for at least 25% of our total revenues. In terms of margin contribution, it's still too early to make the predictions. But we expect if we can sell more Edge AI products, we will gain some gross margin benefit from it. This is my answer. Thank you. Sure. Thanks, Eric. The next one is also regarding the Edge AI. What are the main sectors where Edge AI is currently applied? Are there any new emergent Edge AI or robotics applications? Also, the contribution from ACE series in the fiscal year 2025 and 2026? Okay, let me answer the question. Edge AI actually has been implemented into many vertical sectors from the existing service sectors, such as medical equipment, industrial equipment. These two big vertical sectors contributed a very significant business result to Advantech as today. For Edge AI and robotics applications as an emerging sector, over the past two years, after we established a product division to dedicate robotics product and solution development and also marketing deployment, now we have more than $200 million projects in design pipeline. It is quite good news from Advantech global sales and region. About the Edge AI and robotics application, especially, we are very confident that we will contribute our business in coming years. About the ACE application computing on edge, the product series, the product concept has been released in Q3 2025, actually just one quarter earlier. We do expect some new products such as ACE- R series for robotic market, ACE- I series for industrial market. We will start to release the product to the market by middle of 2026. This is an update from the Edge AI and also robotic application business progress for Europe. Thank you. Okay, thank you, Eric and Miller. Now we have already answered all of the previously gathered questions from investors. Now we can take the questions from the line. If you have any questions, feel free to raise your hand. After your name is pronounced, please go ahead and ask your questions. Derrick, we do see some investors raise hands online, so maybe we can take the questions. Yeah, sure. The first question will be from Rohit Kadam. Please go ahead. Thanks, Derrick. Thanks, Grace. And thank you everyone for this presentation. I have a couple of questions. First is on the U.S. BB ratio, which dropped to 0.88. Now, are there parts of the U.S. industrial CapEx where there is some sort of a slowdown is what you're picking up? Also, is this because you think there was some pull forward of demand in the first half, which is now normalizing? That's my first question, please. Let me answer the questions. Just as mentioned earlier, the U.S. BB ratio in the second quarter was 1.19. In the third quarter, it declined to 0.88. In October, the BB ratio rose to 1.19. About our internal design indicators, we still have very positive about the pipeline. The design win and design win indicators show Advantech USA already got a lot of pipeline, design win pipeline on hand, and it will secure our business for the coming two to three years. For the third quarter, I think the BB ratio declined just for the design win cycle because in some times we will slow down for the design order placement from the customers. This is my answer. Thank you. That is very clear. The second question is, if you could just share the organic growth number in dollar terms for this quarter as well as for the nine months of this year. Okay. This year. This quarter? This quarter. Yeah, this quarter and also for nine months, that'll be very helpful. I think most of the revenue is organic growth. Only for Intelligent Service, 58% due to factory in ORIS integration. However, Intelligent Service, organic growth is 24% year-on-year basis. This is for the first three quarters. Yeah. You mean the YTM organic growth? ORIS accounts for 4.7% of our consolidated revenue. If we deduct ORIS from our total growth, it will be 20.3%. It is our organic growth. This is the figure of our organic growth. Thank you. Understood. That's very helpful. Wish you all the best. Thank you. The next question is from Will Man. Will, please introduce yourself. Yeah, and go ahead. Thank you. Thanks very much. You maybe just talk a little bit about the competitive environment within Mainland China. That would be great. I guess I've seen your margins be very strong over a number of years. And I'd just be interested in just to sort of how you see that competitive threat within the mainland evolving. I guess what do you think? What are the key success factors that allow you to keep those margins so high? Thank you. China. Yeah, China. Okay. Regarding for China market, yes, there's quite a big competition there because of the China local domestic peer company. They try to cut the cost to try to provide a very similar product to our customer. However, our industry, our service market, are quite concerned about the longevity of long-term services. So not only talking about the price, but also talk about the quality and also the long-term support services. That's the big reason that we can get back some business design, design win in the past year and contribute the result from this year. Another important figure is that we invest a lot of the resources in our China supporting team from the product services and also technical support as well. That's the reason the local competition is even higher. However, our team is still quite strong to compete with our competitor and also get a business design win. That's the answer for your reference. Yeah. Let me add some colors for how Advantech to protect our gross margins. Actually, we do very hard. Actually, in China, our selling price dropped about 2% compared with year 2022 or 2023 because China price competition is very hard recently. The reason we can strengthen our gross margin and keep at around 40% mainly from two factors. The first one is we drive our operational efficiency very hard. In our production line, we adapt a lot of AI solutions to compensate a lot of the labor investments. Also, our procurement team have a KPI for the cost savings. They do a lot of efforts to reduce our material price. Just for your information, most of our products, take our product as an example, 90% of the product cost came from material cost. The labor and overhead only accounts for 10%. For the labor, the labor and overhead only account for 6% or 7% only. For the system product, it accounts for 10%. How to secure the material price also drives material cost savings is very key for Advantech to protect our margins. Also, just mentioned earlier, we have a very strong manufacturing capacity both in Quanshan and Taiwan. Both two regions have a very good improve our production efficiencies. This is the reason we can keep our margin at around 40% for a long run. This is my answers. Thank you. Thank you. If I could just have one follow-up. You talked, I think, earlier about the services component that people, clients choose you because of the product quality as well as the after services. That services business, is that a separate revenue stream or is it essentially captured in the product revenue when you divide it not by geography, but by products? Actually, internal, we have a product group called Advantech Global Services. It's around $250 million, $200 million, and $300 million. Yeah, it's Advantech service. Normally, we provide CTOS, we provide RMA, we provide local assembly service, and some project installation, such as WISE IoT project installation and turn on some software features to serve our industrial customers. The margin is around 28% because most of the AGS, we treat the CPU, memory, and we treat the—I just give you an example. For the IPC, we have chassis, we have motherboard, we also will add on the memory, CPU, and peripherals. We separate the IPC as different calculation factors for the CPU, memory, and hard drive. We will contribute as the AGS revenue, and for the chassis, for the motherboard, we will belong to automation assistance revenue. There's a total difference, margin, and total difference BU. We have a different revenue target for both BU. Yeah, this is my answer. Thank you. Thanks very much. Okay, thanks. Right now, we are in the Q&A session. If you wish to ask a question, please raise your hand virtually. Okay, before we go to the next one, maybe I can ask a couple of questions from my side. The first one is regarding this component cost. Since there has been a lot of focus on this increasing DRAM price. Not sure if Eric can share with us what's the DRAM as a percentage of your total component cost for this year or for the most recent quarter. Yeah, sorry, I don't have the figures on hand. Maybe I can provide more detail to you later because internally, we don't calculate these figures. Maybe we can try to figure out. Yeah. Okay, okay. No problem. Thanks. The next one is regarding your Edge AI business. It certainly has been growing pretty quick. Could you share with us or provide more information regarding what are the specific products or components that Advantech has been providing in this Edge AI space? All right, I can give the answer about the Edge AI implementation. From Advantech product point of view, actually, there are three product segments. The first beginning is Edge AI platform design in business. That means the customer needs an AI acceleration module, for example. They come to Advantech, request based on their requirement to provide the Edge AI acceleration module like GPU card, for example, or Edge AI acceleration module, for example. They buy it and plug into their existing system to upgrade the system with the AI computing power. This is the first of the, number one, design in business model that currently Advantech will handle it. Second is Edge AI system. For different diversified vertical market, for example, like medical, like industrial equipment in factory. The customer comes to Advantech only buy an Edge AI system, ready-to-use system. They implemented their AI solution into, based on our Edge AI system. Then we provide the software stack together with our Edge AI system, inference system, for their design in business. This is the second business model. The third one is Edge AI server. Customer needs to implement the large language model or a small language model based on the Edge AI system. Okay, they do not like to leverage the cloud solution. They want to implement their own on-prem server system based on their application. They come to Advantech to buy Edge AI server. Then we also provide an Edge AI stack, a Wise stack, together with our hardware solution to our customer to implement their solution based on our Edge AI server. Three different kinds of product solution and offering that we currently support our customer. That is for your reference. Thank you. Okay, thanks, Eric. Next, we got a question from Benny. Please go ahead. Okay, thank you for the presentation. I have a question. Regarding the U.S. market, what opportunities or challenges do you see from the manufacturing shortage trend? Okay, that's my question. Thank you. Manufacturing. Can you say that again? The manufacturing business, right? About the manufacturing. Yes. Regarding the U.S. market. What opportunities or challenges do you see from the manufacturing shortage trend? Maybe U.S. opportunity. Oh, maybe USA. All right. All right. Okay. Yes, as I said earlier, the automation segment, especially focused on the manufacturing and factory, built up in USA market sector, which is a very significant increase in the requirement and demand to Advantech. From the existing IPC business model, also our Intelligent System, especially for the factory automation, machine automation, the demand is increased to our product development team. That's the reason that our USA sales team got a lot of inquiry. Also, they are under the design process from our product division and also sales division work together with our customer locally in USA. Understood. Thank you. Thank you. Welcome. Okay. And then we got another question from Rohit Kadam again. Please go ahead. Hi, thank you. Yeah, just two quick questions. On the Edge AI piece, it seems very interesting. We are doing very well. Who would be our major competitors here? Would it be the same Taiwanese kind of bunch, or are there some good European and American companies we compete with in Edge AI? Okay. From the pure hardware product point of view, I think more than 50% of the competition is from Taiwan hardware supplier and vendor. That's for sure. Yes, you are right. However, I think the Edge AI, the real value is provided not only from the hardware point of view, but also from the software application layer point of view. That's the reason because of different service sectors, vertical sectors like medical, like robotics, like the retail market, they did require different patients to implement it together with our Edge AI solution. That's the reason we are quite closely working with the individual sector, the SI or SV, all together to provide the hardware and software integrated solution to service our customer. I hope that's right. Yeah, I was just wanting to see if larger names like, say, the likes of Siemens, etc., would be a direct competitor in Edge AI, or would they largely be a customer of yours? Not really. really. Yeah, not really. They are in the some automation area. As I said earlier, different service sectors, we did have different competition. If we only compete with the portable product or hardware product, the main competition is from Taiwan, for sure. Yes. Got it. No, thank you. That's very helpful. One last one from my side is the non-operating income, which you mentioned, dividend income. Which entity is this which gives you the dividend? If you could just clarify. Dividend income. I think the dividend and operating items are the dividend income mainly come from ASUS. and WeMart. WeMart. One of our subsidiaries, Action Tech. Yeah, Action Tech. I remember that English name. Yeah. Mainly from these three companies. Yeah. Got it. Thank you. Thank you. We can take one last question. Yeah. Sure. So the last question will be from Gary. Please go ahead. Thank you for taking my question. Regarding Edge AI, I'm trying to understand whether currently the demand that we are seeing is mostly replacement-driven, where those customers already bought an industrial PC, basically, now they want a PC with a GPU. Or do you think the majority are new demand where they were not using industrial PC at all? Okay. Thanks for the question. As I said earlier, the existing vertical market, subsector that we encounter. The medical equipment and also industrial equipment is originally our big subsector. They already have the system. Some of them only request Advantech to add on the GPU card to upgrade their system to have the AI computing power. That's for sure, big market. For the new market, service sector, especially like AMR robotic market, for example, customer requests a lot of the new initiatives, especially from the AI. AI robotics, the AI algorithm development, deployment for the AMR and robotic market. That's the reason the inquiry is not from the generic, traditional our customer. It's from the new robot application developer. For example, in Korea is a good example. Some of the robotic companies, they are only the AI software companies. They develop the AI mechanism, algorithm to support the mainstream robotic customer, their target customer. They are not put their attention on the hardware development, but they put their focus on the software AI algorithm development and the innovation to support the AI robotic market. Depends. Our existing service market, there's quite a big portion to push the AI, Edge AI solution growth, but also the new emerging territory and also emerging sector, we also put a lot of attention on that. Productive is very aggressively to put all our attention on both sides. Understood. A quick follow-up on that is, given we have seen an increase in Edge AI revenue, have we seen any impact on the revenue of the peripherals like industrial cameras, sensors, as well as a software and cloud platform? Yeah, you are right. Before time, yes, they only come to buy the ready-to-use system or the embedded platform for the design in for the Edge AI system. Okay. However, moving forward, there are more and more industrial peripheral module requirements coming to Advantech. For example, we provide, we call it building block solution for robotic application, not only the board and system, but also the camera module like 2D and 3D camera module to support the robotic application. Also provide the wireless component to support the LiDAR and MU solution, for example. They also work with the region, the software ISV developer to provide the integrated solution. The building block not only from the pure Edge AI hardware platform, but also including the component and also the software application. Yeah, that's for sure. Thank you. Got it. Any chance to maybe quantify and perhaps how much revenue is from software and cloud platform as well? I remember you mentioned that number before. I would say that pure hardware solution, the revenue can be very easy to accumulate. At least another 50%. The total revenue will come from, will be generally from the peripheral module and also the component integration and also software evaluated. For Edge AI projects? For Edge AI projects, 50% is not only hardware, but also the component and also the software application integration services. Traditionally, majority, like 90%, is just the hardware? Yes. Just the PC? Yes, that's correct. Got it. That's very clear. Thank you very much, Management. Welcome. Okay, thanks. Right now, we do not have further questions on the line. I would like to hand it back to Eric to see if he would like to make some closing remarks. Okay. Thank you. Thank you for the questions, also for the participation. My ending comments, we anticipate true digital growth in 2026 as Edge AI applications become more mature and are widely adapted by our customers across factory automation, healthcare, transportation, and more. However, the shortage of key components became a critical short-term issue. I treat the short-term issues. Also, we see the opportunity to grow our business by leveraging our position as a leading Edge AI computing company, also our stronger supply chain capabilities. We are committed to ensure reliable delivery to our customers and actively manage our ASP to safeguard our profitabilities. This is our long-term strategies to our customers. This ends up my comments and. Have a good day. Okay, thank you, Eric. Thank you, Miller and Grace, for your sharing. Thank you, everyone, for joining us for the call. We will conclude the call here. See you next quarter. Thank you. Thank you. Thank you. Bye-bye. Bye-bye.