Welcome to Nanya Technology's 2023 first quarter earnings conference call. All lines are in a listen-only mode. The conference will be held only in English for investors around the world. Today's conference will be approximately 60 minutes. Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the first quarter of 2023, followed by our guidance for the next quarter and key messages. Nanya Technology's Executive Vice President, Dr. Lin-Chin Su, Vice President, Mr. Joseph Wu, and Financial Executive, Mr. Philip Jao, will join us as we open our Q&A session. Today's presentation materials are available for download at Nanya Technology's website at www.nanya.com. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause the actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our presentation materials. Now, I would like to turn the call over to Nanya Technology's President, Dr. Pei-Ing Lee, for the summary of operations and current quarter guidance. Dr. Lee, please begin. Ladies and gentlemen, welcome to Nanya Technology Q1 Investor Conference. I'm Pei-Ing Lee. Before the meeting, a couple of statement. A number of negative factors had influenced the global economics and DRAM market. As a result, Nanya's Q1 performance is not so good. Okay. However, we have been seeing the ASP decline been slowing down. Okay? As that is a start, let me begin today's report to you. The content of my report is Q1 revenue and result, and then followed by CapEx and bit shipment, market outlook, and business review and outlook. First of all, Nanya Q1 net sale comes to NTD 6.425 billion, and which is down, okay? Gross profit, -NTD 554 million, okay? With a remark down below is, that's including our idle cost. Operating income comes to NTD -2.885 billion, -44.9%, okay? EBITDA is at NTD 873 million. Non-operating income is at NTD 773 million, and followed by the income benefit at NTD 428 million. When it comes to net income for Nanya, is NTD -1.685 billion at net margin of -26.2%. Our earnings per share is NTD -0.54 per share. The book value comes to NTD 55.62 per share. This is already consider the deduction of approximately NTD 2.13 per share cash dividend upcoming payable. For Q-to-Q and year-to-year comparison, our revenue is minus 19.2% compared to Q4 last year. That indicate our shipment decreased by high single digit, and also indicate that our ASP decreased by high single digit, with exchange rate also unfavor by low single digit. For year-to-year, representing revenue down by 67.8%, and mostly due to decrease by high 30s in shipment and low 50s in ASP. To the next page, our revenue comparison quarter-to-quarter, our Q1 2023 revenue NTD 6.425 billion versus Q4 last year, NTD 7.954 billion, is down by 19.2%. In the remark on the right-hand side indicated ASP is down by high single digit, bit shipment also high single digit, with exchange rate also unfavorable by low single digit, okay? For gross profit, negative NTD 554 million at -8.6%. Okay? Compared to Q4 last year, it is positive at 13% of NTD 1.037 billion. The gross profit decreased by NTD 1.591 billion, mostly due to the remark described above, plus including idle cost. Okay? Without considering idle cost, the gross profit still marginally positive. For operating expense, NTD 2.331 billion versus Q4 last year, NTD 2.581 billion. It's very similar. Operating income at -NT dollars 2.885 billion, versus Q4 last year, NT dollars 1.544 billion. This is mainly due to the ASP decline and bit shipment decline. Net income comes to loss of NT dollars 1.685 billion, versus Q4 last year, loss of NT dollars 1.146 billion. The net income decreased by NT dollars 539 million, with operating income decreased by NT dollars 1.341 billion, exchange rate favorable. The Q1 this year, the exchange rate is still negative, compared to Q4 last year, the negative at -NT dollars 716 million is a smaller number. The income tax favorable by NT dollars 156 million. For operating expense, on the next page, our SG&A expense for this quarter, this past quarter, NT dollars 551 million is in the ballpark of the range. On the right-hand side, R&D expense, NT dollars 1.780 billion, also normal. Cash flow-wise, Q1 this year, beginning of the balance, NT dollars 73.593 billion. This quarter, we have the cash from operating activity negative by NT dollars 2.276 billion, mostly for the operating loss. Q4 last year, we still have a positive of cash from operating activity at NT dollars 699 million. For capital expenditure for Q1, NT dollars 5.817 billion, okay? For financial activity and others, minus NT dollars 565 million. At the end, the balance for Q1 is NT$ 64.935 billion with free cash flow negative of NT$ 8.093 billion. Our CapEx and bit shipment situation, on the left-hand side of the chart, the CapEx for this year, we targeted for NT$ 18.5 billion. This is about -11% year-over-year reduce. The wafer equipment CapEx will be less than 50% of that. The remaining is mostly for non-wafer equipment CapEx. Bit shipment-wise, first half of this year, we're seeing weak demand may continue. Second half likely will be gradually improved. Production output reduction targeted for up to 20% dynamically. Okay? This will be dynamically adjusted according to customer demand as well as the market situation. For market outlook, first of all, we're seeing DRAM demand relatively weak for first half 2023. This is the result from weak global economic, weak consumer confidence and conservative enterprise spending. Of course, there are a number of negative factor, as most of you already understand. That's including high inflation, interest rate hiking, geopolitical conflict in Europe, bankruptcy in U.S. and European banking industry, also including weak China domestic demands. For the outlook, second point is, we're seeing output adjustment by DRAM supplier in first half this year. We're also expecting seasonal demand improvement may favor gradual inventory digestion. We are expecting marginal DRAM market recovery in second half this year. From a supply side, as the inventory continued to peak in, some supplier took action on capacity adjustment, slowing down process migration and control of capital spending. The balance of that will be the outlook for second half this year. Demand, each of individual application-wise, server market, enterprise cloud customer have been cutting spending due to sluggish economic. However, penetration of AI and 5G may improve server DRAM demand. For mobile market, U.S. and Korean mobile shipment has been relatively flat or relatively healthy, while Chinese smartphone shipment relatively sluggish. Second half this year, smartphone shipment may improve seasonally and inventory may be digested. For PC market, annual PC unit shipment may continue to decline. However, maybe already in a low point, second half PC demand may improve due to gradual inventory digestion and average DRAM content increase. For consumer market, large order for TV has been received in first half, and overall consumer market may recover in second half as demand for IP camera, networking, industrial, automotive application are relatively healthy. For Nanya business review and outlook. For finance, on the top, cash dividend of NT$2.13 per share will be distributed. For Q1, we have a net loss of NT$1.685 billion, with EPS NT$-0.54 per share. For operation-wise, we're seeing flexible approach in adjusting our product mix and production output and CapEx to better response to weaker market demand. Our first. 10nm-class is already in production, and our second 10nm-class E product piloting is on schedule. For the quarter, Nanya has been recognized by Top 100 Global Innovators in 2023. For the market outlook, currently, DRAM demand is still relatively weak. However, we are expecting marginal DRAM market recovery in the second half this year. With that, thank you for your attention, and let's begin your question. Yes. Thank you, Dr. Lee. Ladies and gentlemen, before we begin the Q&A session, I would like to remind everyone to limit your questions to two at a time to allow all participants an opportunity to ask questions. We will begin taking questions from dial-ins first. To webcast participants, please message your questions with your name and company name to Nanya operator in the chat box. Now, for dial-in participants, please press star key and one on your telephone keypad if you would like to ask questions. If you would like to cancel your questions, please press star key and then two. As a reminder, it is greatly appreciated that you turn off the speakerphone mode of your device to prevent possible echo effects. We thank you for your cooperation. Now, for dial-in participants, please press star key and one if you would like to ask questions. Thank you. The first one to ask questions is JJ Park from JPMorgan. Go ahead, please. Okay. Thanks for taking my question, Dr. Lee. I have 2 question. Number one, looking back at the Q1 result, how much inventory valuation loss did you recognize during the Q1? What's the day of inventory by the end of the Q1? For location. Okay. JJ, your question is inventory loss. In the Q1, we recognize equipment idle loss. However, we still don't have to recognize the inventory loss due to our inventory value still higher than our cost. Q1, still no inventory evaluation loss. As of the day of inventory, day of inventory is high, okay? Hopefully it's already at peak. Okay. Can you quantify how many day of the inventory you have? We don't publicly disclose our inventory number. You may be able to as we come out with our financial report to you, we will have the more detailed report later on. Okay, got it. Looking at the your blended ASP down, high single-digit% QoQ in the Q1, it seems to be much better than the mainstream DDRAM price. Do you think the trend will actually continue in the second quarter and then probably second half? Yes. That of course, is what we working hard for, okay. Our ASP decline is slightly better than market average for the last quarter, okay. Our shipments remain steady month-by-month, okay. Which is good sign that maybe there's a chance of the ASP decline will be gradually reduced, okay, the slowdown, as I indicated in the very beginning. Likely that this trend will continue to happen for second half. Okay, thank you very much. Ladies and gentlemen, if you would like to ask questions, please press star key and one on your keypad. Thank you. Next one to ask questions, Judy Tsai from UBS. The line is open to you now. Thank you, operator. Dr. Lee, I have 2 questions. First question is, well, there's a lot of discussion regarding to the generative AI. Can you try to give us a little bit of perspective, how much more memory can we expect in a sort of generative AI environment? Maybe give us some guidance on that. If you can quantify, that would be even better. This is the 1st question. I think in overall speaking in general, introduction of AI and 5G will improve the market demand, overall speaking. Versus particular AI application, as you ask about the generative AI, that's one of the AI application, okay. There are quite a few AI application that can be found. That's including also AI application in industry, in enterprise, in many other applications. For instance, Nanya has implemented more than 80 AI application in our, in our factory, in our manufacturing to making improvement on our overall efficiency, improvement our yield, improve our quality, et cetera. With those AI application, Nanya will need AI memory, okay. As a result will help. That's one of the example, okay. This enterprise need of AI also happen in many, many other companies as we speak, okay? This plus the generative AI, as you point out, okay, everything combined together is an AI contribution to this industry, okay? I also mentioned 5G is as people using more AI, including the generative AI, they will have more communication happen, okay? They will need more data moving around from cloud to cloud, from cloud to personal computer, from cloud to your mobile phone, et cetera. All this will trigger more demand in DRAM. However, specific number-wise that as you have asked, I would say this will happen, gradually happen, will not be a step function happen right away. Will be happening gradually. All in all, this is a very good bright spot, okay? Good thing that has happened. To quantify it right away is a very challenging question. Okay, Judy, I don't know if I asked you a question enough. Okay? Got it. Thank you. Second question is, Dr. Lee, you have seen through so many cycles before, right? What are the chances for you guys to make maybe break even in the second half? Of course, we are very hopeful for that. Okay? Nanya is, as I indicated at Q4 last year, we had lose money Q1. We marginally lose NTD 0.54 per share. Okay? The percentage-wise is big, but somehow we are able to have the pretty good operational efficiency as well. Okay? We are able to prevent inventory loss so far. Cycle-wise, I would say this would depend on several major factors. That's including, say, number one is from supplier side, what is the capacity output adjustment effect? Okay? The second is, as I say, seasonal demand improvement, how much that improvement will be happening. Of course, that would depends on many, many factors, as I indicated in the very beginning. All those negative factors that are impacting global economics, are they making improvement or not? Including geopolitical conflict in Europe, including the inflation, including bankruptcy in banking industry, including the China domestic demand, is that making improvement? If any of these negative factor make an improvement, we'll be also adding additional demand triggering. I'm very hopeful for the second half gradual recovery. Got it. Okay. Thank you, Dr. Lee. I'll get back to the queue. Thank you. Yes. Thank you. Our next caller is Jeff Owyler from Macquarie. The line is open to you now. Yeah. Hi, Dr. Lee. Thank you for taking my question. Do you think at some point in second quarter you'll see an inflection point where ASP will stop going down and maybe even or I guess at worst, flatten but start going up on a more monthly basis? For Q-to-Q quarterly, we are still expecting ASP maybe going down slightly, okay? Hopefully the ASP going down will be slower and slower, okay? Q-to-Q wise. However, this dynamically, month-over-month, may be more, even more indicator. There's a good opportunity that by the end of Q2 or Q3 sometime, we'll come to the point that you just asked. Okay. My second question a lot's been going on with U.S.-China trade war and semiconductor exports and Entity List. You know, are you less concerned about competition coming from China now than you were maybe six months ago? Any thoughts on how things have progressed over the last few months? I would say this is pro and con. Okay? Pro is, as you indicated, that the competitor may be slowing down. However, they will not stop. Okay? They will continue on their business for sure. However, they will not be probably as much of the impact. They already not so much impact, not so big impact before. Now, hopefully it is that not so much impact, it's not growing. Okay? That's from the supplier side. For the Entity List point of view, actually some of the Entity List is our customer, and that's a con side. That's a negative side for us. However, on the other hand also that, in the China market, we also have other customers developing, and there will be newcomer gradually coming up to the speed. Okay? There are pros, there are cons. All in all, I'm looking this as that, this is something that Nanya is cannot change. We cannot control. We have to take it and move on with our positive thinking of developing more business, okay? To help Nanya business. Okay? Thank you, Jeff, for your question. Yes. Thank you, Dr. Lee. Ladies and gentlemen, we are still in dialing Q&A sessions. If you would like to ask questions, please dial star key and one on your telephone keypad. Thank you. Next one to ask question, Simon Wu from Bank of America. The line is open to you now. Thank you, operator. Thank you very much, Dr. Li. Always a great comment. Appreciate. Number one, when we look at the industry trend, your competitors already reported 20%, 30% price cut December quarter. The year-to-date data point just to indicate a quite significant price cut trend. Any key reason why you defended well the customers' price cut pressure? Your report is saying high single-digit price cuts. Any rationale or background or differentiation to see the, only the single-digit price cut for the March quarter? Thank you. Yeah. One of the key factor is that Nanya is no longer a single commodity deal and supplier, okay? We used to so much concentrate on commodity memory at time that we are more than 90% only to commodity, only to few prepare. We had changed that. We are doing a major adjustment on our business direction that we diversify our application, diversify our customer base. As I keep on mentioning that we now have hundreds, okay, sometimes 700, sometimes 800 customer that we're constantly dealing with, okay? Customer base is much wider now. Product wise, we actually many years ago, we only ship maybe 1 or 2 product at that at one time. Now we have more than 30 products that are serving many customer at many different market application. That actually help us a lot. Basically, it's a product portfolio customer base. Also, Nanya is doing a lot of more application service as well that tend to stabilize our business. Probably that's the reason, okay? We will continue to work on the effort to make even further improvement for our for our business. Yeah, great point, Dr. Lee. Any follow-up question, is there any rough idea your Q1 revenue mix consumer maybe 60% or for low mid-single digits or et cetera? Yep. Any rough idea of revenue mix? Thank you. Yes. Our consumer, in general speaking, is staying around 60% to 70%, okay. That number, that ratio did not change in a big way, okay. As I indicated in also my report that the impact on economic is in every area, okay, including the server market, the PC market, mobile market, as well as the consumer market has been impacted by this global economic issue, by consumer confidence coming down issue. All those been making impact to all the sectors, okay. Yeah. our general consumer, that's including so many different area by itself, okay? we were able to using a product portfolio, using different customer base to make adjustment within that. What's the mixed ratio? Consumer 60%-70%. PC maybe mid-teen IT or mobile, how much? Server? The consumer. The server now is mid-single digit, okay? Yep. It's running around mid-single digit to 10%, on and off. Yes. Okay? Then our mobile is running around 10%, okay? Yep. Also in the mobile area, we are serving areas that also with different, application, many different customer, et cetera. Business we're serving in is actually, more stable compared to- Yeah. main mobile market in the mobile phone. Yeah. PC? Yeah. PC is about mid-teen or? PC is a race. Okay. You might ask, probably around, PC is around mid-15, yes. Mid-teen? Yeah, mid-teens. Yeah. Yeah. lastly given the fact your competitors they, keeping saying production cutback, one of the the big memory makers also confirmed the production cutback. Any update your utilization ratio or percentage of the the wafer input reduction, March quarter and then the outlook, if you don't mind? Thank you, sir. Yes. I already reported last quarter and this quarter that Nanya is doing up to 20% production cut. Okay? Of course, this is. The way we're doing is very dynamic, okay? According to which product that our customer will require more or less, okay? Which market is going more demand or less demand. We're doing dynamic adjustment every week, okay. I cannot give you a very specific number of as a whole. In general, up to 20% is what we're doing. Okay. That's enough to expect industry more balanced or a price recovery in second half then? For Nanya, we are relatively small. Okay? If you look at Nanya's size compared to the big supplier, the biggest supplier is like almost 22 times our size. Okay? 22 times of our size. Nanya cutting 20% is a peanut compared to the industry demand. Yeah, the competitors also doing 20%, 30% production cuts. Yeah, yeah. My question is, you think it's enough to see the maybe a stable price in second half or a recovery? I think Simon, you are asking tough question, is that I really cannot comment on a specific competitor, okay? I also don't know what is their production cut, specifically on which product. Demand and supply-wise, it's very difficult for me to comment on which specific market will get better sooner or later. Average speaking, just average speaking, the overall supplier production adjustment, plus seasonal demand gradual improvement, will help digesting the current peak in inventory, for sure. Okay? That's what I'm saying that I'm expecting gradually market recovery. How fast will depend on all these quantitative sides of how much demand increase, how much supply control. As well as all the negative factors, is there any improvement in, for instance, geopolitical conflict in Europe, is there going to be a peaceful settle? If that happen, will help a lot also. Yeah. Yeah. Very clear, sir. Really appreciate. Thank you very much, Dr. Lee. You're welcome, Simon. Ladies and gentlemen, if you would like to ask questions, please press star key and one on your keypad. Thank you. Please press star key and one on your keypad if you would like to ask questions. Thank you. Next one to ask question is Simon Wu from Bank of America. The line is open to you now. Thank you. Sorry, yeah, no one is asking the question. Very quickly, the financial-related thing. Your income statement shows the positive EBITDA margin 13.6%. It's good, and seems to be high depreciation cost, which covers the operating loss. When you look at your statement, page 9, the cash from the operating activity is -NT$2 billion. That means that you are still spending extra NT dollars for the working capital. Well, would you explain, yeah, how you manage the cash flow? The free cash flow is -NT$8 billion. Your cash balance is still $2 billion or NT$65 billion. It's seems to be big enough to cover the operating loss. Any update color on your cash flow management, sir? You need any debt financing or equity financing? Thank you. We don't look at this financial number, we don't have the urgency of needing financial financing activity yet, okay. One important point is the CapEx requirement, okay. If you look at this financial number, operating activity -NTD 2.2 billion, but the CapEx is NTD 5.8 billion minus this quarter and NTD 6.6 billion last quarter, okay. That's also the key reason for free cash flow being negative, okay. That's also one of the factor we have to look into, okay. That's why we have been gradually reducing our CapEx since last year already, okay. Last year, our spending, 2022, our spending already lower than our original plan. This year, our planning is further down from last year, at NTD 185 billion, okay. How much spending that going to be, well, also we have to measure that and making sure that, we be careful on CapEx as well. As I indicated, as I indicated also very clearly that our CapEx, less than 50% is in wafer equipment spending, okay? We are already making quite a bit of CapEx spending on equipment, we already control that in quite a significant way. Okay. Yeah, sure, sir. One last question. Regarding the China government's potential restriction on the U.S. memories maker, do you see any impact on this or potential benefit possible thing on Nanya Technology? You can also recap what's your revenue sales exposure to China, 20%, 30%? Yeah. Yeah. I used to report that our sale is around, yes, around 20%. Between 20%-30% to Chinese customer. Yeah. In terms of Chinese government action on certain supplier, I think that I should not comment on other suppliers impact by all the factors, external factors. I don't think that's fair, okay, for me to comment on that, okay? In terms of that impact to Nanya, we don't see any significant impact yet. The size of Nanya is not big compared to all these major supplier, okay? At this point, I don't see that there are impact on Nanya. Yeah. Yeah. logistics-wise, once you fabricate the wafers in Taiwan, all the packaging, testing also done in Taiwan. Yes. The finished know go to Mainland China, right? By airplane or on cargo. That's the logistics, right? Logistically-wise, to Chinese customer, of course, that's the way we do it. Yeah. You don't rely on the China domestic packaging testing companies? No. We don't. We don't do that directly. Yeah. Yeah. Okay. All clear, sir. Appreciate it. Thank you. Ladies and gentlemen, if you would like to ask questions, please dial star key and 1 on your keypad. Thank you. We are now starting Q&A session. Please dial star key and 1 on your keypad if you would like to ask questions. Thank you. Please press star key and 1 on your keypad if you would like to ask questions. Thank you. There seems to be no further question at this point. We are going to move on to the webcast Q&A session. Dr. Lee, please begin. The first question is from Chen Jiabin, Sino Venture. The growth margin trend for coming quarter and CapEx trend. The growth margin, likely, as I indicated, that the ASP will be still decline and hopefully the decline will be smaller. Okay? Also growth margin has a lot of factor on our idle cost, our production cut, okay? Also depends on how much we cut our production in terms of cost increase, okay? That also will be adjusted dynamically, as I say. Trend-wise, I cannot give you a specific number for that, except ASP will be marginally declining still, okay? CapEx-wise, as I indicated, we targeted for 18.5 billion NT dollars, okay, for the year. Our second quarter will be on schedule, okay, for our spending. Is there going to be further change? We will also do it dynamically. Our second question from Paul Chan KSI. The question is 2Q 2023 ASP and shipment outlook. ASP, I already commented that on the last question. Shipment-wise, hopefully, the shipment, if there is some gradual seasonal improvement in the demand, I'm looking forward for gradual shipment improvement. The extent of how much improvement will depends on all the factor I have discussed over and over again just now. The next question is Richard Hsia from Fubon Securities. What would be the R&D and SG&A expense in 2023 and 2024 respectively? In general speaking, we are not slowing down our R&D. We'll continue to have the R&D spending, and we'll continue to develop several generation of technology in parallel. Okay? R&D will be stable, okay? SG&A expense, we also don't see that to be a major change, okay, for the next couple of years. Stanley Wang, next question, SinoPac Securities, the question is, "What would be the depreciation in 2023?" Monthly wise, it is around TWD 1.2 billion-TWD 1.3 billion. The next question is, what would be the dividend policy in 2023? We already making announcement just now, okay? The dividend distribution will be NTD 2.13 per share, that will be distributed in likely will be in Q3. Q3. Oh, likely it will be in Q3 this year. Okay. Next question from T.K. Yi from Principal. Question is, what is your view about Samsung utilization cut? I'm sorry, I cannot comment on other suppliers' policy. In general speaking, I have made comment on whole industry as a whole, okay? The next follow that is by how much is it more for DRAM or NAND? Again, all the question is, please exit that company specifically. I'm not expert for other company's policy. The next question is Mr. Chen Kuan- Yi from Zhicheng Capital. The question is, at the moment, is there any sign of DRAM recovery? Actually, I have making quite a bit of comment on this over my presentation. Yes, we are potentially seeing some marginal improvement as we speak. How much improvement is it going to be speeding up, it depends on so many different factors, and I also indicated on those factors already. The next question is from S.K. Kim from Daiwa. The question is, it looks like demand remain weak and inventory adjustment is prolonged. What is your current DRAM bit demand outlook for 2023 versus early this year? This question is in general, I already covered through my presentation and through the question and answer as well. Yes, first half we are seeing potential weak demand. However, in Q2, likely may have maybe some improvement gradually already. Inventory digesting, it is possible happening from the factor of a supplier production adjustment, as well as the market demand improvement due to seasonal recovery. Also, if those negative factor get improved, get better, and also will make a good contribution to the market demand. Okay. We had Hash from Credit Suisse. The first question is regarding to inventory level and the comment on current situation in the makers and the supply chain. Our inventory is high. Okay, Nanya specifically inventory is high. Okay. As I indicated that our inventory, yes, it's high and but it's widely distributed into many different product portfolio. As I say, we have more than 30 product that we are shipping, okay? We also have different product costs as well as the market value for those product, okay? We were able to prevent inventory the evaluation loss, okay? That's for Nanya specific. For the industry-wise, the inventory for the major supplier, I think that you already know, okay, and you can study well on their financial report as well. I think that there are some company already took action on their output adjustment. Yeah, okay? Also there may be some improvement in the market demand upcoming, likely their inventory also be improved as well. Okay, Hash, your second question. Okay, your second question is about inventory write-off, and I just made that comment just now, okay? The case cost and the only price situation. Yeah, our inventory structure is that, our inventory value still higher than their cost. Okay? We did not have inventory write-off in the past quarter. For the upcoming quarter, we are working hard to prevent that from happening, right as we speak, okay? Hopefully we will be successful, okay? We'll let you know at the end of the next quarter. The third question is idle cost. On idle cost wise, I already reported that it costs us quite a bit of gross margin, okay? We will continue. We'll continue to consider up to 20% of the production output depends on customer requirement and also market demand on each of different product area, okay? That will be done dynamically. Your next question is on the technology migration, quantify how much percentage of production on 1A and my expectation on 1B. Percentage of 1A production is only on beginning small, very small volume, and we are looking forward by end of this year, will be some significant percentage, hopefully up to 10% or so. Okay? 1B, why? We are working on piloting, and we are looking forward for 1B will be having some small volume next year, hopefully, mid next year, beginning next year. Okay? Your next question is that production output reduced by 20%. You saying that if the fishermen will be improved Q to Q in second quarter for full year, are we expected to grow year-over-year? Actually, this is already discussed in my presentation, okay? We are expecting year-over-year this year that fishermen may be marginally lower than last year. Okay? Q-to-Q wise, we are expecting Q2 will be marginally better than Q1. Okay. That conclude my report to Hash and to all of you. Thank you, Dr. Lee, and thank you, ladies and gentlemen. That concludes our conference call today. Please be advised that the replay of the conference will be accessible within three hours from now, which will be available through Nanya Technology's website at www.nanya.com. We hope you will join us again next quarter. Thank you for your participation again, and have a wonderful day. You may disconnect now.