Welcome to AUO Corporation 2026 First Quarter Financial Results Conference. Before the meeting starts all lines have been placed on mute. After the presentation and remarks by the management team there will be an answer and question session. Now I would like to hand over to AUO's IR Officer, Ms. Julia Chao. Julia, please go ahead. Ladies and gentlemen, good afternoon. I'm Julia Chao, AUO's IR Officer. On behalf of the company, I would like to welcome you to participate in our first quarter financial results conference. I'm joined by four executives: Paul Peng, Chairman and CEO of our Group; Frank Ko, President and our Group's COO; James Chen, Senior VP of Display Strategy Business Group; and David Chang, our CFO. The agenda of today is as follows. Our CFO will go over our 2026 first quarter financial results and provide you with our guidance for Q2. Paul and Frank will each have an opening remark. We will proceed into Q&A. We have collected questions from analysts before the meeting. Our speakers will address these questions. If there are still more questions, we will open the line for you to pose more questions. That is the format of the meeting. Before I turn over to our CFO, I would like to remind you that all forward-looking statements contain risks and uncertainties. Please spend some time to read the Safe Harbor notice on slide number two. Our CFO, please. Ladies and gentlemen, good afternoon. I'm David. I would like to walk you through the results for our first quarter and our outlook for the second quarter. First, let's look at the income statements. Q1 revenue was TWD 69 billion, down by 1.6% QoQ. The decline was partly offset by a favorable impact of roughly 2% from the de-depreciation of the New Taiwan dollar. Looking at our three business pillars, Display benefited from early pullings by some customers due to the memory shortages for consumer electronics, together with rising TV panel prices. Despite the traditional seasonal slowdown, our revenue declined only about 3% QoQ. Mobility Solutions Business Group saw revenue decrease by about 3% QoQ as the automotive market entered the off-season. Vertical Solutions grew about 2% QoQ, driven by a recovery in demand for industrial and commercial panels. Overall, revenue performance across the three pillars was in line with the company's expectations. Our Q1 gross margin rose to 11.9%, up by 1.2 percentage points QoQ, mainly benefiting from forex tailwinds, higher TV panel prices, and continued optimization of our product mix. Our Q1 OpEx ratio declined to 12.8%, down by 0.6 percentage points QoQ. We will continue to manage our OpEx, and our near-term target remains at 11%-12%. Our OP margin was -0.9% in Q1, improving by 1.8 percentage points QoQ, and OP loss narrowed to TWD 600 million. Net loss for the first quarter was TWD 1.14 billion, and loss per share was TWD 0.15. EBITDA was TWD 6.6 billion. EBITDA margin, 9.6%. Now let's look at the balance sheet. Cash at the end of the first quarter was TWD 53.1 billion, down by TWD 2.5 billion QoQ, still at a healthy level. I will go into more detail on the next page with the cash flow statement. Total short and long-term borrowings were TWD 104.9 billion, down by TWD 4.1 billion QoQ. Gearing ratio was 32.1%, down by 0.5 percentage points QoQ, reflecting a solid overall financial state position. Inventory level edged up in Q1, with days of inventory increasing to 56 days, mainly due to memory shortages, customers delaying pulling for panels, and some front-loading at certain subsidiaries under Vertical Solutions. Going forward, we will continue to closely monitor display market dynamics and customer demand, as well as strictly manage inventory. Moving on to cash flow. In Q1, net cash inflow from operating activities was about TWD 2.9 billion. Depreciation and amortization for the quarter was about TWD 7.3 billion. Cash outflow from investing activities was about TWD 2.8 billion, mainly due to CapEx. Cash outflow from financing activities was TWD 4.1 billion, mainly used to repay borrowings to further optimize our capital structure and reduce interest expenses. Now let's look at the revenue contribution of the three pillars. Display's share decreased by 1 percentage point QoQ to 49%. Vertical Solutions accounted for 17%, flat QoQ. Mobility Solutions accounted for 29%, also flat QoQ. Next, OP margin of the three pillars. As Mobility Solutions began operating independently as AUO Mobility Solutions Corp, starting January first this year, AUO's three business pillars are now managed in a more independent company model. Going forward, we will present each pillar's operating results. Therefore, starting this quarter, we are providing the operating margin of each of the three pillars for your reference. In Q1, Mobility Solutions OP margin was 5.2%. Vertical Solutions 5.5%. Display, - 6.5%. Next, our outlook for Q2. First, for Mobility Solutions, we expect the mobility team to continue winning orders with steady business growth, and revenue is expected to increase versus Q1 by low to mid-single digits. For Vertical Solutions, we anticipate contribution from new projects of smart field solutions and demand for green solutions to increase as well. We expect revenue to grow QoQ by high single digits. Lastly, for Display, we expect customer pulling momentum in consumer electronics to slow and revenue will decrease slightly versus first quarter. This concludes my remarks. Thank you. Thank you, David. Next, Paul will have an opening remark. Ladies and gentlemen, good afternoon. I'm Paul. I would like to briefly walk you through our results. Our revenue in Q1 was TWD 69 billion, down slightly by 2% QoQ versus Q4 last year. Revenue breakdown across the three business groups saw some changes, with changes that were not significant. Our CFO has just explained the details to you. One thing that is different this time around is that at last quarter's earnings conference, we told you that starting this quarter, we will disclose the revenue and OP profit of Mobility Solutions and Vertical Solutions. You can also see the OP margins of the three pillars on the CFO's slides. This will make it easier for investors to do the calculations in the future to assess the performance of our three pillars when tracking revenue and profitability improvements by pillar. In Q1, although revenue declined, TV panel prices edged up and the New Taiwan dollar depreciated about 2% against the U.S. dollar, which had a favorable impact. We also continue to optimize our product mix and control our OpEx, so our OP performance improved QoQ. Gross margin improved quite a bit, and OP loss was TWD 600 million, an improvement of TWD 1.3 billion versus last quarter. However, we posted net loss attributable to the parent company. I'd like to explain that in recent years, we've been transforming from being a supplier of consumer panels in a highly price competitive and highly cyclical market to becoming a system and solutions provider with display technology at the core. You can see from the improvement in gross margin from 2024 to 2025, and again in our Q1 performance this time, that our transformation direction is right by prioritizing value creation. That said, the profit we're creating is still not enough. The core business has not yet reached true profitability and is still slightly in the red. We will continue working toward making a solid profit. Delivering sustained and stable profitability, rather, remains our objective. As for Display's Q2 outlook, we expect consumer electronics demand to soften slightly due to pullings in Q4 and Q1. Display revenue is expected to decrease slightly from Q1. In the first half, inventory builds for promotions tied to major sports events like the FIFA World Cup and the Olympics were largely completed in Q1 and Q2. In the second half, with the recent war situation and the related uncertainties around energy and inflation, the market has become harder to predict, and customer order visibility is relatively low. As for whether energy price volatility will drive up costs and lead to higher raw material and other costs, or even affect end market consumption power, we are taking a cautious view of the 2026 economic outlook. We are not pessimistic, but we will closely monitor geopolitical developments and adjust dynamically as needed. To address rising raw material and related costs, we will take several steps. First, we will continue cost reduction efforts and tighten expense control. Cost reduction is not only about negotiating with suppliers. We also need to improve product design and material utilization efficiency in parallel to reach our targets. For increases in raw material costs, we will also appropriately reflect them in our product pricing. On April 10th, the annual major event for the optoelectronics industry, which is Touch Taiwan, took place. This year in Touch Taiwan, there was a big shift. What used to be mainly a display exhibition has now evolved into an integration of displays and display applications. AUO was not only there as a participant, we are in a key industry position leading this transformation trend. The display industry has already undergone a qualitative change. In the past, Touch Taiwan participants focused more on technical specs like resolution, bezel, and thickness. Over the past two years, especially this year, we are seeing much more about display technology and how display technology can be integrated into everyday life, work, and entertainment, as well as various application scenarios. AUO has accumulated 30 years of experience, and in non-display applications, we also have many new technologies. Last quarter, we told you our involvement in AI across different dimensions, whether direct participation or participation in the ecosystem. This year at Touch Taiwan, together with our group companies and Ennostar, we showcased high-speed interconnect technologies, including CPO modules for opto-optical communications, as well as AR technologies and low Earth orbit, or LEO, satellite applications. Through this exhibition, we made it very clear to the market that AUO is accelerating our transformation. We are moving from display manufacturing toward technology-driven value creation. Of course, we hope this will help AUO gradually move toward stable profitability in the future. Now, I'll hand the time over to Frank to further review the highlights from Touch Taiwan and to share an overview of our operations in Mobility Solutions and Vertical Solutions. Thank you. Thank you, Paul. Ladies and gentlemen, good afternoon. I'm Frank. I'd like to further report to you on some of the highlights AUO showcased at Touch Taiwan, and also add an update on the current operating status of our Mobility Solutions and Vertical Solutions businesses. As Paul just mentioned, this year's Touch Taiwan shows that AUO is no longer simply demonstrating display specifications or pure technical capability. Instead, we are extending technology into product innovation and applications, showing that AUO's ability to create value across different scenarios. First, with this slide, I'd like to present to you our advancements in Micro-LED. This is one of the core new technologies and new platforms that AUO showcased, and also what we've been saying over the past few years, that is, Micro-LED will be an important platform for the next generation of display technology. This time, we presented concrete results. In the top left, you see an application scenario combining Micro-LED with AI used in retail, smart living, and even in transportation, like transparent windows. It can enable human interaction. For example, in smart retail, we showcased a 42-in interactive ordering and translation device. Customers of different nationalities rather, and languages can use a transparent display together with AI language translation to provide convenient experiences, whether in retail or in transportation or immigration clearance scenarios. In the bottom left, the image shows a 64-in transparent AR display. The first message we want to share is that AUO can scale it up beyond 42 in. We can tile it to 64 in, for example. Of course, this also applies in sports venue scenarios. Together with a similar AI solution as before, across different scenarios and different sizes, we can create new business opportunities. This reflects AUO's innovation capability from technology to product creation. These products are also starting to be commercialized through our Vertical Solutions development via ADP, and we are already engaging with customers. On the right side of the slide, you can see the third item. This is a showcase that we had on the main stage at Touch Taiwan. This is a crystal forest transparent stage enabled by Micro-LED, combined with a fine-pitch tiled LED wall from our subsidiary, Yenrich. We presented this stunning 5-m-tall transparent stage. Put it simply, we want to tell the market that AUO already has the maturity to mass-produce Micro-LED, and we have the capability to deploy it across multiple scenarios. Micro-LED is not only for displays. As Paul mentioned, this time we also showcased technologies needed for AI, specifically CPO for optical interconnect in optical communications. This extends AUO's Micro-LED technology roadmap from new display platforms to future AI application solution creation capabilities. Next, this slide focuses more on our latest progress in Mobility Solutions and Vertical Solutions. First, let's review two key highlights from ADP. smart retail solutions focusing on energy-saving display technologies and the integration of Micro-LED. We provide what we call Aeco Retail, which is a sustainable retail display solution covering electronic shelf labels, electronic signage, and Micro-LED integrated solutions. On the right, we show AUO and our smart healthcare solutions, including 3D surgical solutions built on medical-grade displays and solutions developed from our panel core technologies for digitized traditional Chinese medicine AI detection, spanning key items like tongue imaging and pulse sensing. This will allow consultation efficiency be significantly improved through digital means at traditional Chinese medicine settings. At the bottom of the slide, here we highlight three core product concepts demonstrating AUO's move toward automotive solutions. First, AUO is moving from automotive panels to a complete automotive HMI solution. Secondly, AUO is not stopping at displays. In AUO Mobility Solutions Corp, we have a second growth engine, automotive computing. This time, we demonstrated a modular cabin domain controller, CDC, architecture that can support multiple displays across passenger and commercial vehicles, together with functions such as AI cameras to meet auto OEMs needs as software-defined vehicles evolve toward AI-defined vehicles. This will help deepen how the E/E architecture integrates directly with computing and displays. This also positions us to move from an automotive panel supplier to a tier one supplier, and further to a tier one plus partner that co-creates solutions with automakers. Third, another new highlight after CES this year is our focus on LEO satellites as a potential future automotive opportunity. Together with our partner YTTEK Technology, we co-develop and announced SatGlass Antenna, which is an industry first transparent satellite antenna, integrated with our panel glass process and combined with the vehicle roof or sunroof structure. As LEO satellites become more common, we can help automakers connect vehicles to the internet, enable real-time V2X connectivity, and support OTA, then various smart cockpit service experiences through an integrated three-in-one solution that includes antenna computing and display. With that, with the two slides from Touch Taiwan and our product and technology roadmap, next, I will update you on our Q1 operating overview for the Mobility Solutions and Vertical Solutions businesses. Starting with the Mobility Solutions side, this is our first quarter for AUO Mobility Solutions Corporation. Beyond the numbers our CFO just reported, looking at market conditions, Q1 in Mainland China's auto market was a bit unusual. In prior years, the period around the Lunar New Year was typically a peak season. This year, due to changes in subsidy policies, Q1 was relatively weaker. As a result, revenue decreased by 3% QoQ versus Q4 of 2025. That said, demand was more of a timing shift. As for Q2, we actually see improvement, especially with new vehicle launches after the Beijing Auto Show in late April, and new subsidy policies coming out. We believe the Mainland China auto market should start to show better demand in Q2. Together with our progress with international OEMs and overseas markets, we estimate that Q2 revenue for AMSC will grow versus Q1 at a low- to mid-single digit rate. For our longer term growth, as we shared in the last earnings conference, AMSC targets a double-digit revenue CAGR. This mainly comes from our ability to secure new orders every quarter. I'm pleased to share with you that in Q1, we successfully landed a new major order from a leading European brand, continuing to build growth momentum for AUO Mobility Solutions Corp going forward. Another driver comes from ongoing product line evolution. Among our new orders, high integration, high value-added solutions reached 45% last year. This year, we saw the share of new orders in the category continuing to increase, which will contribute to higher revenue scale. Secondly, for the smart cockpit computing solution, we will begin deployment with our commercial vehicle customer in Taiwan in Q2. It will enter the market. Our strategy is to use the commercial vehicle segment as a proving ground for our technology platform, and then expand overseas quickly into passenger vehicle markets. This is also an important lever for us to continue increasing product value. Next, I'll talk about Vertical Solutions. Here are a few key points. Display related vertical solutions are now integrated under our subsidiary, ADP. In Q1, ADP's performance was quite solid, driven by strong demand for industrial and commercial panels and increased shipments of retail, healthcare, and HMI solutions. Overall revenue increased by 2% QoQ. Looking ahead to Q2, we also see new smart solution projects starting to contribute revenue, which will become a growth driver. In addition, for green solutions, including AuE sustain tech, ADTTech, and energy businesses, we also see Q2 demand and revenue growth trending better than Q1. Combined, total revenue is expected to increase versus Q1 with high single-digit growth. Over the past few earnings conferences, many investors have been paying close attention to AUO's progress on strategic partnerships, both within and outside the industry. One of these is the joint venture between AUO and E Ink to build a large size color ePaper module production line. Let me provide you with an update. After completing the relevant application and approval processes, the joint company name has been confirmed as NXEPD Corporation. The collaboration model is that E Ink provides the key ePaper materials and core technologies, while ADP integrates them into modular design and combines them with our solution sales resources. In Q1, the production line officially started mass production. Going forward, NXEPD's module products will be core components within ADP's solutions. Of course, NXEPD's customers are not limited to our group only. The company can also serve more customers across the broader ePaper ecosystem. We will actively expand into more products and prepare for a scale-up going forward. For Green Solutions, another major event in Q1 was that on April 13th, AUO's board of directors approved the spin-off of the energy business unit under Green Solutions so that the AUO group can focus on display and optoelectronics-related core businesses. At the same time, the energy unit can further optimize operating efficiency and capital allocation flexibility. We estimate that after shareholder approval, it can be spun off as an independent company in the second half of this year. AUO will continue to hold 33% of the stake, so going forward it will be accounted for under the equity method rather than consolidated into the financial statements of AUO. With the updates, let me summarize our Q2 operating outlook. Continuing from what Paul just shared with you on display, we expect consumer products to have seen some pull-in demand from Q4 to Q1, which could lead to slightly softer demand in Q2. Revenue may be slightly lower than Q1. For AUO Mobility Solutions Corporation, with stable orders and steady market demand growth, plus the new vehicle launch momentum after the Beijing Auto Show, we anticipate Q2 revenue to grow QoQ at a low- to mid-single-digit rate. For Vertical Solutions, including Green Solutions as well as ADP, we also see new projects and new demand coming in. Combined revenue is expected to increase versus Q1 at a high single-digit percentage. Overall, our Q1 performance was in line with the guidance provided earlier. For the first half, we believe results should also meet the company's anticipation. For the second half, given the many uncertainties in the macro environment and across the supply chain, we remain cautious about demand trends. The company will monitor these developments closely, take necessary actions, and maintain healthy and sustainable growth. Thank you. Thank you, Paul and Frank, for your sharing. We will address the questions that we collected previously from analysts. The first category of questions is financial related. Analysts asked for an update on Q1 depreciation and CapEx for the first quarter of 2026, and whether our 2026 expectations have changed. For this one, David, would you please? Hi, I'm David. As mentioned earlier, our Q1 depreciation was TWD 7.3 billion, and CapEx was TWD 2.8 billion. As for full year 2026 depreciation and CapEx, as of now, the numbers we shared with you last quarter remain the same. Full year depreciation is expected to stay at TWD 28 billion. Full year CapEx is currently targeted to stay no more than TWD 20 billion. Thank you, David. Next is a question related to the display market. What is the panel industry supply-demand situation in 2026? Did we see any pull-in in Q1 due to memory price increases? How do we view the second half of 2026? For this one, we will ask James to answer. Hi, everyone. Let me give you an update on the market situation for TV, monitors, and notebooks. For Q1 TV in Q1, with upcoming sporting events and some tightness in memory supply, amid expectations of price increases, customers built inventory earlier and pushed shipments into the channels, resulting in roughly low single-digit YoY growth. Within that, Latin America saw relatively stronger growth at 8.6%. North America also grew by 1 percentage point. Europe was also up YoY. In mainland China, because government subsidies eased, it declined by about 5%. Overall, we saw a trend toward larger sizes. With memory prices going up, smaller sized TVs saw a larger increase in cost. Customers are shifting their product mix toward larger size, higher end products. This mix adjustment also helps the overall panel supply demand situation gradually become more balanced going forward, since everyone is moving to larger sizes. Looking ahead to the second quarter, there will be sporting events, and Amazon Prime Day has also been moved up to June. Mainland China's June 18th sales event. We expect sales in Q2 should continue to grow. The uncertainties in the second half are larger because sporting events and promotions have been pulled into the first half. In the second half, on top of that, the upward trend in memory pricing is still there. As mentioned earlier, there are also potential inflation concerns. For the second half, we are taking a cautiously optimistic view. On the IT product side, monitors and notebooks also delivered positive growth in Q1, low single-digit YoY growth. This was mainly because customers expected prices to go up in Q1, so they built inventory early and pushed shipments into the channels. In Q1, we saw a clear pull in. In Q2, we are seeing a wide range across different segments, from about 15% up to 40%. It's not entirely consistent, but overall notebook price increases have become quite obvious. Starting from Q2, we are also seeing demand visibility weaken a little bit. Many customers are continuing to shift their mix toward higher-end AI PCs. With raw materials relatively tight, the market is leaning more toward these higher value-added products like AI PCs. Overall, for IT products in the second half, there are still concerns about shortages, including CPUs and memories. We are also watching this very cautiously. With a clear trend toward larger TV sizes, we also saw overall capacity loading in Q1 remaining at 88% worldwide. This is a worldwide number. Compared with previous years, when Q1 loading rate was typically around 80%, it also reflects that the TV size migration trend has been quite significant, and we believe future supply and demand will be relatively more balanced, which should help support pricing. Thank you, James. Next is a question related to newly developed technologies by AUO. What role does AUO play in Micro-LED CPO? How have you been collaborating with Ennostar and Tyntek? Paul, would you please? Hi, this is Paul. As we mentioned last quarter in our AI-related business, one area that we focus on is the application of Micro-LED in CPO. For this work, our focus is on modules and system-level products. We are currently working together with major communications companies in the AI supply chain to co-develop Micro-LED-based CPO optical modules, mainly for in-rack scale-up applications. Of course, we're also integrating resources across the group and the entire ecosystem. Micro-LED CPO is an important collaboration project between AUO and Ennostar in the AI server optical communications field, and we also showcased it in Touch Taiwan this year. In this project, Ennostar provides the Micro-LED transmitter devices, and Ennostar's subsidiary, Tyntek, provides the photodiode receiver devices. AUO plays the role of system integrator. This also builds on our years of capability in Micro-LED mass transfer, panel level RDL, interconnect, and heterogeneous integration. We are able to provide fully tested Micro-LED CPO optical modules. We are very confident about commercialization, and it should become mature in about two to three years rather. During development, this Micro-LED-based CPO optical module offers the advantages of high bandwidth and low power consumption. That's why we talk about the co-packaged optics concept. Its main value is improving short-range data transmission efficiency within data centers. This is largely because we've accumulated about 30 years of panel manufacturing experience, and we've also been investing in Micro-LED for many years. Our capabilities in this core optoelectronics area can continue to expand and strengthen. Whether it's Micro-LED mass transfer capability or related integrated experiences, these are long-term accumulations and represent our competitive advantages. That's all from me. Thank you. Thank you, Paul. We will proceed to the Q&A session. To allow more participants to present their questions, please be reminded to limit the number of your questions to three per call, and please state them all in one go. Thank you. We will now start Q&A. If you wish to ask question please press star one nine on your phone keypad. After your name is announced please start your question. If you wish to cancel your question please press star two on your keypad. Thank you. The first question comes from Citi's Karen Huang. Please go ahead. Thank you for such detailed comments, and thank you for taking my questions. I have three questions. First, could management give us an update on the progress of Micro-LED? Besides shipments to the smartwatch wearable customer last year, are there any other customers or projects that are currently moving forward? Second, what's your overall outlook for the auto market this year? And has the situation that started in March had any impact on your automotive business? Third, does the company have plans to expand your capacity in the U.S. or Mexico? Those are questions from me. Thank you. This is Paul. Let me address your first question. Frank will address the other two questions. On the Micro-LED part, besides the watch that we officially launched last year, we are also making progress toward the next generation watch and other wearable device applications. In addition, last year, we already installed capacity on a Gen 4.5 line. For this Gen 4.5 line, it's not only about scaling up the size, it's also about process capability. We are also making progress in the larger size direction very well. Frank mentioned, there are many products in the pipeline. For example, transparent commercial applications. In some use cases, these are already being deployed. If you're interested, some of the displays in Taichung Main Train Station are our products. Of course, on the TV side, we also have some large size developments underway, and a few automotive applications being deployed as well. At this week's Beijing Auto Show, you can actually see our Micro-LED products being showcased. For automotive applications, there are now a lot more opportunities coming out, from non-transparent or transparent products, mass production, to various project rollouts and deployments. That's all. Thank you. It's Frank speaking. Let me also respond to your second question on the outlook for the auto industry, and your third question on our North America footprint. This year, looking at what we have seen so far, the global auto industry is really quite active. From the Beijing Auto Show, you can see that the mainland China market and Chinese auto brands are continuing to innovate very rapidly. We are also seeing international OEMs stepping up their innovation as well. For example, after some European OEMs launched their new platforms, we've seen strong improvements in innovations, from charging performance, driving range, and the entire in-cabin display experience. There's a trend emerging here. The first trend is that the smart cockpit is now becoming common across internal combustion engine vehicles and EVs. In the past, we often associated cockpit intelligence mainly with EVs, but that's no longer the case. Whether it's an internal combustion engine, an EV vehicle, or any platform with more computing capability, the smart cockpit has become a major innovation and selling point. Together with the trend toward autonomous driving becoming more and more established, this is also part of the broader direction vehicles moving toward electrification and more ICT technologies being integrated in the car. This is something we are seeing globally, including in mainland China. Second, on the sales environment, as reported earlier, besides local subsidy policies in mainland China, the conflict in the Middle East seems to have had some impact on global auto logistics and supply chain planning. In particular, the transportation lead time for materials and vehicles are longer, so industry inventory has risen somewhat. Given the industry's experience in building supply chain resilience in recent years, we see that supply chain from upstream to downstream is relatively mature in how it responds. We believe the overall impact on global auto production and sales is manageable. What we do need to watch more closely is oil prices. If they rise significantly, whether that will affect auto demand is something we are still monitoring. As for our footprint in North America, let me add a bit more color. In the past, AUO has secured new orders in North America, which will go into mass production in the next two to three years, and that will contribute to our growth substantially. This, thanks to our acquisition of BHTC, and the manufacturing setup in Mexico has helped us with orders over the past two years, and we continue to see that benefit playing out this year. Because of the new order requirements, AUO's board approved a local expansion in Mexico last October, with the plan targeting 2027, second half, for mass production. However, as demand continues to increase, our board also approved the next phase of expansion in Mexico this morning to further increase our mass production capacity and strengthen our ability to serve customers locally. The capacity ramp from this phase is anticipated to come online around 2028 to 2029. The additional CapEx approved today has already been included in the 2026 CapEx plan that our CFO explained earlier. The next question comes from Morgan Stanley's Vivi Huang. Please go ahead. Thank you very much for taking my question. I'm Vivi. I have a few questions. First, could you share what the overall industry utilization rate looked like in Q1, and what level you expect looking into 2026? Second, could the management share more about some of your new business initiatives, such as CPO, LEO satellites, and waveguide optics for AR glasses. Lastly, regarding the rising costs in components and raw materials, you mentioned cost reduction efforts. Besides that, are there any other measures that the company can take to mitigate the impact? These are my three questions. Thank you. Hi, Vivi. We will have James address your questions on the utilization rate and what we are seeing for 2026. Hi, Vivi. This is James. In Q1, the overall industry utilization rate was roughly in the 88%-90% range. This was mainly because a lot of demand was pulled forward, rather. TV is relatively strong segment right now, with brands building inventory ahead of major sports events. That supported utilization in Q1. Q2 should likely stay around as similar level. What we will need to watch is that after June, the sports event restocking may start to fade. For the first half of the year, the industry's loading rate is already higher than what you typically see in the off-season, which was usually around 80% previously. We are seeing a meaningful improvement, especially in large sized TVs. In addition, since panel prices have been going up, that creates more pressure from small and mid-size TVs given the price increases for memories. As a result, brand customers are pushing more toward larger sizes. At CES, for example, we are seeing sizes like 115 in, 116 in, and 100 in. I think size migration trend will accelerate this year. This is Paul. Let me add a couple of quick comments on that. First, the industry has become more disciplined. Simply put, production is more demand driven now, so every player is adjusting dynamically. On your second question about new business, new initiatives, as we mentioned earlier, we've talked about CPO modules, AR glasses, and satellite communications. These are all applications based on new technologies or new products, and there is an adoption process. We estimate that in about two to three years, these should enter mass production. For all of these, we already have customers or users, and we are working together on joint production, joint introduction, and launch plans. There are also some areas that we didn't go into detail. Medical is an existing business, but it is actually a high growth business for us. We've also adjusted our plant setup and increased capacity for medical products. In medical displays, if you look purely at monitors or displays, we are already the number one globally, and we plan to accelerate further. Across both new applications and existing products, we reduce the weighting or ratio of our consumer products. Many of the back-end businesses we are talking about tend to have longer ramp cycles. Many of the technology we're talking about have a longer adoption cycle. Take automotive applications as example. Frank mentioned earlier that for the auto orders we've won, mass production typically starts two to three years later. What you are hearing now about capacity expansion is also for demand coming in around 2028. As part of our transformation to a higher value products, one reality we need to manage is a longer ramp-up period. As for material costs, we are discussing with our suppliers, but more importantly, it is about how we redesign our products. How do we simplify our designs, use less material, improve efficiency, and through the redesign, we hope to bring down total cost. In many cases, the results from redesign can be even better than relying only on supplier negotiations. Thank you. Our next questions comes from Warren from SinoPac Securities. Warren, please go ahead. Thank you for taking my questions. I have three questions. First, for Micro-LED CPO, what are the main technical challenges you are currently facing? For the process and material selection, will you mainly use silicon, or will you mainly use glass substrates? Could you also share your current overall positioning and strategy in advanced packaging? Secondly, for LEO satellites, do you have any estimated revenue contribution over the next two to three years? Third, do you have any plans to dispose of assets going forward, and what would that look like? Thank you. For CPO, what we are doing is glass-based interposer. By advanced packaging, we are mainly referring to CPO or the optical communication module side. As for fan-out PLP, as we mentioned before, we started developing the process technology eight or nine years ago. More recently, we've applied the same or similar technology to glass-based satellite antennas for LEO satellites. We're not directly moving into fan-out PLP IC packaging at this point because that is not our current focus. As for asset matters, in the past, we've executed several asset revitalization cases, including sites in Tainan and our Houli facility. And also a Hsinchu site toward the end of last year. These were mostly smaller generation production lines. We are continuing to review and reorganize these smaller generations lines. If a line is no longer competitive, we will phase it out. After phasing out, it doesn't mean that we will revitalize everything, because part of the space will be repurposed for other uses. For example, we are now expanding capacity for Micro-LED, and we're also expanding capacity for medical products. Some of these new technologies will require space going forward, so we will keep part of the space for new technologies and higher value product development. Only if it truly is needed would we proceed with asset revitalization. This is still part of our planning. Thank you. As for the expected revenue share of Micro-LED products, honestly, these new technologies generally have a longer adoption cycle. Some have already started mass production, we do expect multi-fold growth year by year. At this stage, we are not able to give you a specific revenue contribution estimate because it's not yet a material portion for us. We'll share more when the time is right. Ladies and gentlemen, we'll open the line for one last caller to ask questions. The next question comes from Lisa Chen from Yuanta Securities. Please go ahead. This is Lisa. I have three questions. First, I'm curious about LEO satellites. Since it uses your fan-out PLP technology, can it share part of your existing equipment and production lines? What kind of solution are you providing here? Are you doing any joint development with customers or other vendors? Secondly, Microsoft is also announced at OFC its Mosaic concept using Micro-LED and multicore fiber for optical communication. What is your view on that? Thirdly, could you share more about your outlook for Vertical Solutions? Thank you. Lisa, let me take your first two questions. For the Vertical Solutions, I'm not sure what angle you are talking about. If you can be a bit more specific, I can ask Tina to respond, and we can come back to you for more detailed questions and explanation later. On the fan-out PLP technology you mentioned, it doesn't mean that we move the whole technology over to some brand-new dedicated production line. It's more that there are many common reusable parts within the technology, so we can leverage existing equipment to do this. It's not a massive CapEx type investment. The Mosaic module you referenced is really a way to validate what we've been talking about all along, using Micro-LED and scaling it up in data centers specifically for short-range interconnection. As bandwidth goes up, efficiency improves, and in turn it helps bring down the energy consumption. Looking ahead, I think the computing power required by AI will become a very serious issue. This Mosaic concept is also validating the feasibility of what we are doing with Micro-LED. As for Vertical Solutions, I'm not sure which specific aspects you want to delve into. I'm actually still quite curious about the LEO satellite area. Are your products, modules installed on mobile platforms like cars or ships? What type of technology or products are you providing? Are the entry barriers high? Okay, this is Frank. Since, Lisa, you specifically asked about antennas on mobile platforms, I'll answer from that angle. Basically, yes, our focus on LEO satellite applications still to enter from extension of the smart cockpit direction. For now, the biggest applications are mainly in two categories: aircraft in the sky and vehicles on the road, and then ships on the water. These three segments have very different market sizes. You can think of it this way. In the automotive segment, global vehicle sales are about 90 million units a year, plus the existing vehicles already on the road. If those get upgraded, or if antennas are integrated into vehicles from the beginning, the future market size is much larger than ships and aircraft. Therefore, that is why we choose to focus and enter into the segment of antennas on mobile platforms like cars. This is a core entry point for us. As for the technical difficulty you mentioned, I think the key challenge is how you integrate it onto a moving platform. What we see on the automotive side is that customers need lightweight, strong thermal management, and also transparency. That fits very well with what we have been working on. Technologies like transparent windows or transparent glass substrates and related packaging technologies. At CES and Touch Taiwan this year, we showcased the combination of transparent antennas with the kind of solutions that I just shared with you. The next stage is how we actually enter the market meaningfully. This aligns closely with future communication standards and industry alliances and specifications around LEO satellite communications and so on. On industry standards, we are an important partner in the standards alliances, and we hope to participate together from the very beginning of the standard setting and implementation process. Thank you. That's very clear. On Microsoft's plan, do you agree that there's a chance it could go into production by the end of 2027, or do you think you still need to watch and see? Actually, as Paul answered earlier, Microsoft architecture is more about using multiple matrix light sources rather than a single high-cost laser. That is fully aligned with how we position Micro-LED as AUO's entry point into optical communication and as a key enabler of the AI industry, including the pricing positioning. Paul's view and Paul's statement is completely consistent with our thinking. This is mainly coming from the technical perspective. As for the timing of mass production, I think more and more major players' progress in CPO will help the whole industry accelerate Micro-LED's adoption in optical communications. We are very optimistic that within the next two to three years it can ramp up quickly. Thank you. That's very clear. I think my questions have been answered quite fully. Thank you very much. Thank you, Lisa. Thank you all for your participation in our investor conference today. This concludes our online investor conference for this quarter. If you have any other questions, please feel free to contact us at the IR department at AUO. Thank you. We will see you next quarter. Thank you all for your participation in AUO Corporation 2026 first quarter financial results conference. This concludes today's meeting. You may disconnect now. Thank you all for your time.