Welcome to the MediaTek 2022 fourth quarter investors conference call. Financial results and presentations for today's call are available on investor section of company website at www.mediatek.com. Now I would like to turn the call over to Miss Jessie Wang, Deputy Director of Investor Relations. Miss Wang, please go ahead. Good afternoon, everyone. Joining us today are Dr. Rick Tsai, MediaTek CEO, and Mr. David Ku, MediaTek CFO. Mr. K u will report our fourth quarter results, and then Dr. Tsai will provide our prepared remarks. After that, we will open for Q&A. As a reminder, today's presentation will provide forward-looking statements based on our current expectations. The statements are subject to various risk factors which may cause actual results materially different from the statements. The presentation material supplement non-IFRS financial measures. Earnings distribution will be main includes with financial statements based on IFRS. For details, please refer to the safe harbor statement in our presentation slides. In addition, all contents provided in this teleconference are for your reference only, not intended for investment advice. Neither MediaTek nor any of independent providers is responsible for any actions taken in reliance on contents provided in today's call. Now I would like to turn the call to our CFO, David Ku, for the fourth quarter financial results. Thank you, Jessie. Good afternoon. Let's start with the 2022 fourth quarter financial results. The currency here is all in NT Dollars. Revenue for the quarter was TWD 108.2 billion, down 23.9% sequentially and down 15.9% year-over-year. Full year 2022 revenue total TWD 548.8 billion, up 11.2% from 2021. Gross margin for the quarter was 48.3%, down 1 percentage point from the previous quarter and down 1.3 percentage point year-over-year. Gross margin for 2022 was 49.4%, up 2.5 percentage point year-over-year. Operating expense for the quarter were TWD 34.2 billion, compared with TWD 37 billion in the previous quarter and TWD 34.1 billion in the year ago quarter. Full year 2022 operating expense was TWD 144.1 billion, compared with TWD 123.6 billion in 2021. Operating income for the quarter was TWD 18.1 billion dollars, down 45.3% sequentially and down 39.1% year-over-year. Non-IFRS operating income for the quarter was TWD 18.8 billion dollars. Full year 2022 operating income was TWD 126.8 billion, up 17.4% year-over-year. Non-IFRS operating income for the year was TWD 131.5 billion dollars. Operating margin for the quarter was 16.7%, decreased 6.6 percentage point from the previous quarter and decreased 6.4 percentage point year-over-year. Non-IFRS operating margin for the quarter was 17.4%. Operating margin for 2022 was 23.1%, up 1.2 percentage point year-over-year. Non-IFRS operating margin for the year was 24%. Net income for the quarter was TWD 18.5 billion, down 40.4% sequentially and down 38.6% year-over-year. Non-IFRS net income for the quarter was TWD 19.2 billion. Full year 2022 net income was TWD 118.6 billion, up 6% year-over-year. Non-IFRS net income for the year was TWD 122.7 billion. Net profit margin for the quarter was 17.1%, decreased 4.8 percentage points from the previous quarter and decreased 6.3 percentage point year-over-year. Non-IFRS net profit margin for the quarter was 17.7%. Net margin for 2022 full year was 21.6%, down 1.1 percentage points year-over-year. Non-IFRS net profit margin for the year was 22.4%. EPS for the quarter was TWD 11.66, down from TWD 19.64 in the previous quarter and down from TWD 18.99 dollar in the year ago quarter. Non-IFRS EPS for the quarter was TWD 12.04. For the full year 2022, EPS was TWD 74.59, compared with TWD 17.56 in 2021. Non-IFRS EPS for the year, for this year was TWD 17.07. A reconciliation table for our IFRS and non-IFRS financial measurement is attached in our press release for information. That concludes my comments. Thank you. Thank you, David. Now I'd like to turn the call to our CEO, Dr. Rick Tsai, for prepared remarks. Thank you, Jessie. Good afternoon, and the belated Happy Chinese New Year, everyone. Our quarter revenue came in at the low end of guidance as customers turned more conservative about demand during the quarter. Demand in China has been weakened due to the fast spread of COVID since the ease of restrictions in mid-November last year. Therefore, customers continue to manage their inventory level cautiously at this stage before we could see demand recovery from China's reopening. On the growth margin side, we were at around the midpoint in the fourth quarter, demonstrating our pricing discipline under demand pressure. Looking back at 2022, global semiconductor industry experienced rapid changes in demand amid macro uncertainties. Throughout these changes, MediaTek managed to achieve record revenue and earnings for the full year of 2022. Notably, all three revenue groups, including Mobile, Smart Edge Platform, and Power IC grew year-over-year for the fourth year in a row. This is the result of the solid execution of our technology leadership and global expansion strategies in the past few years. We now have built an industry-leading product portfolio and diversified global customer base, which underpin our business foundation. Now, I would like to make some comments on each revenue groups for their fourth quarter results, 2022 achievements, 2023 market outlook and recent highlights. In the fourth quarter of 2022, mobile phone business was negatively impacted by customers' aggressive inventory adjustments, declining 17% year-over-year and 29% quarter-over-quarter to account for 52% of total revenue. For 2022 full year, mobile phone grew 10% year-over-year. MediaTek continued to be the leader in global semiconductor smartphone market share. We made a very significant move with our 5G flagship Dimensity 9000 series solutions. In 2022, we gained greater than 20% of Android flagship market share in China market from 0% in 2021. We expect our flagship market share to continue to expand in 2023 with more solutions and further penetration into more regions. Vivo X90 and X90 Pro flagship smartphones, powered by MediaTek's latest Dimensity 9200, is well received by consumers, generating higher sales than the previous model. Dimensity 9000+ was also adopted by several latest foldable flagship smartphone. As the smartphones are adopting satellite connectivity, MediaTek is ready for providing 3GPP end-to-end, which is Non-Terrestrial Network compliant solutions. It is 3GPP R17 standard-based approach for enabling satellite communication, merging existing cellular technology and ecosystem, which is easy to grow to larger scale, contrasting to other competing solutions based on proprietary technology. The first smartphone made by Bullitt, the British company that equips with MediaTek's 3GPP end-to-end solution, will hit the market and start to contribute revenue in the first quarter. MediaTek is fully committed in this new exciting application for our customers. For 2023 full year, we think global smartphone shipment is likely to decline slightly of 5G penetration rate to increase from high 40% in 2022 to mid 50% in 2023. The higher global 5G penetration rate is expected to come from higher 5G adoption in mainstream segments in emerging regions such as India and Southeast Asia, where we have a very strong presence. We are the major beneficiary to capture the trend of 4G to 5G migration. We continue to demonstrate our values to global customers by enabling leading 4G and 5G smartphone efficiently through our complete solutions as well as strong customer support. The solid partnership we have established with our global customers over the years will extend into the future. Now let me move on to the Smart Edge Platforms, which accounted for 42% of revenue in the fourth quarter. This group declined 14% from last year, and 18% from last quarter due to customers' cautious inventory management. For 2022 full year, our Smart Edge Platform grew 13%. Among which, connectivity grew very strongly as we continued to gain shares and benefit from the ongoing technology migration to Wi-Fi 6, 6E, 5G and 10G-PON. We also demonstrated our leadership in Wi-Fi 7 development. In addition, we grew our revenues significantly in consumer and enterprise ASIC, as well as automotive products, and continued to gain traction with global customers in the U.S. and Europe. Most of our Smart Edge Platforms revenue come from consumer-related applications. In a year such as 2023, where consumer demand is expected to be weak, our Smart Edge Platform business are not immune to broader macro impact. However, technology upgrades will continue. We continue to see higher adoption of our industry-leading Wi-Fi 6, 6E, 5G and 10G-PON solutions across all kinds of devices. Our full Wi-Fi 7 ecosystem is also ready to embrace the new technology cycle. We are gaining shares in premium segments in router, notebook, wire network and TV with our Wi-Fi solutions, which already started to generate revenues in the first quarter. In addition, we continue to expand globally by offering strategic values to global customers with our diversified connectivity solutions and strong capability in low power processors. For example, our business with global top tier telecom operators continue to grow robustly across broadband, router and CPE. We further deepen our relationship with global customers in collaboration across computing, XR, IoT, ASIC and automotive applications. Those new business initiatives not only partially offset the current market slowdown, but also pave the way for future growth. Now moving on to Power IC, which accounted for 7% of total revenue in the fourth quarter and declined 21% from last year and quarter-over-quarter. In 2022, our Power IC grew 13%, among which revenues from automotive and industrial applications were more than doubled. In 2023, we aim to continue to diversify our product mix and support the continuous 5G Wi-Fi migration across devices. Before we give the first quarter guidance, I would like to bring the next few points. Numerous industry research reports forecast that the semiconductor industry excluding memory in 2023 is expected to decline by mid-single digit percentage. Most of our customers maintain a conservative business outlook and have been managing their inventory very cautiously. Their current level of inventory is approaching a normal level. However, with the recent reopen of China, a relatively stable global economy, we believe demand visibility will gradually improve in the next few months, and our business start recovering from the second quarter of this year. TV and Wi-Fi, for example, are seeing a mild demand pickup in the first quarter of 2023. Thus, the first quarter of 2023 is likely a low point for MediaTek. In this environment, we will continue to exercise pricing discipline and protect our profitability. We now expect our first quarter revenue to be in the range of TWD 93 billion-TWD 101.7 billion, down 6%-14% sequentially, and down 29%-35% year-over-year at a forecasted exchange rate of 30.5 NT dollars to 1 US dollar. Gross margin is forecasted at 47.5%, ±1.5 percentage point. Quarterly operating expenses ratio to be at 33%, ±2 percentage point. For the full year of 2023, there are still a number of uncertainties regarding global macroeconomic conditions. We will need to gain additional visibility with respect to magnitude of recovery in order to give you a full year revenue estimate in the next few months. As to gross margin, we aim to manage it at the level that our first quarter guidance indicates. We are also managing our expenses very cautiously and expect our total operating expenses to be flattish in 2023 compared to that in 2022. Last but not least, we reiterate our shareholder return program. Our cash dividend payment in 2023 will include the regular cash dividend, which is based upon 80%-85% payout ratio and TWD 16 dollar special cash dividend per share. This concludes my prepared comments. Thank you. Thank you, Rick. Operator, we are now ready for Q&A session. May we please have the first question? Thank you, Amber. Ladies and gentlemen, we will now go for questions. If you'd like to register for a question, please press star one on your telephone. Thank you. Ladies and gentlemen, we are now in question and answer session. If you would like to ask the question, please press star one on your telephone keypad. Please ask your questions after your name is announced. Please limit your question two at a time to allow more participants to join the discussion. After two questions, we will move to the next caller. Should you have more questions, please press star one to come back to the queue. To cancel your question, please press star two. As a reminder, it is greatly appreciated that you turn off speakerphone mode of your device to prevent possible echo effect. We thank you for your cooperation. Thank you. Our first question is coming from Gokul Hariharan of JP Morgan. Thank you. Yeah, hi. Happy New Year. Thanks for taking my question. Pretty resilient performance on the margin, especially. Couple of things. First, maybe I start with your commentary on demand and inventory. Could we get a little bit more detailed color on what you're seeing on inventory in the channel and customers? Also, I think MediaTek inventory on-hand has also been coming down, but probably not coming down as much. How do we see inventory in the channel and customers evolve in Q1? Are we going to be at a normal or slightly below normal level in Q1 already? Do you need to take MediaTek's own inventory down a fair bit still? Is the inventory situation in China different from inventory situation in the channel and of our customers in the non-China market? Boy, it's a long question. Thank you. I think our understanding and maybe observation is that the smartphone inventory, including our customers and channel in China is probably at about 3.5 months level. We believe it will go down to probably 2-2.5 months this quarter. I think that's what we are expecting to see. During the Chinese New Year time, the sell-out in China, as far as we understand, is better, fairly good, but definitely better than our customers expectation. As to the outside of China inventory, what I can say, I don't have specific numbers. What I can say is some of our customers had a little better fourth quarter business than they expected. They still have inventory at hand, so they're burning their inventory probably at a faster clip than expected. Our own inventory days is still high. However, the inventory, how do you call that? The inventory dollars continues to go down quite substantially. We have really carefully managed our wafer start for our business. I think this careful management of the wafer start will continue, at least for the foreseeable future. We are also looking very carefully for customers demand dynamics. I think this is a time of transition, and we will be very careful in managing our inventory while fulfilling our customers, any of our customers, demand. Thank you. All right. That's very helpful. The second question I had is around 5G pricing, given there is a lot of noise in the market. Could you talk a little bit about what is MediaTek's expectations for overall 5G portfolio pricing this year? You have a few moving parts with better traction for flagship, while you're also moving down to lower segments. Also comment a little bit about how do you see the competitive intensity. Has the competitive intensity with your main competitor changed in the last 3 to 6 months? Jacob, it's David here. Why don't I try to re-answer that? I think overall, the market is always with a lot of dynamic and competition situation or competitive landscape situation is always part of the dynamic. We understand right now, you know, several sell-side an alysts and also some investors were worried about the pricing, the price competition, even worry about extend that worry to market share or gross margin. To be honest, it's not a straight or easy answer, but let me try to answer with you about our overall pricing strategy. I think, our pricing strategy is always trying to find a dedicated balance among pricing, the market share, and our gross margin. On top of that three key consideration, we also need to consider about the demand profile, the product life cycle, and also the segmentation we get in. Overall, I guess, we will not be able to provide the detailed, you know, pricing guidance and, you know, this is all confidential, but probably one of the best way to think about that is actually is, think about our gross margin. You know, as you can see from the guidance perspective, our gross margin actually holding up fairly okay, fairly good. Actually, just I told you, overall, the market dynamic or the competition is out there, and we've been there for so many years, we know how to handle that. We, when necessary, we will respond, you know, nicely and strategically rather than panickily. I think that's our quick response. Just following up. Do you think the competitive intensity has gotten worse in the last three to six months, just relative to, let's say, middle of last year when demand was still a little bit better, or it's largely the same still? We don't think it's getting materially worse. It is always, you know, quite as a strong competition out there. Okay. All right. Thank you very much. I'll go back to the queue. Thank you. Next question is from Sunny Lin, UBS. Go ahead, please. Thank you for taking my question, and Happy Chinese New Year. My first question is on your gross margin. I wonder there's a few upside and downside drivers going to next couple quarters, but I guess the concerns are on the downside from the increasing foundry cost, and also your competitor pushing the lower cost solution. In the short term, your customers are still digesting inventories. Could you let us know what give you confidence that going to next couple quarters gross margin could sustain at Q1 level? Thank you. Sunny, like I explained earlier, basically we're trying to find a dedicated balance among pricing, market share, and also gross margin, and more importantly, because we've got so many dial we can adjust among different segments. For example, if we worry about the entry level competition, but in the meantime, we're also gaining share nicely on the flagship, now that would be a good balance. Overall, I guess, that actually give us the confidence that we can find a dedicated balance among, again, pricing, market share, and growth margin. That's point number one. Point number two about our cost structure, mainly I think both including the foundry and also in the back end. I think overall foundry, I guess, due to the market situation, it's actually not a pleasant situation, but we also have the back end and other vendors on a combined basis. More importantly, I think consider our overall industry position. We do believe it actually is not pleasant, but it's actually still manageable, especially when we take into the pricing discipline, also segmentations, migrations or expansions into consideration. That actually give us the confidence we can actually maintain the growth margin, at the current guidance level. Got it. Just a quick follow-up on your pricing strategy. Since you aim to remain disciplined, whereas your competitor appears to be a bit more aggressive, do you think in the maybe mainstream product segment going to next couple quarters, there will be some risk for your market share position? I think, overall, like I say, competition is always there. Also it's very dynamic. Very much there's an entry level, there's a mainstream, and also there's flagship. We are actually making some pretty strong attack or offense on the flagship. On the entry-level side, we're on the defensive role because our market share is very high. Once we consider the both end and consider the total package rather than just slice and die, only focused on one sector, I think actually it's not that as bad as actually people worry about that. Got it. Thank you very much. My second question is also to follow up on the destocking situation in China market. Because overnight, your competitor also shared some comments, and they seems to be a bit more negative and saying that destocking may sustain a bit longer going to second quarter. Just wonder, maybe from your perspective, what give you, maybe a bit more confidence, that the destocking could be finished maybe by late Q1, early Q2, and therefore your business will start to pick up? I think maybe we start from the what's the market sell out or demand situation, because we got some of the weekly sell numbers, and also we got a close conversation with our customer. I think the to make a long story short, I think overall, much we see some encouraging final sell out numbers, the market demand situation. By the way, don't get me wrong, I'm not talking about a strong recovery. We're just talking about it's not no more bad news. Probably that's the best way to think about that. When we talk to our customer, when they see the final sell-through situation, most of our customers feel much more comfortable about no more bad news coming in. Also consider about the reopen in China. Most people will expect there will be some kind of a positive impact or positive move, help to overall economy. We didn't see that come in yet, but at least we see the sign of stabilize. That's point number one. The demand profile is getting better and no more bad news on the demand profile side. The second point is actually, because we know our sale in numbers, and we kind of know the channel inventory. When the demand side is getting better and we actually didn't really see the picking up on sale in yet, that's actually a strong signal about, you know, adjustment of the channel inventory and the customer inventory. Overall, given the overall volume and also the momentum, we do feel, you know, fairly confident that actually is, the demand profile should be better starting from maybe next quarter. Got it. Let me go back to the queue. Thank you. Thank you. Next question is from Randy Abrams, Credit Suisse. Go ahead, please. Yes, thank you and good afternoon. I actually wanted to ask then about the non-smartphone. If you could give a bit more on the outlook, I guess first just the power management, where the consumer side has been quite weak, how you see that stabilizing. And then for the Smart Edge, I guess the same way, because there's talk about more of the both consumer and industrial IoT slowing. How you see the broader market where we're at in that slowdown plus inventory correction. And then to lift us out, if you could talk a bit about Wi-Fi 7, if you see much this year or it's more a 2024 story and if you're seeing auto move the needle. Sorry, a lot in that. Okay, Randy. On the Power IC side, yes, it is, we described it has gone through a pretty bad fourth quarter. What we have been doing is again, to manage the revenue just like David said, managing the revenue including pricing, the market share and the growth margin. We kind of decided not to engage in some of the really bloody competition so that we manage our margin relatively well while we continue to move into a more, shall we say, higher end applications, more stable applications such as industrial applications and automotive applications. That's the direction we're going for some time. I think some of the effect will start to show up this year. In the first quarter, well, I mean, we're not doing well, but we're not doing badly either. My, my thinking about the Power IC is, I think we're gonna get back to a reasonable track soon. On the other smart edge products, you asked about the Wi-Fi. I think our Wi-Fi business did really quite well last year. Well, fourth quarter of course, where everything went down pretty badly, including Wi-Fi. Overall, our Wi-Fi business improved 28% Q over Q. We are quite confident that the demand will come back up, such as the broadband demand, albeit gradually, and our market share will be stable and maybe better after that. Our technology in Wi-Fi 7, as you ask, I think we're really pretty much at an equal status against our two competitors. We do expect the real revenue of course to come in probably more in 2024 than in 2023. The important thing in 2023 is to get the key designs into different segments. I think Wi-Fi 7, a bit of like our 5G strategy is we are not moving to engage in high-end segments at the very beginning rather than play a follower role. Okay. Do I miss something? Uh. Very long question, so. I know it was a long question. I think actually if you could take the Smart Edge where you think we're at relative to smartphone. Do you see the same prospect that we start to sign of life, lift off in second quarter? One you missed, just on automotive, if it's moving the needle, like if that's like low mid-single digit contribution. Is it mostly, like modem and like telematics smart cockpit? Okay. Well, Smart Edge Platform in general I think, actually if you ask me, I would feel a little better compared to smartphone, in terms of its, changing of direction shall we say. It is more if you look at the business in that, what do we call it? That Smart Edge Platform, it's quite diversified, many of which rely, you know, more stable or relatively more stable business segments. It was hit, yes, but it's the comeback, I think it's a bit sooner and it's more. I mean, you have to look at it. It occupies 42% of our revenue in the fourth quarter. It's if you add the Power IC, it's the high 40%, even 50%. We're, in that sense, we are quite diversified, especially vis-a-vis 5G or overall smartphone business. As to automotive, we are. Well, we don't have a lot of revenue right now, but we do have, I would think, quite competitive roadmap for the smart cockpit segment. We have a also competitive telematics roadmap. We're engaging in different regions in China, Europe, and the U.S. OEMs. Right now, I think the key thing, again, is to win the designs, to win the sockets. This is a long-term business, as we all know. We are being patient. We are investing inside the company aggressively. We are determined to gain, I hope, our fair share of this high-growth business. Okay, great. Yeah. Thank you, Rick. My second one is shorter. Just on the OpEx, maybe David can answer. The move to be flattish, if you could talk a bit if there's certain areas you're diverting to do that, or is it more of just a discretionary squeeze on everything? Just wanna see where after being very aggressive the last couple years on development. Randy, I would say probably is we need to work on both end. A is actually very discretionary. B actually is also very strategic. Internally, we need to reshuffle, reallocate about the focus of all our engineering resource to the future growth, especially for the two to three years. In the meantime, we need to actually be cautious about the operating expense, you know, management in according to the external environment. It's actually is, we're working on both end. We're working on both end. Is future growth, should we think that's auto and networking or Smart Edge? I mean, just to think if there's a couple pieces where you're really putting more resource. The answer is yes. Obviously it's some other area as well. Some other area as well. Okay. All right. Listen. Thank you, David. Thank you. Next question is from Bruce Lu of Goldman Sachs. Go ahead, please. Hi, can you hear me? Yes. Yeah. Hello? Oh, yes. Yeah. We can hear you. Okay. Thank you. Thank you for my question. I think for the first question is still regarding the smartphone. I think the first quarter, given your guidance, like smartphone business is something like, you know, 30%-40% down year-over-year, which obviously you can see some recovery in the second half. I wanted to ask what's beyond that. I mean, you know, in 2024 onwards, smartphone, 5G penetration rate is plateauing. It seems to me that the market share movement is not the key growth driver for MediaTek as well. What can we expect MediaTek to grow in the smartphone business beyond like 2023 when the inventory, replenishment, play out at, in the second half? Bruce, again, it's actually is, think about the product portfolio, right? We have, close to, for last year or fourth quarter last year, we have close to 50% of the revenue coming out from non-smartphone, and that actually present a lot of, growth opportunity. We talk about the Smart Edge, we think about IoT, we're talking about Metaverse, PMIC. Also if we judging from the customer segmentation, now we get into, the operators, industrial, and also from power line, we're also talking about automotive. That actually presents a pretty, sizable growth opportunity. I wanna highlight, it start with almost 50% of the revenue contribution already. That's point number one. Point number two, let's come back to the smartphone. Again, smartphone, within smartphone, we still believe, actually, I should say the, wireless technology. We keep talking about that a 5G smartphone is part of the 5G cycle, but there are also other application for 5G. For example, the thin modem, you know, right now the industry talking about Reduced Capability model. For example, in US, we are taking a very good market share on the CPE side. We do believe actually in the last few year, and including this year, is actually lay out very good 5G foundation from infrastructure perspective. Once we have the infrastructure ready, and we do believe there's gonna be more opportunity coming out from the 5G model or 5G technology on top of 5G smartphone. For 5G smartphone, given the high penetration like you say, there's no secret. I mean, the growth rate need to be saturated or slowing down. doesn't mean, again, 5G cycle, product cycle, is bigger than 5G smartphone cycle. I think that actually is, our response. I see. I think your first part of the question actually was my second question, Let's take back to smartphone a little bit. What kind of addressable market for the 5G SIM modem can we expect in the coming few years? Again, earlier last year, we kind of announced about the 5G SIM modem on the PC application. We talked about 5G CPU, CPE, which actually is with the upgraders. Going forward, we do believe a lot of, you know, IoT related product will require 5G modem over there. It could be 5G modem for the speed, it could be RedCap modems for the, you know, latency and also for the speed and the connectivity. We do believe if you think about the broader sense of IoT and have the 5G modems over there. The question should be that what kind of addressable market for a non-smartphone 5G market for MediaTek? Taking this year For 2022, our view is actually the 5G overall addressable market is actually around TWD 30 billion. For the phone account for TWD 20 billion. This year, right now, it's actually TWD 10 billion of 5G market already, which, you know, by and large is actually telematics, for example, and also 5G modem as well. I see. Okay. It's like half of the smartphone market. Okay. It's actually a lot bigger than expected. Thank you very much. The second question again is that, you know, you talk about like, you know, which you answered in the very beginning. If you can help, you know, can you help to rank like top three, the product which can grow, in the non-smartphone business? You guys talk about a lot. Can we rank it at like a top three? Everything is like, from our perspective, we do understand that you have a multiple growth driver from the non-smartphone market, but the absolute number for MediaTek revenue is close to TWD 20 billion, so we need something really big enough to move the needle. We try to dig a bit detail that, you know, that's focused on the, like, top two or top three, growth product in the non-smartphone business. Can we have that? Well, I think you have to look at this in, I think in some kind of cadence. One is for the next two to three years, the other is probably from the next three to five, six years. Connectivity is definitely a critical growth driver for us for the next two to three years. It's still a lot of upside for both Wi-Fi and, as David just said, 5G modems or Reduced Capability modems for different, I think that's still untapped, a lot of untapped market. For Wi-Fi, for us, it's moving into much more different higher end segments as we have done in 5G. I think these provides already a quite good outlook for next couple of three years. Further out, we are investing heavily in automotive and some other areas that we probably would prefer not to really discuss. These are high, really with very large ten. Our IT is another area that will provide us, I think, a really good and a stable growth going forward. I have, you know, it's up of TWD 1.4 billion revenue last year. I think having a growth rate for, in the teens is quite achievable for expansion. Thank you. I see. Thank you. The long-term growth, revenue growth compound guidance for the 10%-15% still stands? Of course, I think given the market dynamic, we probably need to revisit that. Right now, we like it for the similarly, like for the full year's guidance, we probably won't be able to provide that. We probably will come back with a different view given the market dynamic and, you know, material movement in the last years. I see. Understand. Thank you. Thank you. Next question is from Brett Simpson, Arete Research. Go ahead, please. Yeah. Thanks very much. Rick, I had a question about the recent U.S. restrictions around Huawei. Can you maybe just explain the licensing situation, as it looks like Huawei's been shipping, you know, good volumes in 4G handsets. Have you been shipping components to Huawei? And if so, what's the impact of the latest restrictions on MediaTek's business? Thank you. Okay. We do not have a license to ship 4G SoC to Huawei. We do not. Yeah, I think we probably have some license for the smaller components like PMIC, that sort of thing. Really it doesn't contribute much of the revenue for us. The impact, the latest, I don't know if it's a formal announcement or not, yeah, at least, the latest story from the press. I don't think we'll have any kind of a material impact on us. Okay. That's clear. Thanks, Rick. Just to follow up, I think you've mentioned in your prepared remarks, you think the smartphone market overall is gonna be slightly down this year. If we focus on domestic China, I think there's various analysts talking about sellout demand last year of about 250 million units. It was quite a depressed year overall in China for obvious reasons. How do you see specifically the China smartphone market playing out this year? Do you see meaningful growth, or do you think it's gonna maintain at these low levels, or how should we think about that? Thank you. Well, China's market last year number, I think 250 million, depending on who you talk to, but it's about there. Our view for this year is a mild pickup compared to last year's number, so maybe 10 million more, a kind of a range. It's not a big pickup. Hey, at this time, any pickup is a good pickup. Yeah. Thank you. Interesting. Maybe just a last one if I can. In the mobile division, how much do you think you're under shipping to demand at the moment? I mean, I guess if I look at your fourth quarter revenue in mobile, it's fallen about 17% year-on-year. Is that? Would that reflect the gap between your sales and overall demand? I'm just trying to understand how, you know, that difference between your business and what's happening on a sellout basis. Thank you. Brett, to be honest actually it's hard to quantify that because currently we only have for this quarter specifically, we only have all the way to end of January, the market sale out numbers. If we only based on the first month of this year, I think the gap is really large. We also need to consider about the, you know, Chinese New Year holiday situation. That would be the first quarter. If you compare to last quarter, the fourth quarter, I would say again, it's roughly which indicates the channel inventory, the customer inventory, probably in the range of like three months, ballpark range, 3 ± a month on the channel side. Okay, that's helpful, David. Thank you very much. Thank you. Next question, Charlie Chan of Morgan Stanley, go ahead, please. Thanks for taking my question and also happy Chinese New Year to management. First question should be for Rick. Rick, you mentioned about MediaTek continue to hold the technology leadership, and you don't want to be just a follower for the future 5G competition. Do you think there is any way to differentiate your technology versus your competitor? On that matter, I'm wondering what's your view about to migrate to 3 nanometer for your China smartphone product in terms of timing and also the benefits. Thank you. Charlie, I think for the 5G competitive landscape, I'm not saying we are necessarily better, but we are definitely on par with our competitor. This is basically a two-player field. We are, you know, but then your definition of leadership is up to anybody's interpretation. From my end, if I look backward for five years, I would gladly say that we have caught up in the technology leadership. That's one. Because if you look at the SOP, I mean, look at our flagship, I mean, The SAM is different for us, I know that. Our flagship chip capability, actually our branding in China, I think we're really making a strong and great progress. I'm very proud of our people. For two, the use of the leading edge process node, I think we are also, we're being very aggressive. We are definitely, engaging with TSMC to use latest, the 3 nanometer process as soon as they can, as soon as we can. Thank you. I see. To the... On that point, because you're, you know, kind of the veteran on that foundry service, right? I'm not sure, from your perspective or MediaTek perspective, whether AMD can really bring a big benefit to no matter your company or end users. Just as some, a preliminary observation, that would be great. Thank you. This, the, I believe there will be some advantage, but probably not because TSMC serves all customers. They do not serve just MediaTek. I do not, let me put it this way. I will not count on that as the key competitive advantage. I do believe that we are very good in utilizing the capabilities of TSMC's leading edge process and converting them into our product capabilities in terms of performances or our consumption. Other than that, I think we really need to really work on our own. Do we have a much better system design or system software? Is our IP competitive CPUs or GPUs? I think overall, as I said earlier, I believe we are certainly on par. Thank you. I see. Thank you. Thanks, Rick. My next question is to David, if I may. Company provide the full year OpEx to be flat, right? I'm wondering about the trend of SG&A, whether they would go up or go down. Specifically, you know, we're hearing that for chip industry, not just smartphone, right? For pretty much CPU, sometimes you need to provide a rebate to create some incentive. I'm not sure if MediaTek also need to provide some rebates, even if it's just temporary and how does it impact your OpEx? Thank you. Charlie, first of all, when we talk about OpEx, which including the rebate, SG&A, the whole package. Okay. Everything is included in that line already. We didn't really single out only talking about R&D. Again, we're talking about from total operating expense, including R&D, SG&A, anything else, basically. Anything below gross margin line. From that perspective, will be flattish. Everything included, like you said, you know, including but not limited to the question you asked. Yeah. Just a very short term, right? Given the tough decision that Adrian has just described in first half. Do you think SG&A or rebates portion will increase in first half? Charlie, we're talking about the full year. What I don't quite understand what you mean by short term. I'm talking about for full year. Okay. 2023 versus 2022. Full year OpEx will be flattish. That's our goal to manage that. That including SG&A. Okay. from a quarter-to-quarter. Okay. It would depend on the revenue pattern. It's really hard for me to give out the guidance as a one single line. It will be varied from quarter- to- quarter if you look at it quarter to quarter. I think it will be helpful for you guys to understand from the full year perspective, it'll be flattish. Okay. Yeah. That's, that's super helpful. Yeah. Just in case this question wouldn't be raised, because lots of people are asking this common question about Oppo's internal competition. Can management address that issue and whether they will impact MediaTek's long-term pricing power? Thank you. Well, Charlie, I understand. Let me just be clear on that point because I read your research and I understand you have some concern and question on that, but I'll be really clear and forthcoming. Our SG&A, and also, which is part of OpEx line, is actually quarter-over-quarter, maybe vary but always in reasonable range. Okay? Okay. We are not trying to do anything funny or strange. You know, everything will be reflect properly. Okay? From quarter to quarter perspective, it will be very quarter over quarter. It's not gonna be changed substantially. Yeah. Okay. Yeah. Thanks again for that explanation. Maybe you want to take that Oppo internal AP question or? I really don't want to comment our customers' activities. Suffice to say that we have, I would say, a very strong relationship with our customers. You know, we do not really comment on customer specific questions. Okay. Okay. Yeah. That's fair enough. Thanks, Rick and David. Thank you. ladies and gentlemen, we are taking the last question. The last question will be Laura Chen of Citigroup. Go ahead, please. Thank you. Thank you very much for having me for the final question. Just wondering that David, you already mentioned about the dynamic on the gross margin trend. I'm just wondering that if there's any chance that MediaTek to renegotiate with your foundry partner to mitigate the potential gross margin pressure since we all know that the current foundry utilization rate is relatively low. Is there any chance for MediaTek to manage the cost on your foundry? Laura, given the fact actually is, our foundry's allocation is pretty centralized, you know, to all the point vendors, I probably will not be able to comment on that question. Let me try to answer from different perspective. It's a dynamic. While we work actually very closely with our partner, and we will see how it goes. For the specific guidance, I probably would not be able to provide that guidance given the fact that we only have, you know, very large vendors out there. Okay, understand. Also, I know that because there's a lot of uncertainties ahead, so, we're not able to provide full year guidance at the moment. Can you also share with us your view on the overall smartphone market outlook? We already talk about a lot about the inventory situation right now, but I'm just wondering that from your perspective, if we expect a gradual recovery starting maybe Q2 this year, is there any chance to still expect the flat year for MediaTek for 2023? Laura, I probably against, that's actually the same question to ask us to provide a full year guidance. Unfortunately, given the market dynamic, we will not be able to provide. If you ask the possibility, I mean anything is possible, but actually it's nothing we can guarantee. The good news is, like we explained, currently, at least we see some stabilization of the market demand. I think that actually is, we will see how it goes. Whether or not you will just stabilize and flat layer or you are coming back still affect, you know, our answer to your earlier question. Okay, got it. Thank you. Thank you. Ladies and gentlemen, we thank you for all your questions. I'll hand it over to Miss Jessie Wang for closing comment. Miss Wang, please go ahead. Ladies and gentlemen, this concludes MediaTek's 2022 fourth quarter conference call, and an audio replay will be available in 1 hour after the call at investor session of MediaTek's website. We would like to thank you for your participation and you may now disconnect. Thank you, Miss Wang. Ladies and gentlemen, we thank you for your participation in today's conference. You may disconnect now. Thank you and goodbye.