Good afternoon and welcome to eMemory's First Quarter 2024 Webcast Investor Conference. Joining us today is our Chairman, Dr. Charles Hsu, President, Mr. Michael Ho, head of IR, Ms. Li Jingchen, and the director of the finance department, Ms. Teresa Kuo. The format of today's event will be as follows: first, eMemory's Chairman, Dr. Charles Hsu, will give an opening remark. Afterwards, President, Mr. Michael Ho, will summarize our operations, followed by our business outlook. Next, Dr. Charles Hsu will give a talk titled "Caliptra Building a Silicon Root of Trust in Data Centers and Every Chip." Then we will conclude today's conference with a Q&A session where our management team will be ready to answer your questions. Please feel free to submit your questions in the input box on the webcast window throughout the conference. Reminder, this conference is recorded, and a webcast replay will be available after it's finished. For more information, please visit the company's website under the Investor Relations section. As usual, before we begin, we would like to remind everyone that today's presentation should maintain forward-looking statements subject to the risks associated with the semiconductor and IP business statement on page three of today's presentation. Now, I would like to give the floor over to eMemory's chairman, Dr. Charles Hsu. Okay, good afternoon, everyone, and thank you for attending our conference call today. As we mentioned in previous quarters, our multi-year growth cycle has just begun. eMemory is a company dedicated to inventing semiconductor device technologies. We license these technologies to foundries, and based on our technology, we design IPs which are then licensed to established customers. Each of our newly invented technologies takes at least 5-10 years to commercialize. However, once successful, the resulting royalty can last for over years. For example, we are still receiving royalties from our first technology, which was licensed 20 years ago. Over the past two decades, once foundries and fabs adopt our technologies, they continue to use them for every following generation. Moreover, our technology and IP portfolios continue growing. We now offer not only OTP but also MTP, eSquare, Flash, ReRAM, PUF, Secure OTP, and PUFrt, which is the robust, and PUFcc, which is a crypto coprocessor. The demand for each technology has been increasing, resulting in significant growth in our license fees. The corresponding royalty will increase greater in the future. With the expansion of foundry capacity worldwide, both existing and new continue to license our technologies, and the royalties for advanced processes or new technologies are much higher compared to the past. Therefore, we are very excited about future continuous growth. Next, I would invite our President, Michael Ho, to share our first quarter performance and the future outlook. Thank you. Good afternoon, everyone. Now, let's begin with our 2024 first quarter financial results. The first quarter revenue was TWD 803.02 million, down 10.7% sequentially but up 20.2% year-over-year. Operating expenses were TWD 382.02 million, up 6.3% sequentially and 27.1% year-over-year. The increase in operating expenses is mainly in employee and director bonuses, as a result of increased net profit before tax. We allocate bonus expenses each quarter as a percentage of net profit before tax: 15% for employees and 1.5% for directors. This quarter, there are foreign exchange gains in non-operating income, leading to an increase in net profit before tax and a non-recurring increase in bonus expenses. Operating income was TWD 421 million, up 14.6% year-over-year. Operating margin decreased by 7.6 percentage points sequentially, and it decreased by 2.6 percentage points year-over-year to 15.0%. Our net income, amounting to TWD 431 million, experienced an increase of 6.6% sequentially and 37% year-over-year. EPS for the quarter was TWD 5.77, and ROE was 53.2%. Now, let's move on to the revenue contribution by licensing and royalty. Licensing in the first quarter accounted for 28.4% of the total revenue, down 6.6% sequentially but up 59.6% year-over-year. Royalties in the first quarter contributed 71.6% of the total revenue, increasing 8.6% sequentially but increasing 9.5% year-over-year. Total revenue for the first quarter decreased by 10.7% compared to the previous quarter but increased by 20.2% compared to the previous year. With that, I will comment on our revenue contribution by IPs. For NeoBit, it accounted for 20.9% of total licensing revenue in the first quarter, decreased 33.5% sequentially but increasing 70% year-over-year. Its royalties accounted for 24.7% of total royalty, up 4% sequentially but down 11.1% year-over-year. For NeoFuse, accounted for 52.6% of total licensing revenue in the first quarter, up 2.3% sequentially and up 69.3% year-over-year. In terms of total royalty revenue, NeoFuse's royalties decreased by 8.4% sequentially but increased by 17.4% year-over-year, accounting for 22.8% of total royalties. For PUF-based security IPs, contributed 8% of the licensing revenue, decreasing 39% sequentially but up 6.2% year-over-year. Its royalties accounted for less than 1% of total royalties, up 15.9% compared to the previous quarter, down 59% compared to the previous year. For MTP Technology, accounted for 18.5% of the total licensing revenue, down 22.8% sequentially but up 53.7% year-over-year. Royalties from MTP increased 12.2% sequentially but increased 64.7% year-over-year, accounting for 2.5% of total royalties. Now, let's look at the royalties for 8-inch and 12-inch wafers. For 8-inch wafers, accounted for 42.8% of royalties, up 4% sequentially but down 0.2% year-over-year. For 12-inch wafers, accounted for 57.2% of royalties, decreasing 15.4% sequentially but up 18.1% year-over-year. In total, 154 product tape-outs were completed in the first quarter. We will provide more information in the management report. In the next section, I will address our future outlook. For licensing revenues, due to strong demand from foundries and chip design companies for all of our technologies, growth momentum in revenue will continue to increase. For royalty revenues, we are beginning a multi-year growth cycle for royalties. Over the past three years, we have accumulated over 1,500 new tape-outs, which are entering mass production. From the first quarter royalty report, production for 22-28 nanometer and below has resulted in new royalty contributions from the productions such as the 6 nanometer DTV, 7 nanometer ADAS, 12 nanometer SSD controller and ISP, as well as the 22-28 nanometer networking switch and smart image processor. For specialty processes like high-speed FinFET, BCD, ReRAM in the emerging memory, we have the following development status: One, NeoFlash is developing toward FinFET in high-speed processes for OLED DDI applications. Two, ReRAM is spinning into more processes. Three, NeoFuse continues progressing in specialty processes for PMIC and MCU-related products. For advanced processes, One, NeoFlash has successfully qualified for the N5A automotive process with customer design in. Two, PUFrt collaboration with CPU partner in 3 nanometer is progressing successfully. Regarding the business collaboration platform, for eMemory and PUFrt -based IP technologies, we are expanding collaboration with all new foundries to license our technologies besides the existing foundries. For security IPs, we have completed the agreement with the largest CPU IP company to integrate our security solution into the CPU architecture. This concludes my comments. Next, I will pass the time to Charles. Thank you. Okay, so next I would like to share with you about the Caliptra, which is building silicon root of trust in data centers and every chip. As it is connected through the internet, there's a growing demand for emerging businesses at the higher levels of confidentiality between clouds and edge devices, particularly for the data center applications. Confidentiality for data center applications is raising the bar for security, requiring every individual chip at the SoC level to prove its trustworthiness. As a result, industry leaders have come together as part of the Open Compute Project, which is called OCP Community, to define and introduce Caliptra, which is a reusable silicon-labeled security IP block. We also call it the hardware root of trust, designed for integration into future chips used for the data centers, such as DPU, CPU, GPU, and NIC, and more. Network IC and more. NIC stands for the network IC. So Caliptra's development is spearheaded by NVIDIA, AMD, Google, Microsoft, and other key players. The related silicon root of trust IP will be added in the data centers, especially driven by the AI data centers. The milestones of Caliptra are shown on this page. As you can see, Caliptra 1.0 has just been published in March of 2024. After knowing the background of Caliptra, let me share with you about what eMemory Technology can do for Caliptra. Caliptra silicon root of trust requires several key components, including secure OTP, which is one-time programmable memory, and PUF, which is physically unclonable functions, and TRNG, which is a true random number generator, and encryption. These elements establish a hardware root of trust for the chip, ensuring the security of the operating systems, software, and personal privacy data. eMemory has long been the major OTP provider based on our OTP technology. We also invented PUF, which is a stable and reliable PUF in the industry. By integrating OTP, PUF, and 4 environmental noise inputs, we have created a true random number generator to achieve Caliptra's root of trust requirement. Our root of trust plays a very important role. With the continual proliferation of the chips integrating Caliptra security root of trust, the demand for eMemory's IP will be increasing. And next, I would like to further elaborate how eMemory's IP can add the three security functions required by Caliptra root of trust. The security function is unique chip identity, which is by chip fingerprint and also can be improved by PUF. This function is like a personal ID. With each chip having a unique identity number, eMemory's PUF and the true random number generator can generate non-repeating random numbers stored directly into the embedded OTP. This unique chip identity serves as the foundation for the secure attestation process. After making sure the connected device has a unique ID, the next step is performing secure attestations, which will be done by the device certificate. Each chip must undergo the attestation, which is the process of verifying its integrity and authenticity. This process involves generating a device certificate based on unique chip identifiers, granting the chip a genuine identity. With the certificate, the chip can be authorized by the data center and registered as a recognized device in the data center system to ensure secure connections. This process is similar to a company issuing a badge to a new employee, granting access to the company's facilities, and secure attestation. Inter-chip communication via ciphertext is performed. A true random number generator and the crypto engine play an important role to ensure cybersecurity is maintained at a secure level. The next after attestations is booting the system by secure boot. Secure boot is a critical step in ensuring the integrity of the operating system during the boot process. If the tampered operating system manages to boot through a non-secure boot process, subsequent applications may be vulnerable to malicious eavesdropping, which may lead to the leakage of private information. Secure boot is essential to verify the authenticity of the operating system image and ensure that it has not been altered. During the secure boot, the hardware for performing security is initialized first. Then the operating system image and the code are authenticated through the hardware during the boot process. To ensure the integrity of the operating system image, the source image must be protected and verified, which requires key generation by true random number generators and encryption by a crypto engine. So eMemory has required for Caliptra silicon root of trust. So with NVIDIA, AMD, Google, and Microsoft implementing the Caliptra silicon root of trust in data center chips, the use of eMemory's IP in every chip for security will speed up. That concludes our sharing on Caliptra, which is building silicon trust in data centers and every chip. And thank you very much for your time. Next, we will enter the Q&A section. Thank you, Charles. This is our prepared statement. We will now begin the Q&A session. The information will follow the format of answering the Chinese version first, followed by the English version. We will now collect questions and begin the Q&A session. Okay, Li Jing. [Foreign language]已经有很多问题传上来。第一个问题就是说，在AI应用上，我们上次法说有提到，大概会分三大块，就是运算，还有储存（storage），还有感应的方面。那请问在这三块的领域，对公司最快贡献权利金会是在营收，或是权利金会在哪一块？未来的total address market到底哪一个会是最大的？那我们请Michael回答。 对于AI的，目前有像刚刚提到的data input，那data model的storage跟data input的sensor应用，那我们已经进入了这方面的应用，那也开始收到相关权利金。那在data storage，像是NAND、DRAM的部分，我们已经有客户在像NAND的SSD controller跟CXL memory interface上面使用IP，并且开始收到权利金了。那另外在computing的部分，最主要这是在先进的制程，我们已经有使用root of trust的IP跟SRAM repair IP的客户，那未来也将会贡献这个相关的权利金。那我们相信在这一个方面的权利金未来会很显著。谢谢。 The first question was, during the earnings call, you mentioned that there are three areas in AI applications: computing, storage, and sensing. Which of these three areas will contribute the fastest to your royalty revenue, and which one will have the largest addressable market in the future? Michael? Application systems, there are three main components: data input, data model storage, and computing accelerators. Currently, data input goes through various sensor operations, and eMemory has already entered the field and started receiving royalties. For data storage in NAND and DRAM, we provide a few in NAND SSD controllers and CXL memory interface using our IPs, which also result in royalty contribution. In terms of computing, many in the advanced nodes are using our root of trust IPs and SRAM repair IPs, and we believe it will significantly contribute to royalty in the future. Thank you. [Foreign language]TP 在 chiplet 的应用是大概怎么样？请 Michael。 [Foreign language] the DRAM repair function. Finally, in the NAND Module part, it can be used as the key storage function for confidential computing. In the future chiplet development, many chips in chiplets will need to use our IP, rather than just one. Thank you. The question was, do you have any solutions for chiplet-related? Michael? eMemory's IPs have been adopted across various applications, which will be integrated into the packaging module as chiplets. One, in Digital ICs for storing keys, ROM code, and repairing high-density SRAM. Two, in Analog ICs for circuit repair and code storage. Three, in DRAM ICs for DRAM repair functions. Four, in NAND modules for storing keys for confidential computing. In the future development of chiplets, we anticipate that more chips in the chiplets will incorporate our IPs instead of just one chip. Thank you. [Foreign language]台积电最新推出 A16，也就是 1.6 奈米的制程技术，就是超级电轨技术。它是将供电网路放到晶圆的背面。那这样的改变对我们公司的技术发展会不会有影响？请 Michael 回答。 在最近美国的 symposium 的 announce 这个最新的 A16 的 1.6 奈米的制程技术。那这个 Backside Power 的话，它主要是用在 2 奈米以下的应用。那最主要有两个重要的功能，一个就是它把 power efficiency 做提升。那第二个的话，就是降低 backend 的 layer 的层数，以达到降低这个 backend 的制造成本。那这两个部分对于使用我们的 IP 是没有影响的。谢谢。 The question was, TSMC's latest A16 process technology featuring Super Power Rail will relocate the power grid to the backside of the wafer. Will this have an impact on your technologies? Michael, can you answer the question? Our primary aims to achieve 2 objectives in the process below the 2 nanometer. One is to improve power efficiency, and the second is to reduce the number of backend layers to lower manufacturing costs. This has no impact on the use of our IPs. Thank you. [Foreign langauge]今年，那个公司有公告这个董事会的名单，那有一些新的面孔，像是这个曾董、曾凡诚先生，还有孙元诚，那之前台积电的这个RD的头。那刚好这个都是跟台积电有关。那请问，这样的安排是有什么想法，那跟对公司的帮助？那请Michael回答。 这个机会来说明一下，那我们公司的董事都已经满了三任。那根据金管会的规定，那必须要有一半以上的董事要做更换。那力旺在 IP 领域已经是 embedded 的 NVM 的领导公司，会持续跟随这些先进技术的代工厂，开发先进制程的 non-volatile memory 跟 security 的技术，以及在公司经营策略和夥伴关系的发展上做前进。那我们新提名的董事，不论在技术、经营策略，以及在夥伴合作方面，都可以给公司很大的帮助。谢谢。 The question was, you recently announced the new board members this year, which include notable additions such as Dr. FC Tseng and Dr. Jackson Sun, both well-known figures closely linked with TSMC. What is the reason behind selecting these two members, and how does it benefit the company? Michael? Per FSC regulations, our independent directors have served three terms, and therefore, more than half of them need to be replaced. eMemory is the leading company in embedded non-volatile memory within the IP industry. We will continue to collaborate with foundries in the advanced process to develop the cutting-edge non-volatile memory and security technologies, while also expanding our business strategy and partnerships. The newly nominated directors will provide invaluable support to the company, bringing its expertise in technology, operating strategy, and forging key partnerships. Thank you. [Foreign language]大概在一个多月前，我们的对手 Synopsys 它收购了一家 SRAM PUF 的公司，叫 Intrinsic ID。那这家公司呢，在很早以前是飞利浦实验室出来的。那这个对公司，它跟公司一样是提供 PUF，但是它是 SRAM，那我们是自己发明的这个 NeoPUF。那这个对我们的影响是什么？那我们请 Charles 来回答。 [Foreign language]有关这个 PUF 的部分，在我们的 NeoPUF 推出来之后，有不少客户从原来是用 SRAM PUF，那就是 Intrinsic ID 的技术，转来使用我们的 NeoPUF ，还有 OTP。那主要是因为这 NeoPUF 的技术比那个现有的这个 SRAM 的 PUF 有更好的效能，包括以下五点，就是我们的 PUF 是更 stable，然后第二个是更 reliable，而且我们也不需要做 error correction，那我们也不需要这个额外的 OTP for 这个 helper data，然后我们的这个 PUF 呢，就具有这个 radiation hardened 的这个特性。那 PUF 通常是用来储存钥匙或是产生钥匙，那你如果说有不够 stable 也不 reliable 的话，那客户根本是用起来会非常担心。所以我们有信心呢，会成为这个 PUF OTP 还有 TRNG 还有这个 root of trust IP 这方面的领导公司。那同业它收购 Intrinsic ID 呢，应该也就是看到 PUF 在晶片安全中呢，未来会有很大的发展的潜能跟需求，所以才会借由这个并购的方式来加速提供相关的 IP 的方案，以切入这个市场取得商机。但是这也表示说这个市场上对这个晶片安全使用这个 PUF 的重视。那我们在 2015 年的时候就已经看到这样一个趋势，也在 2015 年发明了这个 PUF 这个技术，那解决呢 SRAM PUF 呢 遭遇到的这个问题。那我们结合我们本身长期发展的 OTP 的技术跟 PUF 呢，来提供客户完整的硬体安全的解决方案。相信我们是走在这个浪潮的前端，可以领先提供一站式的服务来满足客户的需求。 The question was, Synopsys recently acquired Intrinsic ID. Will this affect your PUF-based applications in business? Also, will this have an impact on similar technologies and IPs of your company? Charles? After the launch of NeoPUF, our PUF technology, many customers have switched to use our NeoPUF and OTP instead of SRAM PUF. The SRAM PUF is from the Intrinsic ID. The main reason is that our NeoPUF has better properties than SRAM PUF, including five different properties. First is the enhanced stability. Second is increased reliability. And the third is eliminating the need for the error corrections, and also eliminating the need for OTP for storing helper data. And we also demonstrate the radiation-hardened capabilities. So with these five extra properties better than SRAM PUF, we are very confident that we will become a leading company in the field of PUF and OTP and TRNG and root of trust IPs. First of all, Synopsys's acquisition of Intrinsic ID is a good sign that the industry recognizes the significant potential and the future demand for PUF in the chip security and driving the provisioning of this IP solution through acquisition to better penetrate the market and capitalize on these opportunities. eMemory recognized this trend in 2015 and developed the best PUF-based technology to address the problem encountered by SRAM PUF. Combined with our own IP, we can provide customers with a complete hardware security solution. We believe that we are at the forefront of this trend and will be the first to provide one-stop shop service to meet customers' demand. [Foreign language] 台积电加速投资 3D 先进封装。请问像 CoWoS、InFO 或是 SoIC 等，那力旺的 IP 的机会为何？那现在有没有具体客户或应用可以分享？Michael。 [Foreign language] 在 2.5D 或 3D 的这个封装，最主要就是把不同的功能的晶片整合在一起。那如果其中有一个晶片 fail 的话，那整个封装在一起的产品就会 fail。而我们的 IP 可以用来修补这些晶片。那比如说像在 memory，如 DRAM 跟 SRAM，或者像一些影像的感测器 CIS 等，就会经常跟逻辑的 IC 一起封装起来做使用。而这些应用就会需要 OTP 来作为这些高容量的记忆体或者是感测器的修补使用。那在这个部分，我们已经有不少客户采用，也持续在导入新的客户跟产品来做使用。谢谢。 The question was, TSMC is accelerating their investment in advanced 3D packaging technologies, such as CoWoS, InFO, and SoIC. Are there opportunities for your IPs? And can you tell us if you currently have any customers adopting these applications? Thank you. In 2.5D and 3D packaging, chips with different functionalities are packaged together. Therefore, if one chip fails, the entire packaging chip will fail. Our IP can help repair these failed chips. For example, memory components such as DRAM and SRAM, and image sensors CIS are frequently combined with the logic ICs. OTP plays an important role as a high-density memory repair and sensor repair in these packaging chips. We already have many customers in this area and continuing adoption from the new customers and applications. Thank you. [Foreign language]还是 AI 的问题。请问公司在 AI 应用中有什么对应的解决方案？Michael 请回答。 [Foreign language]一直都很热门。那力旺在 AI 的应用的解决方案主要可以分为三个面向。那第一个就是 AI 的应用也需要像安全的硬体信任根来保护资产跟运作的安全。那目前我们公司也提供完整的安全解决方案，可以完美地解决 AI 应用中相关的安全问题。那第二个就是像 AI 在应用中也需要大量的 SRAM 来解决运算的问题。那我们公司有提供完整的 SRAM repair 方案，可以大幅地提高 AI 晶片的良率，降低生产的成本。那第三个，AI 在应用中需要大量的 DRAM。那我们公司也提供完整的 DRAM 修补方案，进一步解决 AI 晶片在大容量记忆体应用中的需求。谢谢。 The question was, do you have any solutions for AI-related applications? Michael? Three aspects to this question. One, AI applications need a hardware root of trust for protecting assets and ensuring operational security. We offer several security solutions tailored to address these specific security concerns related to the AI applications. Two, the computational demands of AI applications require substantial SRAM. Our comprehensive SRAM repair solutions are designed to improve the yield of AI chips and reduce the production cost. Three, AI applications rely heavily on the large scale of DRAM. Our complete DRAM repair solution can help meet the demands of AI chips in high-density memory applications. Thank you. [Foreign language] 第一季的营业费用比往以前大，因为成长二十几%嘛，那比我们平常看年对年都算是比较大的幅度。那请问公司是不是有大幅扩编人员的计划？那全年的营业费用预估大概会增加多少？Michael。 [Foreign language]这个机会也解释一下，我们在第一季的营业费用会增加，主要是来自于说员工跟董事酬劳会因为税前净利的增加而增加。那我们是以每一季用税前净利的比例，那比如说员工是 15%，董事是 1.5% 来提列分红的费用，并且会计入当期的营业费用。那我们可以看到在第一季因为我们有业外有汇兑的收益，那导致税前的净利很明显地增加，那进而也会造成我们分红费用会出现这个非常态性的增加。那我们在第一季如果不含这些员工跟董事酬劳的固定营业费用的话，其实大概还是维持在新台币 2.8 亿左右。那这个部分事实上跟上一季是相当的。所以我们公司目前并没有大幅扩编人员的计划，所以除了每年应该有的这个员工加薪，那平均来看就是 3%-5%。那未来的营业费用的变化主要还是会随著净利的变动而有变化。谢谢。 We noticed a significant increase in operating expenses in quarter one compared to last year. Was there a rise in recruitment during this period? Additionally, could you provide an estimate of the growth ratio of your operating expenses for the entire year? Michael? In operating expenses in the first quarter is mainly due to the increase in employee and director bonuses as a result of increased net profit before tax. We allocate the bonuses expenses each quarter as a percentage of net profit before tax. That is 15% for employees and 1.5% for directors, which were included in that quarter's operating expenses. In the first quarter, there are foreign exchange gains in the non-operating income, leading to an increase in the net profit before tax and a non-recurring increase in bonuses expenses. [Foreign language] 全球晶圆代工产业的成长率，而且他说大概只有 AI 之外，其他产业都很需求都没有明显上升。那对我们公司 2024 年营运的影响为何？ Michael。 [Foreign language]我们之前所报告的，事实上我们对于 2024 年的营运成长，我们是很有信心的。那最主要来自两个部分。第一个，我们的 IP 的 portfolio 是越来越多，那包括像 OTP、MTP、EEPROM、Flash、ReRAM、MRAM、PUF、Secure OTP、PUFrt，也就是 Root of Trust IP 跟 PUFcc, Crypto Co-Processor IP 等等。那这些都会带动 2024 年的像 License、NRE 跟 Usage 的相关的营业额。那这部分会比 2023 年有大幅的成长。那第二个的话，就是关于在权利金的部分，根据我们客户的回馈，那他们手上的库存的消化大概已经告了一个段落，那也回到像往年比较正常的水位。所以我们看到在成熟制程的产品会回到往年正常的这个量产需求。那加上我们过去三年已经累积超过 1,500 个新产品的设计订案，那随著客户进入量产，那这些也会带动权利金进入成长的一个循环。谢谢。 TSMC has lowered their growth forecast for the global semiconductor foundry industry, indicating weak demand across industries apart from AI-related products. What is the impact on your business in 2024? Its growth in 2022, we are very confident due to the following reasons. One, our IP portfolios are increasingly diversified, including the OTP, MTP, EEPROM, Flash, ReRAM, MRAM, PUF, Secure OTP, PUFrt, that is the Root of Trust IP, and PUFcc, that is the Secure Co-Processor IP. This will drive significant growth in licensing, NRE, and Usage revenue in 2024 compared to 2023. Two, regarding the royalties, according to the feedback from our customers, their inventory has decreased to a certain extent, returning to the normal levels. Therefore, demand for products in mature nodes will also return to a normal level of production. Furthermore, we have accumulated over 1,500 tape-outs in the pipeline in the past three years, which will drive our royalty growth further. Thank you. [Foreign langauage] 请问那个中国晶圆厂过度扩张，而且杀价抢单，那这会不会对我们公司的权利金产生影响？请 Michael 回答。 [Foreign language] 到中国晶圆厂的成熟制程持续在扩张。那但是我们对于这种过度的扩张，我们目前觉得这部分对产业的影响，我们认为已经是趋缓了。那理由是第一个，领导的我们一些看到领导代工厂的体系并没有跟进这样的扩张，因为价格的下降不一定会带来市占率的增加。那第二点，那像客户对于代工厂的选择，代工价并不是唯一的因素，其他的还有包括像交期、time to market、良率跟技术服务等等。那第三个，那基于区域性的政治考量，那像是大型的美国晶片的业者已经有移出在中国的生产制造，那以及像是我们看到欧洲、美国、日本都希望半导体能够有在地化的制造的这些国家政策。那这些事实上都会限制中国晶圆厂产能过剩的这种外溢效能，进而限制代工价格下跌的空间。那况且我们的各项技术目前都持续往更先进的制程进行，那像或者是开发一些特殊的制程，像是 NeoFlash 跟 MTP 相关的。那在这个部分我们的权利金比例比平均都高很多，所以我们并不担心中国晶圆厂杀价对公司权利金的影响。那此外，根据以往的经验，客户产品的价格的下降事实上会带来更多的需求跟普及。整体长久来看的话，是会可以带来更多的收入。那我们随著各个代工厂的产能持续扩充，我们相对应的权利金收入也会持续成长。谢谢。 Will the excessive expansion and price-cutting competition among Chinese foundries affect the company's royalty? Michael, can you please answer this? The asset expansion of Chinese foundry in mature process nodes will limit for the following reasons. One, the leading foundry haven't followed pricing cuts as the reducing foundry price doesn't necessarily guarantee an increase in market share. Two, customers choose foundry partners not only based on the pricing but also on the time delivery, time to market, year, and service. Three, furthermore, the geopolitical risk pushes major U.S. chip makers to shift away from the manufacturing in China. Also, the semiconductor manufacturing localization policies in regions like Europe, the U.S., and then Japan all limit the effect of China overcapacity and the downward pressure on the foundry price outside of China. As our technology development towards more advanced nodes and specialty processes such as NeoFlash and MTP, the royalty we receive will be higher than average. Therefore, we are not concerned about the impact of price erosion of Chinese foundries. Additionally, based on our previous experience, IP demand and adoption trend to rise as the price of foundry wafer price declined, ultimately resulting in increased penetration and royalty revenue over time. Also, as foundries continue to expand their capacities, our royalty revenue will grow continuously. Thank you. [Foreign language] 请问公司是否有这个云端这个服务业者，像这个 Amazon、Google、Microsoft、Meta 这些？ Michael。 [Foreign language]是，已经有几个大型的云端业者已经是我们的客户了，使用我们的 IP 用在不同的产品线。那这些大型的业者对于 IP vendor 有很严格的要求，那我们在多年前就已经都有符合了。所以不管在 AI server 或者是 edge device 里面，不同功能性的晶片，那我们的 IP 都有机会被使用到。谢谢。 Do you have cloud service customers, Michael? Cloud service providers are our customers already, using our IP across different product lines. These major players have strict requirements for IP vendors, which we have qualified for many years. Therefore, our IPs can be used in chips of different functionalities, whether in AI servers or edge devices. Thank you. [Foreign language] 这一题是有关于 IP 竞争性的问题。那市场上呢，有几家呢，他宣称他已经要跨入这个 OTP 的市场，而且讲说他的 IP 比公司的小，更有竞争力。那请问公司担不担心会有掉单的问题？Michael。 [Foreign language] 不管是在 OTP 或 MTP 的技术，我们在市场已经超过 20 年了。那竞争的问题也从来没有停止过。但是同样的时间，我们的公司也是一路在往前开发更多。那在 IP 产业的里面，reputation 是很重要的。我们目前的客户，不论是晶圆厂或者是晶片设计公司，甚至是系统厂，都很满意公司的技术及服务。那近几年我们的市占率也持续在提升，并且展现在这个营收的表现上面。我们很有信心这个趋势会持续下去。谢谢。 There are multiple companies claiming to enter the OTP market and stating that their IPs are more competitive because their IP size is smaller than yours. Will you be losing orders because of them? Michael? The MTP technologies have been in the market for over 20 years, and the competition has never stopped. Our company continues to progress into the most leading process nodes, extending our technology portfolio into the security area. Reputation is very important in the IP industry, and our customers, whether they are foundries, fabless, or even the OEMs, are all satisfied with our technologies and services. All of this is reflected in our revenue and earnings. We strongly believe this trend will continue in the future. Thank you. [Foreign language] 联电法说有提到，就是他原本的新加坡的扩厂延后。那这部分会不会影响公司？Michael。 [Foreign language] 厂本身就会因为景气的循环或者是客户的需求等等的因素，来调整他们自己产能的扩充规模跟时程。那我们跟联电的合作其实不限于单一的制程或者是特定的厂区，我们是全面性的，而且持续往更先进的制程前进。那因此对于单一厂区的扩厂延后，那这部分对我们是不会有影响的。谢谢。 UMC mentioned that they are postponing their Singapore fab expansion. Will this affect you, Michael? Frequently revise their expansion plans and schedule in response to the economic cycles, customer demand, and various other factors. Our collaboration with UMC is not limited to specific process or location. There are multiple projects ongoing across all our technologies. Therefore, the delay in expanding a particular factory location will not affect us. Thank you. [Foreign language] 公司的客户法说有提到，这个 driver IC 杀价很严重。他们都希望这个晶圆代工价能够降价。那这个会不会影响到公司权利金的收入？Michael。 [Foreign language] 你看到了，就是我们的 DDI 的客户，事实上都持续往更先进的这个制程去移动。那像高单价的这些 OLED 的 DDI 的比重也持续在提升。甚至你可以看到像在折叠机，他所用的 OLED 的 DDI 的颗数是 double 的。那加上我们看到在面板的应用上的 content 是持续增加的，譬如像是电子纸、电子标签、PMIC 相关的应用。那整体而言，我们认为来自于 DDI 的相关的权利金，并不会受到部分晶圆代工厂价格下降而有所影响。谢谢。 Your customer mentioned in their earnings that the driver IC is facing severe price pressure, with hopes of foundry reducing wafer prices. Will this affect your royalty? Customers continue to migrate toward more advanced processes, with the proportion of high-end OLED DDI steadily increasing. Additionally, the number of OLED DDI will increase in the foldable smartphones, along with the content increase on the panels such as ePaper, ESL, PMIC-related, and more. Overall, we believe that these factors will mitigate the impact of declining wafer prices and remain a strong cash cow for us. Thank you. [Foreign language] 中国半导体自主化，那里面有没有包含 IP？那我们在中国是不是有当地的 IP 的竞争业者？会不会因为这个政策导致客户转用国产 IP？Michael。 [Foreign language] 就如我们以往在法说会所说明的，这个 Non-volatile memory 的 IP 事实上有一些特性，就是像是说它的技术门槛高，研发投入期非常长，而且回收的周期也很长，而且对应产出的营收相对于像是代工厂跟晶片的金额是小很多，有这些的特质。所以这个部分并不就会是当地半导体要自主化的首要重点。那虽然我们看到当地也有少数相关的 IP 公司，但是因为有量的这个客户对于专利保护、品质可靠度以及这个技术服务等都会有很高的要求。那这个部分并不是说只要便宜就好。因此我们在中国的授权案件还是持续的增加。那我们也看到有不少客户是在使用当地的 IP 之后产品出现问题，那后来又转回来使用我们的 IP。谢谢。 Does China's semiconductor localization plan include IPs? And do we face competition from local IP vendors in China? And are customers switching to domestic IPs due to government policies? Michael? As we mentioned before, the Non-Volatile Memory IP business is characterized by high technological barriers, very long periods of development, and relatively small revenue output compared to the foundries and chips. Therefore, there is not the focus of localization of semiconductor policies. While we have observed some competition from the local IP vendors, customers are very careful about the IP adoption, which is not only a cost consideration. Factors such as the patent protection, quality, reliability, and technical support are much more important considerations. Thus, our licensing cases in China continue to increase. Additionally, some customers have encountered a big issue after trying local IP vendors and have subsequently switched back to using our IPs. Thank you. [Foreign language]从 2020 年的第三季开始，公司的 new tech NTO，因为我们都有 disclose 这个在 major report 上，大概每季的平均都是差不多是 140-150 个，没有特别的往上。那这样的数目是代表公司刻意去筛选案子，还是 engineer 的 resource 不够？那未来怎么看 NTO 的变化？Michael。 [Foreign langauage] 个 NTO 的数字里面，事实上有大概 85% 是来自于 usage 的案子。那也就是说，这些客户是使用现成的 library 的 IP，然后这部分也是比较不需要 engineering resource 的。那虽然在最近的近年来，我们看到每一季的 NTO 数并没有很明显的增加，但是你如果看到其中的这个比较的话，你可以看到对应的制程还是持续往更先进的这个节点来移动。那因为越往先进制程的开发设计跟光罩的费用是急剧的上升，所以这会让客户在先进制程上面的 NTO 的数字会比在成熟制程的部分来得少很多。所以即便我们看到整体的 NTO 的数字并没有很明显的增加，但是因为其中更先进制程的 tape-outs 数的比例是增加的，所以每个 tape-outs 平均的产值就会增加很多。那这个部分也可以从我们的这个 license fee 授权金的成长可以看得出来。谢谢。 Starting from the third quarter of 2020, your NTO averages around 140-150, with no substantial increase. Does this mean that your R&D resources are limited? And how do you predict your NTO trends? Michael? 85% of our NTOs are from usage cases, where customers reuse existing IPs and therefore require minimal engineering resources. Although there hasn't been a significant increase in NTO number per quarter in the recent years, our tape-outs are continuously moving toward more advanced nodes. The cost of design, development, and mask increases at more advanced nodes, resulting in fewer NTOs in advanced processes compared to the mature processes. The average royalty per tape-outs in advanced nodes is much higher. In addition, as the proportion of tape-out s in advanced nodes increased year-over-year, so does our licensing revenue. Thank you. Time, we will answer our last question. [Foreign language] 2023 年 MTP 的 license fee 比前一年 2022 年成长了快一倍。那相对应的 royalty 什么时候才会看到比较明显的营收贡献？那大概是在哪一个领域？那怎么看 ESL 这个市场？请 Michael 回答。 过去这三年我们的 MTP 已经累积超过有 200 个 NTO。那最主要的应用在于像 MCU、PMIC 跟 sensor 这几个方面。那这些产品其实已经开始陆续进入量产，而且有权利金的贡献。那我们在第一季就有看到 MTP 的权利金已经有超过 60% 的年对年的成长。那至于 ESL，也就是所谓的电子标签这个部分，事实上我们很早就已经有客户用我们的 OTP 在他们的单色或者是三色的这个驱动 IC 上去做量产。那过去这一年多以来，因为客户开始在新的产品，也就是这个彩色的这个电子标签上面，他们需要这个四色的驱动 IC 来使用，并且使用 MTP 的这个技术。所以我们已经有好几个客户导入我们的 MTP，并且在多家晶圆代工厂的制程平台上做 tech qual。那相信这个部分很快就会看到相关的权利金贡献。谢谢。 The license fee for MTP in 2023 grew nearly 100% compared to 2022. When can we expect to see a significant royalty contribution, and in which areas? Additionally, how do you view the ESL market? Michael? The three years we have accumulated over 200 NTOs for MTP, primarily used in the applications such as MCU, PMIC, and sensors. These products have gradually entered production, contributing to royalty revenue. In the first quarter alone, we saw over 60% year-over-year growth in MTP royalty. As for ESL, we already have customers in production using our OTP for single color and three color driver ICs. Due to customers requiring MTP on the new four color driver ICs, we already have many customers adopting our MTP on multiple foundry process platforms over the past years, which will contribute to our royalties soon. Thank you. We will now begin the closing comment. Charles, please proceed. Okay. Thank you once again for your patience and the support for eMemory. We will continue to work hard on technology and IP innovation and the PUF-based hardware security solutions for our customers and bringing higher returns for our shareholders. For more information about our PUF-based security IP and the technology, we encourage you to visit our PUF Security website and check out our articles and other materials. Thank you. Thank you, ladies and gentlemen. Please be advised that the conference recording will be accessible within the next three hours. You may now disconnect. Goodbye and have a good day.