Good afternoon and welcome to E! Second quarter 2026 webcast Investor Conference Joining us today is our chairman, Doctor Charles Xu, head of IR. Miss Li Jin Chen, director of the Finance Department. Mr. Joseph Xia and Head of Digital Marketing Doctor Felix Xu. The format of today's events will be as follows. First, in-memory German doctor Charles Xu will give an opening remarks. Afterwards, our financial officer, Mr. Joseph Hsieh, will present the review of our financial results. Following that, Doctor Charles, she will share our business outlook. Next, doctor Felix. Xu will give a talk titled Securing the Next Generation of AI infrastructure. The hardware anchor for Calyptra Root of Trust to secure Chiplets and compute Express link or CXL. Then we will conclude today's conference with the Q&A session where our management team will answer your questions. Please feel free to submit your questions in the input box on the webcast. Window. Throughout the conference. As a reminder, this conference is being recorded and a webcast replay will be available after the conference is 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 may contain forward looking statements subject to risk factors associated with the semiconductor and IP business. Please refer to the cautionary statement on page three of today's presentation. Now, I would like to give the floor over to memories Chairman Doctor Xiao Xue. Good afternoon. Shareholders and investors. Welcome to our investor conference. First, I would like to report on our latest progress in the security IP. Over the past few years. Our security IP has evolved from a foundational. Are OTP and. The path into a path rule of trust. Today, as a security requirements for AI servers. Continue to rise. Our technology has taken a major step forward, advancing from a stand alone security IP to the design of integration of comprehensive security subsystems This transition. Transition is crucial for us. We are no longer providing clients with just OTP path or rule of trust. We are now delivering fully integrated system level security, IP that combines encryption technology, software, firmware, and Anti-tampering protections In other words, our role within our clients chips has become far more critical, allowing us to deliver significantly higher value Consequently, the potential license fee fee and also royalty are expected to increase its significantly as well. We have a license to several major global memory manufacturers to integrate our security IP into SSD. Solid state disk. Systems. For AI data centers providing the security subsistence required to comply comply with crypto standards. Beyond SSDs, we have also expanded into another vital area of AI servers, which is memory expansion. I see. As AI model grows increasingly large, the memory capacity required by AI servers is a surging rapidly. As a result, C XL is becoming a dominant interface technology for AI server memory expansion CSL switch and their related controller chips. Similarly. Require a complete hardware security architectures. We are currently working with several CXL chip makers to supply both security, IP and security subsystems. So connecting the dots over the past few years reveal a career trajectory for our security. IP applications. The last year we. In. We entered AI, AGI, CPUs and also BMC. And this year we expand into AI data center solid state disk security subsystems. And now we are. Creating C XL switch for the AI server memory expansions. This means our security IP is expanding from a single chip inside an AI server to much. Multiple critical chips. Furthermore, many of these advanced chips are utilizing cutting edge process nodes Such as three nanometer and the. Generating much higher licensing and royalties than corporate average Another highly favorable trends for us is cholesterol Driven jointly by global tech giants like such as Microsoft. Google. MD and Nvidia. We are seeing an increase number of AI and data center chips, and the system adopt. Adopting the collateral security. Picture. This indicates that the number of chips required in rule of trust. Security subsystem and the related security IP will grow significantly. Moving forward Therefore, we remain highly confident in the long term growth of our security IP within the AI server and the data center. This and the next. I would like to also share some updates on another key growth driver. We are heavily focused on which is. We call it the logic fresh technologies Currently, our collaboration with foundries on logic for fresh technology is accelerating. Applications extend beyond embedded flash to include standalone fresh products as well. We believe the significance of logic fresh goes beyond. Goes far beyond adding another IP technology to our portfolios. More. Importantly, it. It presents an. Opportunity to leverage a more competitive process and cost structure to gradually replace. Portion of existing legacy fresh technologies. Fresh memory represents a massive market with exceptionally broad applications. Once logic Fresh enters mass production and begins a progressively replacing conventional fresh technologies, the market opportunity and the long term impact on our future revenue and profit, profitability will be far reaching. For this reasons, we have a strong confidence in our marching multi-year growth outlook ahead. Next. I would like to invite our financial officer, Joseph Joseph, to present our second quarter performance Thank you. Good afternoon everyone. Now let's begin with our 2026 second quarter financial results. The second quarter revenue was $1,097 million, up 0.2% sequentially and up 17.1% year over year. Operating expenses were $431 million, down 0.3% sequentially and up 10.2% year over year. In results are operating income was $666 million, with an increase of 0.6% sequentially and an increase of 22% year over year. Operating margin also increased by 0.2 percentage points sequentially and increased by 2.4 percentage points year over year to 60.7%. Our income, amounting to $580 million, experienced a decrease of 2.8% sequentially, but an increase of 44.9% year over year. The EPS for this quarter was 7.77 NT dollars, and next, let's move on to revenue contributions by licensing and royalty. First of all, licensing in the second quarter accounted for 39.2% of the total revenue, increasing 12.8% sequentially and up 35.1% year over year. On the US dollar basis, licensing grew by 12.8% quarter over quarter and 32.6% year over year. Royalty in the second quarter contributed 60.8% of our total revenue, decreasing 6.4% sequentially but increasing 7.7.8 percent year over year. On US dollar basis, there was a 6.7% decrease quarter over quarter, but an increase of 8.6% year over year. And the overall, the revenue increased by 0.2% quarter over quarter and up 17.1% year over year. On US dollar basis, the growth was up 0.1. Percent quarter over quarter and 16.9% year over year. For the first half of 2026, the licensing and royalty revenues are as follows. First of all, licensing in the first half accounted for 37% of our total revenue. Increasing 45.2% year over year. And on US dollar basis, licensing grew by 45.9% year over year, and royalty in the first half contributed 63% of the total revenue, increasing 7% year over year. And on the US dollar basis, there was 9.8% increase year over year. And together, the total revenue for the first half increased by 18.5% compared to the previous quarter. And on US dollar basis, the growth was even stronger at 20.9% year over year. And with that, I will comment further on our revenue contribution by specific IPS. First of all, NIO accounted for 21.9% of total revenue in the second quarter. The licensing revenue increased 11.2% sequentially, but decreasing 22.4% year over year, while royalty increased by 9% sequentially and increasing 9.2% year over year. And for new fields, technology, it accounted for 56.6% of total revenue in the second quarter. The licensing revenue was up by 24.8% sequentially and up by 55.6% year over year In terms of royalty Neofelis royalty decreased by 13.3% sequentially, but increased by 4.4% year over year. And for puff based security IPS, it contributed 10.9% of total revenue. The licensing revenue decreased 13.8% sequentially, but increased 133.5% year over year. And in terms of royalty, puff based royalty. Increased by 213.9% sequentially and increased by over 1,600% year over year. And lastly, for MTP, technology accounted for 10.6% of the total revenue in the second quarter. The licensing revenue increased by 40.2% sequentially and increased by 9.3% year over year. The royalty from MTP was up 7.2% sequentially, and increased by 19.2% year over year and. Together for the first half of 2026, the revenue by technology are as follows. First of all, new licensing revenue decreased by 18.5% year over year, but the royalty increased by 2.4% and together accounted for 20.9% of the total revenue for the first half of 2026. For new foods, the licensing revenue increased by 37.9%, and the royalty also increased by 6% year over year, contributing to 58.2% of our total revenue in the first half. And for puff based security IPS, the licensing revenue increased by 234.260 4.6% year over year, and the royalty increased by over 1,300% year over year. And together accounted for 11.6% of our total revenue in the first half. And lastly, for NP technology, the licensing revenue increased by 19.6% and the royalty increased by 30.4% year over year. And together accounted for 9.3% of the total revenue. And now let's take a look at our royalties for a 12 inch wafers. First of all, eight inch wafers accounted for 37.5% of the royalties, up 4.2% sequentially and up 1.2% year over year. And on US dollar basis, this represents a sequential increase of 4% and a year over year increase of 3.1%, and for 12 inch wafers, it contributed 62.5% of the total royalties, down 11.9% sequentially, but increased 12.3% year over year on the US dollar basis. This represents a sequential decrease of 12.1%, but a year over year increase of 12.2%, and in total, 156 product takeouts were completed in the second quarter, and we will provide more information in our management report, which will be released shortly after this earnings call. And next, I would like to invite our chairman, Charles, to share a little bit more about our future outlook. Thank you. Okay. In the following section, I will address our future outlook. As far as the licensing revenue concerned, licensing will continue. It's a strong momentum due to robust demand for our technologies from leading edge to the legacy process. Node security and the next generation flash technologies. And for the royalty. Revenue, the royalty revenue growth is expected to accelerate, driven by the higher ASP from the new advanced node applications and the new application ramps, and also expanding the path for royalty contribution and growth. Growing mix of higher royalty rate of MTP related applications And as far as new, new new technologies. For the advanced nor OTP and the pub based hardware security continue to develop the and qualify. Next generation OTP and the path based. Hardware security solutions for two nanometer. Get all get around. Technology and also sub Subcentimeter nodes and the meeting growth in growing customer demand in the device. Identity and key protections and the secure votes, and also our role of trust and for the next and another new technology will be next generation one T fresh one T. Neo fresh technology is advancing across embedded. Also standalone applications, and its logic process compared. Compatible architecture offers great greater scalability, lower process complexity, and better cost efficiency, and the. In the future. Outlook for the business development platforms, which we have. Five items and. The first is the Chip Security platform. We continue to work with ecosystem partners on an end to end. Security framework for Chiplet based systems, covering supply chain traceability, identity and authentication, and also secure provision provisioning, and also the day to day communication and also the key management and hardware rule of trust. Addressing the increasingly complex, complex security challenges of AI and also the advancing packaging and the heterogeneous. Integration among today's geopolitical. Environments. Okay. And the second item is the data center security and cholesterol platform. Targeting data center and AI servers. We continue to upsell expanding our pop rule of trust from hardware. Rule of trust solution into a cholesterol compatible. Security subsystem and the integration service that reduce the integration, complexity and accelerate customer deployments. And. Other business platform is on the AI compute and also rule of trust platform. We are extending collaboration across CPU, accelerator and AI. ASIC ecosystem to integrate chip label rule of trust, secure boot device identity, and also secure key. Protection into the next generation AI computing platform. Strengthen, strengthen. In trust and also security from system in to a system from system silicon to system and another business platform. We are developing is HSM h server and security as a service platform. The. Hub based HSM edge server combines device identity. Key and certification management and the secure OTA updates. For verification. And the private privacy. Protection and the post-quantum cryptography, migration and early opportunities are progressing in the automotive. OTA and PKI. And also. HSM integration with potential to expand into the industrial industrial control and high. Device medical and also the data centers and. The last platform is. We call it the Post-Quantum Security platform. So we continue to strengthen our path for Q, P, Q, C portfolio with attack system resistant hardware security, including such channel to support the transition to a post-quantum security standards. Okay, so next I would like to pass to. Felix. Our head of digital Marketing, to share with our feature topic today. Felix. Please. Thank you. Modern data centers depend on thousands of interconnected servers each processing sensitive workloads, credentials, and proprietary data. But system level security ultimately begins much deeper inside the silicon. A server board contains Chiplets of CPUs, accelerators. Bmcs networking, storage controllers, and other programmable devices. Each component loads firmware and communicates across shared interfaces, creating multiple points where trust must be established without a consistent hardware root of trust. Compromised firmware, counterfeit components. Leaked keys, or unauthenticated communication can allow an attacker to move across the board and persist below the operating system. Calyptra addresses this challenge with an open source root of trust architecture designed for data center class silicon. It establishes a standardized security foundation that can be integrated into each major system on chip. During boot, the Calyptra subsystem begins from immutable code, authenticates its firmware measures the device state, and derives protected identities and cryptographic keys. It can then support secure boot signed firmware updates and device attestation. However, the security architecture still requires a trustworthy physical source for device secrets. Lifecycle data, and entropy pop art. Provides this silicon level foundation directly beneath the Calyptra core. It's puff generates a device unique secret without permanently storing the key OTP securely. Retains configuration and lifecycle information, while the hardware noise source supplies high quality entropy for cryptographic operations. With Calyptra deployed across critical devices, components can authenticate one another. Verify firmware, establish protected channels, exchange keys, and produce evidence of their security state. The result is board level security built from independently verifiable chips, extending a consistent chain of trust from each component across the server platform and throughout the data center. E. And puff Security your trusted partner in providing non-volatile memory and puff based security, intellectual properties. Hi, everyone. So what do have just viewed in this video is one part of a much bigger movement happening around Calyptra and the hardware rooted security Before I begin this talk, I'd like to briefly mention some related activities. We've just been involved in. Earlier this week in Taipei. We participated in a Calyptra workshop focused on implementation and on bringing the specification closer to production. Silicon. We also presented at two sessions at OCP apex, where we discuss Calyptra and Chiplet security from both the architecture and systems perspective. Those discussions reinforce something we've been seeing more broadly across the industry. The security technologies are becoming increasingly increasingly important as AI servers and data center infrastructure become more distributed and more interconnected. So rather than covering everything around Calyptra, I'd like to use the next few minutes to just focus on the underlying reason why this movement is gaining momentum. And instead of starting from security, I would actually like to start from how I compute itself has been changing. AI systems are increasingly being built across multiple dies, accelerators, memory devices, and high speed fabrics. And as more components are connected together, more of these components and their interfaces also need to be individually trusted and protected. And that's the story I like to present today. So I compute can no longer scale in a single die. When we. Talk about scaling AI, compute, simply making chips larger is no longer enough. In the past, we wanted more performance. We could build a larger die or use more advanced process nodes. But these are practical limits that we will approach, including die size, yield, cost, power, memory, bandwidth, and IO all start to become constraints. So increasingly, the system, the industry is scaling by composition There are two important architectural trends shown on this slide, and I want to separate them because they're related, but they're not the same thing. The. First one is triplets, which operate inside the package. Instead of building one enormous monolithic SoC containing every function, we can divide the system into multiple sized specialized dies For example, we have a CPU compute die, a GPU or MPU accelerator dies. We have. Management dies. A security die or dies with other specialized functions Importantly, these dies do not necessarily need to use the same process. Technology. The compute portion may benefit the most from advanced node, but other dies such as management, security functions, and may be more economical on less advanced nodes. So Chiplets give us modularity, reuse better economics. And another way to continue scaling the processor package. But even if we scale inside the package, we eventually hit another boundary. The processor socket, and the server itself. And that's where Compute express link cells come in CXL operates at the system level outside the processor package. Here you can see the servers on the left connect connected through a CXL fabric switch to a CXL type three memory shelf on the right. Instead of memory belonging permanently to one CPU socket, CXL allows memory and other devices to participate in a coherent fabric. That means memory can increasingly be expanded, pooled, shared and dynamically assigned across systems So you could think of it as triplets. The processor. By combining combining multiple specialized dies in one package, whereas CXL scales the system by connecting processors, accelerators, and memory across the server. That's a very important shift for the AI infrastructure. We are moving away from scaling only through one large piece of silicon and towards scaling by connecting many specialized resources together But this composition has security. Consequences. Every new Die Linke device, controller, and firmware layer creates another place where trust has to be established. And that brings us to the next architecture. The same composability that gives us flexibility and scalability also creates a much larger attack surface. Let me separate this again into two architectural, architectural domains. On the CXL side, we now have multiple endpoints joining a fabric high value memory moving across links. Such as controlling connectivity in a fabric manager, potentially deciding how pooled resources are located. That introduces several different classes of risks. For example, if the firmware of a highly privileged infrastructure component such as the CXL switch is compromised, the impact radius can be very large because now the attacker is not targeting only one endpoint. They may potentially manipulate connectivity, resource allocation or the behavior of multiple devices in the fabric Another important area is DMA direct memory access, which is in panel five. DMA itself is a legitimate and very powerful capability. The security problem is when a compromise or malicious device receives more access than it should have. If those. Permissions are not properly controlled, a device can potentially read or modify memory outside its authorized region. And in an environment where memory is pooled or shared, the consequence can become especially serious. Data leakage across workloads or even between tenants inside. The Chiplet package. The security problem looks different, but the principle is the same. Now we're dealing with multiple active dies communicating across die to die interfaces. A counterfeit or rogue chiplet can introduce an unauthorized unauthorized component into the package or supply chain. Severely affecting silicon identity and supply chain trust. A malicious or unauthorized die can introduce hardware Trojans manipulate transactions, leak data, or undermine the assumptions of the entire package. Recent triplets security research specifically highlights malicious triplets and hardware Trojans as major system level threats. Chilblains may also be attacked. Leading to key extraction and secret secret leakage, as shown in panel four. If the root key or device secret is compromised, the consequence is much bigger than simply losing one piece of data An attacker may be able to impersonate the device or undermine the trusted relationship built on top of that identity. So I don't expect everyone to remember these attacks. But the key point is the trust boundary has expanded. Security can no longer exist only at the board level or only around the CPU. What we increasingly need to know is this is the device or die authentic. Did it boot trusted firmware? Can I trust the keys inside it? Can I trust the communication between components and can I prove that trust to the rest of the system? This is why the root of trust increasingly has to move closer to individual silicon itself. And this is where architectures such as Calyptra become very important. Calyptra gives us an open source security architecture for establishing a hardware root of trust in modern devices. But there is an important distinction here between a digital root of trust architecture and the physical security foundation underneath it. On. The left, we have the Calyptra subsystem within the subsystem. The Calyptra core includes things such as the Risc-v processor, cryptographic functions, Qram and Rome mailbox, in the firmware responsible for implementing the security architecture. But ultimately, all that digital security logic has to anchor itself to something physical in silicon. So as you see on the right, there are three fundamental requirements for this physical hardware anchor, which we also call foundational security primitives. First, a unique device secret UDS. We need something unique to the individual piece of silicon that can establish device identity and support. Key derivation. Second is a secure non-volatile storage security critical information such as life, state configuration, seeds or other protected value needs to survive power cycles and remain protected from unauthorized modifications. Third, a trustworthy entropy. All of the cryptography above this layer ultimately depends on good randomness. At the entropy is weak or predictable. The key is derived from. It can also become weaker, predictable So Calyptra provides a architecture and framework for the root of trust. But the foundation of that trust still has to terminate in physical properties and protected state inside the silicon. That is, the physical security anchor. And those requires requirements actually match very naturally to technologies of hardware security that in-memory and public security have already been developing for many years. This is where we move from the architecture to the actual silicon implementation for the UDS. Unique device secret, we use Neel PUF rather than simply programming the root of secret into conventional memory. Neopuff derives device unique information from the intrinsic physical characteristics of each individual piece of silicon. That gives us a silicon bound foundation for device identity and key derivation for secure non-volatile storage, we have Neel Fuse, our OTP Neo Fuels provides protected storage for security critical information such as life cycle values, seeds, configuration, or other persistent security assets for entropy, we provide the physical noise source supporting the Trng true random number generator, giving the cryptographic system the randomness required for secure key generation and operation. On top of that, we're extending this foundation into the post-quantum era through PUF Pqc Importantly, we view these IPS as different pieces of the same security foundation identity protected storage, trusted entropy, and cryptographic agility Together, these are the types of silicon level primitives that a framework such as Calyptra ultimately. Ultimately needs in order to establish trust. By having the primitives only part of the problem. But for our customers, the next question is how to integrate all these pieces into a complete, validated security system? This is where our strategy goes beyond selling individual IPS. We start with PUF art as the hardware anchor IP. Around that, we add post-quantum security capabilities and importantly, we have experience in integrating with Calyptra because from a chip designers perspective, the difficult question isn't just can I license a puff? The real question is how do I turn this specification into silicon that actually works? How do I connect the hardware primitives to the calyptra root of trust architecture? How do I validate the interfaces? How do I shorten integration and verification time? That is. Why we're moving toward a towards a validated subsystem approach. And once that foundation is available, the same security architecture can scale across accelerator boards. AI servers, rack scale systems, and eventually data center infrastructure. What starts as a very small security block in silicon can ultimately become the Trust foundation for a much larger computing platform, and that brings us back to where we started this increasingly composed AI system. So the trust must extend across every layer of the AI infrastructure. AI infrastructure is becoming distributed across multiple layers at the system level. CXL can protect data moving across a link through mechanisms for confidentiality, integrity and replay protection. But protecting the link does not automatically mean that the device on the other end should be trusted. The end still needs an integrity trusted firmware secure boot, and also needs to be able to prove its state through attestation. The Multi-die package follows similar principles. Each active chiplet may have its own identity keys, firmware lifecycle, state, and relationships with the other dies in the package, so trust increasingly has to extend from the data center to the rack to the server, to the device, to the package. Ultimately down to the individual silicon. And that's why our foundational IP is so important. Neopuff neo fuse and our entropy source and PUF Pqc. May be physically small pieces of an overall AI system, but they provide some of its most fundamental security properties. A unique identity protected state, trustworthy entropy, and cryptographic trust. Puberty bring those capabilities together as a physical hardware anchor, while Calyptra provides the architecture that builds a root of trust on top of them as AI. Compute becomes more compatible and more distributed. We believe security has to follow exactly the same direction. Trust must also become distributed. But it must remain anchored in silicon, and that is the role we see for in-memory and pub securities. Foundational IP providing the Silicon Trust Foundation that enables security, that enables secure chiplets, secure CXL connected device and ultimately the next generation of AI infrastructure Thank you for your time. This concludes our prepared statement. Next, we will enter the Q and section. We will now begin the Q&A section. Please submit your questions in the input box on the webcast window. Out of our questions will follow the format of answering the Chinese version first, followed by the English version. We will now collect the questions and begin our Q&A section. We. Are. Will. Joseph. Xiang, Adas. AI. The. SSD. Wang. Liang. Chen. The. Our. First. Question is. In the previous earnings call, the company mentioned that royalty revenue was expected to grow in the second half of this year. Are you now confident in that outlook? Joseph, please. Yes, our outlook remains the same. We have already seen several events. No products, including Adas, AI accelerators, SSDs, networking and other new products. They begin to enter the mass production phase. And in addition, with foundry wafer prices gradually increasing, we believe the growth momentum will continue to accelerate. Thank you. Joseph. Now. The company has mentioned that the number of customers using three nanometer technology have already been licensed or about cause some of them being contributing to royalty revenue. In the second half of this year. Joseph, please. Yes, we have already seen customers moving into mass production with several hundred wafers. And this indicates that their products have been successfully validated. And the contribution expected to be become much more meaningful next year. It's. For the CDC that the power is. Joseph. The. IP. The. The. Power. Should be. The IP. OTP. A trimming. Should be. Not. The. AI data centers are driving upgrades in high voltage power architectures such as 400V and 800V FVD. DC, as well as next generation power ICS has a. Company starts to benefit from this trend, which product lines would be the main beneficiary? Risks. Joseph, please. Yes. For memory, the upgrade of AI. AI data center power architectures creates opportunities through our IP. Being integrated into power management, power control and related analog mixed signal chips. And as voltage levels and power density continue to increase for power ICS, they require much more precise calibration parameter compensation device identification, and also reliability, reliability management. And of course the security functions and the related IPS. We can provide mainly includes OTP, which is mainly being used for analog parameter calibration, trimming, power control setting, and of course, product identification. And for PNP, they can support system parameters and configuration settings that need to be updated. Multiple times. And our customers have already started to move into mass production. And we expect the contribution to expand further in the coming quarters. Thank you. And. Joseph. A. A license. Addition. Could you share how investors should think about the contribution from advanced product product to your royalty revenue today and how you expect that mix to evolve over the next few years? Joseph, please. In terms of licensing, are in contribution events, no projects already accounted for More than 50%. And this is mainly because the licensing fee for a single advanced node project is several times higher than average project licensing, licensing price. So looking ahead, as these projects are gradually move into mass production, we expect the royalty contribution to increase meaningfully as well. Q2. 20. Royalty revenue decline in the second quarter compared with the first quarter. Could you please help explain the main reasons behind this? The decrease. Joseph, please. So for our Q2 royalty revenue, they correspond to the foundry production in the first quarter. And overall maternal foundry capacity utilization remained at a relatively low level in Q1. And some customers are also going through. We're also going through seasonal inventory adjustment and starting from the second quarter overall, foundry capacity utilization began to improve, while new applications started to enter mass production. And together with subsequent impact from foundry price increases, we believe royalty revenue is expected to accelerate in the second half of 2026. Thank you. Neil. The. Charles. For. The first. And the part based. Security. IP. The. A new. The. OTP. And the. Co. Patch. Repair. For. The. SoC. And. You. Can. Tell. Can you. Us. Two nanometer and GA processes gradually move toward mass production. Have the competitive advantage of Neopuff and Neo fuse in. Advanced nodes become even stronger. Our customers also adopting this technology faster than they did last year. Charles, please. As the process technologies move from 200 meter and GA chip design and the manufacturing costs continue to rise and the customers are placing even stricter, stricter requirements on aerial power consumption. Reliability and compliance with security standards. In this environment, the competitive advantage of Neo fuels and Neopuff based security IP become even more apparent. Neopuff can create an unique hardware identity at the silicon level. For each chip, supporting key generation and hardware rule of the trust and the new fuse provides reliable OTP storage. And for the chip configuration capacity. Copaxone. And S, s m repair and other functions. This capability can be integrated with advanced logic processes and support the. The security, reliability, and the high heat and the high. Requirement of advanced SoC compared with the past. We are indeed seeing customers start discussion on the security architectures earlier and the number of applications under evaluation is also increasing. Leading. To. Charles. Advanced. Secure. Some. In the future. I I. Security. The. A small. A part of. License. Enter. Mass. Production. How do you expect the mix between licensing and royalty revenue to evolve? Charles, please. Well, based on our operating performance. In recent years, our business has delivered very strong growth in both licensing and royalty revenue. We believe this trend is still in the early stage because the. Due to the AI booming very fast and now there are a lot of demands to secure the AI's applications. So I believe that we believe that the license fee and also royalty due to the application of puff. Will be increased. In. Could you share the latest progress with customers? For one T flash. Is there a possibility that it could start moving into mass production within the next year or so? Charles. Please. For one T fresh. We are currently working with several foundries partners on platform development and very defecation. Each platform is progressing. Accordingly. According to its development plan, and we may see customers begin mass production next year. AI, CPU. BMC. AI. Center. As deacon. CSL. Secure p AI server. Phyllis. AI server. And. So. The security IP. CP. ICS. FPGA g. And. The. Security. IP. I ai. Structure on the way. To. The hardware. Root of trust. And. AI. Structure. The. Security. IP. AI data center. The. System. Your. Security. IP has expanded from. AI, CP use and bmcs into AI data center. SSDs and CXL related applications. Does this suggest that in-memory security IP is moving from a single chip to multiple critical chips within an AI server? Where do you see the next major opportunities? Felix, please. Yes. So as AI server architectures continue to evolve, we are seeing hardware security requirements extend across different parts of the system. These include computing, storage, connectivity and system management. This gives us. This gives our security IP opportunities to address a much broader range of chips. Our licensing activity in the first half also reflects this trend, with applications across CPUs, storage devices, optical communication, ICS, FPGAs, and high speed interface chips. So for us, the opportunity is not simply about adding more customers. It's about expanding our security footprint across AI infrastructure, while also providing more security functionality within each chip as hardware trust, data protection and system level security become very important for the AI infrastructure, we believe that there significant room for our security IP business to continue to grow across AI and data center applications. Neil. Enterprise. Consumers. Disjointed. Name. Flash. SLC. PLC. Shows. Charles. Standalone. Flash. The. So. So. Well. The. No. Flash. Way to. Say. No. Flash. To. To. To. Now. Also. To the execute. Execution. In place. XIPG to. Roads into the young. On the. Way to. Use. Your. New. Standalone offerings. I. Wanted. Flash. Well. Neil. Flash. Compete with Nand flash. Used in enterprise and consumer. SSDs such as SLC, TLC, or QLC. Or does it address a different market? And. Charles, please. Stand alone application. All initial development focus is mainly on the North. Ridge North region. The Nand flash are two different memory technologies with different positioning and they mainly address a different application needs not is focused on fast boot. Low latency, random read and execution in place or x, I, P and the high reliability is Therefore, it is mainly used to store firmware and the system call. On the other hand, is mainly designed for high capacity and low cost. Make it. Making it more suitable for the large scale data storage applications. However, after foundry partner successfully moved for standalone north range into mass production, we made further extend one to fresh into fresh architecture in the future. All the. Wang G fine. Not too far away. The. Beijing are. To. SLC on the. Phyllis. Wang. Fine. In Color of to. And also the 22nd. To descend to. Secured by. Design. You. Secure by default, the linear. Path to a. The. You. 27. On. By a. To the. Z anchor. On the. Samsung. A cyber security. Regulations such as the EU, cyber Resilience Act or C are a gradually. Coming force and at September this year. How does the company view the adoption trend of path in advanced node SOC? Felix, please. With the CRA expected to become mandatory, a non may result in significant penalties. The regulation also applies broadly to all connected products sold in the European market. So as a result, the market is placing great emphasis on cyber compliance At the same time, the concepts of secure by design and secure by default are increasingly becoming industry consensus. In such a context. Puff as a key technology for trust plays an important role in device identity and key protection. As regulatory requirements become more stringent, we expect demand for related security mechanisms to continue to increase. Challenging. Joseph. To. To. Anchor. The. Repair. So. Of. The. On the. Memory. Solution. To the flash. Double Eeprom. Now. The OTP is. The. In. Default. OTP. For. The. Entity. On the. OTP. The. Has. E memories IP been. Adopted in application related to low earth orbit or. Leo satellites and space communications. Joseph. Please. Yes. Our. Technology has already been adopted by US customers for low earth orbit satellite applications. And given that satellites. They operate in extreme environments and are. Non-recoverable. Once launched, our OTP provides for critical safeguards First of all, is radiation hardening and high reliability, because in space, intense radiation can cause bit flips in traditional flash or double Eeprom solutions. And they can lead to data errors and emission failure. Our OTP, on the other hand, they store data by permanently altering the physical circuit structure. So once written, they remain immune to radiation, making it the most secure place to store critical bluecoat. And second is for secure communication and key storage as satellite, they function as massive network nodes Cybersecurity is critical, and our OTP stores encryption keys and digital certificates that cannot be remotely tampered with or erased. And this establishes a robust hardware root of trust, protecting the communication between satellites and also the ground stations from hacking attempts. And third is hardware identification. For constellation, with thousands of satellites, precise management is vital, and each chip should be programmed with a unique ID during production, which is essential for fleet management. Fault tracking, and automated spectrum licensing verification, and lastly, is parameter compensation for extreme environments. Because, as you know, to withstand drastic temperature fluctuation in space, our OTP source calibration and compensation parameters for precision sensors and this ensures that electronic signals, they can remain accurate regardless of the extreme thermal conditions. Thank you. In the interest of time, we will begin the last questions. They. Just. As to. MCI. To the. Taiwan. Percent. To the. The wise man. To the. More. In the. How not to. Not to. Be. Fundamental. How. The. Not. Woman. Can. I. Talk. Percent. To. You. All. The. Woman. Okay. And this. Is not. A. To. Not. So. Not me. In the. Due to. Not on the way. So. MCI. Ten times. One. Okay. Not. Just. For. The. The. So. This. So. So. In. So. On. Why. To. Your mind. The. So. In. A woman. Okay. Not. So. How. La. A woman. Go to the. To the. To go. So. In. A native. Woman. To the. So. Why. Don't. To. The. Or. We. So. OTC. To. Not. To. The way to the. So. Don't. So. Information. So. You go to the. Simple. So you. Don't. So. To the. To. Like. To the. Being. Removed from the MSCI index. Coupled with our relative high foreign ownership may. May raise concerns about potential heavy foreign sale of. And how the company plans to respond. MSCI index inclusion is primarily based on market capitalization, ranking and. It's not a reflection of company fundamental. In fact, ten years ago. Okay, when we are not included in the MSCI Standard Index, our foreign ownership of our shares already above 50% and the. At the end. Of the July this year, our foreign shareholder actually is a record high like a 6768. Just slightly lower than the shareholding of the TSMC foreign shareholding. We have reached out to our major foreign shareholder and the response that the index adjustment will not affect their investment decision. As for passive fund rebalancing, experiences show that the index constitutes change. A large, predictable during quantitative model. So the market usually discount and also the impact in advance the foreign selling pressure observed since early August. Likely reflects this passive fund adjustment to mitigate significant stock price volatility. We will proactively enhance our communication with the capital market, especially local institutional investor. We plan to participate in more investor conference and expense analyst research coverage proven the company true value through our strong fundamental. And operating result. Okay. And the next, we will begin the closing comments. Please proceed. Okay. Thank you for attending our investor conference and for more information about our based. Security IP and the technology we encourage you to visit our security website and check out our articles and other materials. Thank you once again for your patience and the support for me. We will continue to work hard on technology and I've. Innovation and pop based hardware security solutions for our customers and bringing higher returns for our shareholders. Thank you. Thank you, ladies and. Gentlemen, please be advised that the conference recording will be accessible within the next three hours. Thank you, everyone for joining us today. We hope you will join us again next quarter. You may now disconnect. Goodbye and have a good day.