All right, good afternoon. This is Daniel Wang of Alchip. Thank you for your interest in our company, and thank you for your participation in our First Quarter 2024 Investor Conference. We will start the meeting by our CEO speaking and the financials, and then the business review and outlook, and then the Q&A session. Next page. Okay, this page is for the safe harbor disclaimer as usual. Okay, this meeting will be in English. If you need Chinese presentation slides, please go to the MOPS to download the Chinese version. You should be able to download it already. Please write down your questions to the host through Zoom's message function with your name and your company name. And please use the Raise Hand button during the Q&A session. We will call your name, and you can unmute your computer or speaker. And, this, the video and the audio content of this meeting, we will upload to MOPS, about 2 hours to 3 hours after this meeting. Okay, let's start with the very brief about what is Alchip. Johnny, please. All right. Good afternoon, ladies and gentlemen. I'm Johnny Shen, President and CEO of Alchip Technologies. Thank you for joining the investor conference meeting, and we appreciate the opportunity to share our Q1 results and provide the guidance for future business outlook. Brief company update. Our company was founded in 2003. We went public in 2014. Since we founded the company, we've been successfully tape out 500 design. Within 500, 50 of, more than 55 are in fab. And current headcount, it'll be over 600. Our last year revenue, $978 million. In terms of revenue, 80% of our revenue is contributed by HPC, HPC, AI area. We are TSMC VCA member and also TSMC 3D Fabric Alliance. Our current capacity, we maintain 22 tape out, 20-30 tape out every year. Market focus is HPC, AI, automotive, ADAS. Whatever you need a leading-edge technology, which is largely scale design. Okay, let me provide a quick update for the Q1. For Q1, we are pleased to announce another record-breaking quarter. With the revenue reaching $334 million. Net income, $39 million, and EPS stand at TWD 15.83. This number marked a historical high for the company. However, since the design NRE, some design NRE has been postponed to the future quarters, resulting higher production to NRE ratio and causing lower gross margin. The detailed quarterly breakdown and comparison will be presented by CFO, Daniel, in a later section. Let me elaborate a bit about current AI market. Through comprehensive market analysis and the endorsement of both user and also suppliers, it evident that potential AI and data center-related market are very optimistic. TSMC recent earnings call and Technology Symposium further reinforce this assessment. AI stand out as a primary segment, experiences significant growth. In contrast, other market segments are either flat, showing minimal growth or even decline. The CAGR for data center AI-related market projected to be 50% in the next 5 years. Despite standard product, company like NVIDIA will continue to dominate the data center-related market. But emerging trend within this landscape is the increasing momentum for custom silicon, aka ASIC. The ratio between ASIC and standard product is expected to rise from 10% to 20% within the next few years. In other words, the ASIC market CAGR will be even higher than the standard product. However, there are only a few proven ASIC providers in the industry. Alchip proudly stand as one of the premier ASIC service provider, and number one, as a pure ASIC service provider. We are committed to never making any product compete with our customer. Our focus and cooperation and innovation ensure we can sustain the market leadership, and continuously capture the opportunity in this dynamic market. Let me talk about a little bit our share price. Our share price experienced a significant decline since previous earnings call, dropping from above TWD 4,500 to below TWD 3,000. The decline occurred despite our consistent record-breaking performance and our ability to meet the guidance provided in each of our earnings call. It's clear investors' expectations are even higher than what we have achieved. The management has fully embraced this message. We are tirelessly working to meet the heightened expectation. Our effort, including diversify our business concentration, improving the percentage gross margin to ensure sustained growth. Fortunately, we are making progress in the right direction in terms of business opportunity and partner relationship. However, we also wish for patience from investor as we navigate complexity of winning multi-billion dollar opportunity. There are numerous steps involved, from engagement to confirm winning. Let me talk about the future business outlook. Demand for mass production in AI and data center remain robust. We anticipate substantial revenue production revenue growth for the entire year. Looking ahead for the next year, we have already see, received a significant amount of demand. We are confident to further grow our company, as long as we can help managing the capacity-related challenges. In terms of a new business opportunity, we have secured several design wins from AI-related company utilizing leading-edge technology like N5, N4, or even N3. Additionally, we have worked very closely with major CSP company, offer custom silicon solutions-- custom ASIC solution, in order to diversify their business dependency. Overall, we anticipate much stronger revenue, NRE revenue growth for this year. As for the geopolitical risk management, we have successfully diversified our business concentration beyond China to other region. In Q1, less than 15% of the revenue originated from China region, but our future China direction remain unchanged. We continuously to believe in and support business in China, as long as they are financially healthy and complying with the rules and regulations. In terms of, in terms of our workforce, we have initiated a very aggressive hiring plan to, to bolster our engineer supporting resource in other region, such like Japan, Taiwan, Malaysia, and Vietnam. Currently, we have around 80 people working in our Japan office. Our Malaysia office already staffed more than 20 engineers. The workforce in Southeast Asia, Asia, is planned to be around 60 people by the end of this year. The strategic expansion is designed to offer more flexible and cost-effective solution to meet our customers' dynamic requirement in the global market. As conclusion, we are confident our business is in an excellent stage. We are anticipate strong revenue growth this year. 2024 is going to be another record-breaking year for Alchip. Thank you. Okay, this page is for the first quarter P&L results. For the first quarter, the revenue is $333.5 million, which represents 14.6% QoQ and 77.4% YoY growth, respectively. And for operating income, for the first quarter, the operating income $38.5 million, which indicates 2.2% QoQ decline, but 84.1% YoY growth due to the lower gross margin compared to last quarter. And the net income for the first quarter is almost $39 million, which represents 10% QoQ growth and 104% YoY growth. For the first quarter this year, the EPS is NT$15.8. Next page. Okay, this page is the revenue breakdown by application. You can see the first quarter, the HPC dominates our total revenue. 93% of our total revenue contributed by the HPC area, and the most of them are AI applications. The others, like niche, networking, and consumer, accounts for single-digit percentage of our total revenue in the first quarter. In the past 2-3 years, you can see HPC dominates our revenue breakdown with 80%-90% of our total revenue in past years. Next page. For the revenue mix by process nodes, we are very proudly saying that we should be the leading ASIC provider within the industry in terms of the process technology. In the first quarter this year, 7-nanometer or more advanced process node- ... related, revenue accounted for 94% of our total revenue in the first quarter. Similar thing for 2023. So we expect, the 7, 5, or 4, or 3 nanometer will keep on increasing, in the near future. Next page. For the geographic breakdown, for the first quarter this year, the revenue came from North American market, accounted for 77% of our total revenue, while Japan accounted only for 1%, and the Asia Pacific accounted for 15%, which means, our exposure to China market in the first quarter is relatively low, to the previous quarters. And the others, the other region, the revenue from the other regions accounted for 6% of our total revenue in the first quarter, 2024. Next page. Okay, for the first quarter business review, the revenue actually hiked as we expected. Obviously, this growing revenue contributed by the soaring AI chip shipment to the North American customer, especially our biggest customer. The first quarter revenue went 14.6% QoQ, and 77.4% YoY, respectively. Among the first quarter 2024 revenue, the 7-nanometer AI ASIC shipment remains the biggest contribution, accounting for more than half of our total revenue in the first quarter this year. For the profit margin side, the gross margin in first quarter this year was at 19%, given the seasonal weakness of the NRE revenue. Usually, in our business, the first quarter is the low season for NRE, and the fourth quarter is usually the high season for the design revenue. For the first quarter, NRE revenue accounted for only 15%-20% of our total revenue, which is the main reason for the low gross margin. For the non-operating income, you may notice that the non-operating income this quarter is quite high. It was mainly due to the interest income, given the high U.S. dollar deposit rate from the banks and the cash in hand in the company. Next page is the 2024 business outlook. We believe the AI computing demand will remain robust. We see the trend for the major cloud service providers to develop their own ASIC. This trend will keep ongoing. We believe Alchip will remain one of the top beneficiaries from this trend, as we has been proven one of the leaders in providing customer ASICs. In addition to the cloud service providers, the North American unicorn startups are also aggressive in introducing AI chips. It provides more design opportunity to physical design suppliers like us. For the growth outlook, we are not allowed to go with the numbers, but for the growth this year, I would say in addition to the current ASIC business, to the North American supplier, 7 nanometer and the 5 nanometer AI chip to the North American IDM customers will also contribute in our 2024 total revenue. We believe the growth this year will be strong, and the growth, the growing momentum will extend it to the even the further future. The NRE pipeline of the company remains promising. We are, we are doing the design for multiple 5 nanometer or even 3 nanometer projects within the AI-related applications. And then, and we maintain our strong growth view towards the full year top line performance, and of course, the bottom line. Yeah, and I guess that's the presentation part for our first quarter investor conference. And we'd like to go into the Q&A session. And the first one is, Haas from UBS. Haas, please, you can unmute your speaker. Okay. Yes, thanks, Johnny and Daniel, for the detailed update and taking my questions. My first question would be regarding your second half outlook. Last time you expect the business to see sequential growth through 2024. So could you discuss on your latest expectation for Q3 and also fourth quarter, with some projects start to ramp production, while the others could be in transition, as you just mentioned? Thank you. Haas, can you say that again? I'm not quite catching your question. Okay. Yeah, what I mean is that if you are still seeing sequential growth throughout second half this year? Yeah. Okay. For the whole year, I would say, we expect sequential growth for the second quarter and the third quarter. And, for the fourth quarter, it is usually the high season for NRE. But the production revenue contribution may decline a little bit in the fourth quarter. So for now, I'm not so I cannot give you so narrow guidance about the movement of the quarterly revenue, about the quarterly revenue. I would say for second and the third quarter, I can say we will enjoy quote, unquote, growth. But for the fourth quarter, I will say maybe flat. That's the best guess. But- Okay. To be honest, the NRE revenue is. There will always be surprise and disappointments. Happens all the time, so I cannot give you a very narrow guidance for the fourth quarter. Sure. That is very helpful. So just regarding the fourth quarter, production, revenue decline, could you elaborate a little bit more about the detail? Because I think your IDM customer recently on his earnings call saying that the new project on 5 nanometer should start ramping through second half. So, if the fourth quarter for your business, for your production business, the wind down of the 7 nanometer project is actually a negative offset. Okay, I think I already told in our last year's year-end earnings call, that the major product we are currently shipping to our North American customers will gradually phase out, starting in fourth quarter. And the next year for this product will be a generation migration year. So I think that's the major reason for fourth quarter mass production decline, quote, unquote, a little bit. And for the IDM customers, we will ramp up the 5-nanometer product in the second half this year. So I would say the fourth quarter right now, our guidance is like a collective conclusion for these two products. Got it. Yes, that's very helpful and clear. Just a quick follow-up to my first question before I ask my second question. Looking into your outlook for 2025, what do we think about the growth trajectory versus your long-term guidance for 30%-40% plus CAGR growth? And, if we just think it a more conservative way, how do we think about the wind down of your hyperscaler project on 7 nanometer? Will the contribution from that project, based on the current order visibility, be lower than the level in 2022? Thank you. I think it's not appropriate for us to give the guidance for some particular product, that precisely. I will, I will say this way, usually, when the product is into the generation migration, the shipment will decline for sure, but the magnitude, I would say right now it's only May 3rd. The magnitude right now, we are not that clear about that, about the magnitude in 2025. But I want to emphasize, for the growth outlook, in 2025, we are currently still confident we will still have certain growth for the top line in 2025 because of the forecast we received from the IDM customer for its 5 nanometer chip. Okay, got it. And so my second question would be related on the competitive landscape. And with your U.S. peers recently more proactive on providing the detail on their customer base and potential project wins, could you also share your potential wins in the next half year and longer term with your hyperscaler customers? Thank you. Okay, let me take this question. Yeah, I think, Yeah, I know, a few of our competitors are very aggressive, and has a lot of, a series of earnings call or even, the AI Day also. But, yeah, to be honestly, the business scale is very big. Like, we, like Daniel also mentioned about entire market analysis, major CSP, they all plan to do the ASIC chip. So that's a lot of opportunity. Yeah, recently, as you can tell, before we are talking about the inference and training chip, now the CSP are even more aggressive. They try to do their own CPU as well. So we have to answer your question, we have to receive a lot of inquiry to make a custom silicon for most of our major cloud service provider. The opportunity is a lot. To be honest, our management team and also supporting team are working very aggressive, and they also approach us almost daily meeting. So I think the opportunity. I'm not saying we win in immediately, but to be straight, a lot of opportunity for us to digest, and some of them, the decision will be made in a very short period. Okay. Yeah. I think, for your competitors, they actually mentioned, they have, project win and also a new customer win. And so I think even, I think, both of them actually mentioned they have 3 hyperscalers out of the top 4. So do you think, it is going to be the case for you, in the next, 6-9 months, that, you will be able to secure another 1 or 2 major hyperscaler project wins? And, what do we think about your relationship with the existing hyperscaler customer? Okay, Haas, let me answer this way. To be honest, we are not allowed to elaborate who we win, who we lose, or what we have very good opportunity to win, and for what project. So you are asking about the narratives about the competition. And, I think because we knew that the market is focusing on the chip using in the data center infrastructure, if you are talking about only the business, I can tell you we already win projects from those hyperscalers. But, to be honestly, we. Let me say this way, when hyperscaler are looking for basic providers in the market, they don't have too many choices. Broadcom, Marvell, Alchip, MediaTek, GUC, probably you can only have these five, can provide the most leading edge process node and the largest scale design ASIC to them. Obviously and logically, we've received multiple RFQs from multiple hyperscalers in North America. That is what I can say the most. Mm-hmm. Okay, Haas, let me elaborate a little bit. Yeah, just like Daniel mentioned, what's the definition for winning? Yeah, the... If you're asking very specific, do we win the next generation AI or something, but I think that's a lot of cooperation we need to do. Yeah, for example, we are doing a few test chips, yeah, for some potential customer to program like a 3D concept and also the IP. Do we consider that as a winning or not? But I think without this approval stage, it's very difficult for a customer to come make a commitment, yeah, immediately. Yeah, that's about starting from 2 nanometer, the design become very complicated. Each of the design requires at least 3 to 4 tape out. Yeah, as you know, due to technology migration limitation, even the SRAM cannot do the further scale anymore anymore. So the main chip, the compute die, will continuously go for 2 nanometer, 1.4. But IO die most likely will be stayed at 5 nanometer. SRAM die is going to stay in the 3 nanometer. So it's a lot of proven concept in order to win those. Currently, I do have a high confidence to secure those kind of project because the die design is so complicated. It's an entry barrier, become higher and higher. It's almost impossible for unproven service provider who claim they can do ASIC to penetrate in. I think it's almost impossible. The only handful of the service provider has a, has this kind of capability and track record. Yeah, pretty much it will be the Broadcom, Marvell and us. The rest of them, I think they don't have enough track record. It's very difficult for CSP to choose them. The reason CSP want to do ASIC, they try to reduce the dependency from standard product like NVIDIA. NVIDIA are very expensive. ASIC solution already is going to provide a significant amount of saving, but you choosing the unproven player to save more, I don't think that's a for the CSP they will consider to do that. Yeah, I hope that answered your question. Okay, Haas- Yes, thank you. That's... Yes, and maybe if I can squeeze one more- No, no, no. Leave some time for to others. Okay. You can- Okay. You may ask the question for the next round. And, Robert, please. Robert from J.P. Morgan. Oh, thanks, Daniel. So thanks, John. So my first question will be on their largest U.S. customer program. Previously, you seemed to be pretty confident about your 2026 goals. So, can you share a little bit about how we are tracking in terms of the design milestone? You say that you've been doing some task shifts, probably maybe for this customer. Any indication on the tape out schedule? Yeah, just get a thought on that. Okay. Robert, you know, as always, I have been pretty consistent with my view, that 2025, I'm kind of conservative because I keep on mentioning it's the generation migration year for our major product. But for 2026, I am very confident that it could be a very promising and a hyper growth year for Alchip. Because, we will have the new AI ASIC product to, the North American service provider, for sure. And, we will... The current 5 nanometer AI chip to the IDM customer will extend it to 2025 with considerable shipment volume, and in two, to 2026. And in 2026-... we will have full-year contribution from the autonomous driving chip to our China customers. Not even counting in the potential win or revenue contribution from other big customers, we will have a very good 2026. I think this guidance already tell you some clue about the scheduling. For the detailed scheduling, I'm sorry that we are not allowed to disclose. Okay, thanks, Daniel. So speaking about your IDM customer, so it looks like the demand is quite strong. How should we think about the revenue contribution from this IDM customer? Looks like it will become the largest customer for 2025. And how should we think about the growth, the production growth margin for this IDM customer? Okay, for sure, this customer probably will become the biggest customer for us in 2025, and the growth margin is better - is a little bit better than what we, what you should know. And, but not much better, a little bit better. Yeah, that's, that's the status for this customer. Currently, what's your view on the, say, the core supporting rate for this customer? Probably share a little bit details about what's your base case scenario, if we can secure probably 50%, 60%, of this, PO, and what will revenue be, in 2025? Yes. The revenue we can get, or let's say, the chip we can ship, depends highly on the CoWoS capacity allocation. And currently, I am personally optimistic because our chip is becoming more and more important to TSMC, especially for the CoWoS side. I think Johnny can elaborate much better than I do. Okay. Yeah, I think we already deliver a very clear message to TSMC. We have to get the support for a specific customer next year. Yeah, so far so good. We get a reasonable feedback. So that's why the customer are willing to place the top die order, even without the CoWoS commitment. So that's why we can, unlike before, there will be no commitment. But right now, the top die already placed. Whatever the order we receive, we will try to get the CoWoS capacity for them. But looking forward, the reason I'm so optimistic because TSMC, in terms of CoWoS capacity, also improved quite a bit. And also, since the top die already placed, if we cannot get the CoWoS capacity, full CoWoS capacity next year, the revenue still will go on to the year after. The business is a real business. Yeah, so working on the CoWoS capacity, and I think it's right now, one of the number one priority for the company. Okay. My last question will be on your your strategy on the project selection. So previously, you seems to be less interested in bidding for the production 3 or so-called production-only business. Have you changed your, your strategy on this, or you still will focus on the production one, production two going forward? No. Our strategy remain the same. More than 90% of our design, I think high ninety of our design is from the business is from design to tape-out and production. We do start to open a door, a door slightly if the customer are big enough. As you know, for major customer, like a cloud service provider, we try to get into their door, become their supplier list as soon as possible. Maybe production-only design will be the show card. If that the case, we will consider to get in. Once we get in, we are working with their design team. Yeah, trust me, all of them need the design support. Like I mentioned before, even the CSP customer, they only doing one tape-out a year or one tape-out every other year. So in terms of design know-how, schedule control, and also the technology limitation, we have a lot of room for them to learn each other. So once we get in through the door, we have the confidence to kind of step up, and eventually we'll be the design partner for them. The reason I'm not focused production only related design, because I consider this kind of relationship will not be sticky. Yeah, we need to. Our company's major confidence is the provider design service. We believe we can doing the best design compared to most of our service provider. Okay. Thanks, Johnny. Thanks, Daniel. I go back to queue. Okay, Charlie, Morgan Stanley, please. Thanks, Daniel. Hi, Johnny. Good afternoon. So, my first question is about your future sort of a strategic partnership, right? Meaning, the chip design will becomes much more complex. On other hand, you see some of your new several competitors, right? They went through the Arm Total Design to access to your CSP customers. So do you have any kind of new thoughts about your future partnership with those IP or EDA vendor? Thank you. Okay. Yeah, let me take this question, Charlie. Yeah, the major supplier we consider, many, for example, foundry partner, IP vendor, front end partner, and packaging testing as well. For foundry partner, we don't need to elaborate. I think only majority, more than 99% of our business go to TSMC. The IP, right now, we are working with a very tight relationship to a specific IP vendor. In fact, they are the... In terms of business, they are number one in the world. We have a very close relationship to this IP vendor. And also, we need each other. As you know, for the leading-edge technology, that just as you mentioned, become very complicated. And to be honestly, majority of the leading-edge technology, like an end user, they all have their own IP. The standard product company, I think most of our company, they have their own IP. The, the leading-edge technology IP can, the, the major customer will be the system house and cloud service provider. That make us, complementary each other. The IP house need a ASIC provider in order to get into, get into the door of a service, a cloud service provider. We need an IP solution in order to, make our solution more comprehensive in order to compete with other competitor at the broadline sale. So we're going to have a very tight, relationship. And in fact, there will be some exclusive, announcement will happen very soon. Yeah. The... So IP house, I don't worry about, too much. Eventually, we're going to have a number one IP provider sitting right behind us to win the CSP customer. As for the other, front end or OSAT kind of IP vendor, we also have a few progress. Yeah, for example, the software IP, like, Arm, yeah, we're going to have some relationship with them as well, similar to some of the other service provider. Yeah, and, again, in terms of support, we are complementary to each other, and we will, we not, we don't have any, we are, we are not have any competition, so eventually we can win together. OSAT and also the package, since our volume start to surge two years ago, we get more and more better deal from the OSAT. Partnership is one of the area we are focused for the future years. I see. Thanks. Thanks, Johnny. So, my follow-up question is to examine your recent, you know, project win or loss, right? So, not trying to be picky, right? I just want to understand why you or the company decided to walk away from some business. Because on the recent the Meta Newsflow announcement, I think Marvell they got AWS Inferentia 2.5, and maybe Google's CPU. And it seems like they have a Microsoft sort of AI accelerator, right? And the Japan consensus coming, Socionext, seems to win, made a CPU, et cetera. Yeah, so can you explain why your competitors you know got those projects and you didn't? If not, so what are you planning for the future? Okay, sorry, let me answer you this way. We cannot say the name of the customer or say the name of the project so specifically. And I do believe the connection for the project name and the supplier is your research and your industry contact. I don't believe Marvell say directly, saying which project is to whom, which project is to whom. I can only say that there are many projects in the market for competition. And for the generation by generation, there will be like the process node. There will be a major node, there will be a half node. And of course, we want to keep on doing projects with existing customers, especially those big ones. And as Johnny mentioned, we... Unlike maybe we, unlike the other peers within the industry, we won't speak it very loud, saying, "Okay, we received some testing project or IP project or block project," those type of project to the outsiders, because the contribution may be minor. Yeah, that's what I can extend my statement to you. Yeah. Let me add some color for this. As you know, the ASIC business are very big. Last year, total ASIC business, I think is around $4 billion. Yeah, people predict 4 years later, this market will grow to more than $70 billion. So the compound growth rate is extremely high. To be honestly, I don't intend to winning all. It's impossible. Yeah, the- Some people, some service provider, they will try to find an angle, try to get in. I think that I totally welcome competition. Without competition, I think the company cannot grow. So, I still consider Broadcom and Marvell will be my true competitor. I don't worry about other too much. In terms of business opportunity, trust me, we are working very close to the target customer. Everybody want us to win. Yeah, I don't think we are behind, honestly. Test chip, everything, will be very little revenue contribution right now because our AI revenue is so high, and without a significant win, you cannot see any total revenue growth. But, we are continuously to work with the customer, even the test chip, IP test chip, 3D test chip, we will do that. But I think, based on the current NDA, even though we are win, confirm win as a customer, we cannot share the- Any progress. So I think wait until people see the number, We start to realize that the winning, just like Daniel mentioned before, 2026 is going to be an excellent year for ALC. I have a confidence to satisfy everybody. But 2025, in the transition period, if we manage it carefully, we still anticipate certain degree of growth on top of this year. Thank you. Yeah, so just a very quick follow-up. So you mentioned something about the test chip, right? So how long does it usually take for customers to evaluate and confirm the kind of official project? Yeah. Good question. Like I mentioned before, right now, the current generation, if it's N3, most likely it will be a homogeneous approach. But starting from N2, that will be the heterogeneous kind of approach. One design require many tape outs, so does the test chip. Yeah, the 2-nanometer and those kind of test chip, I think it fully depends on the TSMC schedule. It's not available, commercially available outside, so there'll be a lot of dependency and trigger. But I think. And also the effort to work with the and those customers. Just like I mentioned, said in the very beginning, there are many, many necessary step from zero to one. Yeah, the winning is, yeah, it take a long time to win a multi-billion dollar kind of business. It's not that easy. I see. Thank you. And yeah, I have a couple of follow-up, but maybe I go back to the queue and ask a question later. Thank you. Okay. Thank you, Sean. Okay, Jeff, I believe from Macquarie. Thank you. Jeff, your voice is really blurred. We cannot even hear. I guess it's because of your signal. No, we cannot- You mentioned the ADAS order from China. Can you give me more specifics on... Okay, I'll talk about time. Okay, sorry. Right now is good. Right now is good. Hello, Jeff? Okay. Yeah, so you mentioned a China ADAS order. Can you... I'm trying to get some color on the ADAS China order and mass production schedule. Okay, we are not allowed to disclose the specific schedule. I can only say the projects are going, and the tape out, we will tape out within 2024. And probably 2025 will be a kickoff for the production. But- Okay, okay. The contribution periods in 25 will not be so considerable, will not, will not be long. Yeah, simply speaking. Okay. And just last follow-up question. Any other color on any meaningful China-related orders and/or order-related orders? Thank you. Thank you. Yeah, our China strategy remains the same. We are not refusing business opportunities in China market. However, for some projects we intended to not, we intend not to take, those projects are sensitive projects or projects from sensitive customer, or projects may have the concern violating the BIS restrictions. So, but to be honestly, for now, not any given China customer can deliver the revenue contribution scale similar with the service provider customer in North America. So currently, our focus will still be in the North American market. Mm-hmm. Okay, let me add some color for China business. Yeah, as Daniel mentioned before, there are many customers. Before, we have a lot of opportunity, people working on the GPU AI-related business. But, most, unfortunately, most of our customer has been slowed down, yeah, by the new regulation. So China, our focus remain the same. Whoever come to us, if they combine with all the regulation, using edge technology, they are financially healthy, we all take. The market focus will be automotive. We're thinking about automotive areas, currently still, politically insensitive. And also another area is the CPU. As you know, CPU, the I/O speed, and also total compute power is much less than the GPU-related, AI-related chip. So I think the recent CPU-related opportunity in China, I think is booming. In fact, we already won a very sexy one, 5 nanometer. They will start to have production in short period, because more and more institutional has hesitate to use the commercial CPU solution from the U.S. provider. So that create a lot of room for the China CPU maker. Yeah, so, we try to take a project because the NRE from China is still very reasonable. And in terms of business and production, CPU and also automotive. Yeah, I hope that has answer your question, Jeff. Yes, thank you. Okay. And, okay, Haas, please. Okay. Yeah, it's me again. Thanks you Jonny and Daniel. I just have two quick follow-up questions, for the next generation hyperscaler project, ramping in 2026 you just mentioned. What should we think about the annual contribution from that project? Because the way I think of is, if we only consider the wafer price difference between 7 nanometer versus 3 nanometer, and everything else equal, it should provide you at least 70%-80% higher annual sales contribution for the new project versus the 7 nanometer one. Is that a fair assumption to make? Thanks. Okay, Haas, have I ever mentioned it is a 3 nanometer? I guess not. So, just kidding. For the potential shipment volume, I'll let Johnny elaborate. It is quite amazing. It is quite amazing. Mm-hmm. I'm not talking about any specific customer, but in usual case, 3 nanometer design versus 7 nanometer design versus 3 versus 5, I think each of the generation, instead of a wafer pricing different, the topology also different. Yeah, for 7 nanometer, in usual case, it's a 1-2 HBM ratio. Yeah, for 5 nanometer, since the compute die is shrinking, so the within a package, they are afford to place, like, a more large die. For 3 nanometer, eventually, even the unit price compared to 7, I'm not surprised, in the 5x or even more. So even with the same shipment, same amount of shipment, the total revenue contribution will be totally different. So that, I hope that answer your question. Okay. Yeah, got it. And could you discuss more detail about the hyperscaler CPU opportunity you just mentioned? When will we start seeing the potential contribution from CPU projects, and how should we think about the potential business scale relative to your existing AI accelerator projects? What I would like to focus on is just on your hyperscaler CPU projects. But we don't need to discuss about the China CPU project. You provide already a lot of detail already. Thanks. Okay. Yeah, the China CPU project is totally different, compared to the AI CPU. Let me talk about the China CPU, use as main application mainly for desktop, laptop, because a lot of institutions try to reduce the dependency from the Intel, AMD type of a company. Yeah, I think that's a, that's a China CPU. Yeah, in terms of AI CPU, most of the service providers, in addition to GPU, they need the CPU, to run. But the, the amount will not be, as much as, the inference chip. Before the CPU solution is all x 86, x87, x86, kind of approach. But right now, since the proven track record from one of the CSP, they use Arm-based kind of approach, saving a lot of cost, and more and more CSP try to catch up. So the... If they use the Arm-based CPU, that free up a lot of room for the ASIC solution. Yeah, the, and also the- [Benefit or Penalty] for the temperature. The design complexity and the unit price is, for CPU, will be much less than GPU, as you know. CPU, they are using the, DDR kind of solution. They don't need the HBM at this moment.... Yeah, so the unit price will be low if they are using the high speed DDR interface. And in terms of, logic, most of, logic core, it will be using the CPU core, for example, ARM or even RISC-V, they can do this kind of a CPU core. Okay. Okay. Yes, that's very clear. And when could we, at the earliest time frame, start seeing some of the contribution from these hyperscaler CPU projects? I cannot give you a date. Yeah. Okay. If everything goes to you, maybe sooner than you expect, anyway. Okay. Okay, yeah. Thanks so much, Johnny and Daniel. I will be back in the queue. Mm-hmm. Okay, Robert, please. Hey, thanks. So I just want to follow up on the N3, N2, and also you're doing more tests too. So does that mean that, in the future, we're not going to see first time right, in terms of the physical design going forward? And, how should we, think about the, NRE activity? So, is it a common practice for you, for customers to release two design contracts or release two test chip projects to different suppliers and eventually go with one into mass production? Okay, Robert, for that question, I can guarantee you in the future, in the future process node, especially for the AI field, the technology will become much more complicated than what we have right now. There are many different technologies may involve in the chip design. I guess, Johnny can elaborate some new technologies to you. Yeah, like I mentioned before, starting from N2, a lot of scaling is contribution will be very insignificant. For compute die, I think, it makes sense. If you want to generate more compute power and also save the yield, you put the compute die using the leading-edge technology. But for the analog, mixed-signal I/O interface, it doesn't make any sense to do the further scaling. Currently, I think based on current analysis, the 5-nanometer will be the suitable and no less than 3-nanometer. Yeah, unfortunately, the 6T SRAM, usually the cache, but also facing the scaling challenge. So most likely they will stay at 3-nanometer using Hybrid Bond to connect to the core logic. So in order to save the yield and the most leading-edge technology, they will only serve the compute die and put the analog mixed signal, and also the SRAM, which is the area suffer the high yield loss, put it in a relatively more mainstream technology. Yeah, so eventually, one design require multiple payback. So in terms of NRE, will be quite significant to complete one design. Yeah, the good thing is we're going to receive a very high NRE if we win design. The drawback thing is, I truly believe number of player will, we are getting less and less. Not too many companies can afford this kind of approach. Early stage of the, Daniel mentioned about we have a lot of AI startup company in the U.S., but those startup company is no longer a pure startup. They, they call unicorn or even uni- dragon kind of a startup, because they be invest directly by the CSP. Yeah, and they intend to put it outside. If everything proven, they may consider to acquire this company. This kind of pure startup company, fundraising, finish the design, try to find customer, it's not gonna happen in the future stage. It's very difficult. So NRE will be very, very good, and business opportunity will be getting less. Entry barrier will be getting higher and higher. Thanks, Johnny. I just want to follow up on that. Looks like it will become a chiplets architecture starting from N2. Will you still be targeting at the core compute dies or you'll be responsible for all the chiplets, compute die, I/O, SRAM, et cetera? Because I'm a little bit concerned, because if the different chiplets are designed by different suppliers, how should we think about the responsibility if just one of the chiplets become having some defect? Mm-hmm. Yeah, IDM will be the one design. Yeah, just a multiple tape out, and we use the hybrid bond, we use the TSV to connect all together. At the end, it's a one chip. We just separate the I/O and SRAM into a different technology, but we have to connect all, connect everything together, sign off the timing, sign off all the signal integrity. Yeah, it's impossible for different company to do different piece, and somebody has to do stitch. Yeah, otherwise the timing... Yeah, SRAM need to talk to logic, otherwise it's useless. Yeah, so does all the interface. To separate two different technology, mainly is to save the yield and also save the overall costs. The NRE will increase, but unit price will reduce drastically. Just to confirm, this trends is only starting from N2, not from N3, right? It also depends. A lot of people use a 3 plus 2. A lot of people are using 2 plus 2, 3 plus 5, and 3 plus 2. So it definitely will happen on N2. It's not going to be earlier. Yeah, we don't know. Yeah, just for your information, in China, people using this kind of technology, even for the mainstream technology, like 16 or 7, because they are facing challenges. Their foundry technology, I think, is saturated, so they have to use this kind of chiplet kind of solution for even for the mainstream technology. But for TSMC and also the 3-nanometer, based on my understanding, only right now, only one customer has a production chip using this kind of a chiplet solution. For CSP, up to 5 nanometer or 3 nanometer, still mainly homogeneous type of approach, based on my understanding. Got it. Yeah, pretty helpful. Thanks, Johnny. Thanks, Daniel. Thank you. Okay. Charlie, please. Thanks, Daniel. So also on that 2 nanometer chiplets, it sounds very, very complex, several tape outs. So I would assume this project may also take, like, 80 or even 100 engineers to work on that project if you win the project. So Johnny, how are you going to plan for that? Have you reserved, like, those headcounts if you will be winning the projects? Mm-hmm. Yeah, very good question. Our headcount will grow based on the design along with the design complexity. We try to maintain at least 20 tape out a year. Yeah, before, we only need about 50 people, we can do 5 nanometer, 7 nanometer tape out. But 3 nanometer, right now, we need 80 people. Eventually, for 2 nanometer to handle in multiple tape out, I think 100, 100 people per per chip, per design is highly possible. But because, you know, the I/O, HBM, and also the, especially the I/O die, in usual case, if they stay, stay, stick with the main, more mainstream technology, design cycle will be much shorter. Yeah, the 3 nanometer, 2 nanometer, and we need, as long as we can manage our resource well, I hope we, we shouldn't have too much people, too many people. I hope 100 people can serve, can still do, you know, one design. Yeah, right now, the test chip we are going to do, after this, we can kind of determine, how many people we need. And we have to charge our customer accordingly, because the resource right now is, is hard to estimate. Got you. Yeah, just want to make sure you leave there some flexibility. Yes. Yeah, because it- It takes time to hire and even train engineers. So yeah, anyway, we wish you success on 2-nanometer win. And my next follow-up is about your 5-nanometer. Or, Daniel, can you give us some breakdown of 5-nanometer revenue in 1Q? And based on the current customers' order, what is the 5-nanometer revenue breakdown? I think your 7-nanometer below that portion is just too high; it's 94%. So maybe- Going forward, we can get some more details. Okay. Give me a second. Sure. 5 nanometer is about 10%-15%. In 1 Q? Mm-hmm. Yes. So what would they be by the end of this year? Actually, let me also erase my original question. I really want to know your 5 nanometer project pipeline. I think this question could be asked before, like- Yeah. Which type or vertical of those are 5 nanometer project in your NRE pipeline? Okay, I would say, I would say for the 5 nanometer, for the revenue conclusion from 5 nanometer project, it will increase quite significantly, starting from the third quarter because of the shipment to IDM customer. And, 5 nanometer definitely will become the major, contributor nodes for 2025. But, I'm lazy, I haven't done the 2025 forecast numbers, so I can give you a number for that. . Yeah, Charlie, also the, in terms of NRE, right now, we have a very little 7 nanometer designs, almost nothing. So the, the, the design we are taking, either 5, 3, 5 or 3. So I think, 5 nanometer NRE contribution is also-... Very high. Yeah, yeah. Okay. So because you mentioned several startup company, right? Any names you can disclose or some hints about- So much. So lot. The product. Okay. They are unicorn type of Oh, unicorns. I don't know. Just search for unicorns. Okay. Okay. Yeah, and last one, also just confirmation, right? I think you talked about CSPs as CPU opportunity. So, may I confirm your future opportunity as CSP includes both CPU and AI accelerators? Yes, yes. Yeah. Actually, the many people knock on our door. Now, now we are approaching. I think I think both angle is quite suitable. I think CPU, eventually, the volume is also quite significant. So going back to the previous question, does attending the Arm design requirements for you to win the CPU projects? Not really. In usual case, I think our customers in-house build has a capability to do all the architecture and sourcing all the IP from the soft IP provider. But, for some customer, I think they don't have an architect-related capability. Yeah, using, for example, some platform already established by us, I think it's kind of helpful. So that's why, yeah, we don't against to join this associate. Got you. Thank you. It's all my questions. Very, very helpful. Thank you. Thank you. Okay, Paul Shu from Taiwan Life asked two questions. The first one is: Does company consider any share buyback to respond to the current pullback? Second, any chance to collect the bad debt happened last year? For your first question, we consider a little bit, but we don't want to do this too regularly, because if you buy back the shares purely because of the share price downfall, without any accident or surprises or events like we had for Phytium, it is not a good habit to do so. Mm-hmm. For collecting bad debt happened the last year, we do collect a little bit, but not in full in the first quarter. Okay, is there any question? 'Cause right now, it's 3:40 P.M. already. Okay, we take one more question, and we can finish today's earnings call. Is there any question? If not... If not, thank you for your participation, and thank you for your interest in Alchip. Thank you. Thank you very much. Thank you.