Okay, good afternoon, ladies and gentlemen. I'm Johnny Shen, President and CEO of Alchip Technologies. Yeah, thanks for joining the investor conference meeting. Yeah, we appreciate the opportunity to share our Q1 results and provide guidance for our future business outlook. Yeah, for Q1, our Q1 financial results are in line with our plan. Revenue reached TWD 319 million, representing approximately 4% year-over-year decline. Net income came in at TWD 44 million, with EPS TWD 18.1. So the detailed breakdown and analysis will be provided by Daniel in a later section. There are a few key highlights for this quarter. First one is our gross margin improvement. Yeah, we have achieved a notable percentage point increase in gross margin compared to last year. This was mainly driven by favorable NRE mix and improved mass production margins. Second is our N3 project milestone. We successfully completed and taped out our most important N3 project. Yeah, we expect wafer out, wafer out to come out during this quarter with prototyping and evaluation beginning in Q3. Number three is our production progress. Prototyping and evaluation for our ADAS production is nearly complete. Our end customer is satisfied with the result, has decided to place additional wafer orders beyond their original plan. As for the future business outlook, as I mentioned in a previous earnings call, our mass production line is currently in transition phase. The current generation is almost end of life, while the next generation product is scheduled to ramp up starting from 2026. Unfortunately, our highly expected IDN customer has revised down their production plan multiple times. As a result, there's a significant revenue decline compared to the number last year. On a more positive note, we continuously see strong demand for HPC and AI-related design opportunities in the North American region, utilizing the most leading edge technology like N5, N3, or even N2. We have already secured several designs and remain confident in our ability to grow our revenue, NRE revenue this year. In addition to HPC business, mass production for new gaming devices and smart speaker applications has started to ramp up. Overall, our annual revenue forecast remains consistent with the guidance we provided in the previous earning call. Yeah, as for the geopolitical risk management, we have significant progress in diversifying our business beyond China. In Q1, only about 5% of the revenue originated from China, and we are also facing limited potential tariff impact as the primary majority of our chips are shipped to the local CM partner rather than directly to the U.S. In terms of workforce, we have to launch a very aggressive hiring plan to strengthen our engineering support beyond China, including Japan, Taiwan, Malaysia, and Vietnam. Our Japan office can accommodate up to 200 employees now, and our Malaysia and Vietnam office has over 50 engineers combined. Based on the current growing plan, our Southeast Asia workforce will be up to 120 people by the end of this year. In conclusion, our revenue forecast remains unchanged. We anticipate flat revenue for the next quarter. However, our profit margin is expected to further improve, driven by increased customer recognition, stronger contribution from NRE, and pricing support from key suppliers. Despite the revenue adjustment, our earning number forecast remains consistent with last year. Look ahead, we remain highly optimistic for the AI market from 2025 to 2027 like the industry leader. We are confident in our ability to outperform the market caterer in HPC applications. Thank you very much. Okay, my turn. It's Daniel. So the number is really straightforward. For the revenue part, it is already public information. The first quarter revenue is $318.7 million, representing a 21.1% quarter-on-quarter decline and a 4.4% year-on-year decline. However, because of the improvement of gross margin, our operating income in the first quarter this year records, no, no, TWD 45.4 million compared to a week ago, compared to a year ago, is a 17.9% year-on-year growth. By comparing with last quarter, fourth quarter 2024, the operating income is a 16.3% quarter-on-quarter decline. For the first quarter, the net income is $44.4 million, representing EPS of NTD 18.1. For the revenue breakdown for the first quarter, by application, you may see that 95% of our revenue came from HPC-related applications. For the other three categories combined, we don't consider they are significant. They are consumer sector, networking sector, and the niche market. I guess. Starting from the breakdown. I will repeat the breakdown again. If some of you are not muted, please mute your microphone. We are facing some technical problems right now. For the quoted breakdown by applications, again, HPC is the application contributors, the biggest revenue of our company. 95% of our revenue is contributed by the HPC sector in the first quarter. For the processional breakdown, again, we are very proud of our advancements of our processional technology contribution. 41% of our total revenue comes from five nanometers or more advanced processional. 55% of our revenue comes from seven nanometers processional in this quarter, which means combined the seven nanometers and five nanometers and the more advanced processional contributes more than 95% of our total revenue in the first quarter this year. For the geographic breakdown, like our CEO mentioned, for the first quarter this year, revenue from North America accounted for 93% of our total revenue, while the Asia-Pacific, which includes Taiwan and China, contributed about 5% of our total revenue in the first quarter. This means the geopolitical risk between China and the U.S. Right now, I think we are managing it very well. For the first quarter business review, first of all, yeah, again, revenue suffers a decline on the tapering of seven nanometers AI chip shipments. I believe, I guess, the majority of you already realized that the previous main revenue contributor, the seven nanometers AI accelerator to the cloud service provider in North America, the shipment is tapering off, and we are expecting very limited revenue contribution from this product in the rest of this year. For the first quarter, again, there is seasonality for the NRE revenue. The first quarter usually is the low season for our NRE design projects. These two factors combined are the main reason for the relatively quiet revenue performance in the first quarter. As I just mentioned, the gross margin in the first quarter improved to 23.2%, creating 17.9% operating income growth year-on-year to TWD 45.4 million in the first quarter, which we consider this trend will keep on going in the rest of this year. Secondly, the NRE pipeline remains strong in the North American region. We are very proud of saying that our first three nanometers AI accelerator project came out in the first quarter this year, and the production is expected to kick off in early first quarter next year. Until today, the whole process, the whole project is running smoothly, and we do not expect any delay for this schedule. Secondly, we expect the processional migration to speed up in 2025. We will see many three nanometers projects to kick off or to tape out this year. We are going to see NRE revenue contribution from two nanometers projects also starting from this year. We will keep on seeing the processional migration from five to three, from three to two nanometers. The NRE demand outlook, especially in North America, keeps very strong. We are keep on winning multiple projects from either startups or some pretty reputated companies. We consider this trend to keep on going for the next couple of years. For the outlook this year, we expect the revenue to remain quiet in the rest of three quarters. There are some reasons. First of all, again, as I mentioned, there could be limited revenue contribution from the seven nanometers AI accelerator. Secondly, we see the five nanometers AI accelerator project to the North American ODN customers appears soft. However, we think given the better revenue mix, which means we have a higher percentage of NRE contribution this year, coupled with the better margin of the current major production contributor, we expect the gross margin in 2025 will have a relevant improvement for the year-on-year basis. For the whole year, the processional migration keeps on going. We do believe it fuels the NRE growth in 2025. We are still projecting a really, really strong NRE revenue growth in 2025. Reasons are, first of all, we see multiple three nanometers projects taping out this year, and multiple two nanometers projects kick off this year. We do see the ADAS project from the China customer to be into production in late this year. We want to reiterate that all important projects are running on schedule. There is no delay in sight, which means I will say for 2025, we will have a quiet revenue performance. However, in 2026, I see very huge significant revenue growth potential in the coming years. Thank you. I think that concludes our earnings call presentation today. Right now, it is the Q&A session. If you have questions, please use the raise hand function. Then, you can unmute your microphone for that. Annie Chan, please. Hi. Can you hear me? Yes. Hi, management team. This is Annie from UBS on behalf of HASS. Thank you for taking our questions. The first question is regarding your progress on the Hyperscalers three nanometers AI project. Could you share a bit more about the latest progress regarding the mass production schedule? As you mentioned, no delays seen. As we get closer to the production, how should we think about the contribution from this project when it starts to ramp? Any reference would be very helpful. Thank you. Okay. As for the potential contribution, because first of all, we are not allowed to mention the numbers here. Secondly, we do not consider to disclose the numbers. It is a good thing for our customers because the project right now is still in the mask-making process. What I can say is, for now, everything is on schedule. Most likely, the pilot-run sample will be in the market by the end of this year. The potential mass production will start in the first quarter next year. As for the revenue contribution, I can just say it could be really, really significant. Let me give you a number for reference. For the seven nanometers project, the lifetime contribution to us is about TWD 1.5 billion-TWD 1.6 billion. I do not know what the situation for the five nanometers is, but according to the report I read, the scale of the five nanometers AI accelerator is probably like TWD 3.5 billion-TWD 4.5 billion. For the three nanometers, I would say you can probably look at the central gesture of the potential scale. For now, I cannot give you a firm number about the scheduling, but I can tell you that the whole ramping-up process will be very fast. Okay. Got it. Thank you. That is super helpful. Our second question would be regarding your business diversification. Given the high potential from the three nanometers AI accelerator project, could you let us know your strategy to diversify your business? How should we think about your opportunities in Hyperscalers or AI model providers? Any color on the initial engagement or project progresses would be helpful. Okay. Let me take this question. Yeah. In fact, we are taping out around 20 designs a year. In order to diversify this particular customer, honestly, it is very hard. To be honest, the total ASIC contribution from this market is 95% coming from two companies. In order to fully diversify this special account, we have to win others. In terms of non-diversification, I think we are working very hard. Other CSP, in addition to these two companies, are working with us very closely. Yeah. Even though the revenue right now is not so significant, but again, we are working with them very closely, trying to win their next generation design. Other applications, like I mentioned before, for ADAS and eventually robotic-related applications, I think we are doing very good. Also, some gaming devices start to ramp up. I hope we can diversify some business. Unavoidable, starting from next year, this particular customer still contributes the majority of our revenue. Got it. Thank you. If we could just sneak in one more, would you mind sharing with us any progress on the two nanometers chipset design and your advantage or value-add to your customers when migrating to more advanced nodes? Separately, would you be able to comment on your IP partners' progress on the IP qualification on two nanometers? Do you think it would be a bottleneck or so far, so good? Thank you. Yeah. For two nanometers design, I think we are doing quite well, to be straight. Yeah. Because of the success of this N3 design, everything is on schedule. Customers are very satisfied with what we are doing. Likely, we have high confidence to continuously provide service to this particular customer. In terms of IP, the different customers have different strategies. I think they intend to be open. Yeah. They do not want to be captive. Working with us along with a third-party IP partner would be the right approach based on customers' demands. There is no showstopper for the IP side. I think we are not too far away from winning. Yeah. Hopefully, we can deliver good news very soon. Okay. Thank you. I'll be back in the queue. Okay. Charlie Chen, Morgan Stanley, you can unmute your microphone. Thank you. Sure. Thanks, Johnny and Daniel. Good afternoon. Also, congrats on a great execution. Maybe just try to answer some tough questions, right, because there are market rumors, chatters talking about your current three nanometers has some performance issues related to SOTIS IP. Even some chatters talk about there are other three nanometers tape-outs on the same projects, which could be provided by some of your competitors. Can you please try to educate us how this does it make sense from industry practice? Okay. Yeah. Let me take this question first, and maybe Daniel can add some color. I think this is a very good and tough question. First of all, let us reiterate again, there's no delay for our existing design. Everything is on schedule based on the wafer-out schedule and also the prototyping and even the production schedule. Everything is on track. If there is any enhanced version needed, this design definitely will be done by us as well. Yeah. Because as you know, all the database is owned by us. If any enhanced version is needed, the implementation, it has to be through us. Yeah. If they invite an additional vendor, they have to do everything from scratch again. Again, there is no delay. Any enhanced version, if it happens, will be implemented by us. Got it. Thanks. Danny, do you have anything to add? No, no, no. Please trust our engineering. I knew there is a long dispute between who will be the supplier to the North American cloud service provider, who will be the major ASIC supplier, or is there any chance co-existing two suppliers for the same project? I personally think most of those rumors don't make any sense. Okay. Okay. Okay. If I may ask some kind of operational questions. For example, if you do want to verify the chip performers, when would be the timing you would know the chip performers? Is Is this number one? Secondly, since you are so confident about this three nanometers mass production, when will you confirm the orders at TSMC, for example, for their wafer front end and cost booking? By when can TSMC give you a confirmation for this three nanometers project? Okay. Honey, I guess it is not good for us to disclose the detailed scheduling of the project. It violates the NDA between Alchip and our customer. What I can say is, as for the production schedule, as I just mentioned, it's expected to be in the first quarter next year. I guess many of you understand that from placing orders to the actual shipment, it takes time. Most likely, the POs, the orders, were placed to TSMC prior to the end of this year. For the potential production scale, I guess the COAS allocation could be a good reference to the market. I believe you are all having very good interest contact. Usually, when TSMC's COAS allocation is coming out in June, I guess probably most of you will understand the scale of the production. Great. Thank you. I do have some follow-up. Because in your open remark, you talked about two nanometers projects to kick off in 2025. Does that include the major customers, two nanometers, or are you referring to other two nanometers opportunities? No, Charlie. For the scheduling of the next generation, I guess it's under negotiation. I would say tape-out two nanometers in 2025 would be a little bit aggressive. He said a kickoff. Oh, kickoff. Okay, okay, okay. Yeah. Kickoff 2025 probably will be in the ballpark. Yeah. Charlie, to answer your question, other than this customer, we do have other designs waiting for N2. Oh, okay. Is it also in kind of the AI accelerator type of product? Or Johnny, because you also attended TSMC's technology symposium, right? Or just broadly, can you share some key takeaways from your side? Because, for example, the AI ASIC market developments, ecosystem, your partnership. Since you want to talk about two nanometers opportunity, why do you not just answer this question more broadly? Thank you. All right. So two nanometers, I think the progress from TSMC is very compelling. At their symposium, they mentioned about compared to the N3 stage, the N2 progress is even faster, and also acceptance rates are even higher. Yeah. We did see a lot of opportunity, people thinking about N2. But for N2 design, other than the communication part, whoever is doing the HPC, most likely will be chiplet type of approach. Yeah. Because the reticle size is too precious for compute. Most of the customers intend to put all the analog mixed signal into other masks, which likely will be N3. Yeah. We call IO die or the IO interface. I think the potential opportunity we are seeing from N2 is all toward that direction. I think one design requires multiple tape-out. That is why we emphasize we have confidence to further grow our revenue, NRE revenue, because even one design, I think, requires two to three different tape-outs. NRE obviously will be added on together. The drawback thing is design complexity and turnaround time, especially the design complexity, will increase. Doing one N2 design easily requires more than 100 people. Okay. Thank you. Yeah. I do have some other follow-up. I will be back to the queue and ask the questions later. Thank you. Thank you. Okay. Harry Haren, Goku please. Hi. Thanks, Daniel and Joseph. The first question I had is on your, I think you talked about potentially diversifying into some of the other CSPs. Could you talk a little bit about how is the opportunity there? Given as you mentioned earlier, most of the CSPs have one big project with a particular customer or, sorry, particular partner. Do you see this changing? Do you start to see multiple large projects in the pipeline for each of the CSPs where you start to potentially get an opportunity to diversify? Okay. I would say it is correct. For the ASIC business, the customer usually intends to work with the physical design suppliers generation by generation. If there is no accident or if the backend decisions provider does not screw up the project, usually we do the generation-by-generation projects with the customer. For now, I would say everybody knows the Big Four in North America. They are Meta, Google, AWS, and Microsoft. We do see opportunity there because right now, I think Alchip is quite reputated in the North American region. Those potential customers know us. We do have some discussion engagement with them already. However, to the capital market, we want to be conservative. We will report if there is any good news. To us, I would say the opportunity comes out because of the business model. When the cloud service provider is working with product companies like Broadcom, Marvell, because for their business model, they require very high gross margin. The cost saving is not that significant to the customer. When the customer is thinking about, "Oh, we are trying to build up a very, very big AI infrastructure in the future," the cost for computing power becomes an important issue. I think it is our opportunity to penetrate into the existing supply chain of those potential customers. Because to be honest, comparing to the margins, the pricing, we are really, really more flexible than those product companies like Broadcom and Marvell. Okay. We have to look for your large CSP target customers to potentially develop enough front-end design capability. That's probably your entry point into those customers, right? So far, yes. We are focusing on the physical design part. For the front-end design, we are building up the capability, but we are not entering the field of doing the front-end for our customer. Okay. Just to follow up there, would you consider partnering with somebody else who can actually do the front-end design so that you can kind of offer this as a joint kind of package to solve for this and still reduce the cost for the eventual customer? Yeah. Let me try to answer your question. I know what's your concern. Basically, like I mentioned many times, winning CSPs need to be step by step. For emerging accounts, in usual case, our starting point is receiving the RFQ. We can move forward. For CSP customers, we need to work with them very closely even before receiving the RFQ. In fact, just like Daniel mentioned before, the gross margin is their price saving is their number one. One of their number one priority. Yeah. CSPs try to reduce the dependency from NVIDIA. I think the majority of their CapEx is going to NVIDIA. If they are using the ASIC service model from Broadcom or Marvell or other competitors, actually, the saving will not be so significant. Go through us. I think everybody tried to copy the business model while we are doing with our end customer. In fact, most of them come to us. We can tell them nowadays, "Yeah, everybody needs to pick up your part. You shouldn't rely on other people to define the architect and do the coding for you. You have to do it by yourself in order to control the entire chip design as kind of a COA model. If you want to rely on other partners, why don't you just buy the NVIDIA chip?" That's a straightforward approach. If they invite another ASIC vendor, still pay a huge margin to them, I think that ruins the entire ASIC purpose. I mentioned so many times for ASIC design, customers need to focus on their architect, their differentiation. For us, we focus on the backend production, make sure the design schedules are under control. The IP vendor can focus on their IP solution. I think that's the best business model which our end customer is adopting. In fact, most of our CSPs are going in that direction. Understood. That is clear. My second question is on the N2 project potential for the big customer. Could you talk a little bit about what is the kind of process that you would be going through just to educate us on? Is it still going to be an RFP/RFQ process, or do you think the project could potentially be awarded directly without too much of a bidding process? What are kind of the milestones in the next six-12 months, given that you think you're pretty close to a kickoff before the end of this year? Goku, we cannot disclose the details of the project. We can just say there are some signals for our confidence. For now, we are really, really confident that we will keep on doing generation-by-generation business with our biggest customer. That's what we can say for now. Okay. Understood. Last question on the ADAS project. I think you reported that it is back on track now with mass production end of this year. Could you talk a little bit about any further ADAS projects that you have won, either follow-ons or with other customers? Also, now that this is back on track, is it fair to assume that some of these geopolitical/security concerns are kind of largely behind this on the design, size of the chip, etc.? Yeah. Goku, we do not have the position to comment on the potential geopolitical change between China and the US. However, we do think that the ADAS is not the major target by the US customer. For now, what we can do is being optimistic. For the project itself, currently, we did a pretty good design job, and our customer's certification is good. I would say because our position in the China region is quite good, as long as there is any ADAS ASIC design opportunity, at least Alchip is one of the major competitors for the projects. For example, if ERD is trying to build up an ASIC, definitely BYD will invite us for at least competing for the project. Okay. Okay. Understood. Yeah. Thank you. You're welcome. Charlie, again. Charlie, please. Thanks for taking my follow-up question. First of all, Daniel, I know you cannot really provide the full-year guidance, right, given regulators' requirements. Compared to three months ago, that version, do you see some updates? It does not need to be numeric, right? For example, you can talk about what do you see about the crypto project because it is considered as your upside and also the major IDM. You just talked about several revised down. Net-Net, compared to three months ago, that version, do you see significant updates? I would say our view remains the same. In our forecast, we have the upside part, and we have the conservative part. All in all, we still consider the ballpark number will be still in the range of what we said in our last year's yearly earnings call. We do not intend to guide up or guide down the current market consensus in this earnings call because we consider for now, at least our internal projections still point out that we were in the ballpark range for our guidance. Okay. How about gross margin? I mean, the first-quarter margin looks pretty good, right? Compared to three months ago, do you see upside to a full-year margin? We are shooting to approach the middle 20s. However, as you may know, our gross margin subjects a lot to the NRE percentage of our total revenue. I cannot give you a very precise number, but honestly, we are shooting for the mid-range. Yeah. As I mentioned, our first-quarter margin is about 20-something, 23%. We are pretty confident that for the following quarters, the gross margin is on an upward direction. Okay. Great. Secondly, maybe to Johnny, again, you brought up the private placements. This time around, what was the purpose and what kind of strategic or financial investors you want to introduce? Yeah. At this moment, we do not have any specific target. I think the PP, as you know, our cash has no issue. It's very provable. We only invite the strategic partner who can help us, who are complementary to our business or can provide more comprehensive solutions to our ecosystem. To answer your question, we don't have any specific target yet. This few inquiries, I think we are putting into consideration at this moment. Okay. Thanks. Also a follow-up from both my side and also some investors about 2nm, because you seem to suggest there are multiple projects or multiple customers. Johnny, can you give us some color? What are other 2nm in terms of customer type, meaning startup versus CSP, or is it the networking chip versus the AI accelerators? Can you give us some colors? Okay. Yeah. I think other than the most important customer, I think I can tell you straight. The rest of our 2nm wing is to the emerging account, yeah, like a startup customer, not CSP at this moment. I think we need to welcome all the leading-edge technology, whoever does the CSP or emerging account. I think we need more reference on N2 because N2 is a first GAA design. The design methodology and approach are totally different. We need more reference. Yeah. Also, N2 will adopt the chiplet. Yeah. We need more reference. I think that's a very important similar situation is like 2.5D. We take the most coarse design, and those references really make it count. Because of this, we are getting to the door to almost everybody. Similar situation for N2. If the customer is financially healthy, yeah, has the ambition to do the N2, we'll be the best partner for them. Yeah. You also mentioned that each project easily will take like one, two people resource. You also mentioned about some kind of new technology like GAA, chiplets. I'm not sure about the risk reward, right? It seems like lots of resource risk you're taking. Are you sure those emerging accounts will really get into the mass production? Yeah. For N2 design, the design turnaround time and complexity, it is our concern. When we're selecting the project, I think we are calculating in varying different dimensions, complexity, and also the design turnaround time. We always are thinking about, yes, if right now, CSP will be our number one priority. Number two will be whoever has a volume on their previous design. Number three will be the most leading-edge technology. Honestly, we don't know for the emerging accounts who are doing the 2nm. But we consider it is an opportunity for us and for our engineers to enhance their skills and their experience in the most leading-edge process. No. No. We will try to manage the resource allocation to the projects. Honestly, 2nm, we want it to be our budget. Gotcha. Thank you. This is super helpful. Looking forward to your next updates. Thank you. Thank you. No problem. Okay. Is there any further questions? I do not see any people ready. I do not see any people raise their hand. I do not see questions in the message board. I guess that is it. Thank you for you all participating in our first-quarter earnings call. Again, if you need the audio-video content, you can go to MOPS, or you can download from our website for your convenience. Thank you. Thank you for your participation. Okay. Thank you very much. Thank you.