Welcome to ENNOSTAR 2023 Q1 results conference. Before the meeting starts, all lines are in listen-only mode. After the remarks from the management team, there will be a question and answer session. Now I would like to hand over to Mr. Damon Tseng, ENNOSTAR's IR officer. Good afternoon, ladies and gentlemen. I am Damon Tseng from ENNOSTAR's IR department. On behalf of the company, I would like to welcome you to participate in our Q1 results conference. I would like to first introduce our speakers, Mr. Patrick Fan, chairman of Epistar Corporation, Mr. Terry Tang, president of Lextar Electronics, Mr. Wayne Shi, chairman of Unikorn Semiconductor, and BY Chang, ENNOSTAR's chief financial officer. First of all, BY, our CFO, will go over our Q1 results. The leaders of the three subsidiaries will go over their outlook and business highlights. We will proceed with the questions and answers session. Before we start, I would like to remind you that all forward-looking statements contain risks and uncertainties. Please also spend some time to read the safe harbor notice on our slide. I would like to hand over to our CFO, BY Chang. Ladies and gentlemen, good afternoon. I'm BY Chang, CFO. I would like to go over Ennostar's Q1 financial results. First, our comprehensive income. In Q1, due to the weak macro environment, slower consumer demand, fewer working days, and more importantly, inventory corrections by major American customers, our net revenue came in at NTD 4.73 billion, down by 19.4% QOQ. Gross margin. As mentioned, we had a 19% slide in revenue in Q1 and, in particular, a steeper slide in Mini LED products, which is a higher margin segment. In Q1, Mini LED's contribution to our revenue lowered to about 10%. In addition, our loading rate was lower in Q1. Our gross margin slid by 10 percentage points QOQ to -2.1% in Q1. After deducting the OPEX and non-GAAP items, net loss attributable to the parent company in Q1 was NTD 1.24 billion, representing a loss per share of NTD 1.65. Moving on to Epistar's comprehensive income. Again, the company's Q1 performance was negatively affected by the weaker consumer demand, fewer working days, and inventory adjustments by major American customers. Epistar's net revenue fell by 26.5% QOQ to TWD 3.032 billion, and gross margin fell to -8.9%. Next slide. Epistar's revenue by application. Amid the slide in net revenue, lighting experienced stronger demand. Thanks to demand from several projects, lighting's share increased to 22% in Q1, while IT's share dropped to 16%. Sensing and special applications, which also accounted for a bigger share, rose to 26%. Next slide. Lextar's Q1 revenue was on par with the previous quarter at TWD 1.63 billion. The higher margin segments, sensing and IT products, posted bigger revenue contributions. As a result, Lextar's Q1 gross margin rose slightly from 16.5% to 19.8%. Next slide. Lextar's revenue by application. TV backlight accounted for 23%. The higher margin segment, IT's revenue share rose to 51%. Lighting, 8%. Sensing UV and auto, also high margin, rose to 17% as a share of the Q1 revenue. Next slide. ENNOSTAR's consolidated balance sheet. We ended Q1 with a cash balance of TWD 16.2 billion. Deducting bank borrowings, net cash reached TWD 11 billion, up slightly by TWD 200 million QOQ. Amid market uncertainties, we have been prudently controlling cash and inventory levels, our inventories continued to lower, reaching approximately NTD 4.77 billion in Q1. Due to a lower revenue, inventory turnover climbed slightly to 91 days. At the end of Q1, our debt ratio was maintained at a healthy level at 21.2%. Next slide. Consolidated cash flows. Cash flow from operating activities was maintained at a relatively healthy level. Despite a loss, we generated a cash inflow of NTD 660 million in Q1. CapEx was about NTD 600 million. Despite a loss, our net change in cash totaled NTD 42 million. The ending balance was NTD 16.2 billion. This concludes my update on ENNOSTAR's Q1 results. Next up, the leaders of the three companies will each go over their business outlook for Q2. Let's first welcome Patrick Fan, Chairman of Epistar. Ladies and gentlemen, good afternoon. I'm Patrick Fan from Epistar. In Q1, as BY just told you, our performance was affected by the weak macro market fluctuations after China lifted lockdowns, rising inflationary pressure, and the Lunar New Year. We've experienced the trough in Q1, but we think Q2 will outperform Q1. I will tell you why later. We also believe that our second half performance will be better than the first half. Generally speaking, while there is not a clear sign of recovery in the consumer market, we have seen some encouraging signs emerging. Our Mini LED backlight for IT segment was negatively affected by a major client's last-minute inventory adjustments in Q4 2022, but has seen recovery since the start of Q2 this year. While the pace of recovery is not strong, it is a positive signal, with Q3 momentum forecast to strengthen even more. Mini LED IT shipments are picking up after a period of corrections. Besides Mini LED for IT, automotive is also a critical business segment for Epistar. As you have heard earlier, the segment's revenue share has increased. Meanwhile, tail lights and indicator lights have maintained their revenue contributions despite the dispersed consumer market. As a result, we benefited from the improved product mix. In terms of our automotive applications, there are three points worth noting here. At Touch Taiwan, which concluded two weeks ago, direct-lit backlighting or full-array local dimming, which is referred to as Mini LED backlight by many in the industry, manifests the increasing popularity. More and more direct-lit backlighting models are entering the designing phase, and we are expecting significant growth, multi-fold growth for next year. It has adopted Package-on-Board employing many LED chips, but we are also seeing it's being discussed that it's possible to adopt Chip-on-Board as a solution. Originally, we didn't think the thin form factor was that important for this segment. However, car displays increasingly are standalone panels these days. They are being used in not only in the clusters, but also in CIDs. The thin form factor is increasingly an option today. The next generation of Package-on-Board solutions will very much likely be Chip-on-Board solutions with more stringent demand for quality. This is the first aspect I would like to share with you in terms of our automotive applications. Secondly, many are interested in knowing headlights contribution to Epistar's automotive revenue. We've been telling you that it's ignorable. In fact, we've been working in this field for a very long time, and we expect to post significant improvements in performance in 2023, with many end customers trying very actively to deploy our solutions. We also expect that in the second half this year or Q4 or in the beginning of next year, the portion will be much higher, representing a high percentage growth, given the lower base period. However, that would be very meaningful because it means that we have expanded our presence in the headlight sector. Today, the top three automotive LED headlight manufacturers by market share are Osram, Nichia, and Lumileds. We have been joining in the market competition. We expect to see our growth to pick up. Although automotive applications are going to experience flat growth this year, we are quite upbeat about the growth momentum, and we remain committed to our automotive strategy. Next, about the display market, which is mainly in mainland China. In Q1, as I just told you, there was some confusion immediately after the market reopened. The demand was suppressed in Q1. Starting from March, things have been getting back to normal. Today, our customers are forecast to post growth. As we told you in the last investor conference, while the market growth will not be very fast, Epistar's chips are taking up a higher market share. To date, two of the largest display end customers are our main partners, one working in the higher-end market, the other in the general display market. We've been shipping in meaningful volumes to both of them. Besides the generic packaging displays, Mini LED is applied in displays. It's been forecast to post significant growth in the second half of this year. Besides Mini LED backlight, we expect to see growth potential starting from the second half of this year in the display market. We also have horticultural lighting and sensing in the high-end application segment. Horticultural lighting, as expected, is starting to pick up in the Q2. Traditionally, horticultural lighting experiences peak demand in Q2 and Q3 and lower demand when the winter comes, before a new model starts another cycle in the next year. This year so far, we are seeing that this cycle taking place as expected. Starting from April or May, the revenue will go up before peaking in Q3. Today, because energy prices have been lowering and have become more stable than last year, the forecast for horticultural lighting is relatively healthier with a favorable base period. We are discussing with end users to possibly delay the pipeline for Q3. Our customers have been very eager, they hope that they can delay the shipments so that they will get more deliveries. We get to capture such big market opportunity because we have aligned our technological roadmap with world-leading specifications. This is not something that a generic horticulture lighting company will be able to do, because while energy prices are lower, the prices remain quite high, so the demand for power efficiency is much higher, and there are only two chipmakers able to explore market opportunities in this area. In terms of sensing, we have been enjoying a nice market share in wearable sensing. Two weeks ago at Touch Taiwan, we demonstrated some possible applications with a partner. We are also working on deploying our sensing for wearable devices to the second or third customers. Today, we are progressing quite nicely. If our new models can enter designing in the second half, we can expect to see growth next year. Generally speaking, while the consumer market is uncertain in 2023, we're seeing slow recovery in the Mini LED IT market, and we are also improving our automotive applications revenue contribution with many more automotive projects. In terms of directly backlighting or headlights, our display business is also improving, and we're working on more projects in high-end horticultural lighting and sensing, which is likely to reach a peak in Q3. This concludes my update. Thank you very much. Okay. Thank you, Mr. Patrick Fan. Next, I will hand over to Mr. Terry Tang, President of Lextar, for the company's highlights and outlook. Ladies and gentlemen, good afternoon. I'm Mr. Terry Tang from Lextar. Our Q2 business outlook is quite similar to that of Epistar. We expect that Q2 to outperform Q1, and the second half to outperform the first half. Our automotive backlight development is in line with our projection, and we may have overachieved our target ahead of time. In Q4 last year, we started trial production, and we started our shipments in Q1 this year. Today, we are working to clinch new projects from European and American carmakers. The revenue share of our automotive products, including backlight sensing and lighting, is now in the double-digit range, having just reached 10%. We're also very upbeat about automotive backlight and automotive display. Full-array local dimming Mini LED is a bright spot because in terms of brightness or contrast ratio or power efficiency, Mini LED is far better than OLED. We expect big growth potential for automotive applications in the future. This happens to be the core competence of Epistar and Lextar. In addition, in terms of sensing business, we are seeing sequential growth for this year on the back of new product deployment in new wearable and surveillance projects. We expect sensing business to sequentially grow, and we also expect to see growth from last year. In terms of professional lighting, it is also expected to grow sequentially. We continue to develop this market, hoping to achieve a balanced development among our professional lighting, automotive, and display applications, so that we will not become over-reliant on our backlight business. In terms of Micro-LED, Lextar is mainly responsible for the development of micro-packaging. This year at Touch Taiwan, we have demonstrated our capability to mass produce Micro-LED this year. More importantly, a lot is riding on whether or not we can lower the cost significantly and whether or not we can meet the market demand going forward. This is something that Lextar will continue to work on in terms of micro-packaging. This is my update on our Q2 business outlook. Thank you very much. Thank you, Terry. Next, Unikorn Semiconductor's Chairman Wen Shi will offer his perspective on the company's Q2 business outlook. Ladies and gentlemen, good afternoon. I'm Wen Shi from Unikorn Semiconductor. I'd like to go over our Q2 business outlook. Unikorn offers foundry services for optoelectronics components. In the field of VCSEL, one of our customers' products have been adopted by a Korean brand, which will result in sequential shipment growth in Q2. Meanwhile, we've received requests from American and European customers regarding VCSEL applications. We are working with our customers, existing customers, to explore market opportunities in mainland China. In addition, we are also exploring business opportunities in the US and Europe. Currently, things are working quite nicely, and we are looking to see new collaborations happening. Moreover, in terms of our Micro LED foundry services outlook, Q2 has been definitely better than Q1, and we have had clarity from our customers on their Q2 and Q3 forecast. We expect our Micro LED business to see sequential growth. We're also working with our customers to make technological breakthroughs to continue improve the yield rates of our Micro LED technology in hopes of helping our customers, our Korean customers, to launch new products in the end market. In addition, at Touch Taiwan, we joined hands with a end customer to demonstrate advanced AR and VR applications. Recently we have received requests from European and American customers on new collaboration opportunities. We hope that these opportunities will be able to leverage our existing AR and VR platforms to help our customers build samples very quickly and to help them launch mass production very soon. Moreover, in terms of our microelectronics, gallium nitride has been performing less than expected. There have been some new challenges emerging. Due to the characteristics of the devices, there are some problems emerging for end applications. We need to work with our customers to identify the root causes, and we also need to improve the specifications. Moreover, gallium nitride market is increasingly crowded with significant ramp-up moves by Chinese makers, so there are stronger headwinds with bigger pricing pressure. We have done our homework. We have decided to leverage Unikorn Semiconductor's foundry services advantages to explore new application markets. We have also been engaging with our customers to identify opportunities to develop niche markets instead of working on the Red Ocean market. About our 5G RF progress. We worked with Japanese customers to develop some new RF platforms. Currently, things are working quite nicely. Previously, we encountered some technological bottlenecks, and these bottlenecks have been gradually resolved, and we continue to make progress ahead. However, these technologies require a longer qualification period. This is some update on our Japanese customers. We are shipping in bigger volumes to our Chinese customers starting from Q2. The volume has been increasing from Q1, and we expect to see more growth in Q3. In terms of RF, we have a better outlook. In Q1, I think because of the inventory corrections moves, the volume went down. In terms of our Q2 order, we are seeing volume to grow continuously, hence the better outlook. Lastly, about the BAW filter business. It has been a bit behind schedule by a quarter or two because our customers want to shift to higher frequency filter, and we are working with our Korean customers to develop higher frequency filters. Currently, things are going quite nicely. However, the schedule may be a little pushed back to Q3 or Q4. Moreover, we have been receiving positive feedback from our American customers, so the volume will gradually go up in Q3 or Q4. In terms of American customers, we will be applying our products in higher-end applications. Overall, Unikorn is experiencing better outlook in the second half. Thank you, Wayne. This concludes our business outlook for Q2. Now we'll proceed with questions and answers. We will now start our questions and answer session. The first caller is Jerry Xu from Credit Suisse. Please go ahead. Management team, good afternoon. I have several questions. Firstly, on your gross margin, could you provide us a breakdown? How much of it comes from the effect of your idle capacity? What is your product margin? How does it compare with Q4 performance? Secondly, could you provide an update on your 2023 CapEx and depreciation? The three leaders just mentioned that they expect to see QoQ growth for this year. What is your outlook for the full year performance? Thank you, Jerry, for your questions. I'm BY. I would answer your questions. About Q1 gross margin, as mentioned, is led by about 10 percentage points QoQ. There are basically several reasons. Idle capacity lost in Q4 was about TWD 800 million plus and 900 million plus in Q1. The inventory valuation loss lowered by TWD 100 million plus. These two factors caused our gross margin to dip by nearly one percentage point. The remaining nine percentage points slide was attributable to the drop in the revenue, especially the drop in high margin products contribution. Your second question on CapEx and depreciation, so far, we continue to maintain a CapEx of TWD 6 billion for this year. That number remains unchanged so far. Last quarter, we talked about our plans to ramp the capacity for Micro LED, red light, and high-end backend micro packaging, and plans to improve efficiency. These plans are highly relevant to our future development. We remain our CapEx numbers, but the actual payment amount will be adjusted according to the lead time of the orders we receive. As for depreciation, we also maintain the same amount at about NTD 5.5 billion. For your third question on the Q2 revenue and gross margin, if I understood our leaders correctly, I think they just said that in Q2, they expect the performance in Q2 to be better than that of Q1. In terms of the actual percentage numbers, we are sorry, we are not supposed to disclose specific numbers, but I can say that we expect our Q2 performance to be better than that of Q1. In terms of our utilization rates, in Q1, the loading rate was about 40% for blue light, 60% for red light, and 50%-60% for the downstream packaging business. Q2, as the leaders just shared with you, we expect our revenue to increase, so the utilization rates will also increase slightly from Q2. In Q2, rather, the UT rate for blue light will be about 50%, 70% for red light, and 60%-70% for packaging. May I have a follow-up? Could you talk about your revenue increase in Q2? Because you had a big monthly revenue growth in March at about TWD 2 billion. Do you expect your revenue to increase sequentially between April and June? For the revenue growth in March, as said in Q1, we were affected by the inventory adjustments of a key US customer, which did not make the correction till the end of Q4 last year, so the pace of restocking was lower in Q1 and Q2. The customer may have re-examined its inventory level recently and afterwards increased its procurement in March and purchased more ahead of the holidays in early April. Therefore, order volume went up in March and basically came back to normal in April. We expect the demand to stay flat or go up slightly afterwards. Overall, we expect Q2 to be better than Q1. For backlight or other consumer products, Q2 will likely be better than Q1. However, in Q2, especially in May or June, customers will start to control their inventory levels more prudently ahead of the semi-annual report. We probably will not be experiencing sequential growth from April through June as you expected. The entire quarter for the Q2 will be better than Q1. Okay. Understood. Under the circumstances, what would your gross margin trend be? Is it possible for you to come back to normal to double digit range from -2% for your gross margin? To be quite frank, the drop in gross margin for the quarter was mainly attributable to the drop in Mini LED revenue on the back of the inventory corrections by a key customer. Currently, we are expecting consumer products to post sequential growth. The pace of recovery would not be very strong, but would be quite moderate. If you expect our gross margin to rebound rapidly, I think it will depend on the revenue of the Mini LED products and the pace of inventory adjustments by customers and how good the order volume will be. After all, Mini LED is a high margin product for ENNOSTAR. Currently, we are experiencing stronger purchasing from customers in Q1 than in Q2 than Q1. We all know that customers may still be adjusting their inventory levels in Q2, so the purchasing momentum may not be that strong. Of course, we hope that the inventory corrections will come to a closure in Q2 and hope that we can return to a normal level in Q3. This is something that we are hoping for. This concludes my question. Thank you very much. Thank you, Jerry. The next caller is Warren Fu from SinoPac. Please go ahead. Management team, good afternoon. Could you give us some color on the growth prospects of your Mini LED products with your key customers? Because it has been rumored that OLED will be used to replace Mini LED in some IT applications. What is the outlook for next year? I'm Patrick Fan from Epistar. It has long been rumored that OLED will be used to replace Mini LED in certain IT products. Of course, we are not in a place to comment on our customers end product strategy. In terms of the forecast that we received from our customers, we expect to see growth in Q3. As we told you earlier, we will ship more Mini LED for IT in Q2 than Q1, and more in Q3 than Q2. Of course, we will need to engage constantly with our customers going forward, and we are not sure of the Q4 and Q1 next year's conditions. As you know, the IT market outlook has been quite uncertain this year. This is the case with the entire IT segment and the entire customer base. We will aggressively maintain our contact with our customers to keep track of their requirements. As for our Q2 outlook, we have just shared with you earlier, given the uncertain macro conditions, we still are exploring new opportunities. We've talked about full-array local dimming or direct-lit backlighting. Originally, it is using POB design, so the chips are packaged first before they are placed on the boards. This is something a little bit different from the Mini LED as defined by Epistar. Because they are applied in vehicles, the quality demand is very high. We will also be using our capacity to produce these kinds of products. In the next generation designs, Chip-on-Board has increasingly been an option, and the demand for the quality of chips will be much more stringent, and they will be used as automotive applications. Overall, while Mini LED for IT growth prospects are not as expected with some risk in the future, there are some very specific and very obvious growth prospects for automotive applications with significant volumes. Secondly, in the high-end display segment, Mini LED is increasingly being applied. These factors combined, we expect Mini LED growth to continue. At the Touch Taiwan exhibition two weeks ago, we saw that Micro LED are being applied in transparent displays. Besides Micro LED, in models that do not require extremely high resolution, Mini LED is also applied to create transparent displays. We are seeing more projects from Mini LED segment. Could I have a follow-up? Could you give us some direction for the pricing trend of Mini LED this year? I think there are different price points for different applications. For the IT segment, currently, because the market conditions are weaker, pricing has been flattish. The volume is not big enough to propel us to aggressively pursue opportunities. Currently, market has been flattish. Thank you. Since we do not have any other questions online, we will conclude our results conference for the Q1. Thank you very much for participating in our results conference. Thank you.