Good afternoon, good evening, or good morning, ladies and gentlemen. Thank you for attending Phison, 2023 CQ1's, our financial report. First, we still like to really refine again, you know, in the media, in a lot of analysts keep saying memory. Phison would prefer in NAND, we are going to say this is storage. Memory basically is a point to the DRAM. This is what we collect from the market. This is the last quarter. Micron is different. Micron is from December to February. Basically, this is what they are lost in these three companies. Most of them, they are covered, they are NAND and DRAM. Based on our study and from their research firms, in the last three months, basically DRAM still maintain profit. Most likely, the loss are coming from NAND. These three company, minus $8.3 billion. The other two key player, WD will be released by next week. Kioxia as an IPO, we believe by middle of May, they are going to release a report. Personally, I guess total loss in the NAND industry, potentially will go to $12 billion-$13 billion. This is to show you know, how bad the market of a NAND. We also believe this kind of a loss, the NAND makers, they have no more room to cutting the price. This is, I believe this can be a signal to the market. Okay. In the 2023 CQ1, I think the ratio basically is quite similar as the last year's CQ4. From this breakdown, we are able to get some also some new signal. Basically, gaming module. Gaming module since last Q4, last year, you may get the report from a lot of the media, PlayStation is selling good. On the other hand, Phison's, our Gen 4 upgrade SSD for PS4, we have around 4x demand versus CQ1 versus a CQ4. This is helping us to gain some more revenue and with a better gross margin. For embedded ODM, you also awarded their PC makers as last CQ4 almost didn't place any PO. Smartphone makers also don't place any PO. From CQ1, slightly we have some rush order from smartphone player. CQ2, we also got some tier one PC OEM start to release their PO. From this ratio, you can read from our ODM slightly increasing and their gaming modules increasing. Industrial actually is quite stable, okay. I believe at this moment, also from our study that some PC tier one makers, smartphone makers, they don't have a high inventory anymore. Their inventory back to kind of much healthy. At this moment, they are still not willing to place a big order. They still try to negotiate the price. They try to ask a lower price. We still need to keep monitoring what is the real demand from the end user side. Okay. The CQ1 revenue is close to TWD 10 billion. The gross profit is TWD 3.2 billion. Revenue-wise, we are declining 41%, and the gross profit declining 40%. From this revenue trend, since last year, Q1, looks like every quarterly the revenue declining. Hopefully, we hope by CQ1 it's the bottom. We hope, okay? We also need to monitoring the demand from the end user side. Basically, from their system side, system means the smartphone makers, PC makers, system makers, inventory is low, but they're still not willing to place a big order. They still try to negotiate the price. Basically, still supply side and their customer side still in the budget. Okay. This is Phison's, our gross margin rate. By CQ1 this year, our gross margin was 31.7%, which is the second highest in our single quarter in the history, okay. In the Q1, we also have a reversal of a write-down. Means inventory, we are able to reverse around 1%, which helping to our gross margin. If we take out this 1% reversal, the gross margin is around 30.7%. Still highest than the last three quarters, maybe last four quarters. You may like to ask why. In the CQ1, Phison, we are not willing to go to compete the price in the market. We still insist we need to ask reasonable price. Second, Phison's our product portfolio. As I mentioned, we have gaming modules, we have industrial modules, which has better gross margin. It's a high-mix customizations. Which we're able to get better margin. The third, the NAND price, we're still able to get a lower price than, you know, every quarter. That we are able to put lower price NAND into the high value products. The fourth, we are getting some more design service project. Later I will mention, we have a design service project with the analog-based. Those analog helping a lot in our gross margin rate. The earning per share. Q1 on the book, finally, the earning is TWD 1.26. Basically, personally, I'm disappointed, but it is what it is. The reason, again, is, we have to take in loss of our investment in China, which cost us around TWD 2.8 loss in the EPS. Okay? We are doing very hard to make sure Phison our own gross margin rate, our own gross margin able to keep reasonable. Unfortunately, the investment still taking loss. Good sign, potential good sign is in the Q2, the loss from our investment in China may go to flat, may go to even. Hopefully this is not become our burden in the coming quarters. This is caused by our investment in China. The balance sheet, which investor more concerned is about cash flow. We still have TWD 10 billion cash on hand, which you may a little bit confused. Last quarter was TWD 17 billion, then went to TWD 10 billion. What happened there? Basically we have around TWD 3 billion the account payable, which we postpone to the Q1. We negotiate with our supplier. They ask Phison to help to pull in the material, we ask longer payment terms and they take it. Originally, a lot of AP had to pay by CQ4, we pushed to the CQ1, around TWD 3 billion. We have an engineer employee bonus cash by TWD 2 billion in CQ1. We also have shareholder dividend, cash dividend by around TWD 2 billion. Overall, TWD 3 billion AP, TWD 2 billion for employees cash bonus and TWD 2 billion for shareholders. With this TWD 10 billion, I believe we still maintain very, very healthy in the cash flow. We still running the business with a zero debt from the bank. Inventory-wise, we keep is a flat inventory versus last CQ4. The write down portion is around 11% of our total inventory. We still have 11% room, potentially able to reverse in the coming futures. The total net value still maintain is similar as last quarter. This is inventory turnover rate. Basically inventory is a flat, but the revenue-wise, customer come to us only asking lower the price, then they're willing to place order. In the sometime we are not willing to take lower price, so we reject. We prefer to keep our gross margin. We also believe the NAND suppliers, they're also not willing to cut price anymore. We believe At this moment, we no need. We have enough cash flow. We don't need to dump inventory in order to get the revenue but loss in the gross margin rate. By the income statement, revenue-wise, we are declining like 20%. Gross profit declining little bit. The operating expense actually we are increasing. We still didn't slow down our R&D activities. We still keep investing our new engineers, new projects, new tape out. Okay? Versus last CQ4, the non-operating gain, mainly is China loss is a big portion. CQ1 is the gap is smaller. Hopefully by CQ2, we're able to, hopefully, okay, to keep this to even. You know, they need to work very, very hard. Even though not going to even, the minus will going to small. They're much smaller than the CQ1. Okay. Gross margin-wise, we're doing good. It's second highest in the history. Okay? This is the income statement. We are also like to disclose our TIF and non-TIF, the difference. First, in the operating profit, actually the gap is a small, it's like 0.7%. This is all about the stock options to our employees. We are start exercising our stock options. In the coming years, Phison will have a more in the stock options and also in the treasury shares exercise. We believe in the futures, the TIF and non-TIF, the gap will become much bigger. We have to try to explain to shareholders to tell you what we are doing, and we need to also get the incentive from this option and the treasury share to attract more talent to join Phison. Okay. By April, the April revenue is at TWD 3.3 billion, little bit declining, month-over-month. The reason is customer, they pull in some material by end of March. By April, after Samsung announced cutting their productions, customers still asking lower the price. Okay. Which we are not that willing to take lower the price orders. We insist not to take that kind of a low price order. That's why revenue is declining. By last year, March, we also issued the NRE service to the design service customers. By April, this portion is a small, but by CQ2, we still have a big portion, income coming from NRE design service. Later, I will explain more to you. Okay, some business highlight in the CQ1. Our partner, actually we get really good in our PCIe 5.0 Express, and we believe it's only one supply in the market. The product itself already in the market, and our customers also get very good review result from their a lot of reviewers. We are working with our partner, Crucial belongs to Micron. Micron very closer to Phison. I believe they are launching the products after a few more hours. It's fifth of May by U.S. time. They are going to ship the product to the market. You're able to get from market. They are get very good point from the reviewer. This is all about Phison. We are working very close with them. Hopefully, these products are able to help Phison and our partner getting much better gross margin because looks like this is only Gen 5 supply in the market. Our PCIe Gen 4, our partner in Japan, which is for their PS4 upgrade, they get also very good recommendation from their magazine. This demand actually increased quite a lot because of PS5 keep selling good. This product also helping us gain much better gross margin. Okay. Basically, CQ1 is a very slow season. Smartphone makers very slow, PC very slow, but embedded industrial, basically, okay. We also made some design win into the PCs, into the tablet. We are more focused in the gaming business. We believe the gross margin gaming is much better. Our enterprise SSD getting more design win. The problem today is even though we get a design win, Samsung still in the CQ1 cutting price. We are not willing to compete with them to take minus margin to get the business. Our activity right now keep more MBR. When the market price start bounce back, we are able to use our low-cost inventory to take little bit market share from the customer side. Industrial demand is stable. We are slightly increased our market share. Okay. CQ1, we announced our new business model in the, especially in the Bay Area. We got very good and positive response from our system customers. You know, Phison for this 20 years, we accumulate a lot of our IPs, not only in the circuit, but also in the analog, high-speed interface, and firmware integration, system integrations. We announced and promote this design service model, and we already got few NRE design service project, which mainly in the automotive, in PCIe Gen4 SSD model for the automotive business. We have service to few Android phone makers in China. Android phone basically now, other than Samsung, is most likely from China. We are service three of them in their UFS controllers, customizations, UFS 4.0 custom design, the new ASIC and the firmware, and also the new eMMC for Android phone to migrate to the 176-layer of a NAND. This is all about NRE-based, with Phison's, our strong portfolio, strong R&D resources, we are more willing to help customers to make customizations. Via our customization, the storage to the customers, they are able to increase their value in the phone, which directly they can get a much better ASP in their selling price. This is helping customers, also helping Phison. We are good to let you know we are already in the design service business and already generate some of income through the NRE. This is some summarize. You read from every public media, NAND makers have suffered a big loss. I believe in the history, this is a single quarter, close to TWD 12 billion- TWD 13 billion loss in the NAND industry. We believe they have no more room to cutting the price. Last month April 7, Samsung also saying that they are cutting their production in the NAND. We don't know if they are willing to cutting more, but if the loss in the CQ2 still as similar as the CQ1, I believe they may need to cut some more production. Okay? What Phison we are trying to do is transform ourselves, go to the design service, which is helping us to get our much better profit margin from this industry. In supply side, I think we don't need to spend any time to talk about supply side. You know everything very well. No more room to lose money. Today's question is what happened to the demand side? Okay, demand side, basically CQ1, Western market still very weak, due to inflation and high interest rate. China slightly recover, we still need to see CQ2, CQ3, how strong the rebounds from the China market. Anyway, we keep ourself ready and controllers development, we keep investing. We still accumulate their low cost NAND flash from our supplier. Inventory-wise, we keep like TWD 21 billion, potentially may increase TWD 1 billion-TWD 2 billion by CQ2. Depends on if we're able to get a better price, we are willing to collect more NAND from our suppliers. Today, I think the only question is, when will the market demand rebounds? This is what we are now keep monitoring. Okay. Again, Phison, we insist we are not going to lay off engineers. We keep hiring more engineers. We keep investing. This year we have two 7 nm tap out, few 12 nm tap out, This all request by the NAND makers inquiry. By all the expense, due to the our, the revenue declining, the ratio is surprising, 20% is high. We believe their slow season is a temporary. Slow season cannot keep for a few more quarters. Customer, they may need good service, good products when the market bounces back. We keep investing and hopefully we can see we are able to gain some more market share very soon. Okay, we collect some Q&A from the host. Let me clean up the Q&A, then we go to the live. This is asking by, you know, Samsung. What happened to Samsung? Okay. Anyway, they are cutting. They are taking, you know, loss in their NAND business. R&D investment, okay, we go high. Why? I believe if a company, you are doing healthy in finance, in cash flow, the much smart, the wise thing to do is increase your R&D because we believe bounce back will happen very, very soon, okay? We are to make ourself ready for the new technology, new products, and the meta team healthy to prepare for next bounce back. The production cut, I think already happened. If CQ2, The loss still big, we believe, okay, the cut may happen again. Depends on also the demand. If the demand CQ3 is not coming back, I believe NAND market may cut more in production. Oh, by the way, in the China recently, they have two module house, NAND module house that just public, so we're able to read their report. From the report, both of company are taking minus. They are suffer high inventory. They need to write off their inventory. This just reflecting the NAND market is so bad. Phison, we're still able to keep revenue and also with our gross margin rate, which is second history high. Phison not going to turn down, not going to decrease the R&D investment. We keep insist to develop their more projects and to build a strong team. This is a just get a question from this afternoon, since our competitors announced their report and saying that they are going to managing their expense. Phison, we are clear. We got so many inquiry from the NAND makers from Korea, from U.S., from Japan. They're asking Phison to prepare more controllers, more firmware, more systems for their new generation, new generation NAND. We also get the inquiry from auto makers, smartphone makers, system makers, PC makers for a lot of applications. We still tight with our engineering headcount. Of course, we are not going to increase headcount crazily, but if they have any good talent, Phison, we are willing to take it. We are not going to slow down the R&D activity, okay? Based on Phison history, I just made a some study. 2019, NAND market also suffer the low cycle. Okay? That period, when you read the Phison, this is yellow color. Phison R&D, we decide to improve, increase R&D activity. This helping Phison in the coming three years, we gain revenue, we gain profit. What happened to today? CQ1, all the NAND makers, I mean, the U.S. NAND makers, they have Korean NAND makers, they slow down activity. They cut the CapEx. Okay? They cut the R&D investment. Controller house, they're cutting their expense. Phison, we insist to keep. The reason, if 2019, what we did happen and we enjoy after three years, we believe sooner or later, when market turn to healthy, Phison, we're able to gain our much better profit from market, and we're also able to gain more market share. This happened in the 2016, 2019. We believe, again, let's keep watching if, you know, we are able to realize our commitment. Okay. Again, Samsung earning. Samsung, they highlight the big growth rate exceeds the market expectation. Why? When NAND getting cheaper, the system content, they are willing to increase. So tablet today from China is a 256 GB, smartphone going to 256, 512 GB. PC going to 512 and terabyte. So this is actually is helping the NAND capacity penetrate to the system. On the other hand, NAND makers losing money. They lost more. System makers, they are willing to use more NAND. Okay? On the other hand, this helping the growth in the NAND industry. So we believe today's what we are concerned is no more talking about supply. It's talking about when the demand is coming back. Okay. This is a. We get last week from the DigiTimes saying that what they say may be rumor, but, yes, the NAND supplier, they are not willing to lower the price any more than March 31st. Okay? They wish they're able to raise the price, but, you know, you need to see if the demand happen or not. They are not willing to lower the price any more, lower than the March 31st. I think this is a signal to show, okay, there are no more room to lose money. Okay. This is to show you our inventory, the write-down and the reversal. Basically, the Q1, we reverse some inventory back. I think I remember it's around TWD 100 million, TWD 100 million-TWD 200 million. For second quarter, we still have to write down. You may need to ask why. We made some deal by CQ1 from our NAND supplier, which price is a top, is a kind of a low price, but shipping to Phison by April, May and June. The cost we lock is quite low. This may pull down our average price, so we may need to suffer again some inventory loss. Overall, this still helping us, still very healthy. We believe by CQ3, supplier, they try, they eagerly to increase their price. This will helping Phison to reverse again. Just to highlight, we may need to write down some, I think it's around 200 million NT, okay, by our CQ2, but this potentially will reverse by CQ3. Okay. This is our, again, our data. CQ1, their supply-demand gap is much, much oversupply. I think it's around 10%. It's around like 13%. Anyway, market is bloody. Supplier lost by $12 billion-$13 billion, but we still able to keep our good gross margin. The reason is wide portfolio, design service. We are capable to lower our NAND price, NAND cost, and we able to get a little big premium from our products. We think when market back to normal, we are able to maintain our business. This is what happened. If this happened by year 2010, 2015, Phison would have been lost at that time because we don't have a design service. We don't have a high-mix, you know, premium products. Today, we doing okay. Yeah. We keep taking loss from Hongxin since the last CQ3. CQ4 is a big loss. This CQ1, the gap smaller hopefully by coming CQ2, we hope even or just a little small loss. Okay? We also collect the two company which is public in the China. This is public in Shenzhen, public in Shanghai. They are losing money in CQ1, surprisingly, their market value, unbelievable, is at 40 billion RMB, which is much larger than Phison. I don't know. I'm not able to complain, it happened. We keep encourage or we push Hongxin, they need to hurry up. They need to work hard to make sure they are able to go to ideal. ESG-wise, we just get their new announcement here, this OTC. Phison, we are ranking top five among these several hundred company listed in the OTC. We are working hard in everything ESG. Hopefully, I wish our hard-working shareholders, you able to know and appreciate to our team members. Okay. Above is today's file. We can go to the lab. Okay, thanks, CEO Ken. Right now we're entering Q&A session. If you have any question, please feel free to press the raise hand button on the menu bar below and or you may type in your question in the chat room. Okay, Jason, please go ahead. Hello. Can you hear me? Yep. Yeah. Thank you for taking my questions. My first question is just one, can you give us more details on gross margin side? It seems like, you know, NAND price has declined in first quarter, your gross margin can still improve in first quarter this year. In third quarter last year, you mentioned, your gross margin was driven by more design win with better gross margins. I just wonder, for this quarter, how can you make better gross margin compared with Q4? Also for the reversal of the write-off, because I think spot and counter price still decline Q1, how can you just have such a reverse from the industry write-off? Thank you. Okay. Again, just I'm keep mentioning the gross margin, right? First of all, we have a wide portfolio which cover industrial gaming, auto, and design service. I think the contribution more in the. Basically, NOI through design service gross margin is 100%. We are able to get some good design service project, and we are able to take the NOI by CQ1. This is helping us more in our gross margin. NOI is the most biggest contributions. Second is about industrial module and gaming modules, which our NAND cost declining, but we're able to keep the module ASP flat or just slightly declining. Because there is a premium product. It's a customization products. High-mix products. That's why they are able to generate the gross margin to us. Talking about reversal, actually reversal is only like 1%, okay. It's not much. Okay. Just reason that, okay, we are buying NAND from six supplier. Six supplier, okay. This is a bit complicated, okay. We are not buying every quarter from this six supplier. Maybe three suppliers CQ4, three suppliers CQ1. For some reason, I don't know much detail, but anyway, we're able to reverse 1%, only 1%. CQ2, the reason CQ2 we have to write down, the reason we are asking too low costs from supplier. Of course, we are happy. We are happy, right? We're able to get a supplier with a much lower cost. On the other hand, that lower cost pull in were inflate to inventory, so we had to write off around $200 million, okay. By CQ2. Basically, when market turn to usual, turn to normal means supplier is not going to take loss, right? Means the price is going to increase. Those write-down will be rapidly to reverse to our gross margins. When market price start going up, supplier increase the price. By coming two, three quarters, we will have a big portion through the reversal from our write-down. Okay. Okay, thank you. My second question is, can you just give us the outlook for the gross margin in Q2 or in second half this year, do you have, you know, a range of gross margins for year 93? Can we expect that if the spot price or NAND price are bottoming in Q1 or Q2, can we expect overall gross margin to further improve from, you know, the current levels? I know that your target gross margin is 27%. Does that mean if the spot price bottom or may have some revisions in second half this year, do we expect these kind of levels can further revise up? This have a few factors. We need to take consideration. First of all, C Q2, we still have a NRE income. This is helping our gross margin. On the other hand, we have to write down TWD 200 million as I just disclosed. The market today, the NAND market today, Samsung announced to cut production by 7th of April. By 27th of April, they're saying they are cutting much effective of the production. I don't know effective equal to 30% or 40% or 20%, I don't know. The fact is the market today still not that, you know, strong. I don't know when the market is going to turn to strong. This depends on their system makers, PC makers, phone makers, when they are willing to pull in their material. For sure that the inventory of a NAND storage in the smartphone supply chain, PC supply chain is low. I also have a con call with one of my supplier at the Tuesday, which they're saying that recently they got a big portion of SSD order, the client SSD order recently. By CQ2, I mean by June, to June, July timeframe, you may little bit surprised, some of a NAND maker, the revenue may start to bounce back. Okay? I cannot disclose who they are, but they said they already able to achieve their revenue target. They are not hurry to push Phison to buy the NAND material from them in CQ2. They push the shipment to CQ3. This reflect that the client SSD demand is coming back. Of course, I don't know what kind of price they are negotiating, again, for a fact is the price today still not yet increased, not yet increased. We hope, I don't know, May or June or July, I hope when the system makers start willing to pull in more material, the NAND supplier really want to raise the price. If that happens, that will help in our gross margin. Conclusion is by CQ2, I believe we still able to maintain either high 20% or low 30% gross margin. Okay? Still follow our I believe it's a 27% + something, I don't know how much I'm going to commit, depends on May and June, what is going to happen in the NAND market. Okay? Got it. Thank you. Thank you, Antonio Pan, and I'll pass it to you. Thank you. If any quick question, please feel free to raise hand button. While waiting for the question, we also collected some question from chat box. The first one is investor wants to know the development progress of Retimer. Can Retimer contribute revenue in 2024? Okay. Our Retimer samples already start to work together with the server makers in Taiwan. We have two or three server makers start to test our Retimer. Because this is for server industry, okay. That may take many, many months for test and qualification. I believe by 2024 second half, Retimer will start to contribute some revenue to us. It's not that much, but hopefully by next first half, we're able to start to try run the samples and ramp up for MP by second half next year. Okay. Got it. Another question is about the E25 PCIe Gen 4. The investor wants to know the order status for this product. E25 is a customer design for one NAND makers, okay? This is a customization project. Basically, this is under qualified by the PC makers. Ramp up hopefully by next year, no, by CQ4. Ramp up by CQ4. Okay. Got it. Another question is about the wearable devices business update. For example, like sport watch, AR, VR. Wonder whether you can provide some update on this? I mean, very, very, very honest, the CQ1 sport watch AR, VR is very, very weak. I believe Q2 still very, very weak. The total capacity in sport watch is like 8 GB, 16 GB, 32 GB. Okay. The ASP is very low. We have a big portion in controller business, okay. A full controller is like $0.50 per piece, okay. AR, VR, I'm suspect, to be honest, I suspect about this market because what the storage they use is only like 4 GB and 8 GB, only for booting, okay. Demand is weak and contribution to the business ASP is very, very low. Okay. Got it. We've got a question from Simon Wu. Please go ahead, Simon. Okay. Thank you. G ood afternoon, Mr. Pua. Oh, by the way, one quick suggestion. You know, the hosting the office for Friday late afternoon these days, I think it's not great for the young people. Maybe next time, would you consider your office for maybe either maybe early week or maybe at least early afternoon, right? Rather than Friday, 5 P.M. Taiwan time, 6 P.M. Korea, Japan time. Understood. Right. Okay. Okay. Gentlemen, let me explain. Okay. First of all, we need to match the New York time, right? You know, some analysts from New York, they expressed they want to participate. Second. The reason we select Friday, we don't want the impact, okay. In second day in the market. We like take a weekend to let the investor digest what we are talking. I see. Yeah. Okay. Yeah. Okay. It's up to you, sir. Yeah. Quick suggestion. Number one, yeah, we appreciate your great presentation, all the details. Question number one, year-to-date revenue down around the 40%, right? Going forward to make at least a -40% become 0% or +40%, what could be the catalyst? Is it more volume driven or you have to lower your product price back to last year level? How to make today's revenue 40% lower than last year level? When the revenue can, you know, come back to the last year level and how? Is volume or price? It's the first question. Thank you. Let's say you look to a Phison, our portfolio configuration. Controller-wise by revenue is a kind of almost flat. Of course, the last year Q1 controller was good, I remember CQ2, CQ3, CQ4, CQ1, controller revenue is kind of plus-minus single-digit%. Controller is very stable. Due to the NAND price itself, I believe the price declining on NAND is over 65%-70%. If Phison revenue only dropping 40% means actually we gain the gigabyte share. The question is how Phison able to take to our revenue as of last year or year 2021. First of all, we need to increase a lot of business product portfolio. We need to increase the content in our systems, which able to get a much higher ASP. Based on today's NAND price, every NAND supplier, they are taking minus gross margin, which this not able to sustain in coming few quarters. Eventually, the NAND price will back to above cost. The price is going to increase. We try to getting more product portfolio. We try to increase the gigabyte in our systems. We try. No, we try, I mean, eventually, NAND makers need to pull up the price. If this is a case happens, Phison, our revenue able back to, you know, 2021, 2022. I need to grow my revenue. I have to grow my revenue. That's why we have a high-density enterprise SSD, high-density automotive SSD, high-density smartphone embedded SSD. Of course, high-density industrial SSD. Okay? Gaming SSD. Conclusion is NAND price has to go up. We need to increase our portfolio. We need to increase our shipment number. We need to increase our gigabyte in the systems. Basically, your revenue upside is more based on the volume rather than the price. No, both. Both. No, no, no. Both important. If Phison today we are doing nothing, invest to the new project, new products, when the price bounce back 30%, then we're able to get 30% revenue by doing nothing. Okay? of course, we are still investing, right? Yeah. Yeah. Okay. Maybe second, last question is, your inventory is more than TWD 20 billion. Your, you know, monthly revenue, like, TWD 3 billion or TWD 4 billion, quarterly revenue, TWD 14 billion. It's very exceptionally high versus your current need, you know, generating revenue. Do you think this is the, could be, proper business model going forward, holding the inventory like, almost, 2x higher than the revenue? Do you have any extra plan to make the inventory leaner and leaner going forward? Thank you. Okay. I think if you ask the same question to Samsung SK, they also don't know how to answer you. They are not willing to produce that many inventory. Unfortunately, the market changed due to the COVID, the lockdown, inflation, war, interest rate. Okay? I am not the guy willingly to get so much, that much inventory, but I have no choice. We are in this business. NAND supplier keep coming to me to call help. My customer also ask Phison to prepare inventory for second half demand. They ask Phison. I need to grow my business. I need to sell more my controllers. When the NAND makers come to us to buy NAND, we ask them, "Hey, you have to use my controller," and they pay my controllers. This is kind of a business negotiation. Second, again, I am not willing to take this revenue, but I have to for that main reason. Second, all my inventory still using Phison own cash. We are not, no have any debt from banks, I'm not that much worried or that much hurry to dump my inventory. Third, look to the Q1. Okay, Q1, the total loss, I believe is $12 billion, $12 billion-$13 billion. Q2 potentially will be little bit higher or lower, but still over $10 billion. I don't believe Q3 NAND makers willing to lose money. This also indirect to tell everyone my inventory cost is low enough when market turn to healthy, Phison able to get extra profit. You know I'm not stupid, right? Why I'm dumping today? The answer is, even though my turnover day in inventory is still high, but I'm not in hurry because so many signs, signals telling us the price definitely will come back way soon. Okay? Yeah. Great. Great answer. Thank you. Thank you. Welcome. Yeah. Operator, do you have another question on the line, or I can raise one more question? Yes, you've got a question. You go ahead. Okay. One last question is, sorry for, you know, keeping asking about inventories, in the past few quarters, your balance sheet continuously showed about TWD 20 billion or higher inventory numbers. In a memory chip, in understanding that, it must be fresh every quarter. If you keep the, you know, still hold the one year ago NAND-based product, six months ago NAND-based product, sounds like a kind of the quality issue or older generation issue because memory chips, as you know, every quarter it should evolve, right? Next year, mainstream NAND chips will be more, you know, fourth generation of the PCIe or more advanced than eMMC, and also the NAND chips will be more advanced. If you hold the inventories maybe six to 12 months, even 12, eight months ago, NAND-based product, don't you think it's a risk for your future revenue? Thank you. No, no. If Phison, if Phison only doing the mainstream business, your answer is yes. Phison, we cover a lot of embedded industrial design, which they ask Phison to supply for seven years. If we design in one project into the system, we cannot change firmware, cannot change hardware, cannot change the NAND for seven years. In the history, NAND, legacy NANDs, when market start to go EOL, the NAND go EOL, the price potentially will go up for 3x. 3x, okay? Because a lot of high mix, slow, small volume customers, they are not willing to change their configurations, which we're able to get a much, much better profit. To me, holding the inventory, if Phison only doing the mainstream business, retail business, your answer is yes. We have so many customization industrial business. Actually, this is helping Phison to generate our gross margin. Look to Phison gross margin last quarter, 31%. If we take out the NRE design service, we still maintain like 25% of products gross margin. You go to look to the China NAND makers, which they are public, right? Their gross margin is like 1%-3%. Why? Because they are in the mainstream spot market deal. We are in the design end deal. We hold inventory eventually helping Phison to get more extra profit. Second, we have enough cash to hold our inventory, we no worry. Third, you're talking about the quality. We have a, you know, packaging house. We invest packaging house. We're able to manage the quality by ourselves. I don't see this as a risk. Yeah. Thank you very much. Yeah. Okay. Also got some question from the chat box. Investor wants to know about the charging station. Whether receive any orders from this customer? Actually, Phison, we are the biggest so-called industrial SSD market supplier. Recently, they have the other one supplier I know, I can't, I don't want to give the NAND, but that SSD supplier start go to build their own industrial PC motherboard, which they are going to compete with their customers. This pushing a lot of IPC customers come to Phison. We are gaining more design win project. Okay? I need to highlight in this, the so-called charging station, the storage using in there is not terabyte SSD. It's like, you know, 120 GB. Of course, the value, the value is good, but the total amount SSD is low. Yes, we are getting more design win, compared to our revenue is too small because the capacities are too small. Okay? Okay, got it. Also, we got Jason. If you want to ask any question, unmute yourself. Thank you. Thank you, Antonio Pan. I think I missed the NRE part. Would you please give us more details on NRE? That means, how much the proportions of the total sales, and how's the visibility on this NRE part and for the applications or clients we can works with or collaborate with? Okay. Yeah. Thank you. We didn't put down our NRE because NRE is not continuous, you know, every quarter. Recently, since the last CQ4, CQ1 NRE, the number is getting much stable, and we already got our CQ2 numbers, okay? We are considering in the coming futures, we are going to put down our NRE portion in our pie chart, okay? CQ1 NRE is around 6% of our gross margin. Means in revenue-wise, 6% coming from the NRE, and before it's a 100% gross margin rate. We hope we are able to getting more NRE projects in the future. We also see more NAND makers, system makers, they are going to use their customization project. Phison, we are able to design the controller through the design service to them. This may help us to get a much stable NRE income in the future. Got it. Do you de-design the SSD controller for the module downstream clients? Not really. Actually, they have, you know, Phison, we are not like GUC, only doing the silicon. NRE can come in from silicon design, firmware design, system integrations. The much bigger portion will come in from silicon design. We are working with the automotive customers, phone customers, design the chips to them, which we are able to get a much better NRE. Yeah. Got it. Got it. Yeah. I know that NRE or design services is cannot longer visibility. Do you have any target that it can contribute what kind of levels in all product? Is this now recognized in the other segments or in which of our revenue term applications segment? Agree NRE visibility is not that long, but we also agree that the NAND module customers in the hyperscale, HPC, smartphone, auto and some, potentially, military, they are asking, you know, a higher level customization, okay? We believe this kind of inquiry will getting much, much more than before. The reason is a NAND become essential in every systems. Every system, they want to have a different performance, different features. NAND makers, they are not willing to support, okay? Every customization on the NAND modules, you can only, you know, using controllers to make the difference. Going to the controllers supplier in the market, again, to be honest, they have two suppliers. Our competitors, they are saying that they slow down the R&D activity. They lay off, you know. They are going to slow down engineering people. They focus to only mainstream business. They are not going to take any kind of a customization. Looks like in this world, Phison is only candidate. If this is the case, right? We are going to get a more NRE project. Recently, they have a many small, medium-sized customer come to Phison because their original controller company not able to make a good support to them because they are not enough in the R&D headcount. If this happening, I think NRE will become much stable to Phison, and we can have a longer visibility. Due to time constraint, we have to close the meeting right here. Thanks, Antonio Pan, for his efforts. Thank you all for your participation. If you have any further question, please feel free to contact by the Phison's IR team directly. This conclude the meeting today. Have a nice weekend. Thank you all. Yeah. Thank you. Thank you, Chair. Thank you, everyone. Thank you.