Hello everyone. Welcome to Phison third quarter earnings call. This is Jason Tsang from CLSA. Today this is our honor to have K.S. Pua, the CEO at Phison here with us. K.S. will share current updates on outlook of both NAND Flash Industrial Market and Phison itself. After that we will open the floor for Q&A section. Now let me turn this call over to K.S. K.S. please go ahead. Yeah, thanks Jason. Thanks everyone for joining our Phison's CQ3 earnings call. Okay, since this quarter we host only one section so in some portion I will give both language English and Chinese to make sure not any misunderstanding of my statement. Okay, this is our CQ3 our revenue breakdown. In this chart you can see consumers still to be honest, CQ3 and CQ4 consumer is still weak in demand. You can look for the whole industry PC, IoT, smartphone it's kind of weak. But at least this business- wise we keep our best to keep our share. But in controller- wise we still keep flat on our controller revenue and CQ4 we can see some PC OEM increase their portion in the controllers industry- wise since you can look industrial actually weak for the other four quarters. Recently industrial demand is slightly big. Gaming. Gaming is really ugly. Like you know, they play to the consumer inflection. So gaming we almost dropped only like one quarter of the Q4 ago revenue and enterprise since we invest a lot, we're cooking a lot enterprise is around 16% of revenue. Next year we were going to have a big growth on our enterprise business data. I will break down to you and again if you look to the whole industry the consumer-wise, especially in the SSD for retail is very. Demand is very weak. And I believe this would be the. I don't see the big demand will be big because if you buy a laptop, a desktop with the SSD 512 GB, 1 TB, you are not going to buy the 512 GB from retail. It's going to the 1 TB, 2 TB, so the unit-wise will be declining and they will answer many is high quality, high performance and the high brand, the good brands products. So what's the trend for futures? Futures? If any non-NAND company you go to the NAND supplier. Everyone going to enterprise in the SSD, everyone going to the AI applications, and Phison we are direct go to the PC OEM and also to the mobile brand company. Without that you cannot move any of your components, and Phison has the best advantage is in the customized storage solution mainly for automotive, for industry, for security, for outer space. The business, so five sense things are three years ago we to be honest we realized when the PC OEM start to put [petabyte] into the PC this is coming so we are ready we prepare a lot of new solution for our futures. Okay, so our CQ3 result revenue- wise is slightly up worldwide but declining QoQ because of a very weak in the consumer market but of course we gained little bit in the enterprise share but still not enough. By profit wise YoY 2.2% up by QoQ we're down 26.4%. Reason is the revenue drop a lot versus CQ2 so debt- wise you can see from the TWD 16 billion down to TWD 15 billion now down to TWD 13 billion. The reason is we don't want to go to follow the price war. We insist to follow our position to get more business with the customized with the design project. Gross margin- wise okay, overall CQ3 29.2% but we try to count back what happened to this 29%. We have our write-down on inventory which impacts gross margin 3.3%, so if we deduct this, the operating margin is 32.5%, which is slightly lower than the CQ2. CQ2 is around 34%, so around 2% lower, but since from the market, you know, the supply, the NAND supply, they are now starting to ask aggressively low prices. We keep buying the inventory, but when we buy that, we need to write down our inventory, so this is the reason why we are below 30% since [Q2]. [Foreign language] Earnings-wise, the CQ4 3.37%. I need to break down what happened here. Write-down impact close to the EPS TWD 2, means it's around TWD 400 million. Okay, and loss on finance, that means it's our investment in the public market, which is a -1 because CQ3 the stock market-wise is kind of weak in the memory business. We have invested in the [peso], and the [loss] we have to cover for [NT$ 1] EPS. Foreign exchange, especially in September, the NT raised a lot is our loss is close to the[NT$1]. So if we this is around close to[NT$4] we are around like seven-something EPS which is close to our CQ2. CQ2 the reason we have some investment gain. So overall, operating profit CQ3 declining because of the write off and also because of a revenue. Now. [Foreign language] Okay, back to our income statement. Revenue-wise are slow because of the market is slow and overall when look to the operating profit operating profit-wise by CQ2 we are declining just because of the revenue. The impact by revenue look to the our expense actually by CQ3 we are controlling our expense especially in the R&D expense. So R&D expense is the lowest in these four quarters. Okay. I think the most impact is coming from the non-operating gain mainly is inventory mainly is the write-down and also the investment loss. Okay. Overall, the OP margin is around 8% versus the CQ2 12% but better than last year CQ3. But again overall we are working hard to make sure this year we're able to get much better profit to contribute back to the shareholders. Okay, back to the balance sheet. Inventory-wise we are slightly declining the inventory not because we are buying less, we keep buying more quantity but the price from supplier are declining. That means the inventory by PB actually increasing by the unit cost declining. Then the question is why we keep buying. The reason is enterprise business we need to keep accumulate our inventory for 2025 use and NAND vendor now more willing to offer lower price to us. [Foreign language] Okay, IFRS actually narrative is not much different. Okay, so it's slightly different because of some amortization of employee stock option, but this is a small number. Okay, so I think I can skip this one. Okay. October revenue is TWD 3.7 billion. I think you may be surprised. The reason is the demand this year. We don't see the Double 11 demand. We don't see the Christmas period demand, and this TWD 3.7 billion most likely still coming from the industrial business, enterprise business, and also mainly the embedded ODM business. We are not going to follow the consumer market because Taiwan is too bloody, and if you can read some report from the China module house, they are turned to loss since the CQ3, and I believe CQ4 they will turn to much bigger loss. Okay. [Foreign language] Okay. In auto-wise this year we work very hard. We get extra 20+ new design wins from many in the U.S., Europe, and the China market. And this business, once you get the design win, is 5-7 years longevity supply so the price is fixed so this one can help us to bring much better gross margin in the future. So we also get some new products in our UFS 4.0 in the automotive and also we are engaging with our NAND semiconductor to gain more projects and design wins together in automotive. This event just happened in Detroit. This is automotive. We invite by the association to give a speech and to tell them what we did in the storage automotive, okay. This is to share with you. Also Phison, we are proud to get the world's first NAND controller independent supplier to achieve ISO/SAE 21434 the certificate. Okay, this is, we are the first one to get the approval and this also can help us to gain more business opportunity and design win in the coming futures. Okay, everybody may agree in the semiconductor today only AI data center business doing good. Other than AI, consumer, medical, everything weak. Okay, so but the question is since AI invests a lot, we can see a lot of new data center under construction. This is the source we get from the market. By 2024, they still have around 200+ data centers under construction. Why? Because of the AI application. When the data center is ready, they are going to buy the equipment, the GPU, the CPU, and the storage. So this is what happened here at the last two years. Last 18 months the CSP spent over $100 billion to buy the GPU they need the GPU come back as an ROI return on investment. They need the users. So users owns the users pay and use the AI. Then this generate a lot of data. Then they need data center with the enterprise SSD. [Foreign language] The new business of Phison AI is aiDAPTIV+. We are promoting very hard. We have a big investment. We have many product line in the business. Recently we also got a lot of inquiry. We are not only selling the component but now we are providing the server with our software application. But now we are facing two difficulty. Okay, the one difficulty is we expect the software companies since early this year they come to our ecosystem they can build their software to support this ecosystem. But unfortunately the market not have enough of AI engineers. They also don't know what kind of business they can approach. So Phison we have to develop all the software by ourselves. [Foreign language] Phison Electronics aiDAPTIV+ hybrid solution now launches a powerful new feature, a real-time personal AI assistant available on Instagram messaging platforms. The AI assistant can receive commands and utilize a pre-trained model to generate presentation files that meet specified requirements. It can also customize the presentation layout according to the unique design needs of different industries. The AI assistant can automatically compose emails, generating content that is tailored to specific needs and contexts. It streamlines communication by drafting emails efficiently, ensuring that the tone, style, and information are appropriate for the intended recipient and purpose. The AI assistant can automatically analyze YouTube video content, identifying key themes, extracting valuable insights, and summarizing essential information. Using advanced natural language and video processing, it efficiently breaks down complex content into concise, understandable formats, making information retrieval easier and faster for users in various industries. The AI assistant can read and analyze documents automatically, extracting key information, identifying patterns and summarizing content for quick insights. Leveraging natural language processing, it transforms complex documents into easily digestible formats, enhancing efficiency and supporting informed decision making across various industries. So we recently got around 30 sets of POC orders from our corporate customers, which is a server including with the license our software. Recently these few new features we are going to promote to the market to help the market more easily to adopt the generative AI on edge solutions. We also start to work very closely not only in Taiwan, but also in US, Southeast Asia, and the Europe customers. We also success to attract the GPU makers to have a POC with Phison. And since they have NDA we are ongoing, hopefully by end of CQ4 we are able to launch the products together with them. Okay, this is all the software, all the features developed by us. We also took three hospital projects in Taiwan helping the hospital to build their on prem AI solution. We also working with our local police station to help them to install one AI equipment here to help them to doing assist them to doing that document. There are a lot of features we request by the corporate customers. So Phison now we try to promote aiDAPTIV+ in the past we hope the software company can help to develop software but unfortunately Phison have to build everything by ourselves. And we did by ourselves. [Foreign language] Okay, second challenge. We have a lot of corporate business in worldwide they like to use our solution. They like to buy the server the software from us. But they tell us they don't have engineers capable engineers to handle. So they ask Phison to send our engineer to their office or we need to train the engineers. We realized this market we don't have enough AI talent. We developed the so-called AI Training PC. At CES, coming CES we can. I mean the market can see the GPU company is going to promote this AI Training PC in the market. Why? This is mainly for education. Imagine one thing. Every university they want to have an AI class. Every student they like to have a GPU machine to learn the AI. But unfortunately GPU machine too expensive. This machine we aim to $4,000 so school can buy the parents also can buy for their kid. We already got to attract the GPU makers to cover on this platform and to move to the volume-wise this is much easier and much faster so we hope Phison will donate this to our National Yang Ming Chiao Tung University. We're also going to talk to the NTU, NCKU, NTHU. We believe this can go popular soon to help to train the talent immediately from the university and also can help to train the talent in the market. [Foreign language] Okay, so back to our current OpEx. Actually, by CQ3 we are controlling our R&D expense so overall the expense is lower than our last two quarters but anyway we believe by CQ4 we still can able to to earn good enough profit to us so we still able to have a good revenue at good profit and good cash dividend to our shareholders. Okay, let me have some summarize. Overall, the consumer market is very weak. The consumer retail SSD is super poor because of not necessary to buy from the market. With the AI solution we get a lot of good attraction from the market not only the enterprise customer but also the GPU makers. We engage with the one GPU makers. They send their server to us. We are ongoing doing a POC. Hopefully by end of December we can launch together. And for the AI training PC this is the one can help us to gain the faster revenue because much easier to adopt by the market. So enterprise SSD we get at least five box makers in the U.S. We engage with them. We customize our solution to them. The revenue-wise will start to happen by end CQ1 starting by early CQ2. So this will be our revenue generator and our profit next year. Last year we start to build a team to develop our in-house software for aiDAPTIV+. I would like to do that but I got no choice because without the software we can't able to sell more of our solutions. But with the software ready the software is not going by free, it's by license. So the margin of software can be 100%. So next year we expect when the AI training PC popular more talent trend from the school and from the market we are able to sell more our solution to get more hardware revenue profit and also the software profit. So this is a summary of a few Q&A questions. Let me finish. Then we can go online. Inventory-wise, we still accumulate the enterprise, our inventory, especially in the controller and NAND. The NAND is for the very specific NAND partners which they cannot supply you in one day, so we start to accumulate for our next year use. Industrial-wise demand tend to strong, so we need to keep some mainly for automotive. There are some components going to EOL, so we need to accumulate seven years inventory. Embedded ODM we are now work directly with the PC Tier 1 OEM. We need to ship to them next year first half component. If NAND price is good enough we need to start accumulating and the retail retail is very weak but we still need to have maintain our share: USB, eMMC memory card and SSD and also the gaming one. The news saying that regarding the production cut according to our contacts the answer is yes the cutting is happening. Of course they have a rumor saying that the cutting is really impact the market or not but this is by December. We believe December will more NAND vendor will jump in to say they are going to cutting the production. The reason is very simple at the last five quarters they lost TWD 40 billion accumulate in the NAND business. In the CQ1 CQ2 this year business good but they not earn back 40 billion yet so I can expect they don't like to keep losing money and by the way next year the enterprise for AI is strong they also don't like to see the price going to minus margin so cutting is going to happen. So this question is when is consumer market coming back for retail SSD. I think it's gone. Gone doesn't mean it's nothing. Gone means it's going to be very niche because it's not necessary to upgrade 100% or maybe only like the PC users 5% upgrade their SSD from 512 to 2 TB means they need the quality, they need their brand they need a service and Phison we are good in this business we are not the price killer inflection actually if you all agree other than AI is really weak in the business so that's why we are working hard to get the AI aiDAPTIV+ business and also enterprise business. Next year U.S. election is done so we don't know what's going to happen either inflation up or inflation down but no matter what Phison we always make ourselves ready for our next challenge. Good thing is aiDAPTIV+ getting much, you know, smooth highlight by the CPU company. We have a POC Enterprise SSD. We got lots of project ongoing which can contribute the revenue. Customer module. They have a lot of customer module ongoing by NRE based and last is we are moving to the software business. Hopefully software can contribute some 100% gross margin to us in next year. Okay, so this is my presentation. Okay, thank you, K.S. Yeah. So now we start the Q&A sections for online investor and participant. If you want to ask any questions, please raise your hand and I will unmute you to start the questions. Thank you. So my first question is, can we provide the outlook or guidance for Q4 regarding the each of sector including consumer industrial gaming or embedded ODM. Thank you. Okay. Every month we have a system to show me all the orders we collect in this year. The lowest order collection happened in September. Okay. October, the order we collect by dollar amount improved 20% versus September. November, we still try to collect more revenue. Of course, when I say that, no Black Friday. But still, they got some rush order from gaming, from PC, from some high-end products. But in that enterprise-wise, we still gaining our business. But enterprise-wise, recently, the main aim is an AI application which is a high-density product. This ongoing pilot project with the customers. This revenue will happen by end CQ1 next year. So overall, by CQ4, controller demand I think is okay because the PC OEM makers start to pull in controllers. Industrial-wise is good. Gaming is a question. I don't know if a Christmas ready attract improve the gaming demand. OEM is okay, but overall CQ4 I believe the goal is to keep flat to CQ3 revenue. This is the goal. Okay. Unless we are willing to cut price to get that order. Unless. But I don't much wish to cut price. The reason is we're still collecting the inventory for our enterprise and embedded order. So overall the wish is to keep flat by CQ4. Okay. Okay. Thank you, K.S. My second question is in terms of the gross margin in Q3. You mentioned that around 2% gross margin was impacted by inventory write-down. So which means another around 2% gross margin is impacted by probably your product mix or your pure product or ASP. So my question is that you mentioned that your pricing in Q3 or even Q4 can still maintain in a stable level because you don't want to join the price war. And your product mix in Q3 things better because your industrial and enterprise remain good. So I just wonder which factor impact your gross margin by around 2% in Q3. And how do we look at your gross margin in Q4? Thank you. I mean without inventory write-down. Yeah. Yeah. Q4 the goal is flat to Q3 the goal. The reason is first we have some high-cost inventory happened in Q1 Q2 but write-off something in the CQ3. You can see around 3.3% write-off. Some high cost inventory started right off and we are buying the lowest price from the market. One thing is that when the market is slow, right, our selling price definitely has to go low. But I don't want to go that crazy low to minus. When I look to the module house in China, since last May June, they started to be really aggressive in price cutting. Now CQ3 they lose money. CQ4 I can tell you is a bit loss on their business. But Phison luckily we have some high mix industrial enterprise. The goal is CQ4 we like to keep fresh, okay. We also can expect some NRE coming from our design service customers, okay. I believe CQ4 since the market is slow we think the NAND manufacturer may keep telling the market they are going to cut the production. If this is true then we need to see the demand will turn to good or the confidence will turn to good by next year CQ1. Okay. Okay, thank you. We had one question from our investor. The first one is if our AI SSD, I mean the penetration rate, can be largely adopted by market. Will other competitors or NAND manufacturer release those kind of similar products in the future? Since this is in Mandarin, I use Mandarin answer, okay. [Foreign language] So I just explained aiDAPTIV+. I don't think the NAND company they're willing to do by themselves. Since Phison announced this is our products and we have already got a one NAND company come to us to work to ask how Phison to help them develop this they just can sell flash okay so we believe if NAND company Willing to do this, we can take the business China. We believe a lot of module house doing the same thing, but this is not easier because they had a lot of software activity. We have a Taiwan partner what we are stacking our product now. They try to develop by themselves. We give a message to them simple: once this happens, we will take any action to protect ourselves if they want to go to their way. But I don't think they are willing to go to their way because we will strongly protect our benefit, okay. Okay, thank you, K.S., my last question, my third question is in terms of your visibility on the NAND price trend. That means currently we do see NAND spot price or module price is declining and you also mentioned that you expect that probably NAND will shortage again in second half next year. So when do we expect that NAND price can have revisions to expect meaningful growth on the NAND spot price or contract price in the future? Thank you. Okay, this market is very transparent. You go to see what the market price is by CQ3 and you refer to the NAND companies their financial book. You can easily to know their gross margin. Okay. And by every month the price declining maybe two to three months the gross margin will turn to minus. I mean component in wafer- wise. So I can see the NAND company they not willing to cut the price under margin. On the other hand, they're selling the enterprise SSD. They still enjoy very equal margin. Why they keep selling the wafer to the market? Just because the consumer market is so slow. It's so slow. In this case, in order to protect their benefit, their profit, they may start to reduce the shipment of wafer to the market. They have to make sure they drive enterprise SSD market. The price can keep stable, so we also can see the enterprise users they have a demand but they push out their purchase order to next year. They also expect the NAND companies willing to cut out price, but if by December if NAND companies start to suffer the component minus margin they start to announce to cut the production, then the buyer of enterprise they may think do they need to buy now or they push out. If this is the case, which this may create a kind of fundamental the demand turn to strong on enterprise. Okay, so I have no comment yet, but we can see by December the NAND companies what they are going to do, but I have a strong confidence cut production is going to happen if the price keep declining. Thank you. My next question is in terms of your enterprise. It seems like you get so many design wins and the market shares currently. So how do we expect that your enterprise contribution in the future? And we know that enterprise gross margins or profitability is significantly better than your consumer product. So how do we expect that it can, you know, probably boost the gross margins or profitability in the future if their contribution getting bigger. Thank you. Okay. Phison Enterprise SSD. We have two business models. One, we sell the drive. Second, we're doing design service. We're helping our customer doing the design the whole drive with our certain agreed gross margin. Okay, so when talk about enterprise, you know, in a whole enterprise the drive itself maybe let's say the 64 TB drive, the NAND component price is around 90% of the drive. So this business will be like kind of a three-party business. We work with our customer's customer. We both work together with the NAND company. They negotiate the price, we take the wafer, take the flash helping them to do the with our certain agreed gross margins. Okay, so I want to just clarify enterprise SSD don't expect the gross margin can be 40%-50% impossible because the NAND component is 60%-90% of the drive. But we are able to improve our buying power there. We can use the same value of a component price to sell to other small Tier 2, Tier 3, Tier 4 with a customized design we can get our extra profit. So it's hard to answer you what kind of a gross margin is going to happen on enterprise. But this can create upside first our revenue, our net profit and improve our buying power. And by the way, sorry to say that if we are in the NAND business we cannot rely on USB, SD, consumer retail SSD anymore because gone. Since we need to go to grow ourselves enterprise SSD is a must to get this industry. Okay, I believe with enterprise next year we grow revenue, we grow net profit. Thank you very much. My next question is also interested in your data centers or automotive opportunity. I think you recently released your Retimer and I think you also have a very good design capability on your Controller. So how do you expect that your data center business can probably bundle those, your good quality products and the logic products with your modules or memory products in several data centers, also auto as well. Thank you. Okay, again the whole market other than AI everything's wrong. Even today, as I mentioned, since the last few quarters data center storage also slow because all the budget of a CSP they go to buy GPU but sooner or later they are start. Now they focus to the storage because without storage they cannot generate their revenue and their profit. Okay, so look to this industry Retimer we are the comer but we gained a few projects. We work with a CPU company. We work together with them. We also work with their server motherboard makers. We get a few projects from them. And this gross margin is much better than any other business because this is niche and we have a good quality of products. Second, for data center the SSD we not able to get the Tier 1 data center because we are small. So we work with our U.S. partner who making the box. We design the enterprise SSD for them, we build a drive for them. Then they sell to the data center with our drive with our service. But we now change the policy since this CQ3 we start to engage with the end users. What is the end users who buy the equipment installed in the data center. We direct work with them. This just because we want to shorten the design path process the relationship increase our influence power. We need to let them know who we are. They're happy with us. Then they prefer to ask their assembly house to use a Phison component. Not only Retimer but also the drive our SSD our Controller. So this business we need time to invest, we need time to cook. But we already there again let me repeat. If we are in the NAND business without going to data center, we are going to the AI to customize our NAND. Because you can't see future in the retail. Okay, thank you. We got one question from [Simo]. [Simo]. You may start your questions. Okay, yeah, thank you. Can you hear me well? Sorry, I'm now using the PC. Yeah, yeah, you can. Okay, great. Yeah. So Mr. Pua, would you recap why the inventory write-down happened? Because I raised the same question a year ago when the NAND price was very weak. But you said no inventory write-down. But today, you know, still NAND price. Okay, but why we have to see the 3% of the revenue is off. Thank you. I don't know where you see the NAND prices. Okay, but I can share with you price CQ September versus June. Yeah, the price I purchased I got 45% discount. Okay. Surprisingly. This I can share with you. I got 45% discount. What you see today is not NAND price. You see it's enterprise SSD price. SSD price is good but component price is very weak. Actually my supplier told me by September when they sell me those wafer they said they are in minus margin. Okay, but back to a year ago. You remember, like 2023, second quarter, third quarter quarter- on- quarter basis. And then the price also collapsed a lot. And then the [Foreign language] also reported a record high amount of the loss at the time. How do you compare current price momentum? Okay, very simple. You see in this. You see the mouse, right? The cursor, right? Yeah, yeah. CQ1, CQ2 component price is high. The TLC is around TWD 0.07 particular. Okay. And here I'm telling you I got 45% discount. So from that one I need to write off. Okay, back to the last year. Last year the worst high cost happened by 2022 CQ3 CQ4. Yeah. In the 2023 CQ1 already touch bottom component price bottom price up. So no, no, no. Write off only happen from high price going to down price like CQ1 CQ2 now so means by CQ1 next year we don't need to write off, we may write back. The following question is when we look at the spot price, still the NAND price getting weaker. So should we expect a further inventory write-down for December quarter then? Okay. Depends on this. We call offset on the book we have close to NT$ 2.3 billion in reserve. When we start to use those component write off then the reserve will coming back to the book and we buy something cheaper. Then we make well. So I sorry to say, I can't tell you but in October since we got some old inventory, we sell to the market, we write back 5% of gross margin. So to be honest, I can't tell you what is going to happen because this little bit complicated. Yeah, it's okay if I ask some very quick questions? Sorry. October revenue collapsed much lower than the market expectation. But meanwhile you are saying December quarter revenue likely flat quarter-on-quarter. That means you have to sell lots of the, you know, your products through the November December. Do you see that my goal? We are working very hard. Okay. But again the market other than AI is very, very weak. You look to the Korean business, right? Only SK Hynix doing good. Yeah. The rest of SK hynix other than HBM other enterprise SD gone, right? Very bad, Very bad. So I'm not complaining. This is all about high inflection. But we still working hard on aiDAPTIV+. We're still working hard on enterprise SD try to see if we can improve. But next year, next year definitely will be good. However, you mentioned that there are some software problem. So we have to wait to see the better software to promote your AI aiDAPTIV+, right? Yes, very true, very true. I also feel very painful because a lot of software company, they didn't pay their time to develop. We try to do everything by ourselves. This is something like NVIDIA 15 years ago. They start the CUDA, right. But we start to build our fundamental software. Once our software ready. We can get extra gross margin, 100% gross margin very quickly. Mr. Pua, AI aiDAPTIV+ revenue now is 0% or 1%. No, no, no, no, no. Still there. We sell our AI 100 SSD to the market. Yeah. But again it's way difficult because no software. So now we are selling the whole server. CQ3 we ship over 30 servers to our customers. Yeah. With our software, and the margin is much better. This portion out of a total enterprise solution. I remember you have about what, 18% of the total revenues enterprise solution. What percentage? Yeah, this, server-wise, is still small because only like 30+ sets, right? But I want to clarify this AI training PC can move much faster because this is only like $4,000-$5,000 products. Okay. Then, at CES, the GPU company is going to promote this. Okay, so what percentage of this revenue out of a total enterprise revenue too small? Forget it. Still small. It's not huge, bro. Not big. But we are going to discuss this next year when we start to see the volume coming under cooking. We are still developing, so two things. But still, your company. Okay. Profitable op margin high single digit. So even the enterprise controller weak. But we don't have to worry about the margins is for the Q3 EPS number generate positive. No need to worry about negative margin, right? No, CQ4, our operating margin is still positive, actually. Since October, we have a write-back. We sell the old inventory which we wrote off, then write back the. We're doing good. We're doing good. So, C4, I'm still optimistic on our net profit because TWD 0.05 still have other many investment is with a good return. But the investors' concern is sort of the downward trend. Your gross margin was so great last year when the memory makers really suffered. And then Q1 Q2 is also so great. I remember you emphasized record high revenue, record high gross margin. But eventually your margin now shaky squeezing. So this is a kind of the one quarter phenomenon. Or maybe at least 2 or 3/4 of winter season. Or I think 2/4, 2/4 enough. So which means we are not god. We cannot manage what's going to happen. Right? Again good to your Korean industry Hynix and others. Right? But at least we work very hard to keep company profitable. By the way, we keep investing for futures. So I am here to say that this month in maybe like two quarters. But next year when the new products ready everything good we back. But you look at the other my competitors. Without the enterprise, without the AI without consumer product with automotive how can they survive? If they cannot survive, they suffer. That means we are able to get major share, right? Look at Hynix five years, seven years ago Hynix how can they compete Samsung. But you see what difference. Yeah, yeah, yeah. Look more further. Okay. We keep investing. When people love Hynix, they're, you know, saying something stronger five years due to the Intel AMD. Right? Yeah, but we never seen like below the 30% gross margin for the past few years or so, and then if this sub 30% gross margin continues into December quarter, March quarter. It's kind of a little headache. It is what it is. But at least I'm telling the shareholders look at the future. Okay, so you're gonna return continuously or 60%-70% EPS for dividend, right? Yes, yes. Policy never change. All right, sir, sorry I took too much time. I pass over to the operator for other guys' question opportunity. Thank you, Mr. Pua. Okay, one question on the list. Right. [Foreign language] Okay. So the question is asking about next year. Is that Phison able to get the NAND companies enterprise controller? The answer is yes, it's ongoing. Okay. Okay. Yes, there's no more questions. So I have another question. Is that how do we look at OpEx for Q4 or next year? Do we plan to hire more employees or headcounts in the future? Okay, we have around 3,000 engineers in the Phison headquarters. We keep recruiting but not heavy, not crazy recruit. We internally push the engineer team to use our aiDAPTIV+ to improve our efficiency. So overall the headcount increase is only single digit. Okay. In the meantime Phison also every month will review the engineering team if the low performance will let go. So this whole year the headcount increase by R&D is a single digit. Next year looks like most likely it's a single digit to 10%. But follow what the market status. So yeah, last year I really saying 2024 we are going to control our OpEx and we make it. Got it. Got it. And my next question is in terms of geopolitical concern. Do we see any, you know, any concern or risk due to the geopolitical? Or will U.S. government ask us to, you know, relocated our module production line out from Asia to U.S.? Will that lead into a higher sell to U.S.? Okay, this is my plan. First we have a China investment. Hopefully they can go public next year. Then we can get our extra market share and also our return. Okay. China use China. This is what they have policy. We can do anything but we can use subsidiary to get the business there. India try to learn the China way. We have a joint venture in India helping our JV in India to get the local domestic business. This is ongoing. We start to get adopted business from local enterprises from local. We believe this company can grow. Of course the company the goal is go public to become local in the company. Phison can get business share and also return of investment. We also built our second I can call it headquarters Malaysia because used by U.S. customers. Taiwan, they say, is risky. Malaysia start to establish the R&D team. We have around 50 engineers, start to develop them, training them the enterprise SSD firmware development, so we are going to use Malaysia as our hub for future Southeast Asia business, Middle East business, U.S. Taiwan cover the U.S. business, and if talking about manufacturing in U.S. is simple because 5% is needed. We need only assembly and we have a lot of U.S. local partners. If you send the cost is higher, we shall higher price, but at the end inflation is happening again if this, you know, is a trend, but the good thing is Phison, we have a very special position. We are able to provide every storage solution to the market, so customer identifier. Got it. I have no more questions and I think due to time interest, I think that's the end of our call today. Thank you everyone to attend our call today and we'll see you next time. Bye bye. Okay, thank you.