Okay. Good afternoon and good morning, everyone. This is Hasteo from UBS Research Team. Joining us today from Phison is the management team, including CEO KS Pua and IR Director, Kuo- Ting Lu, to discuss the company's first quarter results and forward guidance. KS will provide some prepared remarks with his presentation and followed by the answers to the Q&As the company has prepared for. We will kick off the Q&A session. Without further ado, let me welcome KS to start his presentation. KS, you may begin. Thank you. Thanks. Good afternoon or good morning, ladies and gentlemen. Thank you for joining Phison's 2025 CQ1 conference call. To this call, we prepared lots of material, and I will mix with English and some portion with Chinese. That the Taiwan's managers are easier to understand what we are doing here, okay? This is our 2025 Q1, the distribution. The controller-wise, turned to very strong since we designed with many named companies' controller business. We are facing also controller shortage from CQ2 and CQ3. Now we are working very hard with TSMC to increase the wafer number and also pulling the cycle time. The embedded ODM almost flat, but we can see the strong demand because of flash after the car production from last year, November, December. The market turned to a strong from mid-February. The revenue-wise, we also get a lot of growth. This is our CQ1s, our revenue, around TWD 13.8 billion. The gross margin is TWD 4.2. The gross profit, we grow 10.4% QOQ. This is our revenue-wise. The lowest revenue in the last few quarters. Last year, CQ4 2024 is the lowest. Talking about monthly, last year, December, and this year, January, is the lowest. After this, January, by every month, our revenue actually is growing. Gross margin growth by the CQ1 2025 is close to 31%, okay? A little bit growth from the CQ4 last year. The reason is actually in January, February, the business is still very challenging. A lot of order, we call it from last year, market was very bloody. Revenue-wise, it's turned to very bad. From the second half of February and March, since the demand turned to good, and also we succeeded to get a big order, or we placed a big order to our name supplier in January with a much better, lower than market price. This is helping us to gain the gross margin from February and March, of course, then go to April. By inventory-wise, I think we are very healthy. [Foreign language] Okay, the EPS at the CQ1 is TWD 5.53. When I compare back to the last two quarters, lowest was last year, actually CQ4. The reason is CQ4, we still have TWD 11.6 because we exercised the Hong Sing's shares to help improve our profit. On the business side, this CQ1, our gross profit going to TWD 5.53 is keep growing. We are optimistic because the net market has turned to good, controller demand turned to very strong. This also can help us to gain our gross margin and also the net profit. [Foreign language] Okay, I think this is our income statement. Since last year CQ3, we have started to control the growth of our R&D headcount. We are easier and also able to manage our cost in the R&D expense. Overall, this number, I think we feel good because the market just turned to a strong after mid-February. [Foreign language] The balance sheet, the inventory-wise, I need to highlight here. By CQ4, it was TWD 24 billion. CQ1 go to 28. The reason is we lock a lot of order. We get lock from five name vendors. All the order locked by January before the Lunar New Year. The market was the lowest price. This inventory helping us a lot in our revenue and also in our gross profit. [Foreign language] Okay, NAND is actually no any different. Most likely NAND, our overhead is coming from the employees' option. Last CQ4, this is CQ1, we didn't issue the new stock option. We also didn't have a treasury share. So this number is almost similar. April revenue, we hit the TWD 6 billion. Still keep growing. The reason is from February, the demand is getting stronger. We start from the middle of March, we start to control to take the order. The order place was getting crazy. They asked to ship more, but we control not to ship that much to our customers. Overall, the revenue-wise, by monthly, we still keep improve. Okay, we have some business highlight here. The most important thing is we have a very two, three segment we have a very big success. This one I need to highlight here. In the PCIe Gen4 controllers, actually we win over four name makers project. The growth of the controller shipment QOQ was 93%. The control revenue increased 77%. One thing I need to specially highlight, we are the first company to ship the PCIe Gen5 derailment solution. This already MP. From this January, we start to ship to the PC makers. In today, the PC makers in the world who claim they are shipping PCIe Gen5, 100% coming from Phison Solutions. We are the early developers and early adopters and early mass production company. Because of this, we win several more than four name company on this derailment solutions. We can see from this September, Gen5 will start to pick up. Next year, Gen5 will be the mainstream. [Foreign language] Go to the SSD modules. The total petabyte growth 8%. And one record we break is PCIe Gen4 TLC QRC both SSDs. We start to ship to all Tier 1, Tier 2, and Tier 3 PC OEM. Okay, let me clarify. We ship controllers to the name makers. They cover every PC makers. On the other hand, Phison also ship our own modules to the Tier 1, Tier 2, and Tier 3 PC OEM. One thing we need to highlight, you may see the AI start to move to the edge device. Phison is the first company PCIe Gen 4 and Gen 5 modules designed into the edge AI platform, which launched by March, shipment by June. We are start to prepare material for the ramp up. The demand is quite strong and good. [Foreign language] Mobile-wise, control revenue increased 38% QOQ. Module shipment 134%. Why? Actually, last year CQ4 the market was very bad. The China module house keep dumping their products, taking minus margin. If you study the China's module house, a public company's report, you can see last year actually they are in last Q4, CQ4, they are in the big minus. Last year CQ4 we decide not to join the battle. CQ1, when we get the very good price on flash, February turned to strong, then we immediately take the market share. Revenue-wise, in March, we increased the 69% shipment. Also, capacity by petabyte we growth 90%. [Foreign language] We also have three UFS projects awarded by the name makers. And one is two with the QRC solutions. So we are the pioneer in the QRC business. And by this quarter, CQ1, we also get extra design win in the seven mobile brands. Means we are the key player now in the market. We are not going to join the market if it's minus margin. When market turn to slow, we better not to take the margin business. But when market turn to good, we have a good price in inventory, then we enjoy our business and our market share. [Foreign language] Enterprise-wise, CQ1 we ship over by PCIe Gen4 over 15 server models. And Gen5 we ship over 20 server models. So this business is growing. We also design win into the extra four servers platform Gen4 and the six server platforms in the Gen5. CQ1, the server enterprise SSD business is a bit slow because last year CQ3, they have an overbuilt inventory for some cloud demand, but cloud demand did not take it. We heard some name company carry the higher inventory on enterprise SSD, they dump in the CQ4 and CQ1. That is why CQ1 we become a little bit conservative. We hold our inventory. We better grow low price. From this April and May, the name company start to raise a price, then we start to ship our inventory to our customers. On the other hand, we also gained extra the 16 TB PCIe Gen4 to the biggest GPU customers to their AI servers. This contributes us a big, a good revenues. [Foreign language] Automotive-wise, actually Phison is working very hard. We cover almost every brand in the market, both controller and their modules. Okay, so we get extra the seven automotive chip platform by the CQ1. So we can see our revenue, both controller and modules on automotive, is going to grow every quarter. Okay, then in the IoT, we also work a lot with the special with the, some GPU, edge device, surveillance, robot, everything there. So, we're working very hard. So when we look to Phison, we can keep the mid around 30% gross margin just because we design win many projects with a much better gross margin. Adaptive is, we invent Adaptive two years ago. Last quarter, we have over 15 POC success. Okay, and we start to ship the Adaptive unit to the market. You may not believe our biggest market to destroy in CQ1 is India. India market is our biggest market. We have a partner there keep shipping our solution to the market, to the education, to the government use. By this CQ2, looks like it will happen by mid of June. The Tier 1 of the Tier 1 PC OEM is going to launch AI training PC with Phison's Adaptive inside, mainly aimed to the small medium size company and also to the education market. We worked for two years, developed for one and a half years, promote very hard in last six months. Finally, we got the Tier 1 award to bring together to the market. Adaptive [Foreign language] Phison also revealed the first USB4 SoC in the market. We are the first one already shipped in the market. We get design win from two name makers and we keep working with extra the Korean name makers. It's ongoing. We believe we can win the program because already in the MP. And the memory card, we are also working with the high-end camera market, also for the game console. This also can help us to get the high-end market share in the micro SD card. Okay, so Pascali, from 2023 to 2024, enterprise SSD will grow 5X. Okay, 5X. This year we are very optimistic. Okay, special, we have made a lot of design win into the SCM and SRV applications. This mainly to the U.S. market. We can expect the revenue growth and the share growth in our enterprise SSD. [Foreign language] We are also developing the 120 TB working with one of the AI storage suppliers. It's ongoing. 64 TB already shipped. 120 TB we hope to ship by coming June. Automotive CQ1, we got the award. The world's first SSD controller achieved ISO 26262 ASIL-B compliance solution. This is the first in the world. This SSD we work with one of the name makers to provide to the automotive manufacturers in the U.S. This is helping us to gain our market share and to gain our awareness in the market. This is the first in the market and no other developer developed the same solution. [Foreign language] In the brand, the top 20 brand actually is all Phison direct and indirect customers. Indirect means controller. Direct, we have 18 direct brands other than BMW and GM. We ship the modules solutions to the 18 of top 20. By this year, we believe we are going to take 100% of top 20 by our modules. Phison controller already covered in this 20 brands. [Foreign language] Okay, this E28 is our new controllers. We just get the golden award of Computex. What I heard, the golden award Computex only award to two companies. We are one of. New New E28 is a PCIe Gen 5 SSD, but also with the Adaptive design built into the controllers. We break a record. Controller silicon comeback by February. We are going to ship our modules by mid of July. This controller, we hit the highest performance and also the power consumption, the whole module power consumption 15% lower than current market competitors. This means Phison, we use the same 6 nm process as our competitors, but we made much better performance and much better power consumption. [Foreign language] Okay, retimer, we Phison are the biggest PCIe 5.0 retimer suppliers, the biggest PCIe 6 already in the market, already start doing POC testing with our customers. Hopefully start to ship by CQ3 this year. Retimer, we win the first CSL 2.0 retimer market, mainly still in the GPU board, but the server start to adopt PCIe Gen 5 into the market, and our retimer also win design win into the Tier 1 server makers. Okay, so in the sales-wise, we have a more than 10 million piece shipment on the PCIe retimer, and revenue-wise, the QQ growth is a 38%, while Y is a 600%. So we confident our high-speed interface chip, the revenue-wise, will keep every year big growth because we win the market share. Okay, Adaptive, we keep promoting Adaptive. This is not only go to the fine tuning, but now we also bring Adaptive to the inference in China DeepSeek market. We bring Adaptive to solve their performance issue. [Foreign language] Also, we prove with Adaptive inference we can improve the time to first token and also can extend the token length. Okay, this is a little bit technical. [Foreign language] Okay, as I'm saying by June one of Tier 1 will start to launch their AI training PC, the shipment will happen by CQ3. We also made the joint development with the Taiwan Telecom, Taiwan Mobile. We will work very close. By Computex, we are going to launch the products together. Phison developed the Adaptive technology. Taiwan Mobile will implement their service, their software, and go to customers' program. We can access to the China Mobile's channel to bring Adaptive to the market. We also have a joint venture with Taiwan's [Foreign language]. Okay, they start to use to move AI into their hospital. Due to their use cloud, a lot of issue privacy and the fee is unlimited. They decide to make joint venture with Phison to bring in Phison Adaptive into their system. Now the joint venture company is ready, start to hire engineers. We also transfer technology to the JV company. We may take six to nine months implement the solution to the hospital. Once the hospital proven, then the JV will go and start to sell this solution to Taiwan hospitals and also worldwide hospitals. [Foreign language] Our Adaptive already moved from Taiwan. We ship again the biggest market to Phison today is India. Then second biggest market is China, Malaysia, and Taiwan. We are ready also in Japan, in Europe, and also in the U.S.A. We wish the GPU company—actually, we have three POC with three GPU companies all ongoing. We are waiting for them to realize the value of Adaptive. I wish they are going to start to promote, then we will be good. [Foreign language] mention we also bring design win fine sensor storage into the AI edge device. That edge device we also convince them to put in Adaptive. So the edge device not only can do inference with Adaptive, can improve the inference performance, and also can turn inference machine to fine tuning machine. One machine to use. [Foreign language] We also have one farming POC with Adaptive. This happened in Malaysia, my hometown. We were asked by the local government to help them to fix the early alarm of the bug in the farming. This is ongoing, just to share with you. Adaptive is not going to the office, but it's going to the industry. This is all our achievement in our CQ1. A lot of achievement. In the expense, we are start to control our expense on the R&D. I think we are doing getting much healthy, try to make the more profit to the company. Summary, I think everyone really care about tariff, but today all Phison shipment to the U.S. deal with a zero tariff. We work with customers when they want to build inventory, we keep ship to them to help them. What is going to happen? I have no idea, but we have nothing to do, just make ourselves stronger. Price increase, not because of tariff, price increase because last year the NAND cut production and the demand turned to strong. Okay, and Adaptive can improve not only fine tuning, but also the inference time to first token and also improve the length of the token. Enterprise business, we believe this year we can have the other big growth after the inventory from the NAND company solved, then we can go aggressively to take the business. Automotive, we cover everywhere. [Foreign language] This above is my report. Let's go to some Q&A. Tariff-wise, do U.S. still know any impact? The reason is our product 100% is a zero tariff, so we keep ship to the U.S. We can see some customers start to slow down their focus because they do not know the Mr. President define flexible is what meaning of flexible is a morning change, night change, right? They have no idea, so they keep slow their focus. The demand in the market is still there. If they stall for one or two months, when tariff things solve, then we'll become the other last order. I don't much worry about tariff because I always believe storage is a key element to every human. When you use any electronic machine, you create data, you need store. What we can do is keep developing our products, make ourselves stronger. [Foreign language] I don't know others, but to Phison is no. If any tariff, they have to pay themselves. We have no obligation to cover their tariff. The NT New Taiwan dollars are raised in the unbelievable. Based on our study, if NT drop one NT, then impact to the gross margin around 3% because inventory we count in the US already come to NT. But due to the NAND price going up, this is able to offset the impact of the strong NT. [Foreign language] We've been also asked what is Phison's position in this market. For many years, only few public companies will have to get the financial report, but China now they have three module house and also one in the U.S. So easily we can make the comparison. Okay, look to the three China company in the CQ1 all in minus. Why? Because mainly in trading and modules. Phison gross margin is over 30%+ versus their single or just like single digit. Okay, only single digit. We still like 31%. Okay, and the profit wise actually we grow. Okay, the profit wise this we have a note here last year because of the exercise the Hong Sing share we write off to the inventory to the R&D investment. Other than this, our profit actually is growing. This is to show what is the difference between Phison and others. We keep investing in our technology. We leverage CFI our applications. We develop controller. We sell controller, but mainly we go to the modules. Modules can help us gain extra dollar amounts profit. Then we are capable to keep invest to our R&D. This is very positive cycle. [Foreign language] The profit wise of course R&D expense we are trying to control. We are trying to control. We are not going to hire much headcount, many headcount of a new staff. We have a few more new advanced technology to tap out like four nanometer, five nanometer. This of course will increase the R&D expense, but with the new development can help our gross margin in the future. [Foreign language] By inventory wise our inventory most still in the enterprise and the embedded ODM consumer wise is getting lower. Controllers is now my head because demand turned to so strong. We ask help from TSMC they solve our problem already all the upside demand until October we 100% fulfill. This also can help to our revenue and the gross margin. Also a question from shareholder asking the GLV Phison we met the GLV in India established in the December at the January debris event. Why? As I mentioned, Adaptive biggest market is in India. We go to GLV MyFi, the gross margin is super, super good. That is why helping them to make the profit in the second month. We also have an investment in the Malaysia MyStorage, own 100%, established by last year July. After this quarter, after this quarter CQ1, we turn to profit. After CQ2, the whole balance sheet go to positive, means start to accumulate profit. Okay, why? Because we get the strong support from Malaysia government. [Foreign language] Okay, above is our report and Q&A. Thank you. Okay, thanks, KS, for detailed remarks. We will now start the Q&A session. If you have any questions, please click the raise hand button and we will unmute you. Alternatively, you could type your questions in the chat box. Thank you. Hi, David, you can ask your question. Hello, David. Looks like, David, I think you need to unmute yourself from your end. Can we control it? Yes, I have already controlled it now. Just a moment, we try to unmute David. Um, I don't know why, David, you are not able to unmute. How about you write down? Yeah, David, can you write down your questions in the chat box? Okay, yeah. We will probably have Fraser here to ask questions. Yeah, he's going to ask in the chat box. Okay, so Fraser, can you unmute yourself? Yeah, hi. Yeah, thank you for taking the question. Could you just explain a little bit more about the opportunity for controllers in the enterprise market? In particular, the side of the CSP market. You have this Pascari 128 TB. I just want to understand how much the market is open to external solutions and to what extent do you know are the big CSPs like Google or Microsoft developing their own controllers? I think I am very, very honest to you. We have not much interest to the CSP. The reason is CSP, they only go to the NAND manufacturers because the price they ask is very, very aggressive. The demand they ask is a few XRI, then they may cancel few XRI tomorrow. Okay, so we believe CSP belongs to a name company, but Phison our business, we are not the name manufacturers. Okay, so our enterprise SSD is mainly to the storage makers, storage makers such as HPE, such as DDN, such as NetApp. They buy their enterprise SSD bundle with our software, they sell to the customers. Okay, this is our first step. To CSP business, we prefer go to the design service, controller design service, module design service. We are not going to cover the name. Okay, because the margin will be very very ugly. Okay, I understand. So the opportunity for modules for years selling to HP and other storage vendors. Yes, this is what we are looking for. By the way, in Taiwan, they have a lot of white brand server. they buy the server. I mean, the worldwide users buy the server installed there. They need to buy some SSD for local service. That is our customers. We are not able to take CSP to be, you know, friendly. Okay. Yeah, and I'll okay, I understand that. Are there opportunities that design controllers for the CSPs? Yes. Do you have some work that you're doing there? Yes, okay, yeah, before we go to CSP, we need to prove our enterprise solution, the technology is mature. How we go through, as I mentioned, the storage makers, the data center, the edge users. Once we have exposure, then the CSP agree we are good in technology quality service. We try to take that design service in controllers and modules. Actually, Phison, we ship some boot drive. Boot drive, boot drive means it's low density. Okay, 1 TB, five 12 GB to two CSP already. They've been wise, they've been wise and it's so big, and the risk is small. Boot drive, because of low density, name company build a low density, they got no any advantage because their overhead is high. We have opportunity to take the CSPs boot drive business. Boot drive, yeah, yeah, boot drive, boot drive means the low density. Thank you very much for explaining that. You're welcome. I'll let somebody else ask. David, Chow Room, AI training PC, all these Tier 1 supply. I think you've been getting on how many services will be sold. This is very new. Actually, Phison, we are selling AI training PC by ourselves. The reason Tier 1, they're willing to come into this market is because they see Phison able to sell AI training PC. We are not the PC build developers. We just buy a PC, plug in our Adaptive solution. We sell to the education systems. We sell to the campus. To be honest, now I have no idea what is the volume, but after CQ3, they start to ship, we can go to check CQ4 what happened in the market. I believe AI training PC will help in the education market. Let the student, they're able to practice their AI technique on this TWD 4,000 PC. Okay, I hope I answer your question. Okay, next we will have questions from Simon. Simon, you may begin. Thanks. Okay, yeah, great. Can you hear me well? Yes, yeah, I'm good to talk to you again. Thanks again, Mr. Pua, all the details. For the short-term question, any details for April revenue up 5% month over month, is more volume driven or price or? Both. Okay, yeah, but I remember your previous comment. The month of March was also good, with maybe double digit, some price hike trend. As with the April result, do you still see the strong pricing momentum for your SSD? Okay. Over the NAND solutions. Now we face two uncertainties. One is anti-growth too strong, means my revenue wise, because we are all shipped by U.S. dollars, right? It means the revenue will drop due to the new strong New Taiwan Dollar. Second, we also start to see some U.S. customers start to slow their forecast for May and June. They now start, they start and watch Mr. Trump dancing every night, every day. Okay, but I don't think this is a big impact to us. The reason is Phison's product is big diversified. Okay, and when they slow down, they keep waiting for one or two months or three months. When everything back to normal, the last order will back again. The answer is I think May and June to growth the revenue is still a bit challenging, but I think we are able to maintain due to the breakdown dollars and also the uncertainty. Yeah. You mean the maintenance means at least the flat. Yep, this is our revenue growth. Yeah, we are working hard on that. You mean the June quarter revenue can be similar to the Q1 level? No, much higher than Q1. You easy, right? April already TWD 6 billion. Q1 is TWD 13 billion. Yeah, yeah, so if we multiply TWD 6 billion times, it's TWD 18 billion. Gentlemen, again, there's uncertainty is Mr. Trump. Tonight he danced this way, morning he danced the other way. This is uncertainty. Okay, to the net market, I think it's much healthy. Yeah, another, you know, maybe question is, would you recap your revenue mix roughly for China versus U.S. based on the Q1 result? Sorry, yeah, TWD 14 billion, the U.S. exposure versus China. We have a lot of shipment actually shipped to the U.S. IPO in, let's say, for example, name manufacturer, we ship to Singapore, we ship to Malaysia. Okay, for PC makers, we ship to China, we ship to Vietnam. If ask me ship direct to U.S., to be honest, not much, only enterprise SSD. EMMC is not shipping to U.S., shipping to China, assembly. PCOEM, we ship to China, Vietnam. Okay, so only I can answer you is a retail, retail to U.S., to China. Yes, not that much because Phison retail is a small. Our main business controller, 0% go to the U.S. because no assembly there. Okay, and many ODM, small percent go to China. I go, I go to the U.S., many to China, to Vietnam, to Malaysia, to India for assembly. So I'm hard to answer your question. Yeah, yeah, very good. Maybe almost the lastly, you already mentioned that the R&D expenses sharply declined, quote unquote, or year near in Q1. Do you want to maintain such low level R&D for the rest of this year? I mean, around TWD 2.6 billion only, rather than TWD 3 billion or TWD 4 billion. I think this year R&D expense will be flat as last year because we still have a few new, not, 6 nm tape out potential. We have a 4 nm tape out, and you know how expensive this is, right? So we will keep the R&D expense flat as last year, but we have a confidence revenue this year definitely growth, and also their profit wise, we have confidence to growth. Yeah, okay, great. Mr. Pua, all clear. Maybe I will get back to you if other guys do not raise their questions. Yeah, thank you. Thank you. Yes, thanks, Simon. I think we actually received a couple of questions in the chat box. First one from Yuanda, our AI training PC aiming toward education market, are we able to sell into China educational market? Thank you. Definitely, yes. The first question, If we mention the Tier 1, the Tier 1 is shipping worldwide everywhere. Okay, not only China, India, U.S., Malaysia, Europe, we start to ship this so-called AI training PC. So answer is yes to China market. Okay. Okay, and the second one is from Waver. Yeah, from showrooms. What's your inventory dollar amount in the first quarter, and what's your expectation for the future quarters? Probably 2Q and also into the second half this year. What's your expectation? Thanks. Most likely slightly increase, slightly increase. Now CQ1 is TWD 28 billion. Most of this increase we lock the deal at January. So again, it's the bottom price that time. And recently, recently the flash vendor, especially the Western country, Western flash vendor raised the price crazily, much higher than the market. So we decide not to take. At the end by CQ2, I think we may slightly increase some inventory because we need to fulfill some shipment CQ3 and CQ4, mainly in the enterprise and the PC OEM. I think this year the inventory average was still below TWD 30 billion. Okay, yes, that's pretty clear. We also have another one coming from Tiffany. What is our expectation for net marketing to second half this year? Also, could you give us an update on the operating scroll, operating expense growth this year as we are now using AI to optimize the engineering workloads? Thanks. Okay, personally, I still believe second half the net market will still turn to strong, but again uncertainty. The most respect Mr. Trump and India, Pakistan, the war is happening. We don't know if this will impact, but the good news is according to the media, China and the U.S. have started to approach to talk about the tariff war. If both are willing to compromise to solve the problem, I believe by coming June TWD 6 trillion debt of American can be solved, then the market will turn to normal. Okay, so answer is because the AI go to the edge is a trend. DeepSeek in China already proved when you deploy the AI on the edge, you keep asking questions, then keep generating the data, data needs storage. AI go to the edge will trigger the demand in the storage. Name wise, I think it's okay. The NAND manufacturers, they don't want to take loss anymore. If something wrong again, they will cut production again. I have no any worry about net market and OpEx growth. Yes, we start to deploy our AI into engineering time. Engineer, they improve the efficiency, but we have some number is not here. Give you an example. We use Adaptive to our chip design, our TL design. We spend six months to train the model, implement to one project. The first project, only stage one, we reduce 10% headcount overhead, 10%. Okay, means we do not need to use that many engineers to do the design, only stage one. Due to this, we now have a joint POC with Cadence. Cadence, they be supplied. Now we have a POC together to see how to improve more. This is our achievement on Adaptive. Yeah, okay, Yes, thanks, KS. Before moving back to Simon for the follow-up questions, I guess just a few quick questions from me. Could you share your view on the end market outlook into the second half of this year, based on your current observation from your customers or their backlog? Secondly, just on the channel inventory levels by end market, could you also share your view on that? Some investors are actually gradually worried about the earlier pulling could weigh on your second half business outlook, similar to your fabless peers. After that, Simon, you could go ahead with your follow-up questions. Thank you. Again, everything triggered by most respect, Mr. Trump. If, I do not know if he can settle with China or not, but we believe after the TWD 6 trillion debt able to settle by June, then things can go to the much optimistic. Talking about inventory pulling, in net market, I don't see that happen. Why? Because still zero tariff to the U.S., and they still believe the tariff will be nothing. Maybe some inventory build, but again, if after build inventory, they start to slow down for one, two, three months when things are back to normal, they rush back again. Overall, the whole year, I don't see the big impact. By the way, due to the uncertain geopolitical issue, companies will start to cut production again. This is for sure. For media, you can see Micron cut the CapEx for the new device, NAND. Hynix moved to the HBM, Kioxia slowed down, SanDisk slowed down. This means if market turns to weak, they will cut, then everything balances. Okay, yes, thanks, KS. Due to time constraints, we might only be able to take the follow-up questions from Simon, and we will wrap up the call. Simon, you can go ahead. Thank you. Yeah, thank you very much, Hass, and thanks, KS. Number one question quickly, yeah, you have a great point. The NAND industry will be further balanced because the weaker demand can be offset by chip makers' production cut. As of today, do you think the NAND industry is currently showing about 70%-80% utilization ratio only these days? I have no idea. Everyone keeps this confidential. Mm-hmm. At least you do not see any way for input increase or any signs for the production increase among the NAND chip makers. Actually, my most worry is Micron cut CapEx in the 170 series, KOCL, BIX8, investment delay, SanDisk delay, Hynix moved the M15 to the HBM. I must worry about next year. Yeah, I mean, you mean the potential shortage because this year's CapEx cut. Yes, next year will be very dangerous in supply. Yeah. Another interesting comment among the NAND chip makers recently, six months ago, one year ago, their comment on the enterprise solution were very bullish with the QLC progress and the data center related demand. Suddenly these days, they are not really vocal on the ESSD demand. They are cautious for the short term. Meanwhile, they are more optimistic on the HBM or DDR4 or DDR5. Do you worry about this short term trend? I don't worry. I don't I don't worry. You know why? Don't you know why? No. Because last year CQ3, the Ironman company keeps shopping around to ask huge SR5 demand. Every NAND guy prepared for it, but they take only a little, then keep inventory. That caused the CQ4, CQ enterprise market to be very weak. Those inventories start to move, start to move. I do not worry about that. You mean through the second half last year, the U.S. big tech companies already accumulated a lot of CSSD? No, not already. Other companies, other cloud, other data center, other users start to consume those inventory. Oh, you mean for the short term? Other customers? No, I do not think after this quarter, those inventory, most of the inventory already settled down. Oh, you mean the ESSD? Yes. Current inventory high, but these inventories of ESSD will be consumed by, Yes, yes. Non-big tech companies? Like, no, Ironman company, they start to buy, they start to take, but some other applications. You see, 64 TB one piece is much easier to replace hardware, right? Okay, and reduce the size of the server, save the space. So those inventory start to consume. By CQ3, I don't see the pressure on those inventory. Sorry, KS, I didn't get the, who gonna consume? My answer is don't worry. Okay, don't worry. The name company, their whole inventory, they have to dump inventory with better price. The price so good, why not buying? Many users start to buy. We can talk after their, I think the time is already, okay. Yeah. Yeah. Yeah, yeah. Okay, thank you very much, Mr. Pua. Hass, thank you so much to host this call. Yes, okay, it's time to wrap up the call. Thanks, KS and Kuo- Ting for joining the call today to share with us your view on the industry and company's results and outlook. Thanks everyone for your time today. Please reach out to your UBS representative or advisor if you have any further questions. You may disconnect now. Thank you. Thank you.