Hi, good day, everyone. Thank you for joining us today for Phison's second quarter earnings call. My name is Astoria Chen, and I am Semi Analyst from SinoPac Securities. Today, we are very honored to have K.S. Pua, the CEO of Phison. In today's call, K.S. will first provide us some updates on Phison's second quarter results and business highlight and then market outlook. After that, we will open the floor for the questions. As a reminder, if you have any questions during the call, you can write down the questions in the chat box, and we will raise the questions for you later. Now I would like to turn over to K.S. for the comments. Thank you, K.S. Yeah. Thanks, Astoria. Good afternoon. Good morning. Ladies and gentlemen, thank you for joining Phison, our CQ2 2026 earnings call. This is where we start with our CQ2's performance. Since the CQ1, we define a new category naming AI ecosystem solutions, which including the enterprise main drive, boot drive, aiDAPTIV, and the AI networking, et cetera. So this CQ2 has around 38% of our total business, which 68% QoQ growth. So we are still gaining a lot of good demand from the enterprise and the AI ecosystem business. The second larger we name is embedded, mainly is PC OEM, customized drive for the PC gaming, security, and also the mobile use. This has a 33% of our CQ2's revenue. But we have over 2x of a growth QoQ. The third largest is industrial modules, which has a 78%, and retail is down to below 5%. Controllers, we are CQ2 6%, just because the revenue growth too much. By net amount of a controller, actually, we are increasing in the CQ2. So you may know the mobile phone PC OEM trajectory declining. Means Phison, we are gaining the unit share of a controller in the PC and also in the smartphones. So, Phison, we are proud that we have the record high in the CQ2, not only in revenue, but also in our market share in mobile PC OEM and also big growth in the AI ecosystem business. Financial result. I think you just read from our announcement, so I do not want to spend time here. I need to highlight is gross margin. We growth Y over 7.5x. Which is a record high, and this is already show the good performance of our engineers that many years hard investing in our new projects. Revenue wise is TWD 67.8 billion is all-time high. The first half, we hit TWD 100 over billion. Again, actually Phison, I tried to map Phison 2025 to hit TWD 100 billion. We failed, but we make it in this first half. Gross margin, we hit 65.3%, but this also we have a company policy. We try to be more conservative, so we have a write-off 1.1% is the inventory write-down. So, the component we keep for my policy, did not use for certain period, we write down and to make sure our inventory is cleaned. So first half average is 63.8%. Earning per share by CQ2 is TWD 118, which we including the TWD 14 from the works, the so-called investing gain. So TWD 118 is also the all-time high, and the first half we are TWD 187. In our income statement, by revenue wise, you can see we have big growth. This part I just want to share with you, especially in our R&D investment. Some shareholder may has a concern company about the investment R&D, but again, since many years ago, Phison insists, we need to focus in our R&D investment. You can compare this CQ2 versus the last CQ2 is around 6.5x, close to 7x of the investment. Why? Because the AI coming, we need to keep customize a lot of a new design. By second half this year, we have many new tap out controllers for the high speed PC OEM, for enterprise, for the bridge, some executive design, and also the mobile UFS 4.0, UFS 5.0. We gain the market share. Why? Because for last five years, no matter market good or bad, we keep heavy investment in R&D. That's why we can show the good performance here. Again, in the second half of this year, Phison will keep same momentum in R&D, make sure we heavy invest and we are able to create the new application and try to lead in this market. Okay? By the balance sheet, I think first of all, by cash flow, by CQ1 Phison, end of CQ1 Phison, we have cut in cash. Turn to CQ2, we are now better. The AR is coming back, and we have TWD 1.8 billion by CQ2, which happened. So cash flow now we are doing okay. Inventory-wise, I just share with you, company policy. We try to keep equivalent of a supply, which we carry every month. I don't know if you believe or not, NAND flash is getting much difficult to ask for supply. No matter you pay how much price, the supply now is really a big issue. Our policy is keep same amount of the supply equivalent every month to make sure our design projects we are able to ship. Unfortunately, by end of this year and early next year, we got so many new inquiry from their CSP Neocloud OEM. We still try to work hard to get upside supply to fulfill what our customer ask. So inventory-wise, if you really ask me, do we enough inventory, I'm telling you, most likely we're still short in some part by end of this year and the early next year. Okay. We'd like to share some tip and then tip differ, but basically you can checking here is not much different. This all about the Phison's our option. It is by our financial policy. We not have much stock option to the employee, so the different is quite small here. For the difference. Okay. We'd like to show this page. For many years, I think you guys also expert to know memory cycle, flash cycle, this, that. This is all predictable, why? Smartphone, you can focus the unit, the content PC, but from now on. By the way, smartphone PC is declining by unit this year and next year. But our controller shipment increasing means we win the major share in this industry. I think this is about last five years, Phison keep investing. Okay, never slow down, keep investing. That was why the, PC OEM, the NAND manufacturer, they trust to Phison. They're willing to work closely with the Phison. So we believe two more years, consumer market, smartphone, PC will bounce back. Why? Because, the phone you use may end of life in certain period after two years. So demand will be back. In Phison 2026, 2027, we are able to keep winning the unit share of controllers. That means 2028, 2029, definitely we can enjoy the good return at that period. But what we have to pay is heavy R&D investment. That's why we keep pushing investment into R&D. Things keep different is AI. I think I will spend too much time. I don't want to waste the time here. The AI inference, the output was a text, is a kilobyte. Now users start to go to the image. It's a megabyte. Some already have a video, the short video from China, from U.S., it's a gigabyte. Unfortunately, if you go to the AI agent, if you start to use AI agent in your platform, no matter on device, PC, on-premise service, server or go to the cloud, you are creating terabyte of content. I don't know how people saying that the flash can supply, demand can be balanced by 2027, 2028. I don't think so. Why? Because AI agent is coming. This is defined by NVIDIA, the five level of the AI cake. What is Phison's role? I think you have to take a look into this. What Phison's our role position in this industry. First of all, we have controllers. Controllers not only mobile, PC, but we have lots of aiDAPTIV and also enterprise, and some customized controller NPU in this layer too. We also provide different kind of modules, main drive, boot drive, to the so-called infrastructure. At the end, Phison, we have aiDAPTIV. Now we transform to the Phison AI Data Platform. It's AI applications. Two weeks ago, our board members also approved Phison start establish a corporate VC. The first investment is $20 million, equivalent to the TWD 600 million. We are going to start invest to a lot of start as ISV, who are designed the program on top of Phison aiDAPTIV. So in this five layer, Phison play the role from chips, info, and also new applications. So we are transforming ourself. So we are now naming Phison, we turn to 3.0. I don't want to spend time in today. Next quarter earning, we are going to show you what Phison doing in the Phison 3.0. So this is to show you in the first generation, we are in the controllers, consumer modules. Then we move to the customized modules, enterprise, which we are doing now. But next, what is our next? Next is mainly in the AI storage and the edge AI platform, which we have to show later. So CQ2. This is to show you what our role in the enterprise. This is enterprise boot drive. In the last few months, our press release, we name our boot drive is like 40 times growth, 60 times growth. Why? You can see here, AI networking, just only this quarter, we have six new design wins program. It's a big program. And in the no matter CSP, OEM, recently we just win the X1-2 OEM, and the AI storage system partner, Neocloud, we have two new design with [Infa], we have one new design win. AI chips ecosystem, we have one new design win. This is a bootstrap. Move to the main drive. We also cover a lot of design win CSP, OEM, AI SOC system, [Infa]. We have two new networking, which has a win special one of a big program of an AI networking. Main drive, not bootstrap. In the AI ecosystem, we play the role main drive, creating a lot of SFI. Bootstrap create a lot of customization. We are now the key player in this field. Please recognize Phison is no more in consumer. We are in the AI ecosystems. This is our new design win just to show here, we are in the 5G base station without EMC. We are moving to the medical, and we are going to do lots of automation. Share something with you about Computex, what our exposure. We have enterprise, PCIe Gen 5 already in MP, which create around 30%+ of our revenue. AI, later I will show you what is our potential revenue in the future. Gen 6, we are controller start sample back by January. We are going to show our Gen 6 Enterprise SSD by November. This is going to move into the AI ecosystems. By the way, we have a pending order already. Unfortunately, or fortunately, we have a pending order, not small amount, but now we have to make sure we can get the supply. Client, E37 is the best performance in the world. We win several big OEM project recently. Mobile, this is a 3.0. Just I want to remind you, Phison is a really key player in the mobile storage controllers. This is, we are show in the Computex our 245 TB, but this is a product go to MP, but recently customer no able to buy why? The price is super expensive. Now customer now move back to the 64 TB. Actually, which is good to us. We can sell more unit, more controllers, more systems. This is our Gen 6 controller. First silicon, we are going to MP directly without any ECO. This again, to show that Phison engineers is very solid. How to make it solid? Again, heavy R&D investment. This project, we are going to show to the November, and again, I have to keep repeating, we already have a pending order. But we still don't know if we can get enough freight to ship. This is a 64 TB demand. This is our E37. We showed it's a lot of reviewers saying that this is the best, fastest, best power consumption in the world. We win several PC OEM and also their name company's OEM business. This is adaptive. We keep saying that for many years. I think if you follow us, you know about this, right? We have a product go to the market. We are working a POC with MediaTek to use our UFS 4 controllers with the MediaTek to deploy the adaptive in the mobile phone, and POC pass. POC doing good. We are able to let the NPU, which asking for 24 GB LPDDR5, downsize to 12 GB, but still can execute the models to run inference, which using our UFS as a cache. This POC done. Hopefully, we like to see this go to the market by end of next year. This is also Phison innovation. Computex. Phison co-promote their Intel platform with the Phison adaptive, and you can check this from the YouTube. You can check. I don't want to spend time here, but go to check this. This small PC, we name is AI PC, AI on device, can run the 120 billion model with 32 GB of a DRAM. You know DRAM shortage, right? We fully believe AI on device means AI on PC, laptop, desktop, is going to happen by next year, but unfortunately, DRAM is shortage. So aiDAPTIV is the only solution. We also show the mature products to their market with our branding partner MSI, ASUS, Advantech, and ASRock. This is already go to market, not just only a concept. Okay? This is our server partners, which Enterprise SSD Gigabyte, AIC, Pegatron, and Western Digital. Okay. I'd like to show you what is Phison achievement. Many quarters, investor, fund manager ask, "What is your revenue? What's the revenue?" Again, revenue is a little small. Why? Because this is a totally new ecosystem. We need to have a lot of hardware, software implementation, and we need a lot of ISV. What's ISV? Independent software vendor. That's why we establish our CVC, corporate VC, to start invest to the staff to help them to design their application into our aiDAPTIV. So revenue-wise, again, I'm still cannot tell you the net amount, but, this is showcase. Again, I want to repeat, this is not a POC, okay? This already in a commercial. We ship our AI server with aiDAPTIV, with Phison SSD, with our proprietary service, the software platform application customized. In Taiwan, more than 10 Banks. Okay? Definitely this generates some revenue, but revenue is small, still very small. We are expanding this design service products to every bank in Taiwan. Every, okay? Which bank, if they ask on-premise AI solution, Phison most likely is the only capable company to provide. Hospital. We have more than 30+ commercial products shipment to the hospitals, which is with Phison aiDAPTIV AI Data Platform and FHIR systems. Today, I not plan to spend time here. If you're interest, go to check Internet what is FHIR. Next earning call, Phison is going to spend more times to tell you what our achievement details in this aiDAPTIV, Phison AI Data Platform business. We also ship over 20+ of SME. What's SME? Small medium size of a company and enterprise. We ship our server service to them. We are going to expand this business. By this year, we have a confidence to win commercial business over 100 to bring in Phison AI Data Platform aiDAPTIV service to our potential customer, bank, government, enterprise, hospital, and education. Okay? We also start to work with the AIDC, AI Data Center, to put Phison's, our software platform, into data centers. This is totally our new business. We take Taiwan because all engineers Taiwan, right? Now we show our performance in Taiwan. We have a shipment, bank, hospital, enterprise. Now, we start to move to North America. Phison already have office in the San Jose, in the Colorado. We set up office in the Vancouver. In Vancouver, start to hire the team, transfer our products to there, our design to there, mainly aim to the U.S., North American potential B2B SME business. At the same time, Phison has a new foundation in Malaysia, my hometown. We use them to start look to the Southeast Asia. India, we have a JV called MiPhi. We transfer this technology to them to help them service the local SME as our new business. Next earning call, we are going to tell you more. This is go to the AI PC, AI on device. A lot of activities after Computex. From now on to CES, a lot activity to promote the so-called AI PC or agentic notebook. This is happening, and Phison aiDAPTIV is the only solution. Investor keep asking about the revenue. Yes. Not yet happened that much, but coming. This is the trend, and Phison has a heavy investment into here. Shareholder may again complaining, but we keep even first half good profit. We still have a 22% investment into R&D, which is still by amount is a record high. We keep to push for more R&D development. Versus last year, the whole year, the R&D investment was TWD 13 billion. Now, first half already TWD 24 billion. This is commitment. We are very consistent. We keep hiring more engineers. Again, not for chips, not for firmware, but for our Phison AI Data Platform because we can see this will be our next future big growth in our revenue. Again, this page will show you, we are heavily invest to the R&D activities to make sure we are able to growth in the coming years. Last, I want to show you. We define a new business platform called Phison AI Data Platform. This already ongoing, already have a commercial business. A lot of engagement is happening. Again, I not spend time, just let you know what we are doing. Next quarter, you will see more. This is a, we call Infra as a hardware CPU server from the ODM/EMS with the Phison aiDAPTIV Cache. Phison define our own storage server with our SSD. We develop every software. We have a HCI, a lot of function. We license this to our partner, to the customers, to data center. We develop different kind of function modules to make sure it is good to use. Then we start our CVC to engage, develop, support a lot of new ISV to design application in Phison AI Data Platform. Phison in-house, we are now pushing internally to use our AI on-premise. We have AI server in Phison server room. Their engineers start to heavily, and every month review, I push them to use more service from our in-house AI service. By soon, Phison save 114 headcount engineers. Just one month, we are able to take back every server investment. You can't believe. This is happening. And what we are doing in our on-premise AI, we use mainly is AI agent and AI copilot. I don't want to go details, but this to show you what we are doing in our AI activities. By ranking, we have a lot of engineering activity here using AI to improve our design cycle, and also the performance. Since I realized Phison, our name is Engineering Hub. This is so-called Engineering Hub. I can save a lot of headcount. We, Phison, place a big order to our ODM Taiwan to buy NVIDIA more than $50 million of GPU card and servers. We are going to step by step install into our server room, and also we are going to rent data center outside to put the server there. What is the purpose? The purpose is target. We are going to save close to 500 headcount engineers by end of this year by AI service. We are not going to hire that many ASIC designer, firmware designer, software designer. We only increase a lot of AI deployment, AI software, AI promotion, AI business development to our new Phison AI Data Platform business. All the chips design, product design, we are going to rely on the new AI server, which we just purchased around $50 million. This page will show you why we insist to go on-premise, why not going to cloud. We made a simulation. We use our June, our application, the input token, output token. We compare to the cloud Sonnet and the cheapest China server, Kimi K2. We found if we have a good utility, let's use 100% my server. My cost is here. This is a cost of Kimi. This is a cost of Sonnet. At the end, if you are the heavy users, your only choice is go to on-premise. After your server all depreciate, that means that the compute power is all you can eat by free. You pay only the power supply fee. This will show you Phison was a users. Unfortunately, we can't find solution. We force ourselves become provider. Now we are a developer. From user to developer. We develop our AI solution to help save our overhead improve cycle. Now we turn to provider. That's what next earning call, I'm going to share with more. What's the next step? Phison will aim to small, medium size enterprise, B2B, AI, on-premise total solutions provider, not only for Taiwan, but also aiming to North America, Southeast Asia, India. Hopefully next year we are able to aim the worldwide. Summary. I think no need to spend time here to tell how difficult to get a supply. AI is changing everything. Phison is from the controller, consumer, embedded computing. Now enterprise storage, main drive. Now we are going to as a system solution providers. That's why we need to keep heavy investment in our R&D, and we are going to build our own ecosystems. Of course, we also need to engage with every key players. We believe our SME B2B business can attract a lot of suppliers, system integrators, users. This is our next growth and our opportunity, but we invest this over three and a half years already. Finally, we can see something is going to happen. Phison is a innovation company. We keep very consistent, invest, find the right way to help Phison to grow our business and to keep the good profitability. Few Q&A here. Let me close, then we can go live. Dividend. Board member decides. Actually, we have a debating in the board members. Which is good. In the last policy, we try to match 35% of the net profit, but this time we decide not to do that. Why? Phison, we need a lot of cash to help to grow our business, to help Phison to get a more market share, to help Phison to transform from 2.0 to 3.0, to help Phison from modules applications to the total system suppliers. We need cash. We like to use index as a interest rate. Based on yesterday's, our stock price, based on the TWD 60, is half year 2.87%. Second half, I believe I have a good confidence we still have a very good earning. Hopefully next first half, January, Phison, potentially, I hope we can make a more earning. We are a little bit cash rich. We can consider to have a more dividend by ratio at the next January. But again, this no commitment. Depends on our cash flow and our business and how good we are able to get the cash from the business. Some shareholder may not happy, but some shareholder keep came to me to ask me, "Don't pay that much." They wish the cash keep in the company to help company drive much faster, rapidly to get the better return. Let me clarify. In the last many years, Phison, we are good in the earning per share. We give 55%, everybody happy. But unfortunately, now we are turned to special turbo mode is in revenue, in profit, in market share, in applications. This for what? This to make sure Phison can live in the market and can enjoy at the last few years business returned from the market. Please understand, we understand the ask from shareholders. We keep 2.87% half year, the year. But we need to keep the cash to run the business, to make our shareholder get the more return, not only from the interest, but also for the capital gain. Again, analysts, not some few, maybe one, keep asking Phison as a module house. Answer is, yes, we are module house. So what? But Phison module house is a different with what definition of a module house. Traditional module house are buy, assemble, buy, sell. Phison as a module house, all activity starting from R&D fundamentally design. But revenue-wise, coming from modules, so you can name this is a module house. We use this example for many years. Again, I have to use this. You look to the Apple and the NVIDIA, they are chip designer. They design the chips. Most likely revenue not selling chips, they build modules. Revenue from modules. So, when I talk to analysts two weeks ago, they say, "No, you Phison different. You are module house and we are module house, but they are in-house technology." I say, "Hey, Phison controller also in-house technology." They say, "No. Your controller is only a small BOM cost. The rest is a flash." Or you see the end company, NVIDIA, is all about their design. If you read the report last week, NVIDIA new data moving platform, memory, BOM cost 62%. So what's the difference? I just want to tell you, we are really consistent, develop our controllers, heavy investment, but good thing is our revenue coming back from the modules. So you call me module house, I'm okay, but we are able to generate the value in the market, generate value to the ecosystem, and generate value to the shareholders. Please, study more, and please understand what we are doing for company, employee, and shareholders. Phison, from everything 100% in-house, going to their products, and we go to the revenue by modules. And now we transform ourself to 3.0 Phison AI Data Platform. I hope I can show you more number, more visibility by next earning call. Again, I have to use this as a comparison. How Phison able to keep growth our technology? Simple. You can see. Show them a comparison. This is all about our R&D investment versus our revenue. And we just go to the Bloomberg to search. Apple, NVIDIA, they're not small, they're big. They have a big revenue. So if go to net amount R&D spend, they are also big. Phison is a tiny, small company, but we have a much higher percentage. Means what? Means we aim to really long-term, and we are able to growth by what? By revenue of modules, which analysts may not happy to see module, but unfortunately, this helping us to make good enough of profit. So last, please understand, we are module house, but different with the module house you mean. This is our inventory. Again, we have, by Q2, 90+ billion NT inventory, most likely enterprise. They are ODM and industrial. I think retail in Phison in the coming two, three, four quarters gone. Retail may back by 2028. When the market start coming back, Phison is going to use our resource to gain the business. And that time, if I ask business, means the profit definitely had to be good. If not, why I spend my resource to there? Back to the ESG, we keep doing all our best. Every index, we keep improving. So thank you. Let's go to the Q&A. Thank you, K.S., for the encouraging update, and congratulations to the strong results. We are now opening the floor to the Q&A session, and if you have any questions, please use raise hand function, and you can also type your questions in the chat box, and we will raise the question for you. When we are waiting for questions, I will start with some questions from me. My first question is about the NAND demand and supply dynamic. As you just mentioned, NAND supply remains quite tight, and you were actively adding supply sources. Can you give us some update on your current supply condition? For example, how many suppliers do you now have LTAs, and how it's compared to what you see in the last quarter? And what can we expect for the incremental bit allocation for maybe second half this year or 2027? Okay. Thanks, Astoria. To be honest, the last 9 months, I spent too much my time by interview, by TV, by everywhere, keep talking about supply, demand, supply, demand. So I don't want to go deep, go details today. Supply, demand, no solutions for many, many years. Back to Phison, we still able to get supply. But unfortunately, supply not enough to what we need. So last week was the FMS in San Jose. We meet every suppliers there. They recognize Phison's value. I am telling them Phison is not going to take their flash, make the modules, and sell the modules. We are now converting ourself to the NAND users. Just now I mentioned we are having our business in the so-called AI Data Platform, and this is the number we show to them. They are very surprised what we are doing. I'm telling them the NAND, what we purchase is not only for selling to others, but we build to the systems. This can bring more values. We can't disclose what kind of LTA, how many is supply. Because if I say something here, my competitors may go there to ask the same amount, so I'm not going to do that. Just a commitment here, we have enough, and we have a supply, but supply still not enough what we need. Okay? Thank you very much. My second question is about the NAND price in the second half. How do you see the price trend in the second half compared to the first half? I remember our peers, SanDisk, they said in their earnings call that price increases will moderate. Is that as much what you are seeing now, and how should we think about the gross margin in second half and onward? I remember by March, I already saying that the memory company, the gross margin bottom line 80% easier. 85% may happen. Now I'm telling you, if 2026, 90% gross margin may happen, but I don't think this is healthy to the industry. My sense of advice, don't do that. If you ask component for 90% gross margin, industry potentially will be killed. You can see the IoT, you can see the consumer die. Okay? So I don't want to comment what price is going. Supply tight, demand too strong. Price definitely will still going up, but 85%, more than enough. Okay? Thank you. I already see some investors online. Maybe next question is from Charlie Chen, Morgan Stanley. Yeah. Hey, Charlie. Charlie, you can Yes. Yeah, I unmute myself. Hi, K.S. and Astoria. First of testing, want to congrats for very strong results. Let me probably just get straight to the point, right? For your AI-related business, right, is a 38% revenue. May I know whether ESSD is kind of the make a most of that business and how big can that ESSD exposure into next year? This 38%, main drive is around 30%+ Okay? These are more in the revenue generator. Boot drive, we win a lot of program and share, so boot drive play the big role, no matter in the AI system or the networking. Okay? aiDAPTIV data solutions still small. As I mentioned, this is totally new. We need to spend a lot of time. But now we convert this to the AI data platform. Hopefully, from Q4, Q1, Q2, we can see the significant number in the revenue. Mm-hmm. Okay. So I guess two follow-up question. It seems like this ESSD business continue to see meaningful growth. Do you have a kind of roughly market share? I am not sure how big is the TAM, but do you have a kind of rough market share for your ESSD business? Another follow-up question is actually to Astoria's question about the NAND price trend. I just want to get a sense whether the consumer NAND and the AI NAND price has some correlation. I ask this is because I agree. I admit that Phison is no longer the consumer-related player. But my concern is that if a consumer NAND market price shows some weakness, whether it would also impact your current AS storage price. That is my two follow-up questions. Thank you. Phison, we are not a NAND manufacturer. We are not aiming to the enterprise SSD market share because we are not NAND supplier. By the way, the NAND is shortage, right? We take our limited supply, limited is quite a lot, mainly go to the customize. Even go to the main drive, most of that is a customized product. That's why we can enjoy the much better gross margin. I read a report. It's a paid report, U.S. report. Phison is around 1.9%. This is what I read, 1.9% of the enterprise SSD. This is what I can share with you. So you can go check the report. Back to the so-called consumer NAND, AI NAND, or I'd like to more easier, downgrade NAND and the good NAND. Downgrade NAND, the price also increased a lot and their supply declining a lot. Why? Back to the history. When the 2D NAND, every 18-24 months, they have a new NAND generation. The N generation not mature yet, N plus one coming. Every period, they have a lot of downgrade. Now 3D NAND, the longevity getting much longer. You cannot believe the NAND produced by the six NAND vendors, the year over can be 90%+. My people report to me they have some wafer with 95% of a good yield. Means what? Means the downgrade part declining a lot. I do not think this consumer, unique consumer NAND, downgrade NAND, will impact to the AI NAND. Who is going to buy consumer downgrade to the AI system? Again, you keep saying that the market price, spot market dropping. Go back to check YouTube, which I already take by March. The time I already hint after June, Shenzhen module house is going to dump their wafer. Why? Because their business, 90+% are in the consumers, consumer tech. They need revenue. If they public, they need revenue, so they buy wafer, they sell wafer. Okay? This happening. I like to share with you, in June, July, Phison, we spent our cash, more than TWD 450 million, to buy the NAND wafer from Shenzhen module house. Of course, the price is much cheaper than the NAND contract price. If not, why I'm buying there, right? Why they sell? Because Phison has a solution. I buy. I don't know how. Okay? So don't take this spot price is a regular price, because NAND guy is not going to decline their price. Okay. Okay? Okay, understood. Thank you. Yeah. Thank you. Next question is from chat box. Bruce. The investor wants to know, "Longsys recently co-exhibited a general DRAM offload solution for edge devices with UNISOC, and is also collaborating with AMD on HLC plus SPU. How about Phison?" This is the first question from Bruce. Okay. In March 20-something, they have a so-called China FMS. The chairman Longsys was my previous speaker and the next. As surprise, he said he got this something. When I on stage, I say, "Hey, don't copy. You are a big company. You are innovative company. Why you just copy? Come to talk." So this is my comment. I don't care. Anyone want to copy, we have our weapon, we have our solution. But wait, see how Phison react. I don't care. But we win everything because we are the innovators. We are the inventors. The world wide know. We start promote this since three years ago. So no hurry. We wait and see. At least in the world, many countries still respect to intellectual property. Okay? Thank you, K.S. Next question from Bruce, I think as a follow-up. He said, "Apple built its own SSD offloader specifically to ship Apple Intelligence, but most laptop OEMs clearly don't have that kind of capability. AMD chose to partner with Longsys, while Phison chose to partner with Intel and MediaTek. Sorry, how about going this way? I think the audience. We no need to spend time here. Sure. First of all, Apple is Apple. It's all proprietary, so no comment. You name AMD chose Longsys. Wrong. This only happened in some show. AMD China, Longsys. You go to ask AMD Austin what happened today. I don't want to comment here. Phison chose partner Intel, MTK. Don't worry. No rush. A lot of NDA there. You wait and see. I just saying that don't copy. Be amend. We go to the next. Yeah, next question is from Simon Woo, Bank of America. Okay. Hey, Simon. Oh, hi, K.S. Yep. Can you hear me well? Yes. Great. Congrats. Great result. Great number. We work so hard. We effort so much. When I talking, nobody listen. We are listening to you, sir. Thank you. So— That's a joke. Yeah. So maybe, number one, how long you think the NAND price still rising? So when you will stop? You mentioned that— Better call to your Korean friend. —makers very profitable. Don't call me. Don't ask me. Call to your Korean friend, okay? Yeah. I wish. 85% gross margin is really good. Don't ask to 90%. Okay. So you think it is a time to see more stable NAND price these days? No. Not stable. What I like to mention is saturate. Still raising, but the ratio getting smaller and eventually saturate. Saturate means— Means that hit some certain point, gross margin there. Supplier is happy, then they start to pick up who they are going to ship. Okay. Sorry. NAND price, still some room to see the NAND price— Yes. —increase for second half of this year, but how about next year, sir? Stable, right? No? Let me ask you, if next year, nobody doing things right, the gross margin of a memory company go to 95%, don't you believe this is going to happen or not? Theoretically possible, but— Yep. I think like Taiwan Foundry, shortage is there, but they are not raising the price aggressively anymore. Memories are different. Different. I see. Okay. You are feeling that the shortage of NAND will continue into next year? Many years, not next year. Many years. Oh, many years. You don't see quite significant NAND, big growth per wafer with— No 200, 300 layers or? No. You go to ask the manufacturers, okay? I met the one NAND, the top-level guy. I say, "Hey, from investment to produce to production, two years." He said, "No." He said, "Four years. Four years. Yeah, no easy. I realized, no easy. Okay. I am double-checking, sir. Your inventory value, TWD 90 billion. It is a lot. It's just a book value, right? Book value. You have some— We never revalue, okay? We, Phison policy, never revalue. We only write down. Yeah. Only. Okay, following the GAAP. Yeah. That's great. Would you recap your recent convertible bond issuance because your competitors also issued a CB— Why? —last night. Why? It looks like they have— Because the consensus indicates that maybe your competitor need extra cash to buy— No. —more NAND chip for the enterprise solutions. No, they are the control company. So working capital increase. They are the control company. Why would they buy NAND? Because enterprise solution need the NAND chips because it's a module business. No Enterprise solution. Yeah, Charlie is here. Charlie can ask, "Hey, they buy a lot of NAND, how about gross margin? Gross margin. Right? Usually the controller should be higher because only the fabless business model. How about margin? Module theoretically should be lower, but it is growing very strongly. No. Anyway, I think my question is, would you recap your previous funding? It was, what, ECB, TWD 500 million, well executed? Fully used. Already used. So— Used. Okay. —already turn one and a half times. Already turn one and a half times. Okay. It was a $500 million equivalent. Sorry, would you remind us how— TWD 800 million. Oh, sorry. TWD 800 million ECB. How much? TWD 800 million. 8. TWD 800 million. Yes. Phison raised TWD 800 million. ECB. ECB. TWD 800 million. Yes. So that implied what percentage of the dilution? Not yet. It's not happened. Yeah, but equivalent-wise. Oh. You ask [Non-English content] 10% or? No. Less. Okay. Low single digit. Less. Less. Single digit. Okay. 5%. Okay. If I remember, was three something. Three. Yeah. 3% something because your conversion price— Yeah. —the market level. Yeah. Okay. Anyway, you used up the cash proceeds, TWD 800 million from issuing the ECB. You already bought a lot of NAND chips— Yes. —that's why your inventory is very high. To me, it is too low. Oh. According to— Too low. Okay. In that case, you believe in second quarter revenue already strongly up, and then September quarter. No. No? No. I have to manage my inventory to design in customer. Design customer not buy everything one night, they buy one year. Okay? Next year, supply is getting much, much, much difficult. You mean the NAND supply will be tighter? Yes. Bigger. Yes. The percentage of a shortage next year bigger— Yes. —than this year. Yes. Yes, no doubt. Yeah, that's why— Simon, you have to agree, I'm a very good, accurate fortune teller, okay? Since the last year, I keep saying a lot. Nobody listen to me, right? Now they agree. Okay. Yeah. Yeah. Simon, I think we need to spend some time to others. Okay. Yeah, sure. Okay. Thank you. Thank you, K.S. and Simon. Next question is from the chat box, from Ching from DIGITIMES. The question is in Chinese. Yeah. I will translate it in English first. Okay. No worry. Ching wants to know the update about the SFIPC, the Securities and Futures Investors Protection Center. [Non-English content] [Non-English content] Thank you, K.S. I will rephrase what K.S. Astoria, we know about time, so no need to say okay. Sure, okay. Anybody interested, you can email me, I can talk to you. Still a lot of— Sure. We are running out of time, we will conclude the call. Let me take over and save time, okay? Sure. I know what to expect to come and say commotion thing. I just telling you, many years ago, I am saying controllers is no hope. No belief. Phison is so lousy, and Charlie said Phison is a module house. What is wrong with module house? We are doing good. So looks like SIMO now transformed themselves to module house. If you are the investor, you are the analyst, you have to start to ask, "What is their gross margin rate in the futures?" Okay. [Non-English content] Okay. We have our own LTA, no matter what, I am not going to disclose because sensitive NDA. [Non-English content] Boris, sorry. Strong result, superior product, superior margin, difficult to tell much come from your value add and how much are using. Okay. Again, back to the so-called low cost inventory. Again, I am not able to describe what is that. Agree, definitely we have a low cost inventory, no doubt. But you can see, if left hand I have a low cost inventory, good profit, right hand I spend this to R&D. I move this to R&D. So this R&D is going to generate the future momentum for our business. Again, what Phison will do if price keep going up, the gross margin definitely cannot be linear, but we need to have a new product. So I keep saying that we are moving to so-called AI Data Platform. This next quarter, I am going to tell you more. This will be our next growth, and we have to do that. If not, the things will follow what you said. Gross margin, I fully agree. Thanks. What is the next? I think Charlie Chen also have questions. He raised his hand. Yes. Oh. No, actually, my questions were all answered, and all good for me now. Thank you. Thanks, Charlie. I think, again, Phison keep telling the market one very consistent message. Yep. I know price going up, eventually gross margin rate will drop. This is simple mathematics, I know. Only thing to move the gross margin is new invention, new product. This is what we are doing. NVIDIA many years ago, they sell GPU to gaming car maker like ASUS. 10 years ago, they sell the car to the mining, now they sell the full rack, and they mark up their gross margin. We named this as a total systems. Phison from controllers many years ago, modules, now we move to AI Data Platform as a systems. Good luck to Phison. Hopefully I can show you our big transformation within 12 to 24 months. Thanks, K.S. Yeah, definitely good luck for that. It also comes to me on this question, because I think Astoria asked that question about SanDisk, right? You also sort of agreed that the gross margin would be better to normalize a little bit. Memory is taking a too big cake from AI CapEx, right? What are we thinking is going to happen in the coming one to two quarters, do you think there are CSPs or, for example, NVIDIA, Google, AMD will try to de-spec the memory or they will try to pressure the price? They have to. No, Charlie, sorry, they have to. Okay. Definitely. This happened, I am saying that since the end of last year, right? Mm-hmm. Now you can see a lot of system, they cut half of the DRAM. Let me ask this way, do they cut storage? They cut DRAM, yes. They cut storage. No. Okay. Storage is income. Agree? Inference, two parts: power, storage. Okay. DRAM is here. You can use algorithm or you can just sacrifice the performance, but storage is money. Okay, so aiDAPTIV. What is the difference between aiDAPTIV? aiDAPTIV using flash to complement DRAM. Yeah. Yeah. My only concern is that during this sort of normalization or kind of negotiation, there could be some sentiment impact to memory stocks, right? I agree with you that your fundamental remains to be very strong, just capital markets, right? Especially for momentum investors, they are looking at those kind of price negotiation very closely. I guess that is why people really care about your view. Yeah. Okay. I think we are one of 10, but still, I think since still 170 audience there, right? Simon Woo, you have something to ask? Hello, Simon? Yes, sir. Just a very quick question. Second quarter results, very good. 65% revenue growth. It is more price increase driven, right? Rather than any meaningful volume increase QoQ. By SI by we grow, and of course, price we grow. Yeah. Yeah. Another question is your volume growth trend in terms of the bit, how it can be meaningful? Because the energy makers are saying 20% bit growth or a little bit lower. How about your overall product volume growth? Product volume actually declining. Declining. I see. Margins declining. No, depends on consumer decline almost to nothing, okay? You have to be clear. Don't misunderstand me, okay? The price margin increased because we have nothing last year. Controllers increased. Yeah. All combined together, your bit growth, Phison's own bit growth. Controller unit increase, SI by increase. Yeah. Maybe third quarter, September quarter, December quarter visibility, I mean, the growth momentum still based on your blended ASP upside. Demand is there, strong, but again, I need to keep repeat, I have to manage my inventory. Why? If I design in one program for 24 months, I have to make sure I can supply. I cannot sell components tomorrow. If I sell, I am not able to buy back next year, I die, because the CSP will kill me. Okay. Sorry, one last question from some investors. They are asking this. ECB issuance already done, but you are saying inventory is still not enough. That means additional funding needed, or you have enough cash to build up the further inventories, sir? Thank you. Okay. By end of March, Phison has a big tap from bank. By July, we pay back almost everything. Now we have none. Okay? No debt. Very healthy. So means what? Means coming six months, if I need to get cash, I can use bank. But if business keep going strong second half next year, yes, I need to raise fund. Okay. All clear, sir, and we appreciate your valuable time today, and congrats. Great result. Thank you, sir. Thank you. Okay, since still 160 here, I want to. [Non-English content] [Non-English content] [Non-English content] [Non-English content]. I think we ran out 10 minutes. Yeah. If no any question, I think we can end up, or in case, because still audience there, if you have any question, you ask, I answer, okay? Yeah. Thank you, K.S. As we are running out of time, we will conclude the call. Thank you, K.S., for your time today, and thank you everyone for joining us. Okay. Thank you, everyone. Thank you.