Good afternoon, everyone. Welcome to AXT's fourth quarter 2022 financial conference call. Leading the call today is Dr. Morris Young, Chief Executive Officer, and Gary Fischer, Chief Financial Officer. My name is Devin. I will be your Coordinator today. I would now like to turn the call over to Leslie Green of Investor Relations. Please proceed. Thank you, Devin, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company, market conditions and trends, including expected growth in the markets we serve, emerging applications using chips or devices fabricated on our substrates, our product mix, our ability to increase orders in succeeding quarters, to control costs and expenses, to improve manufacturing yields and efficiencies, to utilize our manufacturing capacity, the growing environmental, health and safety and chemical industry regulations in China, as well as global economic and political conditions, including trade tariffs and restrictions. We wish to caution you that such statements deal with future events, are based on management's current expectations, and are subject to risks and uncertainties that could cause actual results or events to differ materially. These uncertainties and risks include, but are not limited to, overall conditions in the markets in which the company competes, global financial conditions and uncertainties, COVID-19 and other outbreaks of contagious disease, potential tariffs and trade restrictions, increased environmental regulations in China, the financial performance of our partially owned supply chain companies, and the impact of delays by our customers on the timing of sales of their products. In addition to the factors that may be discussed in this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission. These are available online by link from our website and contain additional information on the risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website at axt.com through February 16th, 2024. Also before we begin, I want to note that shortly following the close of market today, we issued a press release reporting financial results for the fourth quarter of 2022. This information is available on the investor relations portion of our website at axt.com. I would now like to turn the call over to Gary Fischer for a review of our fourth quarter 2022 results. Gary? Thank you, Leslie. Good afternoon to everyone. Revenue for the fourth quarter of 2022 was $26.8 million. That's down from $35.2 million in the third quarter of 2022 and down from $37.7 million in the fourth quarter of 2021. To break down our Q4 2022 revenue for you by product category, indium phosphide came in at $14.0 million, reflecting a market softening, particularly in the data center and telecommunications infrastructure. gallium arsenide was $5.5 million, reflecting the overall slowdown across a number of applications, particularly in China. germanium substrates were $1.3 million. Our germanium substrate revenue was up slightly from Q3 as we have resolved a payment issue that we described in the past quarters. Revenue from our two consolidated raw material joint venture companies in Q4 was $6.0 million. In the fourth quarter of 2022, revenue from Asia Pacific was 70% of sales, Europe was 15%, and North America was 15%. The top five customers generated approximately 41% of total revenue, and one customer was over the 10% level. Non-GAAP gross margin in the fourth quarter was 32.5% compared with 42.2% in Q3 of 2022 and 32.4% in Q4 of 2021. This was below our expectations, and it is a result of significantly lower volume, with revenue coming in at the lowest end of our guidance, more of an unfavorable shift in product mix than we had anticipated, and a significant drop in the price of raw gallium in Q4, which resulted in low margin contribution from our consolidated joint venture. For those who prefer to track results on a GAAP basis, gross margin in the fourth quarter was 32.1% compared with 42.0% in Q3 of 2022 and 32.2% in Q4 of 2021. Total non-GAAP operating expense in Q4 was $9.0 million. This compares with $9.2 million in Q3 of 2022 and with $8.1 million in Q4 of 2021. On a GAAP basis, total operating expense in Q4 of 2022 was $9.6 million, down from $10.2 million in Q3. For comparison, total GAAP operating expense was $9.1 million in Q4 of 2021. Our non-GAAP operating line for the fourth quarter of 2022 was a loss of $252,000 compared with a non-GAAP operating profit in Q3 of 2022 of $5.6 million and $4.1 million in Q4 of 2021. For reference, our GAAP operating line for the fourth quarter of 2022 was a loss of $1.0 million compared with an operating profit of $4.6 million in Q3 and an operating profit of $3.0 million in Q4 of 2021. Non-operating other income and expense and other items below the operating line for the fourth quarter of 2022 was a net gain of $2.2 million. The full breakdown is in our press release. This included a government grant of $1.2 million and is a good example of the strength of our favorable reputation and positive regard for our presence in China. For Q4 of 2022, we had a non-GAAP net income of $2.0 million or $0.05 per share, compared with $6.8 million or $0.16 per share in the third quarter 2022. Non-GAAP net income in Q4 2021 was $4.1 million or $0.09 per share. On a GAAP basis, net income in Q4 was $1.2 million or $0.03 per share. Net income was $5.8 million or $0.13 per share in the third quarter 2022, and $3.0 million or $0.07 per share in Q4 2021. The weighted average diluted outstanding shares in Q4 was 42.7 million. Cash, cash equivalents, and investments were $52.8 million as of December 31st. At September 30th, it was $48.2 million. Depreciation and amortization in the fourth quarter was $2.1 million. CapEx investments were $7.4 million. Most of the CapEx was for facilities and indium phosphide equipment related matters. Total stock comp was $700K. Net inventory at December 31st was $89.6 million. 52% of the inventory is raw materials. WIP is 44%. Finished goods makes up approximately 4% of inventory. Inventory will be a key focus area for us in 2023. Our goal is to reduce it by approximately $10 million-$15 million this year. This concludes the discussion of our quarterly financial results. Turning to our plan to list our subsidiary, Tongmei, in China on the STAR Market in Shanghai. Let me give you a brief update. Since the Chinese New Year, we have had active dialogue again with the China Securities Regulatory Commission, also called the CSRC. Their process is detailed and thorough. They have asked us to respond to a couple of additional items. We are in the process of doing so now and remain optimistic that we will get CSRC approval in the coming months. We have posted a brief summary of the plan and the process on our website. With that, I'll now turn the call over to Dr. Morris Young for a review of our business and market. Morris? Thank you, Gary. During Q4, the softening of the microenvironment continued as expected. We saw a step back in revenue across our portfolio as customers continued to digest inventory in the channel and evaluate their needs for the coming quarters. Overall, we believe they are approaching the 2023 demand environment with conservatism, and will further reduce their estimated need in Q1. With that said, we continue to see active development for new applications and technology advancement using III-V material. What this tells us is that while the near-term environment is working through a significant inventory correction, the mid-term and longer term prospect for our markets are vibrant. In addition to the core applications that are driving our revenue today, new uses in automotive sensing, consumer products, health sensing, display, and more are taking shape in a very real way. For the last two years, we have focused on raising our readiness and business efficiency and have created a world-class operation capable of supporting the current and future need of Tier 1 customers. To that end, I'm very proud of the work that we've done, of the accomplishment of the entire AXT team. We have successfully completed the relocation of our gallium arsenide and germanium substrates manufacturing, continue to build out our capability to support a dramatic increase in demand for our indium phosphide wafers, made good progress on two major R&D projects to produce larger diameter wafers, and implemented a recycling program that benefit our cost structure and drive positive results in our ESG efforts. Collectively, our work to date has positioned us more favorably than ever before, both with customers as well as competitive landscape. This includes gains in our market share, particularly in indium phosphide, as well as enhancement of our reputation for quality and innovation, and our ability to scale and our ability to deliver the specifications that enable technology progress. For these reasons, we are optimistic about our return to growth when the market recovers. As we're heading to Q1, we're seeing a business slowdown continue as customers across our portfolio are evaluating and reducing inventory. We believe that the effect in Q1 is exacerbated by the typical business interruption of Chinese New Year, as well as the lingering effect of COVID shutdown in China. We're planning for a major reset in Q1, we do expect that we could see improvement beginning in Q2 as China reopens more fully. Indium phosphide was down in Q4, primarily as a result of continued cooling in the data center market, as well as ongoing softness in 5G telecom infrastructure, particularly in China. The pulse market was coming down off its peak, but has been fairly resilient. In addition, we continue to perform well in our consumer applications, but because of inventory digestion, we're expected to take a meaningful pause in the first half of 2023. We have two programs that are currently shipping, and we are excited for the ability to build long-term relationship in this important development market. Our gallium arsenide revenue is down significantly of its mid-2022 highs, with customers in China having slowed significantly. We're seeing a strong impact on applications in wireless devices for the IoT and headset markets, as well as industrial lasers and LED lighting and display. After such a strong decline, the gallium arsenide market appears to stabilizing, and we could see incremental improvement beginning in Q2. We are making good progress in our 8-inch gallium arsenide wafer development. This product will be a cornerstone for microLED adoption in a variety of consumer devices. While a meaningful revenue ramp isn't expected to begin until sometime next year, product qualification at the substrate level are scheduled to begin this year. AXT is well-positioned to be a prime player in this market. We view microLED as a breakthrough display technology for consumers as it is expected to deliver significant improvement in power efficiency as well as greater brightness and more bright, brilliant colors. Tier One companies are advancing its development, and we believe it has the potential to reshape the gallium arsenide substrate industry. We're pleased to report that we have resolved the payment issue with our germanium customers. We saw a small improvement in revenue in Q4. While the germanium substrate market has also been affected by the micro softness, we will be working towards sequential growth in the coming quarters. Finally, turning to our raw material supply chain companies. Consolidated revenue were down due to pricing pressure in Q4 and softer demand environment. We do continue to see a good contribution from our supply chain companies treated in equity accounting below the operating line. While increasing price of certain raw material can be negative for a company like JinMei, which is offset by improved contribution below the line. Our supply chain strategy is unique as compared to our competitors and is attractive to our customers. This is a strong focus for us in 2023. In closing, though a softening of microenvironment has reset our growth trajectory, the trend that has been driven our revenue, customer, and application expansions remain very much intact. Today, we are the world leader in indium phosphide, and we are the company that Tier 1 customers come to when they are beginning their new innovation to market. We continue to raise the bar on our technical capability, creating clear differentiation with our competitors. Further, we have worked hard to improve our efficiency and will continue to focus on delivering profitability. As such, the fundamentals in our business are solid, and we're looking ahead to our future with optimism. I will now return the call back to Gary for our first quarter guidance. Gary? Thank you, Morris. Given the continuing inventory correction, as well as the impact in Q1 from Chinese New Year and COVID shutdowns in China, we expect Q1 revenue to be between $19 million and $21 million. This lower revenue is expected to have a significant impact on our manufacturing overhead being spread over fewer units, which will have a negative impact on gross margin. Product mix is also less favorable, and as a result of lower expected revenue for indium phosphide. As such, we expect our non-GAAP net loss will be in the range of $0.10- $0.12, and GAAP net loss will be in the range of $0.12- $0.14. The share count will be approximately 42.7 million shares. Okay. This concludes our prepared comments. Morris and I will be glad to answer your questions now. Devin? At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. Our first question comes from Charles Shi with Needham & Company. Hi. Good afternoon, Gary, Morris. Thank you for taking my question. Maybe first I wanna start, obviously, Q1 is a reset, but I did hear you had some relatively more positive commentary, for example, gallium arsenide. You're seeing possibly some indication of improvement beginning in Q2. But what about the indium phosphide side? I did hear you, yes, that in Q1 there may be some slowdown related as customer pause a little bit in the first half 2023. If I tie all your comments together, hard for me to not to think maybe Q1 or even if I want to be more cautious, maybe Q2 seems to be the bottom of this down cycle for you. Can you share with us some color, what your thoughts are at this point? Yeah. Thank you. Sure, Charles. I think, let me put it this way: I think, you know, although AXT is a small company, but our business covers a whole range of different product. As you know, germanium is in the solar cell, and gallium arsenide not only covers the handsets and the wireless infrastructure, as well as high brightness LEDs, and high power lasers. I believe every segment of the business goes into the prime, you know, demand in different stages. For instance, wireless handsets took a hit, I think a inventory correction early in Q3. Infrastructure came a little bit later. You know, we hear that the HBT market device inventory is still quite strong there. On the other hand, you can say that China is reopening up with COVID-19, you know, problem out of the way. When will the consumer demand come back up? That was the major driver for, you know, gallium arsenide HBTs. As far as indium phosphide is concerned, we didn't see the softness in indium phosphide for consumer product until late in mid Q1. We do expect that inventory correction probably will last through this quarter and maybe drag into second quarter, and hopefully it will start to recover. Indium phosphide also covers other area of applications such as PONs market as well as the data center. You know, in a data center, it has been, you know, having a inventory correction, and the demand is not very strong. We do expect, yeah, indium phosphide probably will soften definitely through Q1. Actually, we expect indium phosphide to be almost 50% of what we have been doing Q4. It's a significant downshift in indium phosphide demand in Q1. Will it recover? How much? It does depends upon the balance of different market segments, such as consumer. When will they start to sort out inventory they have? The data center, will it recover soon enough to give us some significant business contribution? It is right now, it's hard to say. You know, I used to say last year, throughout the last, I think five, six quarters, we've been saying that AXT is having improved, you know, clarity on what is coming in the business pipeline. Because of the business interruptions or inventory corrections, I think we lose that visibility. We just don't have a whole lot of visibility of seeing what we can recover. I think it's probably gonna be flat in Q2, but definitely we hope with consumer coming back in China, I think the market will start to bounce back in Q3 and Q4 of this year. Gary? Thank you. You know, I think it's a good response. I mean, the short summary is, yeah, we think Q1 is gonna be the bottom. You know, we'll all find out in another month or two. Yeah. Yeah. Thanks. Maybe a little bit longer term. You said indium phosphide two programs shipping, I mean, production products to your end customers. Do you have much visibility if there may be a third program where you can get to the stage that you can ship production wafers to your customers this year? Maybe this year is more about a continuation of the existing two programs, maybe expand the volume a bit when we really get to the second half of the year when those end products start to ramp again? That's my second question. Yeah. I would say, we don't see any new consumer product applications for indium phosphide this year. If there's any increase in demand after they count all their inventories and if they digested their inventory, it's probably, you know, if the demand goes from the top line, phone sets to the lower sets, and then that may drive some increase in demand. I cannot tell because the customers are not giving us visibilities. As far as future development is concerned. You know, Charles, you hit me right here in a very sort of, you know, among the inventory corrections. You know, things are fairly pessimistic. Like, if you would ask me what indium phosphide are used for, what's our marketing, our gathering information, what's the possibility, I definitely think there is a lot of growth potentials, especially in sensors, in lasers, where you need, you know, eye safety as well as, you know, autonomous vehicle. I mean, we had customer interest in us delivering sizable product to that market. That, you know, that inquiry was late sometime last year, but it never materialized. When will it come back? I don't know. I think, you know, our other potential product is healthcare product. Again, you know, the customer was taking our product for a beta site pilot production. I think unfortunately, you know, that is not materializing and becoming a major production product demand now. When will it come back? I think the interest is there, but we just don't have visibility it will come to become a major production demand yet. Yeah. Thank you, Morris. Definitely understand that this is a supply chain that, well, well, the customer I mean, your end customer probably only gonna tell you almost the last minute whether it's go or no-go. Totally understand. I think my last question really around the larger diameter gallium arsenide for microLED application. I think that one of your top customer recently said it's that they're gonna see meaningful revenue in 2025, which kinda implies that that's the time they start to ship in volume, right? But I don't know how much of your revenue will lead to their revenue in terms of generating meaningful revenue from this microLED application. Can you kinda give us some idea how the ramp of revenue could look like? I think you said that you're gonna start shipping some volume this year, but this year, next year, and then 2025. How does that revenue ramp look like? Thank you. Sure. You know, we are shipping hundreds of wafer to customers. I think they are doing their pilot runs as well as looking at wafer in all different ways, including growing epi and seeing how flat they need the wafer to be and running through their pilot production lines. I think we agree with you. I think although the earlier projection was that it's gonna start to run, have a production ramp up in 2024, but I think it's, we think it's gonna be a late 2024 rather than early 2024. That matches with your 2025 big production ramp. I think I'm very glad to see that this project is really taking shape and looks like it's gonna be a major project. I think the bigger known is how successful this project will be and will it spread to other applications. You know, our customer has told us that, you know, this is just the start of the program, and eventually it could lead to something like 5x-1 0x the volume as the initial demand is. I mean, it does depends upon how well they can run this project and how well they can reduce the cost and, you know, how the overall microLED perform. I think, you know, as you know, there are many different competing technology eyeing for these microLED applications, you know, such as, you know, wearables, such as, you know, goggles. big win for gallium arsenide, and I think we are very well-positioned because we not only are in substrate making, but we are also in supplying some of the raw material, which will benefit, you know, us because, you know, this, the demand for gallium arsenide is gonna increase significantly. I think that's the way I view it, what the microLED is gonna be. As I said, I think the timeframe of when will it be commercially ramping up in volume production, I think it's probably late 2024 to 2025. Got it. Got it. Sounds like you may lead your customers' revenue ramp up by a little bit. Well, that kind of makes sense, right? Because wafer first. You ship the wafer, you recognize revenue. They process the wafer, they recognize their revenue. Thank you very much, Morris and Gary. I hope to catch up more with you soon. Thank you. Thanks, Charles. Our next question comes from Matt Bryson with Wedbush. Hey, thanks for taking my questions. First one is, when you look at the three factors, you mentioned as impacting gross margins, Gary, can you provide some weight as to... or some idea of the weight of each of those factors, on the quarter? Um, well- I would say the lower revenue is, you know, a key part of the story and the product mix wasn't as good as we expected. Those are probably the two main things. you know, a little bit of below expectation from the raw material companies, but it's really more around the substrate business. On the other hand, you know, the guidance for Q1, the major impact of the gross margin coming down, I will probably think is shifting more towards the product mix because we expect indium phosphide to take a major hit on the inventory correction. You know, that will drop significantly. That will impact our gross margin overall. That's correct, so. Understood. When we're thinking about normal, gross margins, if you're able to return revenues to the level they had been at, then you're still looking at the gross margins you were enjoying a quarter or two ago. Is that fair? Oh, absolutely. I. I think, Matt, I think we, you know, although there are price pressure from customers when, you know, business is not looking good, but there's not a significant. I mean, it's not a drop of overall margin. You know, our business is fairly stable, and we're also increasing our efficiency, and we have new joint ventures, you know, taking care of the raw material supply. We're confident. As business return, I think we should be looking forward to, you know, mid-30s and even, yeah, high 30s. Yeah, no, understand. I just wanted to make sure it wasn't more of a the pricing wasn't more of a factor, right? Because that becomes. No. Pricing is not really a key factor. Yeah, there's price pressure from time to time. Really the big reasons were what I just said. We're confident that, you know, when things rebound, all the stuff that we've done for the last two years to improve gross margin is gonna blossom again. It's just, you know, taking a pause because of the disruption in the marketplace right now. Understood. And then I guess my one other question is, you talked to some programs being potentially put on hold at your customers given the more difficult environment, which makes sense. On the silicon photonics front, are you still seeing progress there? Or anything you can talk about as to how you see that market developing for AXT? Yeah. Silicon photonics I think is doing fine, although the data center market, from what we read in the marketplace is that it's not doing well. I mean, there's a pause, as you know, that. I mean, even I read, Microsoft, their data center business is not doing well, they are taking a correction, and so is Amazon. All these big data center, if they're not buying, then silicon photonics are doing well. On the other hand, I would still say, you know, as far as internet and cloud computing is concerned, there's gonna be more and more data transferring back and forth, and you need more data, more bigger data center, and you need fiber optics to solve the bandwidth and the speed problem. I think that's all going good for indium phosphide. I think longer trend, there's no question about it. I think it's we're gonna see growth. It's short term, you know, you're gonna have inventory correction. Even Microsoft, their business is sort of being soft right now. Everybody's looking at a possible, you know, slowdown in the overall economy. Yeah. I would add that one of the strengths of our business model is that the life cycle for some of these key applications is really quite different than the general semiconductor industry, you know. As we all know, you know, every 18 months or 24 months, you've got to come out with a new chip. You know, this, the data center is a good example. That's gonna be here for, and be a driver for silicon photonics and for therefore for indium phosphide, for, man, probably 5-15 years. I mean, there's really, it's hard to believe it would ever slow down. If you look at our history in gallium arsenide, the life cycle for the some of those products was 15 years or 12-15 years. It's quite different and it's, but it's a positive difference, so. Got it. Thanks so much for the color. Thanks, Matt. As a reminder, press star one to ask a question. Our next question comes from Richard Shannon with Craig-Hallum. Well, thanks, guys, for taking my questions. I'm gonna hit on the gross margin topic here and ask a very direct question, Gary, as I usually do here. Trying to fit the guidance to get to the bottom line and guessing on OpEx here, I was coming up with gross margins that are around a little bit below 20%. As I look back in the history to the last quarter around $20 million per quarter, I saw a number of around 26%-27%. Clearly you've got a negative mix here with indium phosphide. That difference seems so, you know, fairly dramatic. I wonder if you could tell us how close we are in doing our math here. Richard, are you describing the Q4 results or? No, Q1. Q1. First quarter. I think Richard wants to know, you know, how do we compare with the last cycle, you know? Yeah ... when we had a $20 million quarter, Richard's saying our gross margin was better than what you telecasted or forecasted. Yeah. Is 18% approximately right? 'cause it's a lot different than last time you were at this sales level. I just wanna get a little bit more clarity there. I'd say it's too low. Yeah. I don't know for sure what it's gonna be. It, you know, obviously, given the mix. I think our model says it's more than 20%, I think. Yes. 21%, if I remember. Okay. That's our model. Okay. It's clearly got some other parts of the model, so we'll follow up offline there, but just wanna get that one out of the way here. That is helpful. Just wanted to make sure I caught this correctly on the first quarter. The expected indium phosphide to be down more than 50% sequentially, and this was entirely or due to consumer and data center. Were there other elements of it? Just wanna make sure I caught all of them. Yeah, I think data center is not helping, but most significantly is the consumer. Okay. The consumer part. All right, great. ... product part didn't take a big inventory correction until recently and, you know. We understand their cycle, so that certainly doesn't necessarily surprising, so that's fair enough then. Gary, I guess kind of a multi-part question here, kind of taking, you know, topic of inventory, the topic of CapEx, and thinking about cash flows this year. You made a prepared remark about trying to burn $10 million-$15 million of inventory this year, which is good to see here given the turns here recently. Wonder if you'd comment also on what your CapEx expectations are for the year, especially relative to last year. Since a lot of the build here in CapEx has been indium phosphide, and you've got a fairly significant hole here, however temporary it may be here, it seems like you don't have as much urgency to build at least right away. I wanna get your sense of, to what degree, CapEx needs to be as high as last year. Let's just kinda cut it off there. Okay. Well, the short answer is it won't be as high as last year. you know, In addition to clamping down on inventory, we're gonna put the brakes on CapEx as well. I would say $3 million-$5 million. you know, we can modify that if things bounce back. If we haven't, we have investments we'd like to make, Morris has already got his shotgun out, and if anyone talks about lot of CapEx, they're gonna be in trouble. Well, you know, even if business were to pick up, I mean, the spend that we did for last year was because the customer demand is, you know. Yep ... way outstripping our ability to deliver. That's why we were building very aggressively and even towards second half of the year. Some of those builds are still hanging out there. Even if the business were to recover, we do expect it to recover, and it will continue to grow. We can handle it, no problem at all. Yeah. Yeah. It's only where if we are seeing, you know, other or two, which I hope other consumer product will come in to use, indium phosphide, then we're gonna start building again. I think the, I hope you understand there's a lag, right? I mean. Mm-hmm, mm-hmm We're forecasting it's gonna grow, so we're gonna build the capacity because we don't want to shortchange and not to be able to deliver to our customers. We, when there's a cutoff, then obviously we put a brake on, but there's some remnant value hanging out there. I don't think it's at risk because I think indium phosphide for the near future probably will absorb all those extra capacity we plan to build. Yeah. Fair enough, and that's. Yeah. Sorry, Morris. I didn't mean to cut you off there. Please finish. Oh, no. I finished. I said, you know, it's. Okay ... we planned, but we build last year. Yeah. Okay. Fair enough. Last question for me, kind of dovetailing off of one of those remarks in there, Morris, regarding, you know, just general sensing applications. I think an earlier question asked about your large customer, and I think you, I think if I caught you correctly, said you didn't expect any new programs in this current calendar year. How about kinda more broadly thinking other customers and applications regarding sensing and to what degree are they in, you know, early stage versus late stage development such that they could impact this year or perhaps in following years? Maybe just kinda give us the big picture long term there. Yeah, but Richard, I think, you know, I have my head hanging down now. If, you know, if you look at indium phosphide, I think, as I said, I think, you know, healthcare is a big application, although I think the development is taking a pause. I mean, automotive, we have a customer asking for 3,000 4-inch indium phosphide per month, and we were giving them a formal quote, and we were calculating how much will it cost us, and we were almost ready to build extra capacity for them, but they didn't come through. Okay? I don't think they're playing games with us. Okay. I think, you know, there are many other programs such as, you know, if you're gonna have Meta goggles, I was told that you need a eye tracking indium phosphide sensor. You know, if that market were to take off. Of course, there's a lot of development program taking a pause right now. I think those are many of these users which will use indium phosphide. One customer told us there are 12 projects being developed using indium phosphide to improve, you know, consumers' experience to improve their handheld devices. If you asked me last year, I think, well, maybe there's a few which could come to fruition in 2024, but I think, you know, I'm taking more conservative, you know, reason. Yeah. Okay. Yeah. Let me add something to that too. It's kind of a big picture comment, but, you know, indium phosphide is taking on a life of its own, and it's robust. It's great to watch. It's exciting for us to be a leader in this kind of material. There's gonna be stuff going into gaming, automotive sensors, you know, health and wellbeing. It's definitely taken on a life of its own. I think, you know, if you're looking for short term, I would say, you know, China is looking to pump up their economy. I think the government may want to do some infrastructure build as well as I think United States. I think, you know, U.S. is thinking about the big infrastructure build, wants to make the internet connection to be available throughout. Our material is used for basic anything which have anything to do with fiber optic communication. I think they may help. I think at this point, you know, 5G base stations are built, which is on a low point, and telecommunication is on a low point, but any of this. Government pumped infrastructure build is gonna help on the demand of indium phosphide. Okay. Perfect. That's all for me, guys. Thank you. Thanks, Richard. Our final question comes from Hamed Khorsand with BWS. Hi. Just wanted to really understand if you're talking about a reset in the business in Q1, why you're not considering resetting your business structure as it is. What's giving you the confidence that, you know, you will bottom out in Q1? I think we're taking a reset, Hamed. I think, you know. I agree. We're not buying material. We're shutting down most of our construction. Lower CapEx. Lower, lower CapEx. We're looking at all possible ways to tighten the, our budget. Lower inventory. Lower inventory. When, you know, are we looking at cutting back on R&D? That probably is area we're not cutting back yet. We're gonna take a cautious look because that's the future of the company. You know, such as 8-inch gallium arsenide, we want to keep on developing it so that we can have a robust crystal growth yield as well as the able capacity to deliver to our customers. That's, you know, revenue is gonna come if we can take care of that business. I mean, so is indium phosphide. I mean, although, as we said, we're not building more capacity anymore. I mean, if you were to ask us last year, we were saying we're gonna increase our capacity by 50%, didn't we? This is a reset. We're not building that capacity anymore. That's a reset. Okay. As far as the inventory is concerned, any risk that it becomes obsolete by the time the business turns around? No. No. You know, the, you know, 50% of our inventory is raw material, and raw material will never go bad. I mean, we can even sell the raw material, can't we? The other 40% is work in process, which, you know, without cutting or polishing to any products, specific product specification. You know, gallium arsenide, indium phosphide has been here. Gallium arsenide has been here for 25, 30 years, so it will never go away. Okay. I mean, anything which is already cut to customer specification, which is only 4% or 5%, and even then, I don't think we have lost customer. The most severe punishment is that the customer take our product and don't pay, and they go bankrupt. That's the only time where we lost. I don't think there's a whole lot of risk for. Yeah. In this business model, again, it's different from the semiconductor, you know, 'cause I come out of that background. The fact that we are a material science company, we start with raw materials, there's not a lot of management need to be micromanaging and watching out for, you know, obsolescence and things like that. Okay. Thank you. Thanks, Hamed. There are no further questions at this time. I now turn the call back over to Dr. Morris Young for closing remarks. Thank you for participating in our conference call. As always, please feel free to contact me, Gary Fischer, or Leslie Green directly if you would like to set up a call. We look forward to speaking with you in the near future. Thank you for attending today's presentation. You may now