Hello, ladies and gentlemen. Welcome to the Himax Technologies, Inc. first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If you require any further assistance, please press star zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mark Schwalenberg from MZ Group. Thank you, operator. Welcome everyone to Himax first quarter 2022 earnings call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, Ms. Jessica Pan, Chief Financial Officer, and Mr. Eric Li, Chief IR/PR Officer. After the company's prepared comments, we've allocated time for questions and a Q&A. If you've not yet received a copy of today's results release, please email HIMX@mzgroup.us, access the press release on financial portals, or download a copy from Himax's website at www.himax.com.tw. Unless otherwise specified, we will discuss our financials based on non-IFRS measures. You can find the related reconciliation to IFRS on our website. Before we begin the formal remarks, I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call. A list of risk factors can be found in the company's SEC filings, Form 20-F for the year ended December 31, 2021 in the section entitled Risk Factors, as may be amended. Except for the company's full year of 2021 financials, which were provided in the company's 20-F and filed with the SEC on March 23, 2022. The financial information included in this conference call is unaudited and consolidated and prepared in accordance with IFRS accounting. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor, to which we subject our annual consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I would now like to turn the call over to Mr. Eric Li. Eric, the floor is yours. Thank you, Mark, and thank you everyone for joining us. My name is Eric Li, Chief IR/PR Officer at Himax. On today's call, I'll first review Himax consolidated financial performance for the first quarter of 2022, followed by our second quarter 2022 outlook. Jordan will then give an update on the status of our business, after which we will take questions. Historically, our quarter sales are seasonally the low point of year due to the Lunar New Year holidays. This year, starting from February, additional factors also weighed in. Many new lockdowns in China to contain the spread of Omicron variant and the geopolitical conflict erupting in Ukraine, both causing major disruption to our supply chain. Despite these additional challenges, our first quarter revenue, gross margin, and EPS were all in line with the guided range issued on February 17, 2022. First quarter net revenues of $412.8 million decreased 8.6% sequentially, within our guidance of down 5%-9%. Yet Q1 sales were up 33.6% on a year-over-year basis. Our gross margin came in at 47%, a decrease from the record high of 51.8% in the fourth quarter last year, within our guidance of around 46%-48%. Now, IFRS profit per diluted ADS was $0.697, a mid-range of the guidance of $0.67-$0.73. Significantly up 81.5% from same period last year. Non-IFRS profit per diluted ADS was $0.663 at midpoint of the guidance of $0.635-$0.695, but significantly up 73.1% year over year. Revenue from large display driver was $110.6 million in Q1, a decrease of 11.5% sequentially, but an increase of approximately 60% year-over-year. TV revenue was flat sequentially, anchored by high-end and the large-sized TV shipments to key account, despite the first quarter being a seasonally low period and the continued soft TV demand. After consecutive quarters of strong growth, both monitor and the notebook IC sales decreased sequentially, as we guided, against the backdrop of slowing end market sales too. However, both grow nicely on a year-over-year basis, a reflection of our leading position across high-end displays and the premium models. Large panel driver IC accounted for 26.8% of the total revenue for this quarter, compared to 27.7% in the first quarter of 2021, and the 22.6% a year ago. Moving on to our small and medium-sized display driver segment. Revenue was $258.5 million, a decline of mid-single digits sequentially, but an increase of more than 25% year-over-year. The robust sales growth in our automotive segment for the past several quarters continued during Q1. Automotive IC sales increased more than 30% sequentially and more than 170% year-over-year. Our ePaper sales increased more than 15% sequentially in Q1, despite a shipment halt at the end of the quarter caused by city lockdowns in China. Small and medium-sized driver IC segment accounted for 62.6% of total sales for the quarter, compared to 61.2% in the previous quarter, and the 66.1% a year ago. In Q1, the automotive driver segment became our single largest revenue contributor, representing over 25% of total sales. We expect this upward trend in automotive contribution to continue throughout 2022. The revenue growth in automotive driver IC was backed by comprehensive design win coverage across the panel houses, Tier 1 wins and the carmakers. Alongside increased capacity for both discrete DDIC and TDDI. Automotive DDIC sales, which is still predominant portion of our automotive IC revenue, enjoyed decent first quarter growth, up more than 20% sequentially, with demand continuing to outpace supply. Our TDDI for automotive, we reached an impressive milestone with over 3 million units shipped during the first quarter as we previously guided. Given our leadership position in automotive IC, driver IC, comprehensive product offerings and the growing vehicle display market, we expect sustainable, robust growth in our automotive business with further market share gains on top of fast-expanding market. After many quarters of consecutive growth, our Q1 tablet revenue slightly declined off a high base by mid-single-digit%. However, tablet revenue was up low-teens% on a year-over-year basis due to strength in our TDDI sales, which grew low-single-digit% from the proactive adoption of all leading non-iOS tablet names. We maintained our leading market share position in the non-iOS tablet market with accelerated TDDI penetration among leading brand names. In line with our guidance, first quarter smartphone revenue declined double-digit% sequentially. The smartphone market continued to be challenged by sluggish demand, unexpected lockdowns in China and the geopolitical tension, resulting in significantly reduced demand visibility at panel houses and OEMs, which have started to reduce their IC inventory. As we mentioned on last quarter's call, we expected a portion of the first quarter decline due to our strategically-initiated product transition for key customers' new design, which led to less production output during Q1. First quarter non-driver revenues came in better than expected at $43.7 million, a sequential decrease of low teens%, but up around 25% year-over-year. The better than expected result was driven for higher shipment of our ultra-low power AI image sensing total solution to the notebook market. Our T-Con business was slightly down mid-single digits% sequentially, but increased more than 50% year-over-year. A reflection of better mix towards high-end product area, such as the 4K 8K TV, gaming monitor, low-power notebook and automotive T-Con. Non-driver product in Q1 accounted for 10.6% of total revenue, as compared to 11.1% in the fourth quarter of 2021, and 11.3% a year ago. Now, IFRS gross margin for the first quarter was 47%, a decrease from 51.8% of last quarter. Much higher than 40.2% of the same period last year. As we previously discussed, there were two primary factors that adversely impacted our margin profile. First, our cost of goods sold for Q1 reflected the higher foundry price from the previous quarter. Second, the expedited customer orders for which we enjoyed premium prices decreased in Q1 due to market softness. Himax's gross margin was also 47% for the quarter. Our non-IFRS operating expenses for the first quarter was $44 million, down 9.3% from the previous quarter, but up 12.3% from a year ago. As a reminder, the sequential operating expenses decrease was caused by a one-time cash bonus at the end of December last year to further reward employees for our last year's remarkable financial results. The year-over-year increase was caused mainly by the increased salary and R&D expenses. IFRS operating expenses was $51.5 million for the first quarter, down 8% from the preceding quarter, but up 30.5% from a year ago. The higher non-IFRS figures were mainly due to the tranche of annual bonus compensation, which we award employees at the end of September each year. The 2021 annual bonus compensation including RSUs and the cash awards totaled $74.7 million, out of which $24.8 million was immediately vested and recognized in the third quarter of 2021. The remainder will be equally vested in three tranches at the first, second, and the third anniversary of the grant date. The remaining compensation expenses will be recognized on a straight-line basis over the vesting period of each tranche. The first quarter non-IFRS operating income was $149.9 million or 36.3% of sales versus 41.1% of sales in the last quarter, and 27.5% of sales from a year ago. Non-IFRS after-tax profit was $121.9 million or 69.7 cents per diluted ADS, decreased from $148.4 million or 84.9 cents per diluted ADS last quarter. Significantly higher than $67.1 million or 38.4 cents for the same period last year. Turning to the balance sheet, we had $447.1 million of cash equivalents, and other financial assets as of March 31, 2022, compared to $245.8 million at the same time last year and $364.4 million a quarter ago. The higher cash balance was mainly from $72 million of operating cash inflow during the quarter, and the payments received from the customer for the purpose of securing their long-term chip supply. We had $51 million of long-term unsecured loans as of the end of Q1, of which $6 million was current portion. Our quarter-end inventories as of March 31, 2022, were $253.1 million, up from $198.6 million last quarter and up from $114.9 million a year ago. Accounts receivable at the end of March 2022 was $442.2 million, up from $410.2 million last quarter and up from $289.1 million a year ago. DSO was 96 days at the quarter end, as compared to 84 days a year ago and 97 days for last quarter. First quarter CapEx expenditures were $3.6 million versus $2 million for both last quarter and a year ago. The first quarter CapEx was mainly for R&D related equipment and in-house tester for our IC design business. Just prior to today's call, we announced an annual cash dividend of $1.25 per ADS, totaling approximately $217.9 million and payable on July 12, 2022. The payout ratio is 50% of net profit of last year, which is lower than our average payout ratio historically. The relatively low payout ratio reflects our decision to reserve sufficient working capital in the light of macroeconomic uncertainties. To facilitate our anticipated growth for the next few years. We are grateful for the continued support of our shareholders as we continue to execute our business objectives and we strive to deliver sustainable long-term growth. As of March 31, 2022, Himax had 174.3 ADS outstanding, unchanged from last quarter. On a fully diluted basis, total numbers of ADS outstanding for the first quarter was 174.8 million. Now, turning to our second quarter 2022 guidance. We expect second quarter revenue to decline 16%-20% sequentially. Now, Himax's gross margin is expected to be around 43%-45%, depending on the final product mix. Now, Himax's profit attributable to shareholders is expected to be in the range of $0.45-$0.50 per fully diluted ADS. IFRS profit attributable to shareholders is estimated to be in the range of $0.415-$0.465 per fully diluted ADS. I would now like to turn the call to Jordan. Jordan, the floor is yours. Thank you, Eric. Looking ahead to the second quarter, a host of geopolitical, macroeconomic, and pandemic-related factors are creating challenges and impairing our near-term outlook. The war in Ukraine, rising inflation, and rolling lockdowns throughout China have significantly impacted the supply chain and consumer electronics demand, leading to a particularly abnormal business environment. Murky order visibility is leading to smaller and shorter demand forecasts by leading global brands. In response, starting at the end of Q1, panel makers began taking aggressive measures in an attempt to quickly reduce the IC inventories. Against the backdrop of challenging market conditions and short-term uncertainty, for the second quarter, we expect a sequential decline in gross margin, mainly because our cost of goods sold this quarter represent pricing from previous quarters when foundries were still raising their prices. We also have some mild price adjustment in support of our non-automotive customers amidst soft demand worldwide. However, with both foundry and back-end pricing already stabilizing, our cost of goods sold moving into the second half will unlikely continue its upward trend over the first half of the year. As COVID-induced lockdowns begin to fade and supply chain disruptions are alleviated, visibility will improve and ultimately lead to a rebound in market demand. We anticipate Q2 sales to be the low point of this year. For full year, despite the murky short-term market condition, we remain upbeat about our top line for 2022, supported by the automotive business and two new revenue streams which all enjoy solid business visibility. We now expect our 2022 full year sales to stay at approximately the same high level of 2021. For the automotive business, regardless of the macro, macroeconomic concerns, we are targeting sales to double from last year, which already more than doubled from the year before. Meanwhile, backed by strong order pipelines, our ultra low power AI, image sensing and OLED business, two new sales streams, are poised to deliver an impactful contribution. The increased contribution of these key sectors comes with the added benefit of improving our long-term product mix in terms of both profit margin and business visibility. With that, I will begin with an update on the large panel driver IC business. For the second quarter, large display driver IC revenue is projected to be down double digits sequentially due to production disruptions in the midst of China's lockdowns, coupled with weakness in consumer demand. The outlook for large size driver IC business remains murky, with moderating TV sales and muted Chromebook sales. TV and notebook IC sales are expected to decline double digits sequentially in the second quarter due to customers' inventory control in response to sluggish global demand and reduced business visibility. We expect monitor IC sales to also decline sequentially, reflecting the overall market softness in the second quarter. Yet, on a year-over-year basis, monitor IC sales are expected to increase by more than 60%. It demonstrates our leading position across major customers for their higher-end displays and premium monitor models, as well as our ability to offer total solutions covering display, driver ICs, and advanced TCONs. Turning to the small and medium-sized display driver IC business. In the second quarter, revenue is expected to decline mid-teens sequentially. Sales for automotive are foreseen to be flat sequentially and up more than 110% year-over-year. Smartphone sales are set to decline single digits sequentially, while sales for tablet are expected to decline by double digit, both due to our customers' efforts to reduce their near-term inventory, a result of the sudden deterioration of forecast visibility from their customers on the backdrop of China's ongoing city lockdowns, weaker macroeconomic environment, and slowing, end market demands. Now for a quick update on each of the major sectors in our small and medium-sized display driver IC business. First, on the automotive segment. As Eric mentioned earlier, automotive overtook other sectors to become our largest revenue contributor during Q1, representing over 25% of our total sales. To elaborate on our success in this core segment, Himax is the market leader in automotive display driver technology with a 40% global market share. We boast a comprehensive product portfolio with market leadership ranging from traditional DDIC to new technologies such as TDDI, local dimming TCON, LTDI, and OLED. Despite strong consumer demand, the global car market continues to suffer from ongoing key component shortages and port congestion, which are hurting automotive sales worldwide. However, the increase in the number, size, and sophistication of displays inside vehicles is evolving at a rapid rate, all indicating much more driver IC content per vehicle. We are uniquely suited to continue to expand our footprint in this lucrative market, backed by secured multi-year foundry capacity and customer purchase agreements, as well as strong design coverage from all major panel houses, Tier-1s, and automotive OEMs. Additionally, we are the pioneer of mass production for TDDI, a technology that is essential for large-sized, interactive, stylish, and curved automotive displays. While TDDI is still in early stage of mass deployment for automotive market, we already achieved a milestone of over 3 million units shipped in Q1 alone. While continuing to see rapid increases in TDDI design win coverage across a broad range of automotive customers across the world for their upcoming vehicle models. In addition, our cutting-edge LTDI, which caters to larger than 30-inch displays and incorporates sophisticated touch feature with multi-chip design architecture, is yet another promising product in which we expect to see tremendous long-term results starting from 2023. We expect to double our automotive sales again in 2022 on top of the already strong 2021 sales growth of 111%. For the second quarter, we expect the automotive DDIC sales, which are still much larger than those of TDDI and AMOLED, to be flat to slightly up sequentially, but up more than 90% year-over-year. Our total IC output was adversely impacted by fab maintenance at one of our major foundry suppliers at the end of the first quarter. The maintenance was long overdue because of the heavy backlog of unmet demand. While we expect our automotive DDIC output to increase quarter-over-quarter for the rest of the year, the severe foundry capacity shortage continues to be a constraint for our automotive DDIC business. Q2 sales for automotive TDDI are expected to decline single-digit% sequentially as a side effect from the Russia-Ukraine war and Chinese city lockdowns, which have led to postponement of certain new projects' mass production timetable. Nevertheless, we still see extraordinary business momentum into the second half of 2022 for our automotive TDDI. We are well prepared in terms of secured long-term foundry capacity for automotive TDDI, which is on track for exponential growth throughout 2022 and the foreseeable future. Next, regarding smartphone and tablet businesses. The smartphone market continues to be depressed by excess inventory for panel makers, ODMs, and brands. Pandemic-induced logistics and supply chain disruptions are also weakening market sentiment. While rising inflation adversely affects household disposable income, leading to a prolonged replacement cycle at the consumer end. Against this backdrop, we expect Q2 smartphone IC business to down single digits sequentially. For tablet, we expect sales to fall double digits sequentially from the high base in the first quarter, driven by this slowdown in orders as our customers digest their inventory. In addition, the mass production timetables for some of the new large-sized tablets were postponed due to China lockdowns. With that said, we believe the pandemic has fueled a secular shift towards remote work and e-learning that consequently will keep tablet demands above pre-pandemic levels. TDDI penetration continues to rise for tablets, which are moving towards larger size displays, higher frame rate, and particularly active stylus features where we are seeing expanding adoption. Himax still has the leading position in non-iOS tablet market with decent market share. As soon as brands regain confidence in their outlook, we expect our sales momentum to rebound from panel makers replenishing inventory and preparing to launch new models. We therefore remain positive in our Q3 business outlook with a high likelihood of sequential rebound from the trough of Q2. Turning to the ePaper driver business, another product in our small and medium-sized driver lineup. Our ePaper business is set to grow more than 120% sequentially, representing around 2% of total sales in Q2. The phenomenal sequential growth stems from increasing demands to a leading customer, as well as catch-up shipments that were delayed last quarter due to logistic disruption from the lockdown in China. On a year-over-year basis, ePaper business is expected to increase significantly by around 300% due to a growing number of awarded projects with leading customers for their ASIC product shipment. We continue to collaborate with world-class ePaper customers for certain ASIC projects with increased R&D efforts spent on their next-generation products towards larger size, higher resolution, and colored ePaper displays. Backed by long-term supply agreements and lasting partnerships with industry-leading customers, we expect to capture significant market share in the ever-expanding eReading and eSignage markets throughout 2022. Next, for an update on AMOLED. In partnerships with major Korean and Chinese panel makers in various applications, we continue to gear up for AMOLED driver IC development. Our AMOLED solution for tablet has commenced mass production starting this quarter, where we provide both AMOLED driver and T-Con total solution and are the sole source supplier for a global leading tablet customer. We are working to secure additional capacity to meet the customer's product launch schedule and desired volume. In addition, our flexible AMOLED driver and T-Con for automotive display successfully ramped up for a customer's flagship EV model in Q1. Concurrently, the number of awarded projects with worldwide conventional carmakers and EV vendors is increasing. As for smartphone, we continue to commit R&D resources to AMOLED driver IC through arrangements with top-tier customers. In the light of serious constraints on AMOLED display driver capacity in the next few years, we have secured meaningful capacity in this area with our secured capacity fully booked up by leading panel makers. Finally, for AMOLED TV and notebook sectors, we are encouraged by our progress in the last few quarters with designs meant for leading customers and panel houses' next-generation products. In the second quarter, our AMOLED business, including T-Cons and driver, is expected to account for around 4% of total sales and is slated for strong growth in the next few years. Now let me share some of the progress we've made on the non-driver IC businesses. Starting with an update on timing controller. We anticipate Q2 T-Con sales to grow low single-digit% sequentially, a result of higher shipment of T-Con for monitor, OLED, tablet and automotive sectors. The consumer market continues to expand its appetite toward advanced displays for visual enjoyment and diverse video entertainment. After years of commitment and R&D effort, we have successfully positioned ourselves toward high-end areas, including 4K, 8K TV, high frame rate, gaming monitor, low power notebook, local dimming T-CON for automotive as well as OLED for tablet and automotive. These high-end areas not only warrant much higher content value on a per panel basis, but also represent the higher barrier to entry for latecomers. As all the displays gain traction in the market due to technological advance, advantages, we've been collaborating closely with major panel houses to jointly develop industry-leading AMOLED tablet display solution. We provide both AMOLED T-CON and drivers with both, commencing mass production in Q2. Additionally, we extended our T-CON product reach from higher-end tablets into notebook sector, where currently we are initiating projects jointly with panel makers for next generation premium OLED notebook. We are optimistic about the long-term potential for our T-CON business and continue to look to secure more capacity from our foundry partners in pursuit of sustaining the growth. Switching gears to the ultra low power AI image sensing total solution, which incorporates Himax ultra low power CMOS image sensor, a proprietary AI processor, and CNN-based AI algorithm. On April fourteenth, our wholly owned subsidiary, Emza, announced that its revolutionary and innovative AI-based visual sensing technology was adopted in a range of Dell's new notebook models. The WiseEye AI image sensing solution, which runs Emza's algorithm on Himax proprietary ultra low power AI processor and AoS image sensor, features always-on, ultra low power contextual aware vision AI. The solution can detect user engagement levels based on presence, movements, and visual direction. This contributes to better laptop power management, maximizing battery life, and ultimately enhancing the types of the laptop's user experience. We are thrilled by this deployment and anticipate continuous market proliferation as we engage in ongoing discussions with worldwide notebook brands and platform partners, where the number of design projects are increasing as we speak. Another area we are gaining momentum with our AI total solution is the Automatic Meter Reading or AMR application, where we have seen surging adoption across the continents over the past few quarters. With greater focus on sustainability and environmental consciousness, more countries are devoting resources to water preservation and are eager to implement intelligent water conservation technology. AMR embedded with Himax ultra low power AI image sensing technology is an ideal fit for this market. Our power efficient AI solution, installed over the existing traditional water meters, can automatically collect water consumption data with AI operating locally on the AMR device itself, providing in-time detection of abnormal leakage. So far, we have received most of the inquiries from China, where our AI total solution has been widely adopted by numerous customers, covering a wide geographical area. Some of these projects were slated for mass production starting Q1, but subsequently delayed due to the pandemic resurgence. In addition to China, we also seen a growing number of inquiries from other countries in Asia and Europe as well as India, an indication that our solution is effective, easy to use, and affordable for this application. The AMR application is expected to start generating sales in the near future. The rapid advancement of AI over the past few years has expanded both the function and popularity of AI applications that are now finding their way into nearly every business sector. For our ultra low power AI image sensing solution, we are seeing a wide range, wide variety of successful use cases and adoptions in areas such as panoramic video conferencing, smart parking, fitness equipment, smart agriculture, and medical inspection, among others. As an illustration, in the area of smart agriculture and environmental protection, our solution was adopted by Seeed Studio and IoT platform enabler in their IoT into the Wild product launch. We expect to see many more of these types of engagements with mass production in some of these exciting new channels. Lastly, I would like to give an update on our optical-related product lines covering WLO AR cores and 3D sensing. On our last earnings call, I provided a brief overview of our optical technology roadmap and applications in the Metaverse market. In short, Himax is at the forefront of this exciting yet early stage industry, having meticulously developed technologies for many years in collaboration with leading companies in the space. We believe our optical technologies, individually or combined, will play a key role in enabling Metaverse AR/VR devices. Now, to provide an update on our progress this quarter. First, on our LCoS microdisplay, I'm pleased to report that a new LCoS design wins for projector products from a leading global player. For AR glasses, currently we have several joint development projects underway with leading tech names, some of which using our cutting-edge Front-Lit LCoS microdisplay for their next generation products. Our Front-Lit LCoS microdisplay features lightweight, smartphone factor, high illumination, and full RGB color display characteristics, making it ideal for future AR glasses. Next, on human interface sensing for 3D gesture control, we have several AR/VR projects underway with industry leaders aiming to achieve immersive and precise controller-free gesture recognition. Moving on to 3D eye tracking. We've been engaged by some of the leading display companies for the adoption of our 3D eye tracking technology, which enables immersive 3D naked eye displays, free of motion sickness for monitor, notebook, and medical applications. Plus, on 3D scanning and reconstruction. Creating virtual worlds involved huge database, huge data sets of 3D image, including avatars, objects, and other environmental surroundings. 3D scanning device is required for the purpose of generating these 3D images. Currently, we have a few projects underway with leading virtual object companies whose 3D scanning devices adopt Himax proprietary dual 3D sensing architecture to reconstruct 3D virtual objects on a real-time basis. As I mentioned last quarter, Metaverse development is still in early stage, yet Himax is well-positioned with years of research and development, a strong product portfolio, production history, and key partnerships to capitalize on its growth in the years to come. For non-driver IC business, we expect revenue to be up low single digits sequentially in the second quarter. That concludes my report for this quarter. Thank you for your interest in Himax. We appreciate you joining today's call and we are now ready to take questions. At this time, if you would like to ask a question, press star then the number one on your telephone keypad. Please limit your question to one question and one follow-up. Your first question comes from the line of Donnie Teng from Nomura. Your line is open. Please ask your question. Oh, thank you, Jordan and Eric, for taking my question. My first question is regarding to our comment on the sales pattern into the second half. I'm just curious. I know second quarter looks like to be a bit, but for the recovery in third quarter and fourth quarter, may I ask if you are seeing like a more shipment driven or more like a ASP recovery? That's my first question. Thank you. I think it's primarily shipment driven. Donnie, I think we actually mentioned that we feel confident that we should be able to achieve at least a flat 2022 total revenue versus the higher level of last year. Now, how do we arrive at that number and how do we get our confidence? I guess this is another way of addressing your question. Mm. Actually, we can conceptually divide our products into two groups. The first group being the ones with high visibility. They are automotive, obviously, timing controller, which is very strong visibility. And also they are the second group. But sorry, that's the first group, right? The first group includes these two existing product lines with very strong visibility. And also we have two major new revenue stream kind of product line, right? Being AMOLED drivers or related products and also ultra low power AI sensor, right? These are new revenues which didn't exist the year before. Now, so that is the first group, right? They enjoy good visibility because of the nature of our product in the industry or because of the fact that they are actually new revenue streams in which we are always the sole source provider for the customers is launching new products. So the visibility for their business plan is actually quite good. Now, there are also the second group of products which are primarily all the consumer electronics, the TVs, computers, cell phone and alike. Honestly, the visibility currently is lower than usual. Right? If I take my existing projection from my customer for the first group, and I put in a number into my whole year's projection, and if I assume my whole year revenue to be flat compared to last year, then that implies the second group, i.e. the low visibility group, the revenue is actually represent a pretty material decline from a year-over-year basis. The number, I mean obviously no visibility being low visibility, that means we don't have a great deal of confidence one way or the other. However, the good news is that we actually recently analyzed customers' inventory level rather thoroughly, and particularly our inventory level, towards the end of the second quarter across this second group of products. We come to an easy conclusion that the panel customers' inventory towards the second quarter will be unusually low. Right. While I don't have the crystal ball to predict when and how, you know, whether China will lift its lockdown or whatever. Given the fact that our panel customers' shipment due to the low season are actually slightly down, but they are making regular shipments without major disruption, while their inventory control has resulted in a very, very unusually low inventory level towards the end of the quarter, like give us the good confidence that there's a good likelihood we may see a good rebound from Q3 or at least for the second half. What I'm trying to say is that if we predict the whole year revenue to be flat, it actually implies the second group, the low visibility consumer electronics group, to suffer from a pretty severe decline year over year, while we are actually seeing very promising signs that it may actually do better than that. We actually believe the flat revenue this year versus last year will be a low target for us for this year. That is basically our analysis. I'm pretty sure within a month or two, the visibility for the second group will be much enhanced. There are a lot of discussions going on with the customers in that regard at the moment. Lastly, let me just add the first group. We now only have good visibility from customers, all the visibility. We either have very strong position or the sole source provider for those products, and we are very much backed by our foundry capacity support. Last but not least, all these products coincidentally are still suffering from capacity shortage. That means our supply will still be lower than the demand for the second half. That is another reason why we feel very confident about the visibility of the first group. Understood. It's shipment driven. It's not the ASP driven primarily based on our assumption. Yeah. Thank you, Jordan. It's very comprehensive. The follow-up should be on the gross margin side because seems like you are like positive on the volume recovery and potentially as you mentioned like the first group products like long visibility as well. But for the ASP side or from foundry's cost perspective, are we able to like pass the cost to customers or to negotiate the new price with foundries? Or what kind of normalized gross margin you are expecting for the second half? Thank you. Well, thank you, Donnie. Again, to follow my previous analysis of the second group versus the first group versus the second group, the high visibility and low visibility. On the high visibility area, we are certainly not lowering our price in any meaningful way because of the simple fact that, you know, we have a very strong position. As I said earlier, demand still outpaces supply, so there's no reason for us to lower our price, right? The second group, low visibility, is harder to say, to be honest. Now, if I look at the supply side, we have been through at least a half year, two full quarters of rising cost of goods sales. That leads directly to our gross margin erosion. If you look at our second quarter guidance, I can tell you our guided gross margin decline is pretty much the same as our expected cost of goods sold increase percentage-wise, right? Now how is the cost of goods sold going to be like in the second half? I think we are seeing very much foundry prices have stabilized. The fact that is that our Q1 and Q2, those are prices fixed much earlier. Because of the production lead time, we are making shipments of those products where the prices were actually fixed much earlier when the foundry prices was on its way up, you know, constantly. I mean, foundry people also realize the fact that the market is soft right now, the demand is weak. You know, through our discussion with foundries, we are not seeing, we are not expecting, any meaningful foundry price increase. The same for back-end. If anything, I think we and our peers will try to get a better price for the second half. I mean, certainly a lot of negotiation going on. I cannot make any promises, but, I think that is the trend. That is on the cost side and on our pricing side, I talk about the high visibility group already. We are not going to lower our price. Selectively, in some selective areas, we may be able to raise our price a bit, I think. On the second group is harder to tell, the low visibility group. Right now, even during Q2, the very bottom season, here and there, you know, selectively small amount of price down have been offered to us, but they are in a very limited scope. What happens is that I think everybody, our customers included, recognize the fact that if you look ahead into next year or the year after, for mature processes, the foundry capacity is still likely to be tight. I mentioned earlier, right, towards the middle of the year, our customers' inventory level is likely to be much lower than normal. These factors combined, I think, I don't expect any major price fluctuation for the second group, even during the second half. You asked me whether we'll be able to pass through the additional cost. I think there will be no such issue as pass through additional cost because I said earlier in the second half, the cost is unlikely to continue to rise. I guess our gross margin for the second half will depend largely on our final product mix, which obviously is harder to predict, especially given the fact that, as I mentioned in the second half, the visibility is low, meaning the revenue, the actual revenue, the actual outcome can come higher or lower than our numbers right now. I think Thank you. As a conclusion, we don't expect our gross margin to deteriorate in any material way from the level of Q2 or Q1, I think. Got it. May I ask one last follow-up, is that what's the sales breakdown you are expecting for the group one and group two this year? Thank you. Okay. About 4 to 6. Group one being 4 and group two being 6. Great. Thank you so much, Jordan. Again, to ask a question, press star then the number. Sorry. A small correction. 4%-6% being the first half. That's the actual number. In the second half, the first group will outgrow the second group based on what our current projection pipeline. The first group will rise to somewhere around 45. It's gonna be 45 to 40 against 55. The whole year will be 40 plus something against 50 plus some something. Again, to ask a question. Yeah. Again, to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of Jerry Su from Credit Suisse. Your line is open. Please ask your question. Thanks for taking my question. I think my first question is regarding your, you know, I think Jordan, you have mentioned quite a few times about the inventory level. Our end customers have been able to go to a pretty low level by end of this quarter. When we look at your inventory level in Q1, I think inventory has increased another 25% from 4Q, and then more than double from a year ago. How should we think about your inventory exiting the second quarter? Are you taking any, you know, further steps, you know, to control your inventory, or are you comfortable with your current inventory level? Thank you, Jerry. Let me just say, it's not a good idea to compare the inventory level with lows of last year, because last year was unhealthy. In the sense that we had no, literally no finished goods inventory, and our customers are chasing us for shortage, like on a daily basis, right, from everywhere. So last year's inventory was unusually low and actually unhealthily low. If you look at our history, let's say we look at the past 5, excluding last year, right, last 5 to 10 years. Our inventory days, meaning inventory compared to cost of goods sold, ranges in between 90 to about 11-10 days. If you look at our Q1, end of Q1 is 104 days. Slightly on the upside, but still within the range, right? We are not worried about our Q1 inventory, because, particularly given the fact that we're still feeling the capacity, foundry capacity will remain short, at least in the next year or two. Now, with the expected dip of Q2 revenue, our end of Q2 inventory will still be higher than those of the end of the first quarter. I said earlier, on the other hand, our customers' inventory level, IC inventory level, will be lower than usual. I think, we are hoping, you know, in Q3 or Q4, our inventory level with the two factors combined, will get back to a more normal status. For now, we are watching our inventory level, like, I mean, I myself is monitoring our inventory level on a weekly basis. I'm not saying I'm not worried. We are watching it very closely, but there's nothing to indicate that we are reaching an unhealthy level, so to speak. In fact, we think it's probably still appropriate that we take a slightly more aggressive inventory preparation approach compared to normal given our view that the foundry capacity in at least the foreseeable future will still remain tight. Okay. Thank you. That's very helpful. Yeah, and then just to follow up on your comments on the foundries. You know, if the foundry supply is going to remain tight for the next few years, why you know, the foundry pricing will not further increase in the second half? Especially I think, you know, in the past few days, we have saw the news about one of the largest foundry in Taiwan, you know, in the world, has been raising the price, you know, in for 2023. So what is your view on the, you know, on foundry pricing, you know, into, you know, maybe into the second half of next year? You know, do you expect, you know, even if it's gonna be flattish later in the year, it could further increase in the longer term? I know you're talking about TSMC, right? Let's just say TSMC. TSMC announced publicly, right, and we got a notice as well. Apparently they sent notice at the same time to every customer that, starting the beginning of next year, they're going to raise their price by 6%. Actually, for mature node, that is the node we are in. Ironically, it is actually very good news for Himax. Because, TSMC in mature node, they are actually just playing catch up for pricing. They, right now, I mean, it is common market knowledge that, TSMC is less expensive. You know, they price their mature node, wafers less than, literally all their peers. I'm not going to comment on advanced nodes where TSMC is clearly the leader. On the mature nodes, TSMC's position is not as dominant as their position in advanced nodes. They're actually playing catch up. And our exposure to TSMC compared to our peers, we are the lowest. Meaning we are using other foundries more heavily compared to our peers. That actually implies that historically compared to our competitors, our cost burden is actually higher, right? Now, the reason why I say good news for us is not really about you know, comparing with our competitor. It's mainly because we are hoping through TSMC raising their price, they'll be able to squeeze out those weaker demands. You know, I just mentioned the first group against second group, right? A good portion of the first group, especially the OLED, large display OLED, products, the ultra-low power AI sensing products, we are using TSMC heavily. We are suffering still pretty big time from shortage. We are hoping through TSMC's raising their price, they get to squeeze out some of the weaker demands, and we can enjoy better supply, where we actually welcome such price increase. Whether we decide to pass this on to our customers is our call. I think, you know, at the moment, you know, to get more supply of TSMC is far more important than pricing. Now, get back to your question, you know. TSMC's being able to raise their price, does that mean the whole industry will follow suit? They are playing catch up, and I think, you know, everybody knows that. I'm certainly hoping, and I don't believe other foundries for their mature nodes will follow TSMC's price hike, further price hike, because they've already had their price hike much earlier on. I mean, again, everybody recognize, you know, the market demand is soft. You know, foundry's customers, guys like us, are having a harder time passing on the cost to our customers because there's only so much the customer can take. I think, for the industry to remain healthy in the long term, through my various discussion with different foundries, I think, the consensus is pretty clear so far to me that people are just going to stay put on pricing for this, for the remainder of the year. I mean, unless there's a major market rebound, right? That is then maybe another story because again, the foundry in the foreseeable future, at least, I think at least, you know, 1-2 years for mature nodes is gonna still be tight. Okay. Okay, thank you. Maybe just one other question, if I may. Regarding, you know, the current competition landscape, what are you seeing, you know, for the competition coming from, you know, the Chinese fabless? I think, you know, especially during the foundry supply constraint, you know, this kind of environment, do you think Chinese fabless they can, you know, come in and then create more impact volatility or take share from the existing, you know, driver IC players? Thank you. I think there's no straight answer, simple answer to cover all sectors. It varies depending on the sector. For example, automotive, where we are, we enjoy the best position. There's very, very little, if any, Chinese presence. It's a much harder, much higher entry barrier, and it takes much longer to see even any revenue contribution, right? I think, for various reasons, that is not their priority. So we feel little threat from there. For consumer electronics, I think their presence is much less in the areas of notebook and monitor and more in the area of smartphone and TV. For the simple reason that, with smartphone and TV, there is a very strong Chinese brand name presence, and brand name presence in the marketplace compared to those in notebook and monitor, right? I think they came in easier through TV and smartphone because they probably get better support from the end customer. I think those two areas, honestly, especially on the low-end market, there will be more competition. Yes. I think our presence, certainly we enjoy the best presence and highest presence in automotive. We also enjoy very good presence in monitor. Probably to a slightly lesser extent in notebook, but our shares in notebook are still increasing. Our presence relatively speaking is lowest in smartphone. This actually being one of the reasons. Certainly, we mentioned, you know, repeatedly in the previous earnings calls, our presence is lower in smartphone than before right now because we are limited by capacity. With the limited capacity, we are allocating more capacity to support tablet compared to smartphone. With tablet, again, less Chinese presence compared to smartphone and brand names, right? I think we are going to regain our smartphone presence once we start the AMOLED driver IC production, which we feel pretty good about. It will still take a little bit of time, but I think that is our strategy. We'll only come back hopefully, you know, with more presence once we start the AMOLED. With traditional TDDI, it's pretty bloody competition right now, yes. Okay. Okay, thank you. That's very helpful. Thank you, Jerry. There are no further questions at this time. You may continue. Excuse me, presenters. There are no further questions at this time. You may continue. Okay. Thank you, operator. As a final note, Eric Li, our Chief IR/PR Officer, will maintain investor marketing activities and continue to attend investor conferences. We'll announce the details as they come about. Thank you, and have a nice day. This concludes today's conference call. Thank you for participating. You may now disconnect.