Good day and thank you for standing by. Welcome to the Silicon Motion Technology Corporation's Q2 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. This conference call contains forward-looking statements within the meaning of Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitations, statements regarding trends in the semiconductor industry and our future results of operations, financial condition, and business prospects. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties and actual market trends, and our results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continued competitive pressure in the semiconductor industry and the effect of such pressure on prices, unpredictable changes in technology and consumer demand for multimedia consumer electronics, the state of any change in our relationship with our major customers, and changes in political, economic, legal, and social conditions in Taiwan. For additional discussions of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements which apply only as of the date of this conference call. Please be advised that today's call is being recorded. I will now like to hand the conference over to Mr. Tom Sepenzis, Senior Director of IR and Strategy. Thank you. Please go ahead. Good morning, everyone, and welcome to Silicon Motion 's Second Quarter 2025 Financial Results Conference Call and Webcast. Joining me today is Wallace Kou, our President and CEO, and Jason Tsai, our CFO. Wallace will first provide a review of our key business developments, and then Jason will discuss our second quarter results and outlook. Following our prepared remarks, we will conclude with a Q&A session. Before we get started, I would like to remind you of our safe harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the U.S. Securities and Exchange Commission. For more details on our financial results, please refer to our press release, which was filed on Form 6-K after the close of market yesterday. This webcast will be available for replay in the Investor Relations section of our website for a limited time. To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner consistent with how we analyze our own operating results. The reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued yesterday. We ask that you review it in conjunction with this call. With that, I will turn the call over to Wallace. Thank you Tom. Hello, everyone, and thank you for joining us today. I'm pleased to report that we exceeded our revenue and operating margin guidance for the second quarter. We further benefited from the introduction of new controllers that drive higher market shares and our continuing expansion and growth into new markets. As we further scale and shift to high-end UFS PCIe controllers and grow our automotive and MonTitan products in the second half of this year, we expect our revenue growth to remain strong and profitability to further improve. We are excited by the progress and foundation for growth we are building. Based on our backlog, diversification strategy, and design win momentum, we are well positioned for a strong second half and remain confident that we will exit the year with our target $1 billion revenue run rate. Let me start by discussing our view of a broader NAND flash environment and how it's positively affecting our business today and opening new opportunities longer term as well. The NAND industry experienced improvement in the second quarter with flash prices increasing as the inventory level in the PC and smartphone market declined further, given a modestly better demand environment. Enterprise storage demand remains strong in the quarter with AI expanding into nearly every industry. NAND flash makers have reduced capital expenditures for big growth and continue to increase prices as enterprise and AI growth are limiting NAND supply. Our module maker partners continue to build inventory ahead, with an expected increase in NAND prices in the second half of 2025. We will remain flexible and are well positioned with both NAND flash makers and module makers to fulfill their growing requirements. With NAND prices expected to increase, demand for more cost-effective QLC NAND expanding increases in smartphone and enterprise storage, increasing QLC production is a lower cost way to rapidly grow big growth for flash makers, while QLC-based solutions deliver high-density storage at a significantly lower cost. We are the only controller company partnered with all flash makers, giving us significant advantages and insights into current and future NAND technologies. We believe this partnership and our unmatched experience in managing QLC NAND will allow us to maintain our industry leadership and drive long-term sustainable revenue and earnings growth for many years. In addition, the demand for memory and storage solutions expands into new end markets in consumer, commercial, industrial, automotive, and enterprise. Memory makers are constrained in where they allocate R&D resources and capital resources between NAND, HBM, and DRAM. The demand from each of these markets continues to rise, and new generations of NAND evolve, with the need for next-generation controllers for these different applications expanding. Our flash maker partners are turning to Silicon Motion as their primary merchant supplier to help build comprehensive portfolios, expanding our market share and building the foundation for strong multi-year growth with an increasingly diversified range of products and end markets. Now, let me share some updates for each of our business segments, beginning with eMMC and UFS. Our mobile business significantly outperformed our expectations in the second quarter as we benefited from several positive trends for our eMMC/ UFS controllers. We continue to see strong booking momentum from both flash makers and module maker customers entering the second half of the year. Module makers, in particular, are experiencing strong growth in mobile as they are benefiting from the trend toward discrete eMMC/ UFS solutions, driven by the increasing availability of low-cost mobile DRAM. Flash makers have also adopted our controllers as they continue to embrace outsourcing to stay competitive, improve their time to market, and prioritize their own internal R&D resources for other technologies and end markets. Our family of UFS controllers for smartphone and other mobile and IoT devices grew meaningfully in the quarter as demand from both our flash maker and module maker customers accelerated. Driven by strong end market demand, the increasing share of UFS in smartphones is driving stronger demand for our new high-ISP UFS controllers in mainstream and high-end devices. In addition, our new engagement with handset OEMs for QLC UFS solutions is also expanding and diversifying our market penetration. We expect this trend to continue in the second half of this year. For eMMC, our increasing share and robust demand in the quarter also delivered strong sequential growth for our controllers. Demand is accelerating in multiple existing and emerging markets, including IoT, smartwatches, smart TVs, set-top boxes, and emerging consumer products such as AI glasses. The market for eMMC accounts for over 800 million units per year, and non-smartphones account for much of this market. We believe our eMMC business will remain a strong contributor for many years to come as these additional markets further scale. Now, I would like to move on to our SSD business. The PC market appeared to be bottomed out in the first quarter of 2025 and stabilized in the second quarter. We believe that the market will grow in the low single digits in 2025, and we are expecting a stronger second half given typical seasonality, which benefits from the back-to-school and holiday sales. This year, we'll also see further benefits from sunsetting of Windows 10 in October, and we are beginning to see more widespread adoption of AI at the edge in consumer and commercial PC, which is increasing the demand for high-performance solutions, including SSD, powered by our PCIe 5.0 controllers. As we have discussed previously, we expect to drive significant market share gains in client SSD over the next few years, especially in the high end, driven by our leading position in PCIe 5.0. Sales for our eight-channel controller, launched in December of last year, continued to grow quickly in the second quarter, increasing by more than 75% sequentially and already accounts for more than 10% of our client SSD controller revenue, driven by strong share gains and high ASP. We expect additional momentum with our PCIe 5.0 controllers throughout this year as OEMs increase sales at the high end. Additionally, we will start the initial ramp of our four-channel DRAMless PCIe 5.0 controller at the end of this year and have already won designs with four of six flash makers and nearly all the module makers. This new controller will target the broader segment of PC and aftermarket SSD sales, and we believe that this introduction will help us achieve 40% of the SSD market by 2028, up from 30% today. I will now provide an update to our automotive and other business. As I mentioned earlier, we continue to experience tremendous design win activity in our automotive segment. Vehicle capacity is increasing with a growing demand for high-speed and low-latency storage. We support automotive storage needed across nearly all our product lines, including PCIe, eMMC, UFS, and increasingly our Ferri embedded solution. We were the first company to achieve ASPICE Level 3 certification for our PCIe 4.0 solution, and we are on track to table a new automotive PCIe 5.0 controller in 2026. Demand for more storage solutions is increasing in conventional cars, as well as with next-generation electric vehicle makers. Our controller power increases storage density, speed, and reliability for diverse needs, including smart cockpits, ADAS sensors, cameras, navigation, and other applications. We are now seeing increased demand for storage solutions to support AI and multi-screen integration to help automakers drive differentiation and customer loyalty. We are currently shipping to many of the largest automotive brands in the business, including Mercedes, Tesla, BYD, Xiaomi, Toyota, Honda, and many others. As we enter the second half, we are seeing greater -than -expected demand from our partners in China. Those brands are successfully taking worldwide market share for low-cost automobiles and leading electric vehicles. Given the strength in China and increasing design win activity globally, we are increasingly confident that automotive will account for at least 10% of our revenue by 2026 - 2027. During the second quarter, we also experienced strong growth in our memory card business due to the highly successful launch of Nintendo Switch 2. We started ramping with the leading South Korean flash maker with direct attach to the Switch 2 games, as well as partnering with leading brands like ADATA and Knowles for retail expandable storage with PCIe SSD-level performance in a microSD form factor. For the first half of 2025, our memory card revenue more than doubled year-over-year, and we expect to see continued success in the second half of the year as the Switch 2 demand remains robust. As we enter the holiday season, the SM270A delivers the high-density, high-speed required by modern portable gaming devices, and we are pursuing other opportunities with this exceptional controller to drive diversified long-term growth. Finally, I would like to provide a highlight on our enterprise business. Both memory and storage needs are evolving rapidly in the AI era, and the opportunities for Silicon Motion are expanding. AI applications require access to data more quickly, driving increased adoption of SSD throughout the data center. The current infrastructure comprises high-performance memory, near -GPU storage, compute storage, warm storage, and cold storage. Our MonTitan platform is ideally suited to manage high-density, high-performance SSDs that are both cost-effective and power-efficient to serve the warm storage market with our leading controller when paired with QLC NAND. The warm storage market has traditionally been served by HDD, but storage performance requirements have increased due to AI applications, and the price disparities between HDD and QLC SSD converge. We expect more hyperscalers and CSPs will adopt high-capacity QLC eSSD for warm storage, while near-line HDD move to support the growing cold storage need. Recently, we have been receiving interest from customers to expand beyond warm storage into the compute storage market with our MonTitan. The new product will pair MonTitan with up to 16 TB of TLC NAND to target the high-performance near -CPU market, and it represents an exciting new opportunity for MonTitan. Longer term, we are also beginning to work with our industry and flash maker partners to support the development of a new JEDEC standard for near-line flash that will likely come to market in the next three to five years to further drive adoption of SSD in warm storage applications, especially as the need to access more data more quickly grows with AI. The near-line flash requirements will allow for more relaxed specifications for QLC with lower costs driven by higher yields. This should drive even greater adoption of QLC NAND in warm storage, and by extension, should create a bigger market opportunity for MonTitan. At the upcoming FMS conference next week, we will be co-hosting a demo with VAST Data to demonstrate how our MonTitan SSD can deliver a compelling solution for the insatiable growth in AI applications. The collaboration will showcase the VAST Data storage class memory, or SCM, for its new Ceres V2 platform. Ceres V2 leverages NVIDIA's BlueField -3 DPU platform for AI storage. The Ceres Intelligence Storage platform is used by system integrators and architects and deployed at hundreds of large enterprises around the world, including banks, data centers, retailers, multinational conglomerates, and other leading companies that are leveraging or are developing AI applications. We invite you to join us at FMS to see how our MonTitan solution will drive the next wave of AI solutions for the next several years. In conclusion, the second quarter of 2025 has delivered a significant rebound in our business, and we are beginning to see returns on the investment we have made over the past few years. This includes our leading six-nanometer product, our new UFS and PCIe 5.0 controllers, our new MonTitan eSSD, and the Blue storage solutions, our market-leading automotive portfolio, and our new microSD product for multiple applications, including Nintendo Switch 2. We are in a better position to expand our market share across each of our markets in 2025 than ever before, as we continue to capture additional share with the NAND flash maker across our product portfolio. Given the current customer demand in our legacy business and the growing success with our new product, I'm increasingly confident that we will achieve our goal of exiting 2025 at a $1 billion revenue run rate and grow further in 2026. Now, let me turn the call over to Jason to go over our financial results and outlook. Thank you, Wallace, and good morning, everyone, for joining us today. I will discuss additional details of our second quarter results and then provide our outlook. Please note that my comments today will focus primarily on our non-GAAP results unless specifically noted. A reconciliation of our GAAP to non-GAAP data is included with the earnings release issued yesterday. In the June quarter, sales increased 19.3% sequentially to $198.7 million, coming in well above the high end of our guided range as we experienced a strong rebound in mobile demand and strong growth in our PCIe 5.0 client SSD business. Gross margin was at the higher end of our guidance range and increased again in the quarter to 47.7% as we continue to capitalize on new product introductions and improving mix. Operating expenses increased sequentially to $69.3 million as we continue to invest in new enterprise storage products and as additional resources to support our significant pipeline of new projects. Higher operating expenses in the second quarter were also impacted by the stronger Taiwan dollar as most of our compensation expenses are paid in Taiwan dollar. Operating margin increased sequentially to 12.8%, well above our guided range, resulting from improved gross margins and higher than expected revenues during the quarter. Our earnings per ADS was $0.69. Total stock-based compensation, which we exclude from non-GAAP results, was $0.2 million in the second quarter. We had $282.3 million cash, cash equivalents, and restricted cash at the end of the second quarter compared to $331.7 million at the end of the first quarter of 2025. Cash declined in the second quarter primarily from the combination of the dividend payout of $16.7 million and an increase in inventory to support our expected strong business ramp. We did not repurchase any shares in the second quarter. Our team executed well and delivered significant outperformance despite ongoing global macro uncertainty and continuing investments in new advanced geometry products and our MonTitan platform for the enterprise and AI markets. Now I'll discuss our third quarter outlook. Revenue is expected to increase 10%- 15% to $219 million - $228 million, driven by growth across all segments of our business as newer products continue to ramp in PCIe 5.0, UFS, eMMC, and the enterprise. Gross margins are expected to be in the range of 48% - 49% as we continue to transition customers to newer platforms and we return back to our historical range. Operating margin is expected to be in the range of 12.3% - 14.3% as we benefit from higher revenue and gross margins, partially offset by higher operating expenses from higher R&D development and headcount expense and the continuing strength of the Taiwan dollar. Our effective tax rate is expected to be approximately 18%. Stock-based compensation and dispute-related expenses are expected to be in the range of $6.5 million- $7.5 million. For the full year, PC and smartphone growth targets remain in the low to mid-single-digit range with an above-average second half waiting. We believe that our business will reflect the broader industry with significant growth expected in the second half, driven by the strong ramp of new products and project wins. We continue to target an annual revenue run rate of approximately $1 billion as we exit the year. We expect to continue to improve gross margins as new products scale and our enterprise business begins to ramp in the second half of the year. We remain confident that we can drive gross margins towards the higher end of the historical range of 48%- 50% by the end of this year. Our pipeline of new design wins continues to grow, and we are committed to investing in next-generation advanced geometry products that allow us to enhance our market share and business long term and help us diversify our product portfolio and enter new markets. We will also continue to add additional R&D resources to address the growing range of customer projects that will drive long-term growth. Despite these higher investments, we're confident that we can return to our historical operating margin range of 25% plus in the midterm as investments we have made over the past 18 months begin to scale and drive stronger revenue growth, better gross profitability, and improve our operating profit. Our overall tax rate is expected to be approximately 15% for the full year, and stock-based comp and dispute-related expenses will be in the range of $32 million- $34 million. As we enter the second half, our pipeline of new projects continues to build and position us for strong growth for the rest of this year and into 2026 and beyond. Investments we have made in client SSD and eMMC and UFS controllers are beginning to scale, driving better ASPs and higher margins. Momentum behind our enterprise business, driven by strong progress in our MonTitan development and expanding opportunities in enterprise boot drives, will deliver a new avenue of high margin growth for the company longer term. We're confident that our leading controller products, paired with our unmatched customer relationships with all the flash makers and virtually every module maker, will drive significant long-term revenue and profitability growth for the company. This concludes our prepared remarks. We will now open the call to questions from the investment community. Operator, please go ahead with the first question. Thank you. As a reminder, to ask questions, please press star one, one on your telephone. Our first question comes from Craig Ellis from B. Riley Securities. Please go ahead. Yeah, thanks for taking the question and congratulations on a very strong quarter of execution and the momentum you have here. I wanted to just start with a clarification question on some of your operating expense comments, Jason. We've all seen that there's been exchange rate fluctuations at unusual degrees as we've gone through the last three months and with where we stand here early in the third quarter. I'm wondering if you can quantify what the new Taiwan dollar exchange impact was to 2Q and 3Q expenses versus the impact of some of the growth-related R&D expenses that you also talked about, just to help us calibrate the currency dynamic in the middle of the income statement. Yeah, you know, the NT dollar strengthened meaningfully and quickly in the second quarter, and it was up by over 10% sequentially. While our revenue, cost of goods sold, and most of our development costs are all denominated in U.S. dollars, our compensation is primarily denominated in Taiwan dollars, given that the majority of our employees are based here in Taiwan. Had the Taiwan dollar and the U.S. dollar exchange rate stayed stable, assuming kind of we stayed similar exchange rates to what we saw in Q1, our operating margin in the second quarter and for our outlook would have been about one plus percentage points higher than what we had reported for the second quarter of what we're guiding to in the third quarter. That's really helpful. Thank you. Yeah, absolutely. The second question is for Wallace. Wallace, you're clearly seeing robust engagement on the enterprise side of the business, and I'm hoping what you can do is talk about this year's exit momentum along three parameters, with respect to enterprise. One, what's happening with the initial customer ramps with MonTitan? Two, can you update us on the status of the NVIDIA BlueField DPU program and what you'd expect there exiting the fourth quarter? We've just seen great engagement from the supply chain pulling in your PCIe Gen5 controllers into lower-end, more efficient, AI-related scale-up, scale-out configurations. Just help us understand what you see there and what all that means as we look to 2026. Thank you. Okay, let me try the MonTitan status. I think the MonTitan's design momentum is very strong. Now, we believe we're going to start to initial ramp in the fourth quarter, and will be more meaningful than strong momentum in 2026. We have four, two tier one customers, four other designs. Actually, we have more coming, but we just don't have enough resources to supply. The most important is the number of customers because each customer needs some custom-made tailored firmware to fit certain categories and workload, so we are focused on delivering the robust finalized firmware and expect production in later this year. I think the momentum is coming, also with both QLC high-capacity enterprise SSD as well as TLC-based for compute storage. Now, let me address the NVIDIA BlueField. The NVIDIA qualification is in the final stage. We believe we'll enter production in the Q4. Actually, frankly, the solution we are controlling and the firmware we have have been with NVIDIA in the past two years with other NAND makers, which we cannot say. This is a transition. Actually, we're winning with our own solution with a different NAND type to supply for the long term. We believe that helping us to grow in 2026 and 2027. In addition, they also opened the door for us to engage with NVIDIA in other BU and other product lines. That's very great for us to be in the NVIDIA supply chain, and hopefully that will expand much more opportunity in the future. Wallace. I beg your pardon. If you would like to ask questions again, please press star one, one. Allow me to move on to the next question from Mehdi Hosseini from SI G. Please go ahead. Yes, thanks for taking my question. The first one for Wallace. Congrats on increasing the annual revenue run rate. I see there's about a $55 million incremental revenue increase from Q4 2024- Q4 2025. I'm assuming the majority of this is driven by the new PCIe projects. As I look into next year, let's say Q4 of 2026, this is where I think BlueField is going to kick in and add incremental revenue. You have a baseline of Q4 2024, and then you overlay $55 million of the new products, especially driven by storage, and then the BlueField would drive or sustain that growth into Q4 of 2026. Am I thinking about this transition the right way? Feel free to modify it and improve that thought process. Yeah, I think, and Mehdi, it's Jason here. In terms of your comparison between Q4 2024 and Q4 2025, that incremental revenue that we're talking about here is a result of really strength across the board. Increasing share in new products in eMMC and UFS, increasing share in new products in PCIe, especially in PCIe 5.0 for SSDs, and then the initial ramp of the MonTitan products as well as the initial ramp of BlueField. Now, we haven't guided into 2026, so you'll have to bear with us for a little bit. I'm not going to comment on kind of how this goes into 2026, but certainly, you know, we still expect to be achieving that 5%- 10% revenue run rate with MonTitan in that 2026-2027 timeframe. Nothing's changed there, and certainly the strength that we're building, the designs we've won, the pipeline that we have to support growth longer term continues to get stronger and stronger each day. I think let me add a comment. We have a very strong backlog in the second half of 2025. That's why we have confidence to reach our financial goal. Okay. Moving on to OpEx, there's a significant step up in 2025, as Jason highlighted, investment for future. Should I expect OpEx intensity to decline into 2026 as the new product ramp, and this is going to give you some OpEx leverage? We certainly expect to see operating margin leverage as our gross margins improve and our revenue scales. We do continue, we will continue to invest. As Wallace pointed out, we have a number of new projects that we actually don't even have enough resources today to support that we have to turn away. We will continue to invest. We will continue to hire. We have a number of new projects that we're going to be taping out next year, especially in the enterprise and some of the more advanced geometry. These are things that we'll continue to invest in longer term. We believe you'll see operating margin leverage. A lot of the investments that we had made over the last two years are now just starting to come to market, and they haven't scaled yet. That should drive a significant amount of operating margin leverage going into next year as well. Okay. Thank you. Thank you for the question. One moment for the next question. Our next question comes from Suji Desilva from ROTH Capital. Please go ahead. Hi, Wallace. Hi, Jason. Curious with the trends you have in the revenues, whether the gross margin would continue to potentially expand maybe above the target range given the auto coming in, enterprise, some of these other areas, or whether we should think about there being offsets to that, keeping it in the range intermediate term. Yeah, I think it really depends on the product mix and depends on which quarter. For a certain product, because it's a high volume, I think the margin is a little below our corporate average. For some high-end products, definitely the margin is better. I think we cannot just, I cannot comment right now. We were above the upside of our guided margin, but definitely we'll meet our gross margin, and I think we should have a better result in 2026. Okay. That helps. Thanks. On the MonTitan firmware efforts and the customer efforts in the R&D you're investing, Jason, is there a point in time where you think you get on top of that, or is that going to be a persistent challenge of sort of having to turn away programs, or is there some kind of leverage after you do a few of these that you can kind of pull that forward? I think after we do a few, to your point, once we do a few of these, once we get a bunch of a few of our customers up and running, we'll have a wide range of firmware capabilities that we can bring to market, right? Some folks are going to want SDKs, hardware only, where they're building their own firmware, and that's pretty easy to support. Some folks that require full turnkey will require more resources, etc. Okay. All right. Thanks, guys. Thank you for the questions. Please hold for the next questions. Our next question comes from Gokul Hariharan from JPMorgan. Please go ahead. Yeah, hi. Thanks for taking my question. Wallace, the first question is you seem to be sounding a lot more optimistic about the automotive engagements compared to maybe two quarters back. Could you talk a little bit about what is the incremental margin profile when it comes to automotive, both for gross margins as well as operating margins, given a lot of the R&D is fairly similar to what you do for client SSD controllers or client eMMC controllers, right? Is there a meaningful operating leverage that we should expect as automotive starts to scale given it kind of just expands the scope of your revenue base on similar R&D? Second question is on enterprise. Could you talk a little bit more about the roadmap for MonTitan? I think what are we thinking about for future engagements like the next generation of MonTitan? What are you planning in terms of the roadmap? All right. Good. Let me try to address automotive business. We feel more positive about our automotive business from the second quarter and moving to the second half of 2025 because it's through our design win pipeline, and we also had a significant breakthrough in the China automotive market. As you know very well, China automotive is very bloody and priced very competitive. I think we find a very special way to position our value proposition to the leading customers like BYD and Xiaomi and several others. That's why we built a tremendous new pipeline and moved into production from late 2025- 2026. Our major program in Toyota global model also starts to ramp by late 2025. That's why we have a very, very strong momentum in the automotive business. We have confidence we'll be above 10% of our total revenue from 2026- 2027. Now, let me comment about enterprise and regarding the plan and roadmap. Our MonTitan today is 16-channel, the PCIe 5.0 controller with performance shaping technology. We also developed a six or eight-channel MonTitan. It's called 8388, and the product will be available by the end of this year. As you know, I don't know whether you know very well, the U.S. has demanded high capacity of enterprise SSD from 128 TB, and some even ask for 256 TB. China also started a new momentum asking for 64 TB from late this year to 2026. Our eight-channel lower-cost MonTitan, which is perfectly fitting the demand and provides decent performance as well as high capacity up to 128 TB. We also will develop our PCIe Gen6 MonTitan family with TSMC 4-nanometer. We'll tap out next year, and we are engaged with at least two NAND makers in this program. This is very, very exciting. We're very busy. We'll build a design pipeline. We believe MonTitan will continue to run and drive much bigger momentum beyond 2026- 2027. Got it. Maybe one follow-up, Wallace, there. I think you talked about potentially seeing some demand for the cold storage market as well for some of the AI data centers. Is there anything that you need to really change in your portfolio or the controller itself to address this market, or is it kind of like an adjacency that you can address without too much change in the product? Data storage today, primary really one storage, and some of the compute storage is conventional server. I think for cold storage really is the conventional near-line HDD. I think Samsung led the association with the near-line flash and proposed to share that standard. That's very, very interesting to drive a lower-cost QLC-based enterprise SSD to expand warm data storage for SSD. I think we definitely willing to see that, and we absolutely will put a good effort to engage with that trend because that's a huge potential for the NAND maker and the data center for enterprise SSD opportunity. Do you have any timing on when this could open up in the next couple of years? Do you think it'll open up or will it take longer than that? I think all NAND makers are working together and looking for how to define the right specs, and definitely the performance has to be a little better than near-line HDD, so they can relax the specs and make sure the performance meets the AI application in the warm data storage. The timeframe, as I said, is about three to five years range. Okay, thank you. Thank you for the questions. Our next question comes from Matt Bryson from Wedbush. Please go ahead. Thanks for your question this morning. I just have one. If I look at your target of 25% plus operating margins, and I work off kind of current OpEx levels, even if I assume gross margins move up into the 50%, 51% range, at the historical high, a little bit [audio distortion] of a new run rate of [audio distortion] $300 million, and that goes higher if OpEx continues to increase, which I think you're suggesting it will because [audio distortion] Hey, Matt, you're breaking up. We can't hear you. Oh, let me, is this better? No. I will jump out and try dialing in again. Okay. Let me answer your previous first question. I think that definitely we have a higher operation expense because we increased R&D, and also we have a six-nanometer tape out. Next year, we also have a four-nanometer tape out with the six-nanometer tape out. Our bringing expense probably will increase slightly. When we grow strongly in the top line of our revenue, it will help much faster for our operation margin. We're definitely looking forward to move back to 20-25% margin in 2026, and you will see even better margin moving to 27%. Thanks, Wallace. I'm sorry for the technical difficulties on my end. Thank you for the questions. One moment for the next question. Our next question comes from the line of Nick Doyle from Needham & Co. Please go ahead. Thanks for taking my questions. Just trying to think about the mobile strength and figuring out how sustainable that is. You mentioned the strength coming from units and share gains. Is the bulk of that related to this Chinese domestic market dynamic you've discussed? You mentioned it again. Just how should we be thinking about that growth into next year and if it's sustainable? Okay. I think that it's a very good question. We have a very specific strategy to grow our mobile controllers for both eMMC and UFS. Of course, the China market, and because of the affordable low-cost mobile DRAM available, that's why most of the smartphone makers, they like to adopt discrete eMMC or UFS that help the module maker customers to expand quickly. That's why when they expand quickly, I think that also will impact some NAND makers for the value line. NAND makers also turn to Silicon Motion controllers because they do not want to develop in-house. They will utilize our solution quickly to the market, and you can either sell the wafer to a module maker or make a lower-cost solution to compete in the market. That's why we grow very quickly for the value line and the mainstream for both eMMC and UFS. In addition, we see the NAND maker also looking for next generation. For example, UFS 4.1 is in high end, but UFS 5.0 will move into the high end by late 2026 and 2027. The 4.1 becomes mainstream. The NAND makers, they don't have enough resources to develop a new firmware to port into the new NAND. They come to outsource to a third party. Silicon Motion is in the right position to capture the outsourcing opportunity. All of this pipeline together continues, you'll see so many opportunities. Actually, we have so many projects in hand, we don't have a resource to take. This is what we see in the momentum, and we definitely see we're growing the market share in the mobile, and hopefully we can reach 30% within two years. Okay. Thanks. If I understand correctly, it sounds a bit like this transition to the 4.1 in the mainstream could help the sustainability into next year. Maybe also asking a bit of a different way, you talked about the module maker inventory and how they're pulling in orders in almost fear of price hikes later in the year. How do their inventories compare to historical? Does that make you nervous at all in terms of the future mobile business? Thanks. We really don't see. I think our customers in early Q2 somewhat worry about the tariff, but later it's stabilized. We really don't see many customers pulling the demand, as you know. A customer, if they don't buy that many NAND, they won't buy a controller for inventory, right? They will see the balance. Most of them really plan ahead and make sure they also can prepare the NAND price increase. I think that's why we see the very stable pipeline because we can see six months backlog right now. That's why we're very confident about what we can achieve, the billion-dollar run rate by year-end. Thank you. Thank you for the questions. As a reminder, to ask questions, please dial star one one and wait for your name to be announced. At this time, we appear to have no further questions. I would like to hand the call back to the management for closing. Thank you, everyone, for joining today and for your continuing interest in Silicon Motion Technology Corporation. We'll be attending the FMS conference in Santa Clara next week, as well as several investor conferences over the next few months. The schedule of these events will be posted in our Investor Relations section of our corporate website, and we look forward to speaking with you at the event. Thank you, everyone, for joining us today. That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.