Welcome to the Diodes Incorporated First Quarter 2013 Financial Results Conference Call. At this time, all participants are in listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, Thursday, May 9, 2013. I would now like to turn the call to Leanne Sievers of Shelton Group, the Investor Relations agency for Diodes. Leanne, please go ahead.

Good afternoon and welcome to Diodes’s first quarter 2013 financial results conference call. I’m Leanne Sievers, Executive Vice President of Shelton Group, Diodes’s Investor Relations firm. With us today are Diodes President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Rick White; Senior Vice President of Sales and Marketing, Mark King; and Director of Investor Relations, Laura Mehrl. Before I turn the call over to Dr. Lu, I’d like to remind our listeners that management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company’s filings with the Securities and Exchange Commission. In addition, any projections as to the company’s future performance represent management’s estimate as of today, May 9, 2013. Diodes assumes no obligation to update these projections in the future, as market conditions may or may not change. Additionally, the company’s press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company’s press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. Also, throughout the company’s press release and management’s statements during this conference call, we refer to net income attributable to common stockholders as GAAP net income. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 60 days in the Investor Relations section of Diodes’s website at www.diodes.com. And now, I’ll turn the call over to Diodes President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.

Thank you, Leanne. Welcome, everyone, and thank you for joining us today. I am pleased to report that Diodes achieved record quarterly revenue despite the typical seasonal softness in the quarter and the slowdown at certain key OEMs. Our sequential revenue growth was due to the result of our continued design win momentum, as well as, one month of revenue contribution from our acquisition of BCD. Additionally, non-GAAP gross profit margin, which excluded an inventory valuation adjustment related to the BCD purchases, improved 60 basis points sequentially and was favorable to our updated guidance due to revenue increases in the higher margin regions of North America and Europe, a better than expected manufacturing recovery following the Chinese New Year holiday, lower gold price and a more favorable product mix. Also during the quarter, we finalized our acquisition of BCD a much fit and the integration to-date has gone smoothly. This transaction was immediately accretive to earnings, excluding purchase price accounting adjustment. We already have begun walking through so that the BCD product upload to our internal assembly test facility and that we’ll start the conversion to internal production in the first quarter this year. We expect the conversion of maturity of the product that can be converted into internal production to be finished by the end of this quarter next year. We expect to begin benefit from the cross-selling synergies of expansion [and] offerings based in the fourth quarter of this year. Overall, I'm pleased with the progress we made in the quarter in terms of design win momentum and the integration of our recent acquisition. As we do with the first quarter, set the stage for continued growth and the margin improvement in the second quarter. With that, I will now turn the call over to Rick to discuss our first quarter financial results as well as second quarter guidance in more detail.

Thanks, Dr. Lu, and good afternoon, everyone. Revenue for the first quarter 2013 was $177 million, an increase of 8.4% over the $163.3 million in the fourth quarter 2012 and an increase of 22.3% from the $144.7 million in the first quarter 2012. The sequential increase in revenue was primarily due to one month of revenue contribution from BCD as well as the result of our continued design win momentum. GAAP gross profit for the first quarter 2013 was $46.2 million, or 26.1% of revenue. As previously disclosed in our mid-quarter guidance press release on March 7, our guidance did not include the impact of any BCD purchase price accounting adjustments. Based on our subsequent initial evaluation of BCD’s acquired assets, GAAP gross profit for the first quarter 2013 included an inventory valuation adjustment related to the BCD purchase totaling $1.8 million. Excluding this amount, non-GAAP adjusted gross profit was $48 million, or 27.1% of revenue, compared to GAAP gross profit of $43.2 million, or 26.5%, in the fourth quarter 2012 and $33.7 million, or 23.3% of revenue, in the first quarter 2012. The 60 basis point sequential improvement and the favorable upside versus our updated guidance in gross profit margin was due mainly to increased revenue in higher margin regions, a better than expected manufacturing recovery following the Chinese New Year holiday, lower gold prices and a more favorable product mix. GAAP operating expenses for the first quarter were $42.4 million, or 24% of revenue, which included approximately $900,000 of items related to the BCD acquisition and $1.9 million related to amortization of acquisition intangibles, compared to $39.7 million, or 24.3% of revenue in the fourth quarter 2012 and $28.2 million, or 19.5% of revenue, in the first quarter 2012. Excluding acquisition-related costs, amortization of acquisition intangibles and the…

Thank you, Rick, and good afternoon. Our achievement of 8.4% sequential growth and the record quarterly revenue was driven by strong increases in North America and Europe, which recovered from a very weak 3Q and 4Q as well as one-month revenue from BCD. The industrial and communications sectors included in both of these regions, while computing was slightly better than expected with expansion in Wi-Fi modules. Although, the consumer market was softer, we continue to execute our strategy and capitalize on our strong position in smartphones and tablets with new products and design wins in both devices and chargers. OEM sales for the quarter were down 8%, and distributor POS was up 8%. It was a strong quarter for PLP, as distributors began anticipating market improvement and started building required inventory, especially in North America and Europe where inventory had been reduced to minimum levels. Distributor inventory rose 4% after two consecutive quarters of decline. Global inventory remained in line and under three months. Turning to global sales, Asia represented 79% of revenue, North America 11% and Europe 10%. Our end market breakup consisted of consumer representing 31% of revenue, computing 29%, industrial 19%, communications 17% and automotive 4%. With the completion of our recent acquisitions and differences in market sector reporting, we plan to redo and align our market sector definitions in the second quarter. In terms of new product and design wins, we had a strong quarter with another revenue record on CMOS LDOs, along with positive momentum in DC-to-DC converters, LED backlighting, audio, hall sensors and SBRs for the broad-based market. Design wins also remained strong, and we have a solid pipeline of designs going forward. Starting with discrete, product introductions totaled 25 new products across 10 product families, representing a wide range of application segments and…

(Operator Instructions) Your first question comes from the line of Steve Smigie from Raymond James. Please proceed.

Great. Thank you very much, and I want to say congratulations on the great report and guide here to impressive margin improvement there. Dr. Lu, I was hoping you could talk a little bit now about BCD, as you’ve had it in-house for little while. Have you had any customer response on potential cross-selling opportunities? Does it seem like that’s going to be some decent revenue leverage there?

Yeah. Thank you, Steve. Yes. I think, number one, the consolidation is pretty good. Everything is smoothly doing and we still have further work to be done, but till today everything is doing well. Second, yes, we get a pretty good feedback from customers especially with BCD product compliment with Diodes' product. We provide much bigger scale of the product portfolio to our customer and this kind of one-stop shopping is really help our customer and people -- our customer really feel very good. So the feedback from our customer about the synergy, you know, the sales synergy, I'm still very happy. And I think in the speech, we are talking about, we think we can start to have a cross-sell synergy realized in 4Q this year because it takes time to get customer design win and go to production.

Great. Thanks. And on the margin side, can you talk a little bit about how you are thinking about gross margin? You know you have BCD and I think the margins at the end of the day weren't that different. So, I'm going to guess, we should see probably if revenue keeps creeping up here, that we would see some margin leverage, so, I guess, the question is, will you keep seeing continued margin leverage? And just to sneak one last one, can you give some guidance or thoughts on how the tax rate looks going forward? You know sort of post June it seems a little higher than you used to have. Thanks.

Okay. I probably cannot give you the particular specific number because we are not really [reduce it] – and other than second quarter number, okay. But, need that you realize, in the 1Q, in BCD, we have to adjust that to ramp it up in January, okay, so we still in the ramp up mode in the second quarter. And that under-loaded ramp-up is going to be negative impact to our GPM percent. But moving forward I think we are – we already started working on offloading or co-define BCD product into Diodes' SKE assembly and I think we say in our speech, the offload will be started in 4Q this year, and majority of what we want to move will be probably completed by end of 1Q next year. And therefore, this will be, for sure, improve our GPM percent, okay, in the future. At the same time, we are looking at move our Diodes' analog wafer loading into the BCD and we already identify where we can move our wafer into the BCD, but, of course, its takes time to qualify. The process is almost – is already there. We just need to qualify it and do the PCM, and the customer expect that will go through a change, and then we will be start to able to offload our analog wafer into the BCD fab. So, again, it won’t be immediately impacted in 2Q, 3Q but farther down the line. It will depend on when the customer acceptance and we [didn’t] as convert, I think, in the future, it will be greatly impact our GPM percent improvement.

Okay. And, Rick, any thoughts. So is the tax that you guys provided for June – is that sort of more what we should be thinking as the rate going forward or is that sort of a one-time rate above normal?

No, no. That tax rate where we said 14% to 20% is going forward, not just the second quarter rate. It’d be for the rest of the year.

Okay. Great. All right. Congratulations, again. Thank you.

Thank you.

Your next question comes from the line of Christopher Longiaru from Sidoti & Company. Please proceed. Chris Longiaru - Sidoti & Co.: Hey, guys. I’ll add my congratulations. Great quarter. Great guide.

Okay. Thank you, Chris. Chris Longiaru - Sidoti & Co.: My first question is for Mark, because I was just a little bit confused. Essentially, you said that consumer was weak but that basically the cell phone guys like HTC, Samsung made up for some of that weakness. Is that what I am to understand?

I think that would be a good assumption. Chris Longiaru - Sidoti & Co.: Okay. And then just in terms of the expenses going forward, so you have some restructuring charges on a GAAP basis. Do those go away, as we move on past June? And then, when you talk about the restructuring saving about $3 million in annual costs, will we start to see that in the September quarter?

Well, the answer is yes. Okay. The destruction is happening now. Okay.

Restructure.

The restructure is happening now. So in the coming quarter you will benefit that $3 million a year. You will benefit from now on. Chris Longiaru - Sidoti & Co.: Okay, got it. And just from a gross margin perspective, BCD was at about 22%, for gross margin, when they were on their own. So it looks like the incorporation of that month might have actually hurt your gross margin in the short-term because you haven’t had a chance to bring that in-house. Is that accurate?

Well, I cannot comment a percent, but like I said, yes, it will be hurting us in the average. But, you know, from long-term it’s going to be helping us and I cannot comment on the number. Okay. But, yes, it’s because they are under-loaded and the ramp-up on Fab 2 and Fab 2 is there last year, it started ramping up in January and it takes time to ramp up. Chris Longiaru - Sidoti & Co.: That's helpful. I think that's all I have for now. Thanks guys.

Thank you, Chris.

Your next question comes from the line of Gary Mobley from Benchmark. Please proceed.

Hi, guys. Thanks for taking my question.

Hi, Gary.

I wanted to hone in on the gross margin, if you look at the midpoint of your gross margin guide for the June quarter, it’s about a 300 basis point sequential improvement. How much of that is a function of better fixed cost coverage, better depreciation, expense coverage, and how much is attributable to, you know, you picking and choosing which opportunities to chase, in other words, selling only the highest margin products, and how much it has to do with the continual conversion to gold bond wiring? Thank you.

Okay, great. We really don't separate all this one, okay, because they give me no forecast, I can solve that, and then we do indeed. So it's very difficult for me to say how much is due to what, what, what. But what you uncovered is all true. Number one, I’ve been talking about gold price and you know the gold price going down in 1Q, and it continue going down. From average point of view, we are really making some assumptions for 2Q and obviously 2Q going to be cheaper than the average of the 3Q – of the first quarter. So gold price is helping us. Second, output more because the business going up, and you can see the growth, and that -- so because 1Q is slow quarter for us, and because the second quarter growth the (inaudible), it will be improve the – profitability of our make and function due to best unloading factors. Number three, product mix, and the picture has started getting better. We are moving our mix to the better for us and so that is the result. And the price stability, I think, we already see price stabilize. I'm not saying increase, although, some misunderstanding. When I say stabilize is, we expect, I think, in the past, certain percent of the price drop every quarter. And as long as it’s within that kind of price curve, our productivity improvement should take care of that, and then it’ll give us a better GPM percent. So I think whatever you have been seeing, talking about the problem affect us, those are four factors. Now, it’s turned into good for us. So that’s what happened.

Okay. I was just hoping to get a couple follow-up ratios as well and the percentages. Looking forward, what is the split between analog and discrete? And looking into your June quarter guidance -- correct me if I’m wrong, but is that assuming about 5% organic growth? And then, last, Mark, if you can share with us the book to bill ratio for the quarter and that’s it for me.

Well, Gary, we really -- since we don’t separate analog from the discrete, I cannot really be talking about how many percent. And from a growth point of view, again, since we don’t separate BCD from Diodes. So I cannot tell you. But one thing you just need to guess from yourself. BCD gave the guidance on what 1Q -- what would be in the 1Q. That is the public information. You take that, you assume some percent, then you can -- from there, you can figure out on your own. But since we do not disclose any separation between analog business to discrete, we don’t separate from BCD from Diodes, I cannot disclose that.

On the book to bill, we don’t really get into the real details of that, but I would say it's obviously above, one, based on the guidance and we're pretty well positioned for the second quarter.

Thank you.

Your next question comes from the line of Shawn Harrison from Longbow Research. Please proceed.

Hi. Good afternoon, everyone.

Yes. Hi, Shawn.

I wanted to get back to the comments about distribution in terms of point of sale increasing and inventory rebuilding. Where do you think you are, I guess, in terms of distributors adding inventory? Will you see them build more inventory this quarter? And, I guess, how long can we see that go on for?

I don't know, I think that, again, it was a pretty strong quarter, but we had actually -- our inventory had gone down to amazingly low levels, so our inventory in the channel in North America and Europe was very, very clean, and solidly positioned in Asia. So I think that – but we were also very happy with the few escrows that in quarter. There was a big recovery in both North America and Europe in POS in the third and fourth -- from the third and fourth quarter, so we think it's good. I just came back from EDS show and everybody is cautiously optimistic going forward about where this is going. Nobody really wants to commit. But I think that the clear indication is, is that, they feel comfortable investing as they see opportunities to do so. So I think we'll continue to see opportunities to position product for future POS growth.

Mark, are you seeing, I guess, lead times expand for your products? And I guess that could be a driver for distribution for your inventory.

We're seeing a little bit of words about lead time extensions on some of the lowest level commodity products. I think a couple of guys are trying to firm up their backlog a little bit, but I don't think anything excessive.

Okay. And then, Rick…

Not really. No, we are running -- our business is not really using lead time on this, right. We used it -- I think I’ve been telling -- talk about our business model is put a wafer in front of assembly, and so our assembly lead time is not high, and therefore, our customer know, they just order when they need it, when they’re across, they need it. They don't give us double order or that kind of thing. So I think our business model really to take care of that kind of long lead time, and ordering and double booking that kind of situation.

Got you. And then, two brief follow-ups. Rick, maybe if can give us the expected interest expense for the June quarter. And then, also just in terms of -- with the better trends you're seeing in the business organically right now, what does that mean for the packaging facility in Chengdu?

Okay. So, the interest expense for the second quarter is just going to be, basically, the first quarter plus a little bit more. I don't have that exact number here. We borrowed the money to buy BCD in January and February area, so it's going to be maybe a little bit more than what we had in our results. And tell me again, what was the other one about Chengdu?

Just in terms of the organic environment being better. What does that mean in terms of just CapEx with the facility and maybe bringing online quicker, anything of that nature.

Yeah. From Chengdu we still not putting the expansion aggressively yet okay, because we still have unresolved situation in our Shanghai facility. But we are watching very closely, because you need certain lead-time for the build-up of the factory. So we are now looking at what we need to do in Chengdu and the timing. Okay. But here today, we’re still keeping us a power line, we run in it, keep people under the training get ready. The building construction is already done, and whenever we are ready, we will start to put in the clean room and start to get -- move the equipment from our power line to the manufacturing site. Okay.

Very helpful and congratulations, again, on closing the acquisition.

The one other comment about interest expense. If you look at our interest expense in the first quarter, it was about a little less than $1 million. And so because we’re going to have a full quarter of interest expense, it’s going to be somewhere over $1 million probably, $1 million to $1.5 million would be my guess.

Okay. Thanks so much, Rick.

Yeah. And another thing I would probably want to mention, you know, you can – you probably started to realize, when we talking about capital expenditure as a percent of revenue, we are no longer talking about [skewing] the Chengdu. It just means, from now on, our capital expenditure in the Chengdu will be going to be part of the model. Okay. So if you look at, when we look at capital as a percent of revenue in our model, Chengdu will be part of that now. Okay. So we are no longer treating Chengdu separately.

Got you. Understood, Dr. Lu. Thank you.

Okay.

Your next question comes from the line of Harsh Kumar from Stephens. Please proceed.

Yes. Hey, Dr. Lu, congratulations on great guidance, good gross margin increases. I wanted to follow up on a couple of questions. First of all, maybe for Rick, Rick, why are the taxes going to be 17 versus historical? Like what's the big reasons, why they will stay up like this?

Well, if you go back historically, our tax rate has been anywhere between 15% to 20%. So over the last year or so, we've been at less than 15, a couple of times, and the reason is that we've had some losses in certain areas, and that affects your tax rate. So, as moving forward, things seem to be improving.

GPM is improving.

Yes. GPM is improving. We went from 23% in the first quarter of last year to the 26% now. So things are improving, plus as Mark mentioned, the revenue in Europe and the U.S. is holding up pretty well, which is where you have high profitability but you also have higher taxes there.

Fair enough. Just wanted to clarify that and then -- and Dr. Lu, you gave a bunch of reasons for margin increases. And you didn't want to get into the numbers, but I was curious, Dr. Lu, if you could just say what's the biggest reason that's driving margins in the June quarter and even beyond, if you had to pick one out of the four or five you listed.

Well, obviously due to the ionization and our productivity improvement in the [making] going to be big this year. Go up and down, okay, Yeah, that's one of the reasons, but I won't just say that is really the major one. Okay. Product pricing, I say, stable, but it's not going to be up. So it's not going to help. It just stopped going down. Right. And yeah, and so, the key thing really is when the business started going up, your loading started to improve and you can realize we are not putting that much of capital anymore, because if you go through the last quarter, and the fourth quarter last year, we have been -- distract our capital investment, and that means our capacity is not going to be increased that much, and that means our ionization of the capacity going to be improved. So you ask me, I want to tell you the truth, it's not -- I'm not telling you the truth, I’ll just say, to be still asking, what was the biggest factor. I would say productivity improvement on our making function plus the ionization of our capacity is the key factor. And then I think the ionization has been hurting us in the past. And we are waiting for business trend and we can start to ionize that capacity.

Fair enough. Very helpful, Doctor, Lu. And then you talked about backend integration of BCD sort of manufacturing and you said you started that. Has a lot of that been done, or are you just kind of started it, and it will take a few more quarters?

Okay. When we say it's started, is we already said that the product we want to convert internally, offload internally, start to do the qualification. And you know, the core, it takes three months. Okay. Then, after you core, then you need to do a PCM to notify the customer. It takes another three months. Then, for the small customer, they might allow you to convert it immediately. And that’s why I would say, 4Q, we’ll start it. But some of the major customers, they just want more time to convert. And so I said, by end of 1Q next year, majority of what we want to convert will be converted.

Great. That’s very helpful. And then, Dr. Lu, at this time, a couple of years ago, you had a China labor problem where you didn’t have enough workers coming back. Anything noteworthy this time around or is everything going on plan?

It’s all the same way. The China labor shortage -- China labor don’t come back. I’m not seeing a major improvement. No. But since this is not the first time – this is, I think, third or fourth time we see the problem – we already know how to handle. The first time, you say, two or three years ago, it feels as a surprise. And now we know how to handle it. So we prepare for it. I think, if you remember, last conference call, we said we’ll build some inventory in by end of fourth quarter to prepare for Chinese New Year shutdown. And then we know how to stage our people instead of all going on the same time on the Chinese New Year. So we’ve already done how to handle and we can handle it each year better and smoother. That's why this time we said, better than we expected. It's just more experience handling this. And we prepare for it. We view the inventory in fourth quarter.

Fair enough, Dr. Lu. Congratulations again. Thanks.

Thank you.

Your next question comes from the line of Vijay Rakesh from Sterne Agee. Please proceed.

Hey, guys. Dr. Lu, congratulations. Good gross margins finally.

Hey, thank you.

I had a couple of questions. So just looking at the OpEx side from BCD, do you think there are any levers that I should go through for second half this year, first half next year?

Number one, we are not doing any day off or anything. We want to keep everybody from BCD team because we believe their people is good people, is really good, and that's the reason we bought BCD. So now, we are not going to reduce the headcount. But if you do look at, if we can continue grow the revenue, then as a percentage, it will go down, and that's the way Diodes has been doing in the past, is we keep everybody -- we kept everybody, and we aggressively grow the revenue and bring the GPM percent, go back to our business model. And we did that when we have -- we did that in the past, is we have a bit of model, our IMD plus SG&A 20% of revenue. We’ll suffer at the beginning, slightly higher, then we said, we – when the revenue start to grow the number will go down. And we proved that into that position, and now we're going to prove the same thing. We are doing the same way for the BCD acquisition.

All right. And as you look at the June quarter, your BCD was a little bit of a drag with underutilization. Do you think you will get little bit more tailwinds for the margin line with as all those underutilization charges go away in the back half at BCD?

Well, I think, actually BCD going to be have more loading in second quarter than first quarter. Because first quarter from January is zero, it start to ramp. And so…

Yeah.

…1Q, if you take the average, that we only confirm much, but even though much, just third month into the ramp, fourth quarter…

Yeah.

…fourth quarter – second quarter, they contribute rent more and they will contribute more from the GPM percent, okay. But don't forget Diodes is improving, too, and so it may still negative impact us. But it's no longer are very significant. The move forward, when the loading start getting better, and that both, fab one and fab two, then when we start to produce a product for them, they of course go down, and at the end, they are going to be helping or we should say, the total together, should we help each other.

Got it. And last question, on the tax rate, it creeped up a little bit. I know you said some revenues from high margin, high tax rate regions, I guess. It looks like you still decent revenues coming from Asia still right. As you look at next year, do you still think tax rate stays at this level, it goes down or is it too far out to say?

Oh, I think it’s too far out to say. It really depends on where the revenue is generated and where the profit is generated. The big difference is between U.S. tax rates and the preferential tax rates in China, for instance. Sorry.

And Taiwan.

And Taiwan too, yeah. Correct. So it’s too far out to say.

Okay. Great. Thanks a lot.

Your next question comes from the line of Lena Zhang from Blaylock Robert Van. Please proceed.

Hi. Thank you for taking my questions, and add my congratulations as well.

Thank you.

And I understand that you guys don’t quantify the gross margin drivers for Q2, but if you -- given a pretty bigger delta for Q1 results and guidance, if you could quantify the gross margin expansion drivers, that would be very helpful for the modelling.

Well, Rick.

So the question is between the guidance and the results for the first quarter?

Yeah. If could you quantify the gross margin expansion drivers for Q1, that would be helpful.

So I think Dr. Lu went through that. And we think a lot of that will have to do with productivity and utilization of our SAT assembly facilities, as the volumes increase.

Yeah. I think…

Okay.

…in our speech, we already say, okay – in our speech, is productivity improvement is better than expected Chinese New Year recovery. I think that -- we put in the model of how the Chinese New Year going to be recover, based on our past experience, and you know, the past is always -- when you go through the Chinese New Year, and allow the people go home and don't come back, or come back late, and that reduce the output. And when you output reduced and now making function is equal to capacity, empty fixed cost is there, capacity is not fully utilized then your profitability can reduce. Okay, as I say in my speech, I said several things. One is the better than expected sales in the North America and the Europe, the high GPM area, but the key one we can say is Chinese New Year recovery, better than I expected, and some gold price. Gold price in the 1Q actually lower than 4Q or lower than expected and the mix is better, but you go back to the whole thing, the big one is still manufacturing. Manufacturing, productivity, because that's really is my nightmare, I think in the last several quarters, or probably last year, the whole year, I am saying, roughly we are not utilized, you know, we are not fully utilized. Our capacity utilization is bad and 1Q is actually -- is not as good because of the Chinese New Year holidays.

Okay, thank you. And also, what was the utilization rates for Q1 and what's your expectation for Q2?

I don't think we give that number. We don't give that kind of number, okay.

Okay. Thank you. That's all I have.

Okay. Thank you.

(Operator instructions) Your next question comes from the line of Stephen Chin from UBS. Please proceed. Stephen Chin – UBS: Hi, Dr. Lu. Thanks for taking the questions. And let me also add my congratulations on the acquisition and solid results.

Yeah. Thank you, Steve.

Yeah, I have a few questions on the BCD kind of wafer fab to kick things off and then a couple on demand side of things. With BCD's analog side, can you talk a little bit about some of the -- I guess, costs or maybe technology advantages that might give you guys – especial, as you talked about converting some of your existing analog products from outside analog with foundries to the BCD internal process? Can you talk about the technology and the cost benefits of that?

Okay. Number one, BCD, obviously, [located] in China, and it's well rounded by BCD. They are fab one is the cost I would say I would say, I'm very happy with their cost. Okay. So, most our analog wafer is six-inch, so BCD says six-inch. Therefore, they don't have any penalty of the six-inch, but by [located] in China with the BCD technology, they do have a very good BCD process, and that is going to help. So, from technology point of view, they provide me to move our analog product from our outside foundry to go into our internal fab with very efficient, very cost-effective fab. I’m happy with that. And they do have the technology for us to utilize the capacity. Stephen Chin – UBS: Okay.

Equal opportunity and another thing to create opportunity they are under-loaded. Okay. So if we can start to move our stuff over there, it helps both. Their cost will be even better because they are under-loaded, and we can get it cheaper because they are very cost-effective.

Yeah. Steve, one of our biggest part of our models is manufacturing margin. Okay. So they give us a lot of same leverages that we had with our internal assembly from a wafer perspective. There is no foundry profit in there. So the foundries we do business with have to make a profit.

Got it, and that’s helpful. And then just one other thing really to that fab, I think, before the deal closed, I think, you previously communicated that the revenue capability of that new capacity was somewhere, I think, in the $75 million range, if I remember that correctly. And I think they also had some targets or timeframe for when they think that revenue level could be achievable. Is that still the case? And if so, as you – was there any expected business that was in the pipeline for filling the fab, and if not, can all of the current analog business that Diodes have, the existing organic analog business that you guys have, can that fill the majority of that?

Okay, Steve, I really don't know what is their previous announcement. Whatever you’re quoting, I really don't know, because I don't pay that much attention to the past, okay. All I know is the fab 1 today is under-loaded, important for me is loading to help to get Fab 1 loaded. Number two, they are moving their Fab 1 loading to their Fab 2 because Fab 2 two started, and they really need to get Fab 2 ramping up and get loaded, okay, especially Fab 2 have a better equipment, better process, and they can support a customer better. So, basically, you know, what we really do is move some of the BCD high-end product into the Fab 2, to help the Fab 2 loading, at the same time, we are moving Diodes product which can be loaded in Fab 1. We are loading to Fab 1, and this is going to be -- each benefit. Now, if Fab 1, A, current equipment fully loaded, then I'm ready to put another step of the equipment to make it up Fab 2a fully loaded. So Fab 2a currently still don't have all the equipment to be fully utilized that space. Okay. And if -- but they don't need it now. But when fab 2A started loading up for you then we'll put the capital improvement to get 2A fully loaded. Then later on, if the business is still going up, if we still need the capacity, then we expect to be, we can open it up and put the capacity in there. So it's just straight, step by step and look at the loading, look at the requirement and really look at how the business progress. Stephen Chin – UBS: Okay. Got it. That’s very helpful. I think you’ve gave additional color. And then just last question probably for Mark on the demand side, just wanted to see if most of the distributor related demand that you’re seeing, is that fairly restocking or do you actually have some sense on or some commentary on actual growth in demand that the distributors are seeing?

I think we saw growth in both. Actually, the POP grew, say in North American and Europe faster than the POS. But the growth rates on POS were very positive and they’re coming off very, very soft POP quarters the last two quarters. So it's required -- the inventory level got to a point where it really required them to invest greater than POP. It should level pretty good, but the growth rate in POS was quite impressive in Q1 versus Q4 and even Q1 over Q3. Stephen Chin – UBS: Okay, perfect. Thanks so much.

Yeah.

Okay. Thank you for your participation today. Operator, you may now disconnect.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect. Have a great day.