Greetings. Welcome to Himax Technologies Incorporated Second Quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded today. It is now my pleasure to introduce your host John Mattio, Senior Vice President of MZ North America. Thank you. Mr. Mattio, you may begin.

Thank you very much, operator. Welcome everyone to Himax’s second quarter 2012 earnings conference call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, and Ms. Jackie Chang, Chief Financial Officer. After the company’s prepared comments, we have allocated time for questions in a Q&A session following the company’s prepared remarks. If you have not yet received a copy of today’s results release, please call MZ Group at 212-301-7130, or the press release can be accessed on financial portals like Bloomberg, Yahoo, or Google, or you can download a copy from Himax’s website at www.himax.com.tw. 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. Factors that could cause actual results include, but are not limited to, general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the company; demand for end-use applications products; reliance on a small group of principal customers; the uncertainty of continued success in technological innovations; and other operational and market challenges including company’s Taiwan depository listing, TDR; the capability to maintain the full two-way fungibles between the company’s ordinary shares and ADSs; and other risks described from time to time in the Company’s SEC filings, including those risks identified in the section entitled "Risk Factors" in its Form 20- F for the year ended December 31, 2011 filed with SEC as amended. Except for the company’s full year of 2011 financials which were provided on the company’s 20-F filed with the SEC, the financial information in this conference call is unaudited and consolidated, and prepared in accordance with US GAAP. Such financial information is generated internally and has not yet been subjected to the same review and scrutiny, including internal auditing procedures and audit by independent auditors, to which the company subjects its annual consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. Any evaluation of the financial information included in this conference call should also take into account the published audited consolidated financial statements and the notes to those statements. In addition, the financial information included in this conference call is not necessarily indicative of results for any future 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. At this time, I would now like to turn the call over to Mr. Jordan Wu, Chairman and CEO. Jordan?

Thank you, John, and thank you everyone for being with us for today’s call. In this earnings call, in addition to reporting our performance for the second quarter, I will also summarize key growth drivers and highlight milestones we have achieved so far in the first half of 2012. I will then provide our outlook for the third quarter 2012 and outline our strategic focus areas for the rest of the year. Our CFO, Jackie Chang, will provide further details on our financial performance. We issued our second quarter earnings press release yesterday. Q2 revenues came in at $189.5 million while gross margin was 23.1% and GAAP earnings per ADS were 8.9 cents, mapped with what we stated in the preliminary results issued on July 9. These strong results reflect further progress we have made across our organization. Starting with our sales performance, second quarter revenues of $189.5 million represented 18% growth year-over-year and 13.7% increase sequentially. Strong sales in our small and medium-sized drivers and non-driver ICs remained the top contributors to our revenue growth. Our sales to non-related parties increased an impressive 36.5% year- over-year and grew 21.9% sequentially. Revenues from large panel display drivers were $79.7 million, up 4.3% from a year ago and also increased 11.7% sequentially. Large panel drivers accounted for 42.1% of our total revenues for the second quarter compared to 47.6% a year ago and 42.8% in the previous quarter. The sales increase was mainly due to the growing sales to the panel customers in China. Thanks to the new capacity ramp currently underway in China, we anticipate this positive trend to continue in the second half of the year. Sales of small and medium sized applications came in at $83.8 million, up 34.7% from the same period last year and up 15.8%…

Thank you, Jordan. I will now provide additional details for our second quarter financial results. Our GAAP operating expenses were $23.5 million in Q2 2012, down 11.2% from $26.5 million a year ago and down 0.6% from $23.7 million in the first quarter of 2012. GAAP operating income for the second quarter of 2012 was $20.2 million or 10.7% of sales, up $16.8 million or 492.3%, as compared to $3.4 million or 2.1% of sales during the same period in 2011. And up $5.7 million or 39.7% from $14.5 million, or 8.7% of sales in the previous quarter. Non-GAAP net income in the second quarter was $15.9 million or 9.3 cents per diluted ADS, up from $5 million or 2.8 cents per ADS for the same period last year, and up from $12.1 million or 7.1 cents per ADS in the previous quarter. Non-GAAP net income for the second quarter 2012 grew 216.8% over the same period last year and 31.1% over first quarter of 2012. Our cash, cash equivalents and marketable securities available for sale were $103.2 million at the end of June 2012, little change from $104.1 million for the same period last year and $102.1 million a quarter ago. Inventories at the end of June were $139.2 million, up from $124.4 million a year ago and up from $118.5 million a quarter ago. The increase in inventory from last quarter is primarily because some customer orders originally scheduled for shipment towards the end of Q2 got pushed back to the third quarter. Accounts receivables at the end of June were $212.9 million as compared to $179.3 million a year ago and $189 million last quarter. Days sales outstanding were 109 days at end of June, 2012 compared to 108 days last year and 103 days at end…

Thank you, Jackie. I will now discuss each of our major business segments in greater detail. I’ll start with now our largest business segment, small and medium sized drivers. Thanks to our leading technology and strong execution we have enjoyed a phenomenal growth in this product category for quite some time. It has not only lifted our overall sales but also contributed to the diversification of our revenues. As recent as Q4 2009, small and medium sized drivers’ quarterly sales were only $37.7 million, or 21.1% of our total sales at the time. In comparison, they were $83.8 million in Q2 this year, or 44.2% of total sales. In particular, smartphone applications have delivered the strongest growth since the third quarter of last year mainly due to our successful penetration into the first tier brands in China. We remain bullish on the growth prospects of the smartphone segment, having had recent successful new product launches and project wins from leading smartphones brands across China and internationally. However, we do foresee our smartphone driver growth momentum slowing down in the third quarter with sales expected to remain flat from those of the second quarter. Our main clientele in China, many of them leaders in higher-end market, are experiencing competitive pressure from second tier and white box players who are launching numerous entry-level phones, dubbed by some pseudo smartphones, to penetrate the marketplace. While the existing first tier customers will continue to be our area of focus, we intend to regain our growth momentum by actively improving our engagement with China’s second tier handset manufacturers. Beyond handsets, our numerous design wins in tablets, notebook and automotive display applications also contributed to growth in the second quarter. These products will continue to produce noteworthy shipments in the second half of this year. We…

(Operator Instructions) Our first quarter is from the line of Jay Srivatsa with Chardan Capital. Please state your question.

Yeah, Jay from Chardan Capital. Jordan, can you give us some sense on how you see the smartphone market in China as you look beyond Q3. It appears that there might be some temporary transition from the feature phone to the smartphone in China and that might be causing some disruption. Can you give us a little bit more color on how you see that market developing as you look ahead to Q4 and more so into fiscal ’13.

Right. As you know, I think China probably moves very fast. Everything changes extremely fast. So starting from around Q3 marks the only, when China started to see some authentic smartphone manufacturers launching, like (inaudible) smartphone till now the market has changed so much. So I think to answer your question I need to have a disclaimer that I don’t have a crystal ball, there might be a big change in the market. But I think that the essence of the market, today what we have seen is, well, in the truth about one year of market production led by third tier mainly. Now the second tier, the so-called ramp-ups are coming in to join the party and they have been able to provide more ‘cost effective form’ to cater towards like entry-level customers and also third world countries. And so that is on the one end of the market, being very lower-end. On the other extreme of the market, we have seen internet companies also coming to the party by launching, in this case, extremely higher spec platforms. Trying to pull a part of the share as well. So the traditional, so-called first tier brand names, I think they are a little bit caught by surprise. I think we have been seeing them adjusting their second half forecast forward over the last few months because I think they do need time to sit back and think what is going on in the market place. And the operator, the carrier, continues to be the biggest buyer and I think that will not change. But carrier as usually has been using this what we call tender system to squeeze the price of the provider of the phones. So, however, we do see that second-tier in ramp-up phase, they are having a hard time getting into carriers market. Although they maybe even (inaudible) to cut their prices. So I think our view is that the third tier eventually within about next year, you know next two years is a long time from now trying to spend it, but I think eventually next year the first tier ones would feel, occupy the bigger chunk of the market. And we continue to believe smaller players who are now extending their wings to cut their price, will still have a hard time because this industry requires a lot of software engineering and content and cooperation with carrier, are really important. Much more important than the feature phone. So we have seen the first tier brands, the traditional first tier brands as well as the high-end kind of internet companies who do might sell software or applications. I think we do see them picking up the bulk of the market. However when it comes to, call it phone export countries, the third world countries, it harder to sell. I think it maybe a place for the white box or second tier may have a better chance.

All right. Switching to microdisplays. You have done a lot of work in that space related to near-eye type products. Can you give us some update on where are some of those projects and when do you expect some of them to come into market and start to become meaningful to you in terms of revenue?

Himax as a company has actually been doing head-mounted displays for a very, very long time. We are talking about almost a decade. But the end product, which is not meant for us rather it’s meant for our content customer. Great product, has not become mature until I think recently. And I said earlier in my remarks that we do enjoy a very strong competitive advantage in our product technology. Our patent for this particular product area. So that kind of explains why I think we referred it, so that we have committed more resources. This tier, non-existent but we believe very very promising product area. As far when it will materialize and become meaningful to us, I think once OED picks up, it will certainly become rather meaningful to us. Both top and bottom line. And I think our customers are telling us with different template or they are medical customers that I think sometime next year I think is a good bet for the people to come start to see this gradually competent product in the market place.

All right. Last earnings call you talked about ASIC services, how you -- to some of that. Can you give us some update on where you are in terms of providing ASIC services to clients and then how is that changing your business model as you look ahead.

I think we are emphasizing that the same [pin] and the same IP part of our TV processor or TV controller business, right. And we kind of admit that we are too late. We want to exit from that market, too competitive for us. And we kind of repositioned our business and we repositioned the team, utilizing basically same IP and the same knowhow. Now almost as soon as we announced it to the market, we have had some of the meeting coming from suppliers, surprisingly some of the biggest names in the market. And they are across TV, projector, or in this case thermal display, even cellphone. So a lot of them enquired with interest. And we are teaming up with -- engage a few customers successfully in the design of (inaudible) for ASIC. Applications for CDIC, for (inaudible) IC. And I tried to explain earlier, at this moment this is how you start a ASIC business. The first step is, you pick up your IP team and then you try to engage your customer, once you have successful engaged then hopefully we will be awarded with some (inaudible) or tooling charges and development fees. That is kind of your part and parcel for day to day of payroll (inaudible). But you got to really pretty make money once some of those ASICs start mass production, because in this business, in addition to the NIEs we charge, we also sell the ICs to them, the ASIC ICs to customers. So in that case typically such IP do enjoy much better gross margin then our driver IC or other stuff. So I think that such customer for mass production of this ASIC IC shipment, I think will be first half of next year. And its -- I mean there is no guarantee, right. I mean people typically come to us for such a thing. I mean why do they not want to buy ICs from the shelf because they want to create differentiation. They want the end product to be somewhat different. And that is these things are conducted confidently, and we kind of are above with respect we (inaudible) for them. So there is no guarantee. Every single bet will become a reality, a success. But we certainly we also listen to our customers, we try to understand their projects, we try to come in the potential of those. So we do believe some of these will start to become material in the third part of next year.

Thank you. Our next question is from the line of Peter Liao of Nomura Group.

Thank you for taking my questions. My first question is upon smartphone type IC. Based on your third quarter guidance, does it mean that you have lower market share for the second tier as (inaudible) does in China. And also what do you see in the, track price competition inventory in China’s smartphone driver IC market right now.

You first question whether we have smaller market share, basically...

Lower, I mean....

Are you probably saying whether we have growing the first tier market and second tier market in China where we have a smaller market share, so can we see it. Is that your question?

Yes.

I think it’s the fair to say the SAES -- currently the [ECCS] and also actually our smartphone market share is much higher than our feature phone market share. And your second question is, price pressure, right?

Yes.

I think price pressure will inevitably come from all directions because I mean as we told earlier, first tier competition is fierce in the second tier. Try to defend their market share, right. So the price pressure will come from both first tier and second tier. But we will try to defend our gross margin for sure. There are cost cut measures, there are new product launches and etcetera. And certainly we have to adapt to the market situation. But in summary I think there are price pressure but we will try to defend our gross margin. We repeat it again and again that gross margin improvement is our focus.

Thank you. And also talking about (inaudible) inventory for like a China smartphone IC is a big high. So perhaps you can give us some color on that?

Sorry, I couldn’t really hear that. Can you repeat the question?

I heard that inventory for China mobile enterprise is a bit higher redundancy, and perhaps you can give us some color on like inventory side in the channel for smartphone IC?

Okay. Yes, indeed. I think that is -- already because we towards the end of last quarter, I think we trigger the first tier in the smartphone makers, seeing rather this ‘unexpected competition’. They are kind of there to take a post and review the situation before they move off again. So that caused some inventory build up along the supply chain. But I wouldn’t say it will be a problem for too long. I mean the market continues -- the market overall continues to have a pretty strong momentum. Or strong on the relative term compared to other markets in the world. And bear in mind China also -- we are talking about China being a manufacturer for our market and China manufactures phones all for export. So we are talking about the local brands or the exports to third countries, which is still a very large area and untapped market for anybody. So I think they do, even they experience the feature phone. They do enjoy a very strong advantage compared to international brand. So I would not underestimate their ability to absorb such inventory in a short time. So we don’t think -- a little bit of pressure of, yes, in Q3, but we don’t foresee this to become a real longer-term problem.

Okay. I see. And my second question is regarding the large driver IC and given the slow growth for larger size panels including TV and IT panels. So even though newer China panel makers, they bring up their capacity very aggressively this year. But with the growth unlike China panel makers be offset by lack of market share loss for Taiwan panel makers or also offset by multi-channel technology.

I am not sure we are losing our panel market shares as such, greatly. I mean cannot predict the future, but I don’t think we have been losing market share in panel. In the past of couple of years, yes, but probably that’s to a much lesser degree right now. I think it’s fair to say I think with our increase of market share in China, I think overall -- our overall market share must have increased somehow. Whether this multichannel trend is going to affect the overall large panel driver IC market? Historically, the answer clearly is, yes. Going forward, I would still say, yes, with the caveat which is on people trying to have small channels for each piece of IC trying to cut costs. Both IC costs and their bonding cost. But I think we have gone to an extreme already, to the extent that now we are talking about 1300 plus channels per [foot] driver. To the extent that the IC has to cover such a big area but failure is becoming a issue and when people are after very narrow TV trend. TV product as a fashion, as a value addition. I think the trend maybe somehow coming backwards. People would need to come back to smaller channel ICs in order to get over that problem. So, overall, whether this is sufficient to offset the trends towards higher channel crowd, I really don’t know. But they are two opposite chains and don’t interact now. And also, I would also that the number or channels count, parallel, short-driver for TV I think has gone as far as it can go already, arguably. So it is unlikely to -- we are unlikely to see this trend pressure coming from higher channels counts technology over the last few years. Which certainly negatively affected the overall market size. I think the trend is substantially slowing now already because as I said, we have gone as high as we can go and people are now actually going back.

Okay. Thank you.

Peter, I think this is a fair overall description, as far as the number is concerned, it’s really very had to tell.

My third question is regarding touch controller IC. And I know you are doing well in the smartphone but there is a new trends for Windows 8 notebook. And would that be a positive growth for you in the future? How do you see that?

Not in, not in this coming one of two quarters, but definitely, yes, for the future. I think with Windows 8 it is highly likely that your desktop PC will have touch panel. And now the real barrier is about the cost of the panel. And so our focus on the development of the technology for control IC is to -- actually, let me go back, so it is about the cost of the panel. So what's stopping the penetration of touch panel validation over laptop is cost. Cost and cost only. So the industry is under tremendous pressure and is undergoing very fast in technology improvement over the cost reduction issue. Well, you know that to achieve lower cost there are technology that is required of the [transmitter], the controller IC. Then I think we believe are in bleeding edge over there. Although it is still in development or sampling stage. So that’s why I said, as far as revenue growth is concerned, touch panel, we are quite happy that the second half was opening decently. Now they will come from four months sales only. But we hope and we believe next year we start to see a contribution from Windows 8 notebook as well. And that is totally a very important for us, of our technology focus right now.

Thank you. And may I ask you to allow to ask one more question?

Yeah, sure.

Thank you. My final question is regarding your (inaudible) since there is a new trend -- there is a trend for higher resolution for all of panels, including TV and notebook. And I know in the notebook that new interface, EDP to replace LBDS. So how do you see the change? Will be of threat to you, positive upside to you? Since you are also well in the (inaudible) business?

Well, thank you for the question. It’s a very good question. Yes, it will provide benefit for us in the long-term and you are absolutely right that we are a major player in (inaudible) business. And EDP is a new interface, a high-speed interface which is only required for super-high resolution. So not all tablet, all notebook PCs will require that. But personally, if you ask me about the current volume industry wise, it’s small. But will that become the trend, I would certainly say yes. Because as we all know, panel prices can only go one way which is south. So the one way to defend your price of the panel is to increase your resolution. So I think that has to be trend. And we are a leader in the EDP development for sure. We are sampling our EDP 1.3 and we are taking the leading edge in this area, although the revenue contribution is still very minimum at this stage.

Thank you. Our next question is from George Chang of Yuanta Research. Please state your question.

Just a few quick ones. Number one, how much is smartphone revenues in second quarter? Maybe in terms of percent or absolute dollar amount?

We don’t really disclose such number, but it was (inaudible) of our total sales. Sorry, about 20% of our total sales.

20% of our total sales. So that portion probably came down a little bit from -- did it go up or it come down from Q1?

It went up a lot from Q1. It went up by almost 50%.

Went up by 50%.

Yeah, went up by almost 50%.

I see.

(inaudible)

In absolute dollar terms?

Yeah.

Okay. And this will be flat going into third quarter?

Yeah.

Would you say the mix of the smartphone changed a lot in the second quarter? Like WVGA, half VGA, and also what's the mix?

I think industry wise for half VGA is still the mainstream in China, right. And in particular we mentioned earlier this so-called pseudo-smartphone, they typically have half VGA as there standard resolution. And I would say a wild guess, it’s probably two to one of all the March. Half VGA versus WVGA and these two are the mainstream worldwide. And I think our market share in WVGA is higher than half VGA, although we mentioned earlier that one the sources of pressure over our smartphone driver business is the people, there the trend moving outward in terms of resolution. So half VGA is -- we do have comparative product lines, we do have a good customer base and we just need to put our act together and try to regain further market share from there.

Okay. So it sounds like the second quarter went up 50% QoQ in revenue wise. That was more driven by volume not so much by the blended ASP change due to the product mix?

Let me see. I am sorry I don’t have the detailed number right in front of me but I would say it is probably both. Because we have always shipped quite a lot of WVGA since second half last year. And we were amongst the earliest to enter into the market. We brought out this at a time very high end product. And we had very good penetration. So rather compared to our peers I would say, coming to Q3, our blended ASPs probably under a slight pressure because we are to pick from our half VGA.

I see. So the mix of half VGA will increase in third quarter putting some pressure on blended ASP?

Yeah. That’s the plan because we need to get back to that white box second tier market. You know half VGA is dominant.

Right. So in second quarter was WVGA more than 50%?

You mean volume wise or?

Yeah, volume wise?

Certainly, not volume wise, not volume wise. I am saying our relative market share of WVGA is higher than half VGA by volume wise. WVGA to half VGA is about 1:2. Half VGA is bigger (inaudible).

Okay. For Himax as well?

For Himax as well, yeah.

Okay. I see. And also Jordan, did you guys ships any tablet driver IC?

Yeah, a lot.

And is that included....?

We are out in China....

Is that included in the small/medium business or the large panel business?

It’s in small/medium business.

And when you say a lot, can you give us a rough percentage of the small/medium business?

I would just say -- this may be [incorrect] answer. (inaudible) compared to last year there is a very strong growth in tablets. They represent a very very strong growth. So I probably said it too quickly. In terms of our total sales, I think it is still small. It is certainly less than 5%.

Less than 5% of the total sales?

Yeah. But it surely is the largest, fastest growth for us right now.

I see, I see, that’s fine. And also on tablets, the ASP for the tablet driver IC, is that more -- is that closer to like smartphone driver IC or is that more similar to the large panels, like source...?

It’s in between but closer to large panel.

But closer to large panel.

Yeah, because with -- well, I think for cellphones, for smartphones, cellphone driver IC has a very wide price range. It can go as high as almost $3 for very high end drivers and with the memory. It can go to as low as let's say $1. So it has a very wide range. And also, it makes a big difference whether the IC is memory embedded or not. But for tablet typically they have don’t have memory, so price typically is lower.

Price typically is....

Is lower than smartphone driver IC.

Lower than smartphone driver IC.

Yeah. On ASP basis.

And similar to those of the large panels? Like the typical source gate ICs?

This is closer to notebook kind of ICs.

Okay. And would you say like may be five ICs per tablet, is that the right assumption for us to model?

Less than that. It depends on customer’s design. Less than that. I would say it’s more like three.

Three. Okay. Last question on the large panel. The revenue from Chi Mei or related party was flat in absolute dollar terms in second quarter after a small rebound in first quarter. I thought that the market has been talking about that Himax and Chi Mei has been doing really good on the 39-inch, 50-inch TV. So indirectly you guys also benefit. What's your take on that in terms of second quarter, this part is now -- is this not growing or...?

Well, certainly Q1, Q2, both Chi Mei and us enjoyed very strong growth, as you said, over 39 or 50 inch TV. And certainly, I mean it is unlikely to be growing like that for ever. So (inaudible) let me see. I think quarter-over-quarter we are seeing about flat, Q3 over Q2.

Q3 over Q2?

Yeah, flat. But certainly Q1-Q2, the growth is very high because this year we started from very little pace but now after the two quarters the pace is already quite high. So Q3 over Q2, we will see about flattish kind of volume or revenue.

Okay. So revenues from related party will be flat in third quarter?

Yeah, flat.

Which means the mix is not going to change then?

That’s right.

Because your (inaudible)?

That’s right.

Thank you. Our next question is from Kyna Wong of Merrill Lynch. Please state your question.

Actually from the above questions I capture the message that large panel driver IC is likely to grow in third quarter and the small and medium sizes should also maintain but non-driver IC were likely to decline in third quarter, right?

I would say, although in large panel there will be some decline in the driver, that’s the focus right now. But non-driver accounts for relatively small out of the whole pie. So if you ask me about large panels, small panels quarter-over-quarter they are supposed to remain above flat.

Got it. So in terms of the gross margin, would the smartphone we may have a driver to increase your margin performance? Or some other cost control or (inaudible)?

Well, from this quarter certainly not from driver -- not from smartphone drivers. Although it tried to be in the past few quarters, smartphone drives certainly has been the key engine to drive our gross margin. But in this quarter they are present in, such as touch-panel controller and tablet, and certainly our cost control as well. And while we guided for margin to go slightly up.

I see. And my next question is about second half of year. Like 4Q, what do you see about 4Q, is large panel size, do you think that momentum from China customer will continue and the non-driver will pick up in fourth quarter. So what you see about the fourth quarter from the current point of view?

You first thought about large panel driver from China, yes, given the macro environment remaining relatively stable, I would say for sure large panel driver from China in Q4 will grow. And non-driver in Q4 definitely will also grow. I think coming from CMOS image sensor after Windows 8, we mentioned earlier. And touch panel controller, these two items in the Q. And also from our ASIC business as well. And timing controller, I think we are looking pretty good as well. So I think we certainly believe, we hope we will regain our non-driver growth momentum starting from Q4.

I see. So I remember the company is looking for sequential growth per quarter this year. Do you think you still (inaudible) target for the objective?

I think it’s a good question. I mean certainly we have guided for flat Q3, right. But in terms of Q4, I mean traditionally Q3 is supposed to be the half season, you know October (inaudible) Chinese holiday and (inaudible) getting ready for that. So we typically ship a lot in Q3 and then slow down in Q4, up there in a [free fall] already have inventory for their manufacture. The Chinese, I mentioned holiday as well as Christmas. But I think interestingly we are seeing that the so called the industry seasonality is getting blurred. It’s almost changing every year. So it’s becoming confusing in the sense that actually we would believe even that end of Q2 and beginning of Q3 are looking slow. There is a good probability that Q4 may actually pickup. And again, there is huge uncertainty which is the global economy, which is totally beyond my scope. So I'm again assuming, since overall events are relatively stable, this not major negative events then -- I mean Q4 we have China smartphone, we have Win 8, we have quite a few things that are looking actually promising. So it’s hard to say but we remain kind of cautiously optimistic about Q4 prospect. I think it is fair to say. And specifically on our sales, certain areas on our non-driver, we think will grow and we certainly hope smartphone will also grow as well.

Thank you. (Operator Instructions) At this time we have come to the end of our question and answer. Now I will turn the floor back to management for closing comments.

Well, thank you everyone for taking the time and thank you for your patience. We look forward to talking with you again at our next call in early November. And as a final note, Jackie, our CFO, will actually be on a road show in the U.S. in early September. So please contact her and/or John Mattio at MZ Group if you are interested in meeting with us in person. So thank you again and have a nice day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.