Kulicke and Soffa Industries, Inc. (KLIC) Q4 2024 Earnings Report, Transcript and Summary

Greetings, and welcome to Kulicke and Soffa’s 2024 Fourth Quarter Results Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Joe Elgindy, Senior Director Investor Relations. Thank you. You may begin.

Thank you. Welcome everyone to Kulicke & Soffa’s Fiscal Fourth Quarter 2024 Conference Call. Fusen Chen, President and Chief Executive Officer; and Lester Wong, Chief Financial Officer are also joining on today’s call. Non-GAAP financial measures, referenced today, should be considered in addition to, not as a substitute for, or in isolation from, our GAAP financial information. GAAP to non-GAAP reconciliation tables are included within our latest earnings release, and earnings presentation. Both are available at investor.kns.com, along with prepared remarks for today’s call. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to risks and uncertainties that may cause our actual results and financial condition to differ materially from the statements made today. For a complete discussion of the risks associated with Kulicke & Soffa, that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest Form 10-K, as well as the 8-K filed today. With that said, I will now turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Good afternoon, everyone. Although some of our core markets remain in a state of digestion, we continue to anticipate a return to capacity growth in the core Ball, Wedge and APS segments throughout fiscal 2025, as we continue to expand share through technology transitions in advanced packaging and dispense. Yesterday, we made several positive announcements regarding a high-potential foundry win, our Copper First Hybrid bonding process, which we expect will reach a three micron pitch, and also an expansion of shareholder return initiatives. Our leadership in Fluxless Thermo-Compression, FTC continues to grow. The collective efforts by our advanced solutions teams, and execution across many parallel customer development programs have allowed us to drive market adoption of this innovative process. These recent wins represent significant milestones which highlight the market potential, our system-level competitiveness, and also the broader reach that chiplet and advanced packaging can have on high-volume, more mature portions of semiconductor packaging. First, these milestones highlight that FTC is a very competitive and compelling industry solution which is capable of directly supporting many different stacked-die applications, including the world’s most advanced logic and memory production. But also within other high-volume logic markets which are transitioning from the mature flip-chip process. We are very proud of our innovations within TCB technology and also our strong foundational base of leading customers, which illustrates the current market needs and longer-term potential of this competitive technology. Secondly, our current wins and innovations highlight our leadership position in this technology transition. K&S is the first, and only provider of Fluxless systems which are proven in a production environment. Today, we have a global TCB install base of over 100 systems and are approaching $200 million of cumulative TCB sales. Of this install base, approximately 30 systems are running FTC in either a development or production environment across five major IDM, OSAT and Foundry customers. Maintaining this level of support across different emerging applications and customer locations continues to be accomplished by our dedicated Advanced Solutions team. Close customer engagements have been essential in the development of our FTC platform – APTURATM-- and provided the critical market insight which enabled us to develop a very flexible and capable system architecture which can support a broad range of new packaging formats. While there are many different marketing acronyms used to explain the growing mix of advanced packaging offerings such as on wafer, on substrate, on interposer, on IC; we have built a system which supports a wide variety of material handling configurations and is very capable of supporting the most advanced TCB requirements, whether chip-to-chip or chip-to-wafer. As the need for advanced fine-pitch FTC and Copper-First hybrid grows, we expect our competitive position will continue to improve across high-performance applications. Finally, these announcements serve as a reminder that the future of semiconductor assembly will require new and increasingly more complex assembly solutions that can provide greater transistor density at the package level. This growing need extends well beyond the most advanced process nodes. Emerging packaging technologies provide a new level of value, increasingly necessary to offset the limitations of two-dimensional node-shrink. Today, our new product portfolio including vertical wire, HPI, FTC, and copper-first provide capable solutions well-positioned to support package level transistor-density across end markets. We have been focusing extensively on this transition for years, are pleased with our recent progress, and look forward to additional adoption. Turning to the fourth quarter results, we delivered revenue of $181.3 million and non-GAAP EPS of $0.34. From an end-market standpoint -- key portions of General Semiconductor, Automotive/Industrial and Memory have improved as anticipated, while LED demand remained very soft. We continue to anticipate coordinated recovery of our two most significant end-markets; General Semiconductor and Automotive/Industrial through fiscal 2025. For the September quarter, General Semiconductor reduced sequentially, primarily due to strong June quarter TCB revenue stemming from shipment schedules and revenue recognition timelines, which create quarter to quarter variability. Excluding TCB, general semiconductor increased by 11% sequentially, driven by capacity digestion and returning demand from global OSATs as anticipated. Although the December quarter tends to be seasonally softer -- averaging a 10% sequential reduction over the prior three years. We are confident broader Ball Bonding demand will improve further through fiscal 2025 due to reasonable unit growth combined with high field-utilization rates. For Automotive and Industrial we are seeing demand improvements after a challenging year. As explained last quarter, the demand improvements in General Semiconductor, driven by Ball Bonding, were completely offset by the challenges within Automotive and Industrial during fiscal 2024. At this point, we believe both critical markets are past trough, and expect coordinated recovery to accelerate in fiscal 2025. Despite this recent period of capacity digestion, we continue to participate in emerging transitions driven by secular growth in electric vehicles and sustainability trends. We have a strong network of global customers, who are critically enabling these transitions, which we continue to support. Over the past four years, many countries in addition to the European Union have implemented targets or policies to incentivize EV adoption. Just last month, the International Energy Agency, IEA, reported 7 million EVs were sold globally in the first half of calendar 2024, representing a 25% year-over-year increase. While our core wedge, SMT and battery assembly solutions are directly enabling these critical transitions within the Automotive market, we continue to seek out new solutions which can expand our market access. During the recent September quarter, we recognized revenue for an Advanced Dispense system positioned to support a solid-state EV battery manufacturer. This represents a new market for our Advanced Dispense business but also diversifies our growing base of battery-related opportunities in the US, Europe and Asia. We anticipate follow up orders in the coming quarters to support this customers production ramp. LED overall remained soft within Ball Bonding and continues to be in a state of digestion across the traditional wire-bonded, high-bright lighting market. While this current level of demand will likely persist over the coming quarters, we remain focused on driving adoption of our Luminex, laser-based mini-led placement system, which is positioned for direct-emissive and advanced backlighting adoption over the coming quarters. During the September quarter we booked revenue for one LUMINEXTM system which is in late-stage development and production readiness. We look forward to qualifying additional customers who seek ultra-fast LED placement, throughout 2025. Lastly, we see ongoing strength related to both capacity additions and technology change within the Memory market. In addition to the improving capacity needs for traditional stacked NAND applications, we are working with key memory customers to leverage vertical wire application in next-generation low-power DRAM packages, as previously explained, but also within NAND applications. Initial vertical wire LPDDR solutions, leveraging a vertical-fan-out configuration, are currently running at two key memory customers -- which we anticipate will move into a low-volume production environment next year. Like LPDDR, Memory customers are also seeking new stacked packaging formats for NAND memory, which also utilizes our unique set of vertical wire solutions. Both approaches offer smaller package footprints and performance benefits related to an improved die layout, lower parasitic capacitance, and also lower parasitic resistance. These unique vertical wire solutions are compelling examples of how new packaging formats are mitigating node-shrink challenges. We expect similar approaches to extend beyond memory into higher-volume general semiconductor applications over the coming years. We are pleased with our recent progress and emerging position supporting advanced packaging applications serving the compute market. This leading-edge market is now being enabled by chiplet and heterogeneous packaging techniques and was previously excluded from our served market, despite our dominant ball and wedge bonding share and has been a key target of our Advanced Solutions strategy. We are proud to demonstrate our strength, progress and potential with this long-term Advanced Solutions strategy, although additional technology changes are providing opportunities in several other areas as well. While the current TCB wins with Foundry, IDM and OSAT customers, who are supporting leading-edge applications is expanding our market potential, we want to remind investors that leading-edge applications are not the only opportunity for advanced packaging. Besides Copper-First hybrid and FTC -- our production ready assembly techniques including vertical wire are providing new solutions for memory and high-volume general semiconductor. Additionally, High Power Interconnect, HPI is enhancing power semiconductor and battery assembly approaches. These all represent critical technology transitions which are enhancing the value of our respective assembly processes. We are well prepared for these transitions and have multiple market-ready solutions to support our extensive customer base. Consortium participation, broadening market engagements, key customer adoption and a comprehensive set of advanced packaging solutions highlight our preparedness to address the next set of industry challenges. After an extended period of capacity digestion, we also expect ongoing improvements and cyclical recovery across key end-markets – most notably-- general semiconductor, Automotive and Industrial. Looking into fiscal 2025 we remain optimistic due to the recent technology wins, but also due to underlying market conditions. The relatively high global ball bonding utilization rates combined with reasonable semiconductor unit growth is expected to trigger additional growth in our core market during fiscal 2025. In addition, the expectations of a broader Automotive and Industrial recovery are also supported with our results this quarter. Finally, broader macroeconomic improvements are also expected to stimulate global semiconductor unit growth through fiscal 2025. I will now turn the call over to Lester for the financial update. Lester?

Thank you, Fusen. My remarks today will refer to GAAP results, unless noted. As we anticipate a broader cyclical recovery for our Ball and Wedge businesses, we remain focused on supporting many different customer engagements and new technology requirements to expand market access further into fiscal 2025. We continue to execute our broad growth strategy intended to expand our market competencies and market share in support of emerging technology transitions. This too been demonstrated in many different markets and applications over the years, including stacked wire bonding, battery assembly, display and most notably fluxless thermo-compression today. The success of this strategy relies on our technology strengths, close customer collaborations and also our ability to hedge customer and project related risks where possible. Considering the extent of the Project W related charges booked during the March quarter of our fiscal 2024, we are pleased to announce we reached a customer agreement for reimbursement of a significant portion of our prior impairment charges. We intend to book this benefit within the current December quarter. Looking back at our September quarter results, we generated $181.3 million of revenue, and a 48.3% gross margin, largely due to an improving mix of higher performance ball and wedge systems. Non-GAAP operating expenses came in above our expectations due primarily to foreign exchange, and end of year accrual adjustments. During the September quarter, we booked a net income tax benefit of $2 million, primarily due to a $6.5 million tax benefit from a US Tax Court case, which reduced our one-time transition tax. Prior to today’s call we also announced several updates to our capital allocation programs. First, we received approval for our fifth-consecutive dividend raise. We continue to appreciate the consistency and continuity of the dividend program, which allows us to provide our long-term holders with a competitive dividend yield and income stream for their support. Secondly, we announced the authorization of a new repurchase program which we anticipate will seamlessly transition, as we complete the existing program. Finally, we wanted to remind investors we have repurchased 10.3 million shares over the prior three fiscal years and continue to maintain a consistent and fairly aggressive repurchase cadence. Over the long-term, growing our market access through the organic and inorganic activities remains our priority, although we expect to further enhance long-term EPS growth for Investors by continuing our proven repurchase strategy. For the December quarter, we expect revenue of approximately $165 million, plus or minus $10 million, with gross margins of 47%. Non-GAAP operating expenses are anticipated to be $70.5 million, plus or minus 2%. Collectively, we expect GAAP EPS of $1.45 per share and non-GAAP EPS of $0.28 per share. This outlook includes customer reimbursements associated with the March 11, 2024 cancellation of Project W. As Fusen mentioned, we remain very focused on many different customer engagements and also very focused to drive market adoption of our growing portfolio of solutions. We look forward to announcing additional product success, as we prepare for a broader core market recovery in fiscal 2025. This concludes our prepared comments. Operator, please open the call for questions.

Thank you. The floor is now open for questions. Today's first question is coming from Krish Sankar of TD Cowen. Please go ahead.

Hi, thanks so much for taking my question. This is Steven calling on behalf of Chris. I guess the first one for Fusen, in terms of your general semiconductor end-market. It's nice to see the sequential growth during the September quarter. But just kind of curious, like if we were to dig in a little bit further in terms of the -- I guess utilization rates at your OSAT customers. I think last quarter you mentioned it would be reaching the high 70% range during the September quarter. Did you reach that or exceed that? And I'm just kind of curious like do you still think 80% utilization rates are still the right threshold to think about for when your customers will add capacity? Or the more historic 90% utilization rate still the great sort of threshold?

So Steven, it's Lester. Let me answer the question on utilization. So I think -- for the September quarter, the utilization rate differs in different regions, right, as well as in different end-markets. So for example, in China utilization rate is over 80%, while for the rest of the world is probably in the mid-70s, but it is -- every last couple of quarters, it is been going up. So I think for now general semi utilization rate is also going up. And I think 80% is sort of the threshold we've always said where people start doing more capacity wise.

Okay. Great. Thank you for that Lester. And then just for my follow-up, in regards to the Foundry customer win for the [TCB- APTURATM tool] (ph), congratulations on that announcement. I'm just kind of curious, like -- is that at a major timeline foundry? And also, can you give us a sense for the longer-term or the opportunity for the APTURATM sales next year and longer-term for the time horizon for that?

Okay. The recent win actually with the multiple system deal, this is for the near-term production. Why we believe we actually have upside for the next year and onward? Actually, we have not received a long-term forecast, but we do believe it can be significant for the futures. So we probably will give you more update a bit early in next year. But I think this, as a conclude however actually was a successful to quantify our products. And we believe the-long term will be good. So short-term, I think we probably will update you in the next couple of quarters.

And Fusen, just a quick follow-up to that, for that FTC win. Are you guys the sole supplier for that solution? Or are you sharing that business with another industry peer, Fusen?

Well, I think at the recent moment, we are don't want to receive it. We don't comment in future any possibility, but we are quite confident our capability and also are confident the opportunity we have for the next couple of years or longer-term.

Okay, thank you so much.

Thank you. The next question is coming from Tom Diffely of D.A. Davidson. Please go ahead.

Yes. Good morning. Thanks for the question. Curious, just on the general semi business, how much did that recover during your fiscal '24? And then what are your projections for fiscal '25? Maybe you can put it in the context of where that market is kind of on a normal basis.

In semiconductor, so are you talking about -- I'd like to know general semiconductor in FY '25?

Yes, just kind of where we are in the cycle. I mean, obviously, two years ago trough and then it came up a bit last year, and then your [indiscernible] growth like again this year.

Okay. So maybe I can just overview to tell you how market forecast from industry forecaster and also our view. So the Q1, actually, we guided [$165 million] (ph). I think industry attrition looks like -- still take a little bit longer. But we do see our Q2 actually will be better than Q1. And industry forecast actually believe next year, unit growth will be about 7% to 8% and approximately about 14% revenue, right, this from Gartner. And the growth in the semiconductor revenue driven by, number one, is AI. Number two is automotive. And a lot of people believe automotive maybe already past the trough. The third one, maybe I answer your question is a general semi. And general semi, I think, in '25, the growth will be in IoT and also AI-edge devices, which is a communication devices with AI, like AI-capable PC and the smartphone, right? So these few items people believe it's going to be 14% for the semiconductor revenue. So from our point of view, we got [$165 million] (ph), and we do believe that Q2 will be better. And as your question to Lester, the current generation rate, I think average, we look at about 77%, really not far away from 80%, which is a [trigger] (ph) capacity addition. So talking about our products, talk about Ball Bonder first. Our Ball Bonder peaked at about $1 billion in FY '21. But as you mentioned, I think recovery -- we do see a recovery in the '24 compared to '23, but was wiped out by actually the auto weakness, right? But our Ball Bonder in '21, '23 and '24, actually is only averaged $300 million, give and take. So we believe our Ball Bonder have a lot of room to go. So we do expect second half '25 normally is our strong second half. We expect pre-COVID, our Ball Bonder [long run rate] (ph) about [$500 million to $600 million] (ph), we do believe from the second half of '25, we should longing towards this number. So to make the story short, we believe our Ball Bonder will be up, more significantly in second half, mainly driven by China mature node capacity addition, right? This is a 28-nanometer and above. China has a lot of capacity coming up. And also Southeast Asia, particularly in Malaysia, a lot of -- some demand will come to Malaysia is for the China Plus One Strategy, right? So Ball Bonder, we believe, will be up. And Wedge Bonder, we discussed probably positive trough. We actually are quite optimistic, receive order in recent quarters. And we believe our TCB expense will also go up, right? So that's a give and take of our view and industrial forecast view about FY '25?

Yes. No, I appreciate the color. That's very helpful. And then as a follow-up, Lester, if you could just talk a little bit about the recovery from Project W you're getting in the first fiscal quarter here, and how that compares to what the total charge-off was, that would be helpful.

Sure, sure. As you recall, in Q2, Project W was canceled by the customer and we took an impairment in Q2. So as we indicated in our remarks, I'm very pleased that we've reached an agreement with the customer for the customer to reimburse a significant part of our impairment charges as reimbursement for our costs. So -- and this reimbursement will be recognized in Q1 and it's already in our current GAAP and non-GAAP guidance. So we provide -- in our earnings release, Tom, at the back, there is a table that shows our anticipated non-GAAP items included in the outlook. And there's a $75 million item related to discontinued business claims and proceeds in that table, which is overwhelmingly related to Project W.

Okay. Great. Can you just remind us what the total impairment charge was in the second quarter?

[$105 million] (ph).

Great. Okay, very helpful. Thank you very much.

Thank you. The next question is coming from Dave Duley of Steelhead Securities. Please go ahead.

Thanks for taking my questions and congratulations on the nice TCB wins. I was curious, you mentioned several applications, I think in the press release. But as far as your initial read on the situation, do you think you're going to be -- is this when at the foundry going to be more for chip-on-wafer or the wafer on the substrate? I think the chip on the wafer is the kind of the higher value-added step. So I was just kind of curious if you've gotten one or two of these steps.

Yes. Actually, to answer your question short, this application, it is for the fluctuates qualification, but it's at the chip-to-wafer level. And this is most advanced, probably, chip-to-wafer application and use our fluxless. And our fluxless actually can qualify process were both chip-to-substrate and chip-to-wafer. But for this case, I think now with chip-to-wafer to qualify fluxless. But I think there will be numerous opportunity and numerous projects.

Okay. And as far as -- will these be for mobile applications? Or do you think these are going to be for high-performance compute AI applications?

So I actually mentioned, I think this probably is the most advanced TCB process for the very high-end products.

Okay. And then I was curious, you've made comments during your prepared remarks and in the press release about a coordinated recovery in the general semiconductor market. So your -- obviously, your utilization rates have improved. Have you started -- are the customers coming in and asking for slots or asking about availability for larger orders? What other signs are you seeing in the general semi business that gives you confidence that there's a recovery underway?

Well, Dave, I mean, one -- you've mentioned one, right, utilization rates across the board on the high 70s in most end-markets, and then on a regional basis, it's over 80 already in China, and it's again, growing in the rest of the world. China has been strong actually over the last couple of quarters. And we believe that now the rest of the world is starting to catch up. I think they're starting to -- for all the reasons that Fusen said, right? In terms of -- in China, there's a lot of fabs coming online, which will -- wafers, which obviously needs to be packaged. And again, wire bonding is still the cheapest way of interconnect. I think in addition, we also are seeing macro recovery a little bit in the economy. Obviously, there is still a little bit of volatility out there. So all-in-all, I think we are seeing a lot more customer interest, both inside and outside of China.

Okay. Great. One more question for me is you had a very robust gross margin in the quarter. I think it was just over 48%. And I was kind of curious, I've asked this question on previous conference calls, you've introduced a bunch of new products in the core, wedge and wire bonder business that have higher margin profiles. I'm wondering, as we move into next year, what can we expect for the gross margin profile for the wire and wedge bonder business? Thank you.

Yes. So for the [overall profit margin] (ph), I mean, we are still aiming towards 50%, right? And then you're right, we have started introducing higher gross margin product in both our ball and wedge bonder businesses, and now they are getting qualified and I think they're becoming a high and high percentage of our overall ball and wedge sales. So I think as we move further into fiscal year '25, I think the margin will start expanding. And also, as we've mentioned many times before, Fusen is very focused on cost reduction efforts, which is still ongoing.

Thank you.

The next question is coming from [indiscernible] of B. Riley Securities. Please go ahead.

Hi. I'm actually calling on behalf of Craig Ellis. And I wanted to ask about something that you said to Tom earlier, which is that you kind of expect a stronger Q2 than Q1. That's sort of kind of been a theme across the board with selling season. Are there any dynamics that you see that lead you to believe that Q1 might be somewhat depressed unusually?

Well, Q1, nobody -- most of the weakest ones quarter probably is Q1. Nobody -- I think seasonality happened in Q1. And the past three years is about 10% down, right? So this looks like in-line with that. Q2 Actually, we do have a few customer. Actually, because of our schedule -- because scheduled reason, I think already have a slot over there. So we do believe Q2 will be better than Q1, that's the number we are seeing right now.

Okay. Thank you. Yes. That makes a lot of sense. And then so another thing, obviously, auto and industrial has been picking up for, I guess three consecutive quarters now. Do you kind of expect that linearity to continue into the next year? And do you think that we've sort of seen the trough of the cycle and now entering into a more sustainable expansion?

Well, I think it impacts us the most in auto, there are two product one is Ball Bonder, one is the Wedge Bonder. So all we can tell you is that we have actually believe the Wedge Bonder is recovering. And so it's Ball Bonder. So in terms of the linearity, some of the Wedge Bonder actually have a big customer, both in the US and also in China two customers. The [indiscernible] actually can be big. And so to achieve linearity probably is not easy. But we do believe Wedge Bonder in the auto industry will be doing well for 2025.

Okay. Great. Thank you. And then just one last question. Congrats on the TCB fluxless wins. The way that I'm talking about is that it might relate to these leading-edge advanced packaging uses. Am I thinking about this the right way? And what sort of end-markets are carrying this order pickup?

Well, end-markets I mentioned -- I don't want to speak about customers' critical information. But we believe this is so critical, it's the most precision and reliability is very important. And it would be -- at this moment is actually is -- can be for many multiple industries, right? It can be for autonomous in the future, it can be for the high-end high-power computing. So we believe that -- this is a really typical application. And once qualified, this will long many, many years. of course.

Okay, yeah. That’s all I have. Thank you so much.

Thank you. [Operator Instructions] The next question is coming from Charles Shi of Needham. Please go ahead.

Good evening Fusen and Lester. Congrats on the TCB announcement. I do have a few follow-up on that. First, it sounds like you are characterizing order, as a production order. Can you kind of confirm that? And the second, I do want to ask from the technical perspective, -- can you kind of speak to why the customer is transitioning to TCB? Because everybody heard about -- the story about the shrinking bump pitch, smaller bumps. But I do think that maybe there is something there regarding the large die assembly that may require TCB. Can you kind of speak to that and especially the -- on the large die angle, is that part of the reason why your tools are getting adopted? Thanks.

Okay. I think the qualification I mentioned is for fluxless. So fluxless, as you know, they are two technology. We actually believe we have a very strong direction. And actually, you know this is a solder process, this is [without solder process] (ph). But anyway, you really got to make a good contact without any upside, right? So we believe our process fluxless is using actually localized delivery forming [assets paper] (ph) to clean the surface, enter the bonding stage. We believe that this is the right approach. There are no wait time in-situ clean, and we do believe the service -- the bonding between a copper to copper is very, really good. And the other one actually is a use of plasma. So and of course, large die is always in our road map, right? And we believe we can handle very, very large die because right now, as you know, the die are getting much bigger. And the whole wafer may be only a couple times, right? So it's a critical one. So I just want to let you know, we have capability for a large die. And we are very confident on our technology provide good liability and [good use] (ph). That's the reason I think, yes to answer your question, yes, this is for production.

Got it. So the current order, is it mostly -- you said there's two technologies, right, that the ones that you're seeing plasma, the other one sounds like it's a different technology, which one is shipping today?

Okay. Of course, we are the ones shipping and we use chemical clean, it’s a forming essence.

Got it. Thank you very much. Maybe the other question regarding high bandwidth memory, any progress you can update us on the TCB for that particular market?

Sure. So actually, we are quite excited. For the memory, this is going to be our focus. So we have 2-part focus in our memory. One is vertical wire. And as we mentioned this for -- the first one is going to follow low-power DDR. And customer indication, preliminarily low volume production will happen probably end of this year -- I'm sorry, end of '25. And with vertical wire in our process, you actually can shrink about 35% of the [phone sector] (ph). So we are quite excited on that. Yes, next one actually is HBM. So we actually quite used a lot of effort engaging our memory customers and -- to demonstrate our capability. So this is going to be our priority in FY '25. I think I probably in another quarter or two, we probably can give you an update. But to tell you, I think we are quite confident in our technical superiority, and we are going to put a good effort. And we have a lot of work to started already, and probably give you more update on next one or two quarters.

Make sense, Fusen.

Okay. Thank you very much Charles.

Thank you. At this time, I'd like to turn the floor back over to Mr. Elgindy for closing comments.

Thank you, Donna, and thank you all for joining today's call. Over the coming quarter, we'll be presenting at several conferences and road shows. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.