Magnachip Semiconductor Corporation (MX) Q4 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the MagnaChip Semiconductor Fourth Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. Bruce Entin, sir you may begin.

Thank you for joining us to discuss MagnaChip's financial results for the fourth quarter ended December 31, 2016. The fourth quarter earnings release that we filed yesterday after the stock market closed and other releases can be found on the Company's Investor Relations website. A telephone replay of today's call will be available shortly after the completion of the call and the webcast will be archived on our website for one year. Access information is provided in the earnings press release. Joining me today are YJ Kim, MagnaChip's Chief Executive Officer, and Jonathan Kim, our Chief Financial Officer. YJ will begin the call with a discussion of the Company's recent operating performance. Following YJ, Jonathan will provide an overview of our financial results. YJ will then briefly recap the Company's business strategy as well as provide financial guidance for the first quarter of 2017. There will be a question-and-answer session following today's prepared remarks. During the course of this conference call, we may make forward-looking statements about MagnaChip's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor discussion found in our SEC filings. During the call, we will also discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles, but are intended to illustrate an alternative measure of MagnaChip's operating performance that may be useful. A reconciliation of the non-GAAP financial measures can be found in our fourth quarter earnings release available on our website under the Investor Relations tab at www.magnachip.com. I would now like to turn the call over to YJ Kim. YJ?

Thank you Bruce and good afternoon to everyone on the Q4 2016 conference call. We ended a solid year on a strong note in the fourth quarter of 2016. Revenue of $180.5 million in the fourth quarter came in at the high end of the guidance range we provided in our earnings call last October and gross margin of a 25.5%, exceeded the high-end of the range by 150 basis point. Our turnaround it's far from complete but the financial results for Q4 and the full year 2016 reflect the progress we've made for the company on a path to sustainable growth and profitability. Looking back on 2016, we achieved several important objectives. We increased total revenue, turnaround our foundry business, cemented our AMOLED leadership position and continued to reduce our cost structure. We closed a low margin 6-inch fab, reduced the fab workforce by 169 employees, sold a fab equipment and we are now in the process of selling the building. For 2017, our primary focus is to improve gross profit margins and over a profitability and invest in key initiatives that we believe will help fuel long-term growth. We recently launched up next phase of a multi-year cost reduction program to reduce the workforce by the end of second quarter. The reduction is expected to be two to three times larger than the workforce reduction excluded in 2016 that impacted 159 employees. Based in part on the successful conclusion of this phase of the plan cost reduction program and improving our product margin profile, we anticipate that gross profit margin and adjusted EBITDA will increase sequentially in 2017 beginning in the second quarter. Jonathan will provide more detail in a few minutes. With that let's dive right into the Q4 numbers. Revenue in Q4 is typically a seasonally soft quarter. However, our fourth quarter revenue of 180.5 million declined just 6% from 192.3 million in Q3 which was the peak revenue quarter for the year. Revenue in Q4 of 2016 increased 18.4% as compared to 152.4 million in the fourth quarter of 2015. The better than expected financial results in Q4 reverted primarily from a richer product mix across all divisions and a larger than expected increase in foundry revenue and despite a seasonal slowdown in our AMOLED business that was previously forecasted and widely expected. Total revenue for the full year was 688 million, a gain of 8.6% as compared with 633.7 million in 2015. When considering the comparison, it is important to note that in 2016 included 10 million of revenue from a 6-inch fab closed in February of that year whereas the 2015 figure included 74 million in revenue from that 6-inch fab. Now let me make a few comments on gross profit in Q4. Total gross profit dollar in Q4 were 46.1 million and gross margin was 25.5%, both figures were at their highest level in over three years. We are encouraged by the improvement in gross profit but we are not satisfied. That's why we are excluding and planed now to further expand growth profits by improving the product mix and by lowering our cost structure. When it comes to spending and cost controls we have a good track record but we are far from done. Now turning to the Q4 performance of two operating segments beginning with the Foundry Services Group. Foundry revenue in Q4 was 77.8 million, a sequential increase of 5.3% making the third consecutive quarter of growth and the highest level since the second quarter of 2015. Foundry revenue in Q4 increased 18.2% from revenue of 65.8 million in the fourth quarter of 2015 and the rate of growth in 8-inch foundry was 74.7% during the same time period. Our two fabs in Korea now manufactures 8-inch wafer. In Q4, our fab utilization was around 90% which was the highest level of utilization achieved since the second quarter of 2014 and was up from the high 80% range in the third quarter of 2016. Our foundry pipeline continued to strengthen in Q4. The rapid growth in fab utilization around 70% in Q4 2015 to around 80% in Q4 2016 is another proof point of the success of our business strategy to engage with global IC customers especially in the power and communications segment. In recent months, MagnaChip introduced three specialized fab processes to further appeal to the particular process need of customers in the power, IoT and wireless communication market. Tapeouts in our fab increased 19% in the second half of 2016 as compared to the same period in 2015 and were up 8% from the first half of 2016. For the full 2016 year the number of tapeouts increased by 20% as compared to 2015. Database tapeouts can sometimes be a leading indicator of future trends in the foundry business but they are not exact matters since each tapeout carries a different volume and margin profile and can take a year or more to each volume production. Having said that the number of tapeouts we generate is a good indication of strong customer interest in our fab processes. Turning now to the Standard Products Group. Revenue in our Standard Products Group which includes the display solution and power solution business lines was 102.5 million in Q4, down 13.4% sequentially and up 0.6% [ph] from the fourth quarter of 2015. The power business turned in its best quarterly revenue performance in three years. Revenue in Q4 was 37.7 million, up 12.2% sequentially and 15.8% as compared to the fourth quarter of 2015, while high voltage and low power consumption features continued to be a key for application in the communication, television, PC and industrial markets. Our approach continues as before to streamline the power product line optimized for margin enhancement. Revenue in display solutions was 64.8 million in Q4, down 23% sequentially from 84.7 million and up 20.2% from 53.9 million in Q4 2015. AMOLED revenue declined 41% sequentially due to a seasonal slowdown. AMOLED represented 48% of display business down from 53% in Q3. Despite the seasonal revenue decline, AMOLED gross margin continued to outpace the corporate average. We said on our Q3 earnings call last October that we expected typical seasonal factors will result in a decline in AMOLED revenue in Q4 2016 and that is exactly what happened. We also said that last October that seasonal factors would extend into 2017 and that would also experience a slowdown due to a timing mismatch between the expected drop-up in revenue from existing 55 and 110 nanometer products and when our 40-nanometer product family begins to generate revenue. Our 55 and 110-nanometer AMOLED product will continue to generate volume production although at lower levels than in 2016. As a result of the factors I've just described, AMOLED revenue will decline sequentially in Q1 from Q4 2016. We expect sequential growth will resume in Q3 as volume production commence from new design wins and gain revenue momentum in Q4. When all is said and done, we anticipate that AMOLED revenue in 2017 will be lower as compared to 2016 but we currently expect to exit 2017 at a revenue run rate that will set the stage for a likely return to robust AMOLED growth in 2018. Let me explain why we believe the drop-off in AMOLED is temporary and why 2017 will establish a foundation for long-term growth. I will also explain our building advantages that will create long-term opportunities for managers and high barriers to entry. As is typical with AC products like AMOLED, the close working relationship between MagnaChip and panel makers takes years to develop and requires a team work and tight alignment around product specification, panel roadmap and the sharing of IP. Teams of design engineers, program managers, quality experts and process engineers from both sides work together for a year to develop display drivers that meet specs and high quality standards. In recognition of this partnership, MagnaChip recently won prestigious supply awards from both of the top two AMOLED panel makers in the world. We’ve worked closely with our panel partners every step of the way under development of our next generation 40-nanometer AMOLED product family and our new family of 55-nanometer flexible AMOLED display drive ICs that enable mobile screens without site to site vessels [ph]. Our new AMOLED product have already designed into several key panels that could be adapted into numerous smartphone models. This is what gives us growing confidence that sequential growth will be due in Q3. Another advantage we have is our superior design, process technology expertise and large IP portfolio. Our 40-nanometer AMOLED drivers will have a die size comparable to any competitors 32-nanometer part. We believe power consumption in our AMOLED drivers will be the lowest in the industry for a given geometry. This is a real competitive advantage for MagnaChip. We also have ties to external foundries that manufacture our newer generation AMOLED on 12-inch wafers, so we have a capability to meet high levels of customer demand. We've been in AMOLED for ten years and shipped a cumulative total over 300 million display drive IC to panel makers. Looking ahead, we have all the ingredients for success in robust roadmap. Partnerships with leading panel makers and tied with external foundry to meet anticipated demand in a market that analysts now forecast will grow greater than 20% CAGR over the next few years. In short, we abolish underlying trends in our AMOLED growth prospects. We continue to believe MagnaChip will achieve modest total revenue growth in 2017 due to the positive trends we are currently seeing in our foundry, power and UHD TV display driver business as well a resumption of the sequential growth for AMOLED beginning in the third quarter. The foundry business continued to grow and the pipeline strengthens as we now turn our focus to improving product mix and gross profit. The non-AMOLED display business is growing in parallel with end market demand in the UHD television markets and our power business which picked up steam in the second half of 2016 continued to show positive signs. I will come back to wrap up the call and provide Q1 guidance after Jonathan gives you more details of our financial performance. Jonathan?

Thank YJ and good afternoon to everyone on the call. YJ spoke in some detail about the quarterly revenue performance in our operating segments, so I will focus on the year-over-year comparison and discuss the operational levers we are pulling in real time to improve gross profit and overall profitability. MagnaChip reported, on a GAAP basis, revenue of $688 million for 2015, a 54.3 million or 8.6% increase compared to $633.7 million for 2015. This was primarily to an increase in revenue related to mobile AMOLED display products which was offset in part by a decline in foundry revenue stemming from the closure of a negative 6-inch wafer fabrication facility in February 2016. Revenue in our Family Services Group was 274 million for 2016, a 15.8 million or 5.8% decrease compared to revenue of 290.8 million in 2015. The year-over-year decline was due primarily to a 54 million net decline in revenue due to the closure of our 6-inch fab offset by an increase in our 8-inch foundry business. Revenue in our Standards Product Group was 413.4 million for 2016, a 71.1 million or 20.8% increase compared to 342.3 million for 2015. The improvement was primarily due to a significant increase in revenues related to our display solutions business line in general and AMOLED display drivers in particular. Revenue in our display solutions business line was 282 million for 2016, 74.5 million or 35.9% increase from 207.5 million for 2015. The increase in revenue was primarily attributable to 91.2 million higher sales of mobile AMOLED display drive ICs partially offset by 15.8 million revenue decrease in large display products. Revenue in our Power Solutions business line was 131.5 million for 2016, a 3.3 million or 2.5% decrease from 134.8 million for 2015. The decrease in sales was primarily due to the deliberate reduction by MagnaChip of sales of low contribution margin MOSFET products as part of our portfolio optimization process. Turning now to gross margin, we achieved meaningful progress in 2015 on our [indiscernible] gross profit. Our total gross profit was 156.2 million for 2016 compared to 134.9 million for 2015 for a 21.4 million or 15.8% increase. Gross profit as a percentage of revenue for 2016 increased to 22.7% compared to 21.3% for 2015. Gross profit improved in both of our operating segments. Gross profit from our foundry services segment was 59.4 million for 2015, a 3.2 million or 4.9% increase compared to 66.2 million for 2015. Gross profit as a percentage of revenue for 2016 increased to 25.3% compared to 22.8% for 2015. The increase in gross profit was mainly attributable through a better product mix. The increase in 8-inch utilization rate throughout 2016 had a positive the impact to gross profit offset in part by absorbed labor cost from the remaining headcount from our legacy 6-inch fab. Gross profit from our standard products group segment was 87.2 million for 2016, 19.1 million or 28% increase from 68.1 million for 205. Gross margin for 2015 increased to 21.1% compared to 19.9% in 2015. Our strategy to fill our fabs reducing a cost and maximize cash flows was successfully executed in 2016. Now, we’re implementing the next phase of our plan to boost gross margin, by being more selective about incoming business opportunities and by continuing to reduce costs. The company this month launched a new headcount reduction plan that is expected to be two to three times larger than the 2016 program, which resulted last year in a reduction in headcount of 169 employees. The expected payback period is estimated at approximately 1.5 years, with estimated annual cost savings from $20 million to $27 million, depending upon the final size of the workforce reduction. The company expects to use $30 million to $40 million of the proceeds from the Exchangeable Senior Notes Offering completed earlier this year to pay the severance and other benefits to affected employees. We believe that a headcount reduction will improve gross profit and reduce operating costs, while still preserving the company's ability to grow and serve customers’ needs. The company anticipates that gross margin will begin to improve as costs begin to shift with lower manufacturing and other costs associated with them. Labor costs [Technical Difficulty] from the headcount reduction program. We believe that 2017 headcount reduction will also have a positive effect on adjusted EBITDA, which was 14.1 million in Q4 2016, up sequentially from 10 million and highest since first quarter of 2014. For the year, adjusted EBITDA totaled 40.7 million as compared 0.8 million in 2015. We expect that gross margin and adjusted EBITDA, both will improve sequentially throughout 2017, beginning in Q2. Now, turning back to the P&L and operating expenses for Q4. Total SG&A and R&D expenses in Q4 totaled 40.9 million or 22.6% of revenue compared to 38.5 million or 20% of revenue in Q3 and 37.5 million or 24.6% of revenue in the fourth quarter in the year ago period. This increase in Q4 was primarily due to a one-time 2.8 million fee related to consulting services. MagnaChip had a net foreign currency loss of 49.6 million in Q4 compared to a gain of 33.2 million in Q3 2016 and compared to net foreign currency gain of 17.1 million for the comparable fourth quarter in 2015. A substantial portion of our net foreign currency gain or loss is non-cash translation gain or loss associated with the inter-company long term loans, but this financial yardstick is not necessarily a relevant measure of our business performance. Net loss on a GAAP basis for the fourth quarter of 2016 was 49.8 million or $1.42 per basic share as compared to third quarter net income of 29.9 million or $0.86 per basic share and $0.85 per diluted share and a net income of 22.9 million or $0.66 per basic and diluted share for the fourth quarter of 2015. Net loss in the fourth quarter of 2016 was attributable primarily to a non-cash foreign exchange loss on intercompany loans. Adjusted net income, a non-GAAP financial measure, for the fourth quarter of 2016 was $1.6 million or $0.05 per basic share and $0.04 per diluted share, as compared with an adjusted net loss in the third quarter of 2016 that totaled $1.3 million or $0.04 per basic share and compared to adjusted net income of $5.2 million for the fourth quarter of 2015 or $0.15 per basic and diluted share. Turning to the balance sheet, cash and cash equivalents totaled 83.4 million at the end of the fourth quarter as compared with 75.4 million at the end of the third quarter. As of December 31, 2016, we entered into an agreement to sell a building that had been used to house the company's 6-inch fab that has become vacant. MagnaChip received total proceeds of 18.2 million, including a 1.7 million value added tax which is reported as restricted cash. We are obligated to perform a certain removal construction work that is expected to be completed by the end of March 2017. Accordingly, once the construction obligation is completed, the proceeds will be recorded as cash and cash equivalents on the consolidated balance sheet. Inventory at the end of fourth quarter was 57 million compared with 72.1 million in Q3 and 57.6 million at the end of the fourth quarter of 2015. We continue to focus on managing working capital while also producing sufficient levels of inventory needed to support the growth of our business. Accounts receivable was 61.8 million as compared with 66 [ph] million at the end of Q3 and as compared with 63.5 million at the end of the fourth quarter 2015. Capital expenditures in Q4 were 7.4 million and 18.7 million for 2016. We completed a 75 million exchangeable notes offering last month and raised an additional 11.25 million after initial purchasers exercised their rights to purchase additional principal amount of the note. At that time, we said we will use 30 million to 40 million of proceeds to implement the 2017 headcount reduction, 15 million to 20 million to help fund capital expenditures, up to 15 million for a stock buyback with the remainder allocated for general corporate purposes. In connection with the transaction, we executed a stock buyback totaling 11.4 or 1.8 million shares. We are currently evaluating our capital expenditure plan while we anticipate that 2017 CapEx requirements to be approximately 25 million. We may increase our CapEx from this level during 2017 if we anticipate a need to meet for increased customer demand. In summary, we're taking aggressive steps now to further reduce costs, streamline the company and shore up the balance sheet in order to build upon the operational progress we’ve made so far to turn around MagnaChip. Now, let me turn the call back to YJ for his closing comments and first quarter financial guidance. YJ?

Thank you, Jonathan. When we began this turnaround effort approximately 2 years ago, our strategy was first and foremost to increase revenue and [indiscernible] and maximize cash flow. Now that we’ve executed on that part of the strategy, our next stage in our plan is to increase gross profit margin and overall profitability and invest in initiatives that will fuel the long term growth. This plan will take time to unfold, but is already underway. Cutting costs and reducing spending are ingrained in MagnaChip’s culture. In the past two years, we've aggressively cut costs and we are not stopping now. We've already shared with you the details of our significant headcount reduction program that we are implementing now. One small but important example of our cost discipline is that our headquarters staff, including my management team and I will relocate our office next week from the high rent district in Seoul to the site of our large wafer fab. By co-locating next to our fab, we will improve overall execution and communication and save approximately 700,000 in annual expenses. We can point to several achievements in 2016, but that is corporate history. Our focus now lies on 2017 and beyond. We have many challenges as well as opportunities ahead to improve profitability and increase revenue and we are committed to meet them all head on. With that, let's turn now to out forward-looking guidance. For the first quarter of 2017, MagnaChip anticipate revenue to be in the range or 157 million to 163 million, a sequential decline of 9.7% to 13%, reflecting both a typical first quarter seasonal decline and a pause between new AMOLED product ramps. The first quarter revenue outlook for MagnaChip compares favorably to the revenue of 148.1 million in the first quarter of 2016. Gross profit is anticipated to be in the range of 24% to 26% as a percent of revenue, about flat with Q4, 2016 and about the 23.1% gross margin in the first quarter of 2016. Now, I will turn the call back to Bruce. Bruce?

Thank you, YJ. So Kaily, this concludes our prepared remarks. We’d know like to open the call for questions.

[Operator Instructions] Our first question comes from the line of Rajvindra Gill with Needham & Company. Your line is open.

Yeah. Thanks for taking my questions and congrats on the recovery. Just YJ, you spent a lot of time on the OLED and I appreciate it. But I’m still kind of struggling to understand why the OLED revenue would be down year-over-year given the timing of the rollout of the product. Is there any other issues that you're seeing coming into play, for instance, share loss or other competitors that are kind of emerging in the space?

Right. Thank you. So you’re asking a very good question. So first of all, if you look at the AMOLED growth in 2016, we grow more than 100%. The industry, the AMOLED panel industry only grew 50%, which is a huge number, 50% by the way, but we grew more than 100%. So we had an unusual home run in some of the AMOLED products in 2016, but that’s not usual. So if you look at from apples-to-apples or to yardstick, the CAGR for the AMOLED, it will grow 24%. So what you are going to see is that we are confident that we go on and meet or exceed the growth rate. And also as I said before, the AMOLED is an ASIC. So the, there is a lot of specification also sharing of the IPs and also I think that we gave you some statements that we have several design wins this year and we are already sampling the new 55-nanometer that will enable site-to-site without the [indiscernible]. So we are excited about the quality of design win we will have, so we feel very comfortable of going into the sequential ramp in Q3 and Q4, which we feel very good about setting in to the 2018. So and the AMOLED also is very complicated. So we don't see that in the near future we have any key competition than who we are.

So on the AMOLED, returning to kind of sequential growth in Q3 and accelerating, do you think you'll get back to the 2016 levels, once we have gone through the transition or how should we look at it kind of exiting 2017 in terms of revenue run rate?

Yes. So I’m sure that's really good question, but we normally give only one quarter guidance, but qualitatively, what I can tell you is that the new design wins we have is very exciting. So for example, to have the site-to-site without [indiscernible], I mean that’s one of the new trend in the AMOLED. So that’s a plastic OLED, flexible AMOLED, we have that and we have a 40-nanometer that we are on schedule to sample in the first half and so forth. So we’re excited about the qualitative design wins and we are also comfortable about the sequential ramp we’re going to start to see in the Q3. So beyond that, but that's all we can say at the moment.

Okay, great. And YJ, you talked about kind of modest growth this year with AMOLED kind of ramping until maybe Q3. It would imply that you’re going to see some acceleration in growth in power or foundry, can you talk a little bit about what you're seeing on the foundry side. I know Jonathan had mention kind of a robust pipeline on foundry, and is great news to see that. What's the thought process on foundry going into 2017, what’s driving the pipeline?

Yes. So if you look at the earnings per share growth, I think we shared today that the year-to-year, we grew more than 70% and looking at the database, we had about 20% more in 2016, so forth. So it's a leading indicator. So in the 2017, we feel that foundry will have a growth year and then same thing on the power, we are starting to get some movement, starting second half 2016 and Q4, we ended up with the highest level since last two years. So we believe that power will also move in the right direction and the non-AMOLED display driven by the UHD UltraHD growth, so but we expect a modest growth for the whole revenue for the year with the resumption of the AMOLED kicking back in and sequential growth from the Q3 and that is which will set up nicely into 2018.

Thank you. Our next question comes from the line of Suji De Silva with ROTH Capital. Your line is open.

Hi, YJ. Hi, Jonathan. Congratulations on the strong results here. So, the gross margins, I wanted to talk about the different segments, for standard products, can you talk about the opportunity to improve gross margin and whether it's dependent solely on AMOLED revenues returning or whether there are other levers you can pull to get the standard product margin higher?

Sure. So the gross margin on standard products I mean obviously will be impacted by our product mix, but the other area that we're looking at is obviously our cost structure and one of the things that we have already announced with the fact that we are going through a process of doing headcount reduction. And so if we did a capital raise during which we stated that we will be using approximately $30 million to $40 million in connection with the headcount reduction and we believe that the return on investment will be about 1.5 years. And so doing simple calculation that will yield about $20 million to $27 million in savings on an annualized basis run rate. And to give you some perspective on the manufacturing costs related savings that we would have, historically, when you look at our overall headcount structure, it’s been historically approximately 70% related to manufacturing. And so provided that the headcount reduction will be throughout the company, we're expecting approximately 70% of the savings to be related to manufacturing of course that will be a positive, both for our standard products group as well as our foundry group.

Okay. Great. And then the foundry gross margin, congratulations again, that’s a 30% level. Is that something that can also improve secularly, despite already being at 90% utilization based on the same logic you just spoke about for the standard products gross margin?

So obviously, the utilization rate does impact the gross margin and you have seen our gross margin grow. Several commentary that I made in my prepared remarks was the fact that we're expecting the gross margin to grow sequentially through 2017, starting in Q2. Again, the product mix will have a positive impact as well as the headcount reduction. And as to your 30% reference, I guess just to give you a data point, in history, remember back in 2012, we were at above 30% gross margin and I think that’s just sort of appointed history where you can look at to see the potential of the company. We’re certainly heading in the right direction and as we are looking at 2017 with sequential growth in gross margin as well as adjusted EBITDA, starting in Q2, we think that things are moving in the right direction.

Okay. And then I just wanted to clarify on the AMOLED products, you talked about the edge to edge product being at I believe 55-nanometer, but the foundry and new designs being at 40-nanometer, can you talk about where the growth is going to come from for you guys. I just want to understand what node you will be using and whether it will all be foundry going forward?

Yes. Suji, so I alluded earlier in the prepared remarks that we have several design wins, so the ones that I shared today is the part that is already sampling this quarter on 35 that will enable a site to site edge without the [indiscernible] and then we will have 40-nanometer parts that we will sample in the first half and then more parts follow. So again, so we will have both 55 and 40-nanometer products, multiple of them and so that's going to help us back into the momentum, starting Q3 where you can see sequential growth.

And YK, just to be clear, are those both on the external foundry at this point?

Yes. Yes. Anything on the 55, 40 and beyond is all using external foundry and if you really look at it that gives us room to grow without spending any CapEx. So our model of MagnaChip has changed tremendously now that we are relying on external foundry for the AMOLED business and we will be phasing out our under 10 nanometer in the second half.

Thank you. And I’m showing no further questions. I’d like to turn the call back to Mr. Entin for closing remarks.

Okay. Thank you, Kaily. So this concludes our fourth quarter earnings conference call. Please look for details of our future events on MagnaChip’s investor relations website. Thanks for joining us today.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.