Magnachip Semiconductor Corporation (MX) Q4 2019 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Q4 2019 MagnaChip Semiconductor Corporation Earnings Conference 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 turn the conference over to your host Mr. Bruce Entin, Head of Investor Relations. Please go ahead, sir.

Thank you, Alexander, and thank you for joining us to discuss MagnaChip's financial results for the fourth quarter ended December 31, 2019. The fourth quarter earnings release we filed today 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 discuss the company's recent operating performance and market outlook for our product categories, and Jonathan will provide an overview of our Q4 and year-end financial results. There will be a Q&A session following today's prepared remarks. During the course of this 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 also will 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 to the most directly comparable GAAP measures can be found in our fourth quarter earnings release available on our website under the Investor Relations tab at www.magnachip.com. I now will turn the call over to YJ Kim. YJ?

Thanks, Bruce, and welcome to everyone on the Q4 2019 conference call. First, we'd like to extend our deepest thoughts and prayers to those coping with the impact of the coronavirus health crisis in China and elsewhere. I will come back to discuss this issue a little later. Let's begin now with a recap of Q4 results and the business outlook. We ended 2019 on a high note in Q4. If you recall our October 23rd earnings call, we said we expected normal seasonal softness in Q4 and guided revenue to be between $181 million to $191 million and gross profit margin to be between 24% to 26%. Due to an improving business environment, we updated guidance on January 13th and projected Q4 revenue between $198 million to $200 million and gross profit margin between 26% to 27%. Today, we reported actual Q4 revenue of $200 million, which was at the high-end of the updated guidance range and represented the highest level achieved in any fourth quarter since 2012. While seasonal selfness was effective for all three businesses as expected, total revenue in Q4 increased 11.5% from a year ago, OLED revenue was significantly better than expected, Foundry was better than expected and Power was seasonally softer than expected. Corporate gross margin profit margin of 26.6% was slightly above the mid point of the updated range due to better than expected fab utilization on improved OLED product mix and better manufacturing yields at an external foundry on latest-generation OLED display drivers. Our cash position improved by 15.5% sequentially, which Jonathan will discuss shortly. Now, let's review the performance of each business unit in Q4 beginning with OLED. OLED revenue of $67.3 million was the highest level achieved in any fourth quarter in the company’s history. Revenue increased twofold from $33.2 million a year ago and declined by only 14% sequentially from Q3. The sequential decline was significantly less than we anticipated heading into Q4 and compared very favorably to the 43.1% decline we experienced from Q3 to Q4 in 2018. Two smartphones with our OLED drivers launched in Asia in Q4 and we expect up to another nine OLED smart phones with our display drivers will launch in the first half of 2020. While all our OLED driver IC contributed to revenue in Q4 our 28-nanometer drivers had a very good production ramp following their initial launch of mass production in Q3. I’d like to now discuss a new technology initiative that will extend our reach into multiple addressable sectors. We are excited to announce that we've developed and introduced the industry's first single chip active metric micro-LED driver IC’s for large panel televisions. At CES, a major TV maker showcased 75, 93 and 150-inch TV models that include our micro-LED DDIC. Depending on the resolution of the TV, up to 256 units of our micro-LED DDIC can be used for TV. We currently expect to begin initial pilot production towards the end of this year. Looking ahead, we believe some micro-LED driver ICs will be used for ultra-high end TV and for large data signage applications in commercial and industrial markets. Speaking of extending the reach of OLED technology, we are encouraged to see that new markets aside from smartphones, tablets, and TVs have begun to adapt OLED as a replacement for LCD. The auto market is a prime example. Some car makers already use OLED for brake lights, but the technology is beginning to move from the trunk to the driver's seat. Just a few weeks ago, Cadillac announced it's 2021 Escalade SUV will contain three screens that form a 38-inch flexible curved OLED dashboard display. Mercedes also has reported plans to replace it’s LCD cockpit display with OLED display in E-Class and S-Class models. We have a number of attractive LCD design wins in the auto segment, but we can see the day when LCDs will convert to OLED for auto application just as they have done in smartphones. As a result, we believe the auto market represents a promising long-term OLED opportunity. To sum-up on OLED, we now have a total of 11 OLED display drivers in our portfolio including five of the latest generation 28-nanometers drivers, one of which we added in Q4. One year ago, at this time our OLED portfolio had a grand total of six drivers and we had only one 28-nanometer driver. We will continue to launch new display drivers in 2020 with differentiated features aligned to changing market requirements for next generation 5G and foldable smartphones. Our OLED drivers already support enhanced capabilities enabling functions like AR and VR with refresh rates of 220 Hertz, interfaces to optical sensing and fingerprint on display and features like QHD plus resolution and OLED correction IP to compensate for pixel aging. Our drivers also are available in different package types including the latest and most cost effective technology called Chip On Plastic. Lastly, our 28-nanometer drivers which are 20% smaller in chip size than the previous generation have the lowest power of any captive or independent OLED supplier in the display industry. If we put aside the demand risk from the coronavirus, we are highly confident about our ability increase OLED revenue, gain market share and extend our technology lead as the number one independent supplier of OLED display drivers. As part of recent internal organization, I have now assumed the role of General Manager of the Display Business, in addition to my role as a CEO of MagnaChip. We believe this change will allow us to provide laser like focus on the Display Business to best capitalize upon the attractive growth opportunity in the OLED and other relevant emerging markets. Over the past two years, display has grown dramatically and now we have the opportunity to help take the display business to the next level of product development and market growth. To increase our focus in Power, we've named a dedicated Power GM to run that business. For now, I continue as the acting General Manager of Foundry business. Let's turn now to our Power Standard Product business. Power revenue grew for the year 2019 but revenue in Q4 was down 18.1% from Q4 2018 and down 22.4% sequentially from Q3 of 2019. We said on the Q3 earnings call in October that power revenue was expected declining Q4 due to seasonal softness but the business actually declined more than we anticipated due primarily to weakness in consumer and communication markets. We also saw pricing pressure stemming from an inventory correction. We don't break that profit margin in the power business, but I can share with you that power profit margin improves significantly year-over-year in Q4 due to improved product mix. While we now estimate the Power revenue may go sideways in the near term. We view this as a temporary pause in our long term growth outlook. As you may recall, we are involved in 10,000 hour qualification stages with auto suppliers and we expect the auto segment would represent a meaningful growth opportunity for our Power business in 2021 and beyond. Now turning to the Foundry business. Foundry revenue of $86.6 million in Q4 increased 4.2% from Q4 of 2018 and was at the highest level for Q4 in six years. Revenue was down 4.1% sequentially from Q3 of 2019, but the decline was less than we anticipated. 8" Foundry revenue in the second half of 2019 was at its highest level since the company went public in 2011. Revenue from B3 EEPROM increased 21% year-over-year and nearly 15% sequentially from Q3 2019, offsetting the decline in high voltage processes. Foundry revenue from new products held steady at 27% in Q4 as compared to Q3 2019, which we attribute to high touch customer service, excellent product and 8" process like BCD EEPROM that are aligned to critical market needs. New products are those in production for one year or less. As for the strategic evaluation process of the Foundry business and Fab 4, there's nothing further we can disclose publicly at this time, but as stated previously, we continue to make substantial progress in discussion with multiple interested parties toward a possible sale of the business as well as consideration of accretive business conversions and other options. We reiterate that our decision regarding the outcome of the various options of the strategic evaluation process will be guided by what the board and management consider to be the best available path to improve MagnaChip’s profitability and to maximize shareholder value. We appreciate your continued patience. Now let me make a few points about our business outlook. Coronavirus aside, I can recall a time when I felt more upbeat about the long-term outlook for MagnaChip. We are poised to expand our position as the leading independent provider of OLED DDIC in a range large market space growing by double-digits. We are extending our market reach with our first ever single chip active metrics micro-LED display driver. We are also well positioned down the road with OLED drivers for auto displays and high voltage power products for automotive. When I look back on 2019, trade tensions were headwind for many semiconductor firms, but a tailwind for MagnaChip. And we are well positioned in the future since we occupy a unique place in the Asian supply chain with our – 100% our IP and our own fab locate in Korea. That's final note. I am proud that the Global Semiconductor Alliance has name MagnaChip as one of the three finalists for the 2019 award, the most respected emerging public semiconductor company. Now let me make a few comments about the coronavirus. From a business perspective, we are still assessing the potential impact since the coronavirus situation is fluid. MagnaChip historically has experienced typical seasonal softness and a decline in revenue in its first quarter as compared to the prior first quarter, but we entered 2020 with a more optimistic view. Prior to the coronavirus outbreak, our primarily internal forecast had anticipated Q1 revenue would be slightly higher than $200 million in revenue reported in Q4 2019. MagnaChip manufacturing supply chain resides largely outside China, so there is negligible impact on our results. However, based on our preliminary assessments, public health measures taken to protect the population China likely will affect customer demand in Q1. As a result, we've lowered our internal expectation and widened the typical guidance range we normally would provide for Q1 2020 to help account for lingering uncertainty around this public health crisis. Now, I’ll turn the call over to Jonathan and come back for Q&A. Jonathan?

Thank you, YJ, and welcome to everyone on the call. Let's start with key financial metrics for the 2019 year and Q4. Revenue in 2019 increased 5.5% despite macro uncertainty that caused the non-memory segment of the semiconductor industry to decline by 3.8%. It was our second straight year of annual growth. Our growth was fueled primarily by a lineup of homegrown standard products including low power OLED display drivers that accounted for 87 of our display revenue. The premium Power products that represented over 50% of total Power revenue. Let's turn to OLED results in 2019. OLED DDIC revenue of $267.1 million set an all time record and broke our previous record of $188 million in 2018. That 42% rate of annual OLED growth was more than 2.5 times the rate of growth for OLED smartphone panel shipments worldwide according to HIS. Turning now to Power. Revenue increased 12.4% for the first nine months of 2019, but a slowdown in Q4 reduced our annual growth rate to 4.1%. As a reference Power market declined by 3% in 2019 according to IHS, still revenue of $176.2 million marked our third consecutive year of growth following double-digit year-over-year increases in revenue in 2017 and 2018. Revenue from premium products, which include a Super Junction MOSFETs, IGBT and Power IC increased by 21.2% year-over-year. Now turning to Foundry, revenue in 2019 was $307.1 million down 5.6% from $325.3 million in 2018 but those figures don't tell the whole story. Foundry revenue and Foundry fab utilization were extremely disappointing in Q1 but the business stabilized faster than we expected and staged an impressive recovery in the final three quarters of the year. Now to Q4 results, revenue in the Standard Products Group, which includes Display and Power was $113.3 million up 17.7% year-over-year and down 18.6% sequentially from a record $139.2 million in Q3 2019. Display revenue was $75.5 million up 50.6% year-over-year and down 16.6% sequentially from a record of $90.6 million in Q3 of 2019. The year-over-year increase was primarily attributable to an increase in revenue related to our mobile OLED display drivers and was especially impressive considering that we continued to strategically reduce the production and sale of our lower margin LCD products. In Q4, LCD revenue was $8.2 million down 52% as compared to $17 million for Q4 of 2018. For the full-year LCD revenue was $41.4 million in 2019, down 39.3% as compared to $68.1 million for all of 2018. All that revenue represented 89.2% of total display revenue in Q4 up from 66.2% in Q4 2018. As noted previously, power revenue was $37.8 million in Q4 and Foundry Services Group revenue was $86.6 million. The Standard Products Group represented 57% of total revenue in Q4 up from 54% in Q4 2018. The Foundry Services Group represented 43% of total revenue down from 46% in Q4 2018. Let’s now recap profitability metrics in Q4, beginning with total gross profit and gross profit margin. Total gross profit was $53.2 million or 26.6% or slightly above the midpoint of the updated guidance range of 26% to 27% provided on January 13. Gross profit in Q4 increased from $43.9 million or 24.5% in Q4 2018. Fab utilization in Q4 was in the low-to-mid 80% range, but was higher than we had expected when we provided our initial Q4 guidance during the Q3 earnings call on October 23. Fab utilization in Q4 compared to approximately 90% in Q3 2019 and the mid-80% range in Q4 of 2018, as we said on many earnings calls in the past, we believe gross profit is an important financial metric to monitor because of the potential flow through to operating income, adjusted EBITDA and cash flows. In Q4, cash and cash equivalents totaled $151.7 million, up 15.5% sequentially from $131.3 million, and highest in six years. And we recorded $20.5 million in net operating cash flow. This represented the third consecutive quarter of net positive operating cash flow. The Standard Products Group gross profit margin in the fourth quarter was 26.9% as compared to 25.6% in the fourth quarter of 2018, and 25.3% in the third quarter of 2019. The year-over-year and sequential improvement in the Standard Product Group’s gross profit margin was due primarily to an improved product mix and stabilized wafer yields from an external supplier on OLED products that entered production in the third quarter of 2019. Foundry gross profit margin in the fourth quarter was 26.1% as compared to 23.2% in the fourth quarter of 2018 and 28.3% in the third quarter of 2019. The year-over-year improvement in the Foundry Service Group’s gross profit margin was primarily due to an improved product mix. Now turning to operating expenses, SG&A was $19.8 million or 9.9% of revenue as compared to $17.5 million or 9.8% of revenue in Q4 2018 and $16.8 million or 7.3% of revenue in Q3 of 2019. R&D was $19 million or 9.5% of revenue compared to $18.5 million or 10.3% of revenue in Q4 2018 and $17.4 million or 7.6% of revenue in Q3 2019. The increase in both SG&A and R&D was primarily attributable to the timing of equity based compensation. Turning now to the balance sheet, as mentioned previously, cash was $151.7 million as a recall, our interest payments occur in the first and third quarters of the year. Accounts receivable totaled $95.6 million, a decline of 10% from $106.3 million in Q3 of 2019. Inventories totaled $73.3 million or about flat with $72.7 million in Q3 2019. CapEx was $6.3 million in Q4 as compared with $1.7 million in Q3 and $10.1 million in Q4 of 2018. CapEx in 2019 was $23 million down from normalized CapEx expenditures in 2018, which were approximately $29 million. The decline in CapEx is consistent with our forecast during our Q1 2019 earnings call. With that, I'll turn the call back to Bruce. Bruce?

Thank you, Jonathan. So Alexander, this concludes our prepared remarks. We now like to open the call for questions.

Thank you. [Operator Instructions] We have your first question from Suji De Silva from ROTH Capital. Your line is open.

Hi ,YJ. Hi, Jonathan, congratulations on the progress here. Outstanding results on display and across the board. So, maybe YJ, you've said this multiple times, so can you just kind of go through again why in the OLED the 28-nanometer products are seeing such a sharp design in and volume ramp interest. It's helpful to understand that as we go into 2020 and how you are competitively positioned?

Yes Suji, thank you. So in my remark, we entering the 2020 with 11 products where five are 28- nanometer. So obviously, that we started production in Q3 2019 and we had a very good ramp in the fourth quarter with more 28-nanometer. So, I think the 28-nanometer product will be a key product and you will see more 28-nanometer products that's going to tape out and sample in good production in 2020. So the, what's the 5G and the foldable, the power consumption is very key and our key aspect is lowest power consumption. So we think that that's going to play to our advantage and also the 28-nanometer products, put a foundation, our future OLED business roadmap.

Okay, great. And then specifically on OLED form factors like foldable and then you talk about large panel TV and one of the first times I've heard you talk about that. What kind of contribution can those sub-segments make within OLED, if that's the way to think about it. And can those help your gross margin in that business trend upwards throughout 2020.

So if you saw my comment earlier, the comment wasn't micro-LED TV. We have the industry's first active metrics, micro-LED TV controller DDS one chip, a full chip. So you can put as much as 256. And we also commented that the limited production will start towards the end of 2020. So, obviously it's not going to be big, but I think it's showing the capability of what this company can do. The micro-LED requires OLED knowledge as well as power IC knowledge as well as some of the analog and we have both display business, OLED business as well as the power IC to discrete analog business and then the – so that enables to create the worlds commercial active metrics, micro-LED TV DDIC. So, this is an example of us addressing adjacent or aggregate market that's next to OLED.

Okay. I didn't catch the part about being end of 2020, so that actually helps in terms of timing. And then similar question and for foldable, I think I asked as well in terms of – if you think of that as a separate sort of segment opportunity in 2020 for OLED or is it kind of blended in and can it help the margin?

Yes, so foldable as you know, it's the embryonic stage. The good thing is that there are already a half dozen products that have been introduced or to be introduced. So, we think that foldable is really future of the OLED and the market and the new smartphones. So we are excited about the future prospects of the foldable segments. So that's how we look at it.

Okay, great. And my last question is on the macro environment and the coronavirus China impact here. Which of your, since you had to guide a little bit lower than you had previous expected, which of the three segments kind of most contributed to that? A more cautious outlook and more generally, how are your three segments particularly Foundry, exposed to China and the demand environment there. Thanks.

Thank you, Suji. So, we don't break out product-by-product on where and how much we do, but I can generally tell you that at the coronavirus thing again, I feel really sorry for the people who's going through this tremendous crisis, my heart is out with them. And, but at the same time, it's – you don't know how long this will last, but if you look at the history in the SARS of course, that's a long time ago that the market really, really reacted and kicked back when the – when people saw that the numbers of the contract people started to go down. So again, this one, I don't know how long will last, but I'm hoping that is the similar kind of kickback that we are going to see. So that's going to determine the actual market and projection. But short term I think there will be some impact in how it's going to play out. We have to be very cautious. But in terms of Foundry we don't have a big exposure yet. But it's one of the key market, the Foundry revenue is expect to grow. And so that’s what I can say.

Okay. Appreciate the color during the difficult times, thanks again. Congratulation again YJ, Jonathan and Bruce.

Thank you.

Your next question comes from the line of Raji Gill from Needham & Company. Your line is open.

Yes, thank you. And I echo my congratulations on the great momentum in OLED. Just go back to the coronavirus, based on your press release, you're thinking about a little over $200 million and you're guiding to like $187.5 million at the mid-point. So it is $11 million, $12 million impact. You talked about that you don't have big exposure to Foundry yet in China. I just want to clarify that – is the $11 million or $12 million impact mostly related to smart phones? My concern is that demand is going to be affected pretty significantly, particularly smartphones in China because of the extent Lunar New Year and many of these cities are locked down. And so I just want to get an impact, try to get an impact maybe going into June as well, if you thought about June at all.

Well, thank you, and I think it's a very valid question. But I think everyone will agree that the visibility is fluid. If you look at what happened in China, we are looking more optimistic before in the Lunar New Year and the Lunar New Year has extended almost three weeks. And the fab production – I mean the manufacturing production just began middle of last week and someone to up to 90% utilization or some are still at much less than 50% utilization. So again, we started to get some, the demand impact or forecasts just getting this week. So I think that's why, our visibility is fluid and limited. But the interesting thing is I'm hearing that the TV sales are up year-over-year. So, I think because the people are staying home and they watch TV more. So again, I think it's all depends on how soon this corona gets settled, and you start to see that number coming down is going to be very critical? But obviously I cannot forecast when that is going to be. But, and if you look at also the history of the SARS the industry was at the bottom of the curve and we had a very strong kickback. The industry started to recover, and we’re hoping that it will have a similar curve and I'm sure that China government wants to also do the revamp very quickly. So again, the analysts, I'm sure you have a similar numbers you look at. So, but beyond that, I cannot really comment and give you an accurate forecast.

And on the power of business, which was strong for three quarters and then saw some pricing pressure in Q4 and in some weakness in communication and other end markets. YJ you mentioned that power may go sideways in the near term, just wanted to see if you could kind of elaborate a little bit further on that comment. Is the pricing pressure from the inventory correction? Is that over? And so, maybe that reverses itself and you could see kind of a benefit there and any thoughts in terms of the end markets in power picking back up again and maybe Q1 or Q2, any views on Power would be helpful.

Sure. Let's look at a big picture. The power last year discrete and power I see for the word has decreased minus 3%. So that's according to IHS. If you look at our power number, we grew 4% year-over-year. We had a double-digit growth in the first three quarters. And fourth quarter, just like everyone else, we saw – we caught up with the supply and demand in our customer segments and – but we still ended 4% year-over-year growth. It is the market assessment and all – the data you see from all the power makers, they think that the market will recover second half this year. And last year, I think the power industry went down due to slowdown in automotive, with the trade tension in China also slowdown. But the second half we expect to see a really good kickback, including hopefully the coronavirus has gone. Therefore, there's a big exhalation. So, my consensus – my forecast belief is similar to other people, who have announced about the outlook on the power business.

That's great. And on the foundry side, you said the highest level in six years in Q4 and the highest full annual foundries are going public. You mentioned that the strong growth in BCD, EEPROM, these high-voltage processes. What end products – end markets are driving this kind of significant increase in your Foundry business? And how do you describe your competitive differentiation in Foundry given the high growth last year?

Yes. So to look at the real numbers, we actually decrease in the Foundry revenue last year. As you know, we had a very poor Q1 due to the industry downfall or our most Foundry had between about 20% to 25% downfall, Q4 to Q1 in 2019. And so despite we recovered nicely, especially in the second half our run rate on six months was highest on the 8" revenue in the history of the company. You are seeing multiple things here. I think the industry in Foundry is very healthy. I think you will see that the capacity is really tight below 40-nanometer today due to CMOS image sensor to latest APs and so forth to RFIC to all kinds, now including OLED by the way. And then you see 8" or so the supply is tight, so that helps in favor of our Foundry. And I think the product we offer very competitive BCD technology. We offer very competitive EE for the IoT market. And we do have one of the best low noise mixed-signal for sensors to other application in this legacy process. And I think the – with continued progress in the stable strategic evaluation keeping our customer intact. So, all these points are making our Foundry business stable.

Thank you and congratulations.

We have your next question from Atif Malik from Citi. Your line is open.

Thank you for taking my questions and congratulations on good results and guide. And why do – I have a question in terms of your March quarter outlook you're guiding to a better than seasonal total sales. I don't know of what's embedded in for display and other segments, but when I look at some of the revisions that third parties are making to the global smartphone unit, the forecast, because of the supply and demand disruption in China from the coronavirus. We're looking at like 11% sequential unit down globally and China units down like 30% year-over-year. So I'm just trying to understand the guidance that you’re providing. How much of that is a function of you guys gaining share versus factoring in the weakness in the overall market?

Yes, Atif, very good question. So let me try to address that. So, I think one thing you have to look at is OLED is a growing segment within the smartphone. So I think that helps. And also I think the 5G is a growing segment within the smartphone. If you look at the Global Times of China, they said that China mobile believes that the 5G phone sales or introduction in China in 2020 will be higher than 4G phones. So if you look at that the 5G OLED is all uptrend. So even though just like last year, the smartphone was either flat or minus, but we grew 42%. So I think it's a combination of OLED going up, combination of 5G going up. It helps us then people who have to sell everything whether it's OLED and LCD, that’s one perspective. And other thing is that this year our selling into non-China market is expect to grow. So – and I think we alluded in last year that we had a lot of phones introduced by Korean maker. So I think if you look at all of these combinations maybe why we are slightly different than the others. But again, how the corona will do, it's – I don't think anyone knows exactly, but look we’re taking one quarter at a time and we are also putting wider outlook for Q1 due to the uncertainty that we left in about one month of full revenue.

Great. And then as a follow-up Jonathan, if you can give us some pointers on how should we think about OpEx modeling for the full year?

Sure. So, we've been very focused on cost savings and profitability and we were able to keep our SG&A relatively flat. So as we look ahead for the first half of 2020, I think the SG&A will continue to be flattish to the second half of 2019. And then also with respect to R&D as we've discussed previously, given our OLED related activities, R&D could go up. But, overall, I think on the SG&A side, it will be flattish. And on the R&D, the amounts related to R&D will fluctuate based on our activities related to OLED.

Thank you.

I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Bruce Entin. Please continue.

Okay, thank you operator. So this concludes our fourth quarter 2019 earnings conference call. Please look for details of our future events on MagnaChip’s Investor Relations website. Thank you for joining us today.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.