AAC Technologies Holdings Inc
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AAC Technologies Holdings Inc
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Ladies and gentlemen, welcome to AAC Technology 2021 Q1 Results Investors Webcast and Conference Call. This presentation will be conducted in English, and question-and-answer sections will be in English and put on in the live channel with English simultaneous interpretation in interpretation channel. [Operator Instructions]
I will now hand over to your host today. Please go ahead.
Good afternoon. Welcome to AAC Technologies Q1 2020 -- 2021 Results Conference Call. I'm Maggie Huang, Investor Relations Director of AAC Technologies. I'm glad to have our CEO, Mr. Benjamin Pan; Managing Director, Mr. Richard Mok; EVP and CIO, Mr. Kelvin Pan; CFO, Ms. Dan Guo; and our Optics Business Group's Chairman, Mr. Jack Duan; and the CEO, Mr. Zhu Bingke, joining us today.
Before we start, we would like to remind you that copies of our result announcement and the presentation are both available on our website. We would also like to draw your attention on the disclaimer on the last page of this presentation. Some information we discuss today may contain forward-looking statements.
With that, I'm going to present our results for the quarter.
In the first quarter of 2021, the group achieved a revenue of RMB 4.29 billion, representing a year-on-year increase of 20.6%. The demand of the global smartphone market is on a recovering trend. The major overseas customer peak season had a delayed start in Q4 last year. Various business segments of the group had further penetrated into domestic Android markets. All of the reasons above contributed to a significant year-on-year growth of the group's total revenue.
Benefiting from improved operating efficiency, effective cost control and the continuous optimization of product mix, the overall gross profit margin increased by 8 percentage point year-on-year to 31.2% and the net profit increased significantly year-on-year to RMB 532 million.
The revenue contributed by Optics business continued to increase in Q1 2021, which accounted for 15.7% of the total revenue, indicating a healthy growth trend of Optics business. For Optics business, the group's market share continued to grow while gross profit margin of plastic lenses reached 36.3% For the 1G5P hybrid lens products, mass production and shipments were completed in the first quarter of 2021. Differentiated user experience will accelerate the introduction of other high-end hybrid lens products.
For the camera module business, shipment increased steadily. Gross profit margin started to turn positive in the first quarter, and high-end projects progressed smoothly. Acoustics segment enhanced the management efficiency helped the gross profit margin of Android acoustics products to improve. The standardized small cavity speaker module to be launched is expected to fit the market trend of stereo acoustics. By improving user experience, it will further strengthen the market competitiveness as well as profitability for the segment.
For Electromagnetic Drives and Precision Mechanics business, our haptics feedback solutions leverage on the high-performance x-axis haptic motors provides a high-quality user experience for all application connections in the ecosystem. This helps to enhance customers' haptic perception in order to promote product upgrade and integration of our customers. For the Precision Mechanics business, the group expanded smoothly in new businesses such as notebook and tablet.
With respect to the MEMS segment, our market share in the smartphone market further increased. Moving forward, the group will accelerate the expansion in IoT, smart home appliances, wearable devices and automotive markets. We believe our sound financial position is critical to the sustainability of the group's development, which ensures the group's ability to continue to innovate and develop in the future.
As at 31 March 2021, net operating cash inflow amounted to RMB 872 million with CapEx of RMB 1.1 billion. Out of the total CapEx, about 68% are for productive lines and about 31% are for the constructions. Net gearing ratio stood at a healthy level of 2.7% with a cash position of RMB 6.71 billion as at 31 March. The group remains prudent in financial management and stringently manage its capital expenditures and R&D expenses to conduct active liquidity management.
In the first quarter of 2021, along with the increase in shipment of plastic lens and the steady growth of the camera module business, revenue from the Optics segment increased by 175.7% year-on-year to RMB 674 million. The production yield and the production efficiency of the Optics business have improved steadily with overall gross profit margin increased by 18.1 percentage points year-on-year to 27.8%. The market share of the group's plastic lens business further expanded with the steady improvement in the production yield and efficiency. The gross profit margin of plastic lens products reached 36.3%, which indicated the group's capabilities in terms of technology, operation and production management had further improved.
The proportion of 6P and above high-end plastic lenses has increased in Q1 2021 and is expected to increase continuously. Furthermore, we have successfully obtained the supplier certifications for certain Android flagship smartphones and will steadily increase our market share among overseas Android customers. We will continue to optimize production costs and the product mix, and expecting the gross profit margin continued to improve in 2021.
The group's unique WLG hybrid lens products have been mass produced and shipped as scheduled in the first quarter. The customers phone is already released to the market. This is a milestone development for our Optics business. We received positive feedback from our customers, and we continue to work closely with customers on the application for this product in other mobile phone models. Currently, we are having close dialogues with leading global OEMs with respect to the 1G6P hybrid lens projects. Projects with 2 pieces of WLG glass lenses are steadily in progress. It is expected that samples will be sent to customers by the end of this year.
In terms of production capacity expansion, the Chongqing glass lens plant was completed at the end of last year, and the Czech molding tool plant is expected to be completed in the second quarter of this year. Our production capacity will be improved significantly, which will boost the customers' confidence to adopt hybrid lens instead of traditional plastic lens.
The camera module business have shown a steady progress as planned. The group's camera module R&D and manufacturing capabilities have been well recognized by customers. Its gross profit margin has turned positive in the first quarter of 2021. The high-end 48 mega project is also on track. Going forward, the group will continue to improve high-end camera module manufacturing capabilities.
Operation of the VCM production line has begun, and 35 shipments in small batches have been made to customers. In the first quarter of 2021, due to the major overseas customers' peak season partially postponed, the revenue from the acoustics segment increased by 47.5% year-on-year to RMB 2.1 billion. With the management of acoustics product lines continued to be optimized and the cost reduction and efficiency enhancement efforts through project-based close-loop management, the gross profit margin rose by 11.4 percentage points year-on-year to 37.4%.
With the stereo and the multitrack solutions becoming standard features for flagship and affordable phones and gradually penetrating into the low- and mid-tier models, we expected the multisize of the acoustics industry to increase. With a smaller size and good sound quality, the group's standardized small cavity speaker module is seen to be perfectly fit to the stereo design and promote the popularity of stereo acoustics. The standardized small cavity speaker modules will be launched in Q2 2021. The standardized products will be able to fully leverage on the group's advantages in automated production, thus, effectively increasing the capacity utilization rate and improving the gross profit margin.
In the first quarter of 2021 due to a decline in unit price for electromagnetic product from a major customer and the decrease in shipment volume of the metal casing business, revenue for the combined segment decreased by 27.3% year-on-year to RMB 1.23 billion. Due to increased profit margin from the metal casing business, the combined gross profit margin for this business segment increased slightly by 1.9 percentage points from the same period last year to 25.5%.
The total shipment volumes of x-axis haptics increased steadily year-on-year, mainly because we have successfully promoted the x-axis haptics to Android market. The Android haptics shipment increased by about 60% Q-on-Q. The haptics solution launched by the group has a precise, exquisite and rich human computer interaction function, which provides the best user experience and enhance its consumers' haptic perception. We have received positive feedbacks from the customers.
The group will continue to promote product upgrade and integration for customers to improve end user experience. The effect of product upgrade is expected to show more results in the fourth quarter of 2021, thus, driving a potential multiple shipment volume growth in 2021.
The group's Precision Mechanics business was affected by customer shipment decline, and its revenue decreased notably compared to last year. However, benefiting from the flexible assessment of production capacity and effective cost control measures, the gross profit margin remained relatively stable with a slight increase.
Relying on the advanced precision manufacturing capabilities, the group's metal casing business has gained leading market shares in the flagship models and high-end smartphones among major customers. In response to an uncertain external environment, we are proactively expanding into different product markets. At the moment, we have successfully introduced multiple smartphone brands in metal casing business and entered notebook and tablet metal mechanics market. It is expected to result in higher production utilization and mitigate business risk.
In the first quarter of 2021, given the increase in market share, revenue from the MEMS segment grew by 42.2% year-on-year to RMB 283 million and gross profit margin remained stable from the same period last year to 16.7%. To meet rising market demand, we have successfully expanded the production capacity of MEMS microphone this year to 120 million units per month. While maintaining a high market share in the smartphone market, the group will continue to expand into IoT, smart home appliances, wearable devices and automotive markets. TWS earphones and the notebook market helped demand for product upgrade for microphones with a higher signal to noise ratio, smaller size and lower power consumption. Further market penetration in these markets will help to improve the proportion of high-end MEMS products.
On sustainability front, we continue to strive for best practice for ESG in the industry. Our disclosure adheres to the top international standards, maintaining a high level of transparency and to be more efficient and responsible in ESG management. We've received several key ESG awards, including HKICPA Best Corporate Governance Awards 2020; Grand Awards in Best Large Cap ESG Report, which fully demonstrates markets and industry's recognition for our ESG performance and reporting. In addition, our ESG performance is well recognized internationally as well included in the FTSE4Good Index and Hang Seng Corporate Sustainability Index, and we received high ranking by MSCI.
We hope to build a truly sustainable business conscientious in environmental, social and government aspects with strong corporate governance and risk management structure to bring long-term defensive investment of high growth potential to our shareholders.
This concludes the overview of our Q1 financial results. There are more supplementary information in the appendix section for your reference. Our management team are here to take your questions. You can ask questions in Chinese and English. We have simultaneous interpretation in other lines from Chinese to English. Thanks.
[Operator Instructions]
[Interpreted] First question is from Huatai Securities.
[Interpreted] I want to ask -- the first question is about acoustics. Because many people are concerned about acoustics, so I want to ask the GP margin. There's a big increase to 30%. And what's the reasons behind into how sustainable it is? And before, it was 40%. So whether it will return to 40%. So how do you see the outlook of Acoustics?
[Interpreted] Okay. Thank you for your question. I will answer the question first, and I will let other colleagues and management to add the information.
Generally speaking, last year, and we faced a severe situation. And for the last year's Q1, the baseline was low. But for this year, the Q1 is resuming. And according to the IDC, the QE, the global shipment volume for cellphone is increasing and global is also in the high-digit growth. Therefore, the overall shipment volume is very good. And in terms of the acoustics and the gross margin, it has reached 37.4%. It has 2 reasons. The first is related to the overseas clients. And we have a very sound GP margin, and we are also influenced by the external factors. And in some, the peak sales was postponed to this quarter, and this boosted the sales of our acoustics.
And other than the external factors, we also shared about the information on our management improvement, and we have a detailed management. And those improvement and upgrading of the management also helped the growth of our GP margin. So for the Android, and it increased 4 percentage point to 27%.
For Q2, it is relatively low season in sales, and we are also influenced by the upstream [ 3Cs ] market. So it depends on the specific situation of the market. But all in all, we still foresee an experimental -- an increase in the smartphone market, and the market is also focusing on the differentiation features of different smartphones. So for this upgrade trend and also the increase of the smartphones, and those are the positive factors to us. So combined both external and internal factors, we have the confidence for the GP margin and we still have a prudent attitude to grow the GP margin.
[Interpreted] Okay. I will add a little. So this is about the GP margin on Acoustics. I also want to mention that, and we emphasized, we are technology-oriented and the technology platform is very important for us. And we also see a structural reform in this GP margin. And Ms. Guo mentioned the gross margin is less than 27%. It's about 27%. And in the future, and this will become stronger. And this is due to this small cavity speaker modules, and other markets are promoting the stereo products. So those are very important products. And this caused a structural reform, and the change for us is not related to the price. And in the new platform, the price is a little increased.
But more importantly, based on this small cavity speaker module, it caused a fundamental change to the Android system. And we -- in the past, we had this 300 to 400 modules. But since last quarter and also for this quarter, the change will be very obvious. So we will maintain the user experience while develop the small cavity speaker, and this is very important for us. And we don't have such models. We don't have such modules. And the modules will reduce from 300 to 400 to 200. And in next year, it's about 100 in which significantly improved our production and also the efficiency of our productivity. So in terms of the GP margin of acoustics, we have already returned the profitability track and the GP margin track years ago.
[Interpreted] My second question is on Optics, and this introduction is very detailed. You're talking about the Czech plant and the Chongqing plant. And the overall deployment is broad. And the WLG is mass produced and shipped. So what's the strategy on this segment? Any change on its strategy?
[Interpreted] With the acoustics, it's on the upgrading and some clients who joined. So we witnessed a lot of change in the Android market.
[Interpreted] So with the change of the market, how do we cope with this change?
[Interpreted] For the optics, especially on the export, we are still following our strategy. You will remember in the past, many people think there was a big gap between the productivity margin and the GP margin. And actually, the plastic lens gross margin is about 36%. And in the second quarter, this trend -- this momentum will be stronger. And for the fourth quarter and the third quarter, and our target and expectation of the gross margin is about 14%. And we have very prudent attitude towards the ASP of the plastic lens. And we will also have this strategy.
And for the plastic lens, we emphasized the cost. The cost represents our technology and the digitalization technology as well as management efficiency. And from the statistics of first quarter, it will continue to prove our strategy is correct. So from the ASP, and some companies in any industry has mistake attitude toward the ASP. But for us, we think the ASP has continued to decline because of the technology improvement. And for this plastic lenses, we think it will still in the growth because the industry is welcoming.
And second, we still think, for example, this glass plus the plastic, it will be a very good strength. And the glass plus plastic, this is the future trend. So based on this structure, we think the future trend of the hybrid lens and glass plus plastic will become strong.
And we also have the WLG technology. They can meet the need of the higher requirement of smartphones and also the cameras demand and the GMOs. Mass production has a large gap between WLG, and we have already proved it. Our main clients admitted it. So from the development of optics, with the completion of the plant in Chongqing and the Czech, we are just followed our plans. And our WLG will challenge 5 million production capacity. And the next step, we will challenge 10 million to 15 million production capacity. Maybe there's a little delay than our expectation. But from the strategy as well as the value and the statistics, we can confirm its future development.
[Interpreted] Next question is from [indiscernible].
[Interpreted] I have several questions. First, I'd like to ask about the optics. And you talked about the continued growth of our optics. And we don't have a very obvious growth in the first quarter. So this is my first question.
And in Q1 and Q4, in terms of the gross margin, this growth is very obvious and prominent.
[Interpreted] Okay. And for optics, actually, the sales is seeing a great growth, and this improved significantly. It is due to our production yield. And the gross margin reflected this cost of control and the data of the management. And those are our core competitiveness. So from the first -- the fourth quarter, 28%, and we improved it to over 30%.
Another thing I want to comment, on the product mix, we shut our lives on the structural optimization of our plastic lens. And for this 6 years, the -- about 4%, it's also improved. And for this ASP, it also has a steady growth. So those are the important factors. So we are not only considering the shipment volume. The cost of control as well as ASP level are also important for us.
[Interpreted] And for the -- on optics, I know, for plastic lens, the revenue is about RMB 100 million. So can you give the inflows and the breakdown? Other than this, and the profitability of the optics and also this -- the loss on -- of the -- on optics was the information.
[Interpreted] Yes. And another growth area is from the module. And the sales for the modules is about 15%, and it increased to 25%. And this growth is prominent.
For the modules, we started to expand its production capacity, but the gross margin has already reached the high digits -- high single-digit growth. And this is a very prominent phenomenon in the industry.
Second, our plan on the production capacity is in line with the demand of clients. I will make some supplements. For the Q1, our optics is still profit. Correct. So it's not reviewed in our reports. Actually, optics contributed to our net profit. Yes. So this is a very good sign.
[Interpreted] Yes. So the net profit is positive and profitable in Q1, right?
[Interpreted] Yes. So I just want to clarify this. So the second point, other than the plastic lens, and the modules accounted the largest percentage. And other than G plus P, and this is for the future momentum of the optics. And when we have to, the 7P and 8P -- and actually, the P doesn't mean plastic. P means pieces. It means 7 pieces, 8 pieces. And those are in the discussion in our Android clients. So that's also -- we have the confidence on -- in the WLG.
And we also see this GP margin growth, and the growth is also related to the demand of our clients. And our clients need us to be the main supplier. And for the modules, we also have our major clients. And for the first quarter, our sales has embarked in the Q2 and Q3. And even Q4, we will become the Android system's main supplier. But we still have to follow our own plans to lay a very solid foundation for our development.
[Interpreted] WLG, I have another question. You also talked about 1G6P, and this will be delivered in the end of this year, right? So any other key products or other main projects on WLG?
[Interpreted] We mentioned the projects in the end of this year, and this is very confirmed. And for those main Android clients, we have 3 to 5 projects in the programs. But at present, we cannot confirm whether this will be completed in the end of this year or not. So we want to show our clients to our plants in Chongqing and Czech. We want to show that we have this confirmed production capacity to our clients first.
[Interpreted] Next question is from CITIC.
[Interpreted] We talked about optics and acoustics, but I want to know more information on the management reform and the change. So what the reform is? So what's the detailed change on the management? So compared with the strategy of 3 to 4 years, what's the biggest change for the future development?
[Interpreted] Maybe we invite Kelvin to answer this question. For the management reform, change is not only referred to our management. It's also covered on our weakness and structure. And the multiproduct structure needs more efficient management and system. So based on this, we proposed the reform on the management. And the results in our business most change have already shows the efficiency of our reform on the management. And at the beginning of 2020, and we did the change of departments and we also set a clear target goal in each production line.
For example, the new strategies on the report is the results and the fruit of the reform of the management. So we have actively blend for our production and business development in the future. So it not only include the traditional business, but also some new business segments like automobile and IoT, et cetera.
And for us, the management reform or the core reform under management, it includes several aspects. First, each production line and the -- each department are closed-loop management. And this will increase the efficiency of our department. And second, for the AAC Optics, we have this incentive -- equity incentive scheme. And this grow also expanded to other departments. Third, all the exposed loop management must be directly linked to the incentive schemes. So other than the value proposal and the short and long-term strategy, and we think the efficiency will be largely improved based on this reform under management.
[Interpreted] Next question is from HSBC.
[Interpreted] I want to ask 2 questions. The first one is about our Electromagnetic Drives and the Precision Mechanics. And we saw the decline in the revenue. And you also mentioned the price decline of the clients. So this is the general situation in Android system or in the industry. Can you elaborate on it?
And the second quarter, you talked about the laptop, notebook, whether this will boost the revenue on this segment.
[Interpreted] Thank you [indiscernible] questions. And for our Drives and Precision Mechanics, the decline of the sales is related to our different departments and aspects. And also, the price cards of our clients, they will influence the revenue and also the reduction of the shipment volume of Android products, and those are the reasons for the revenue reduction. And for us, we actively develop into the laptops and notebooks. And they have already created the revenue for us, and even we tap into the tablet. And we will increase our production efficiency and the -- our gross margin.
And it's not easy for us to comment on the export clients because of the confidentiality. But I want to emphasize, another driver is from the motor from Android end. The shipment volume is seeing great growth in the last several quarters, and the growth is about 60% to 70%. And this gross margin is the same. And for example, our x-axis haptics motor, this will help to solve the problems and also increase the customers' experience as well as gain the market share. And the -- based on those technology, and we think this will help us to increase gross margin.
[Interpreted] My second question is on Optics. And the gross margin is increasing on the lenses. And for the ASP, it's also hiking. Therefore, I want to ask whether we still have the potential to increase our gross margin. And for the Q2, many people estimate there would not be a large shipment volume of the smartphones. So any reasons you want to share?
[Interpreted] And from the perspective of plastic lens. Q2, we used the same production equipment, but the efficiency will be increased. And this is due to the management and technology. And based on the statistics, the Q2 shipments will be bigger than the first quarter. And this is due to our expansion and of our business and work. So those are the fundamentals for our growth.
In terms of the ASP, 6P, the price will hike. And we also have some adjustments on the traditional and old products, and this is in line with what you have heard in the market. So the gross margin is from technology and also the efficiency of the shipment volume.
[Interpreted] Next question is from Jefferies, [indiscernible].
[Interpreted] First question, I want to ask about the modules. And Ms. Guo mentioned starting from this quarter, our modules, it's in a high efficiency. And for these modules, we just started last year. So why the growth rate is big? So what's the outlook for the modules business?
[Interpreted] I can answer the questions. For the modules development, it's based on several aspects. And we also changed the management concept based on the traditional business. Traditional acoustics and optics, we self-develop technology and also an alert from the outside experts. But for modules, and we can rely on the talents of the industry. So modules become the first segment for us, and we accumulate and invite the talents of the industry to form a team for us. Therefore, the development of modules promising and the modules development is stronger than the first quarter. And the production capacity as well as customer demand are met, and we have 45 million. And also, the 6, 4P, and even for some pre-scope as well other industries, we want to expand our business to those markets than those based on the technology development. And also invited a team [indiscernible] as our management and also the reform of our business department.
And the -- compared with our competitors, we have our advantages, but as well as disadvantages. We have those incentive schemes and a closed loop management. And for some mature production in line, we need to find experts and the talent as soon as possible to speed up our development . So this must be in line with the overall reform and efficiency improvement of management.
[Interpreted] My second question. I know we see the shipment volume of smartphone for the second quarter is weakening. And the other factors, for example, the pandemic in India is out of control. Whether those will influence our Q2.
[Interpreted] If there's some change on the external demand or an exchange of the pandemic, this will cause impacts on us. And we are actively discussed with our clients on the production plan. But last year, we also experienced a volatile market that -- even in such a severe situation. We also faced the -- for example, the shortage of the chips, but we still -- and observed an obvious Q-on-Q increase.
Facing up the severe situation of last year, we constantly improved our detailed management and cost control and reform of our structure and management. And we achieved the results on the close-loop management, and this is also related to our results and performance. And with this linkage of the results and performance, and I think we will continue to improve our profitability.
[Interpreted] Next question is from Crédit Suisse, Kyna Wong.
[Interpreted] My first question is on the Android haptics. You told this obvious results in Q4, and this has a multiple shipment growth. So this is on the -- is it retail projects or the large influx of customers?
And my second question is on optics. Modules will reach a scale effect. So I want to ask when you can disclose the shipment volume. And in your vertical integration, I want to know the deployments and plans and ECM is in the operation? So what's the performance? Or any results on -- It's a cost of control or any influence on the gross margin of modules?
[Interpreted] For the Android haptics motor, I would like to invite Kevin to answer.
[Interpreted] You can see related to the overall production lines and strategies, yes. For the Android haptics motor, it is market driven. And in different scenarios and in social media, we can observe that clients show the high expectation on some gaming motor and also the social media scenarios. And this is the new demand and -- from the market. We also observed that many Android top clients were actively cooperate with us. And we have the high cost-effective solution and products on this motor. So it helped this young -- helps these young customers to experience the new motor. So this will create the macro trend, which is based on the ecosystem and also the long-term Android deployment. And Q1 is just a start, and we think it will be a continued Q-on-Q growth. And based on our customers' demand and also the market, we are still in the preliminary stage.
For your second question, on modules, we also talked before that the modules production and the layout in the study expansion. At current, we have 15 production line. And every month, it's about 7 million to 8 million per month for the production capacity. And the -- based on the market demand, we will -- we may expand the business production line to -- by setting lines. Of course, we have hold a prudent attitude. And modules gross margin for this quarter is very obviously increased. And next quarter is negative, and this quarter is positive. And with the scale effects, we are actively -- and you have this confidence for its gross margin of the whole year.
[Interpreted] I also want to ask about the optics. The inventory of the optics in the past, we have the increasement of the production output. So whether this is in line with your previous plan and strategy. And in the Q2 and the Q3, and this inventory will reach a normalized level. This is for optics.
[Interpreted] In terms of inventory, the production capacity is in growth. So the production will be higher than the -- our sales, but our production is in line with the demand of our clients. And based on our overall production, it's about 3 months, and it is similar to last year's level. And we have the confidence. In the future, we will actively promote the sales. And also, this will match our production output.
Due to the time constraint, we will have the last question.
[Interpreted] The question is from Citi Research.
[Interpreted] I have 2 questions. The first question, you talked about this electronics. So from next 3 to 5 years, what's the opportunity? What are the opportunities you can share to the long-term investors?
And second question is the high-end smartphones. You mentioned, on those game smartphones, and there's a big upgrade. And in the recent, for example, April and May, and what's the sales situation of those smartphone in the market? And we also heard this weakening sales in the market in the recent months. So what's your opinion on this regard?
[Interpreted] As for your first question, for the new deployments and the plan on the new business segments, the automobile and electronics, we see some obvious trends. The first is the MEVs, and this will grow during big exchanges to the business. And second is on the passenger cars, and the passenger cars are in the upgrading and a transitional period. So those are the journey opportunity for us. And we are actively to discuss with those automobile companies and also their clients. When we have detailed progress, we'll disclose the information to you. As far as I know, our technologies on the macro technology, and so we have a lot of opportunities for us to breakthrough and also -- and we can create the differentiation based on those endpoints. And the -- it's easier for us to create -- to be creative.
And for the game smartphones and the new high-end smartphones, and the precisions has higher requirements for us. And in order to support them, we will focus on the scenario application. So we will focus on the scenario, not only limited on the smartphones, and did the check on notebooks or the other game equipment. Those are the new business areas we can tap in.
Will you please repeat the last part of your question?
[Interpreted] The sales.
[Interpreted] So you're asking the sales volume?
[Interpreted] Some high-end smartphones. So whether you see any recognition and acceptance of those high-end smartphones. So any figures on the terminal sales?
[Interpreted] And for our shipment volume, it's maintained at a high growth. And Kelvin also mentioned that our company is focusing on the client demand and the -- offer our differentiated and unique solutions. And actually, we are leading the transition of the whole industry. It's not only in the Android haptic motor. In different segments, we wanted to offer our customized and differentiated solutions, therefore, to increase the value of the whole industry. And based on this, we really need to gain more market share and also increase our profitability.
Yes. This is also related to the market situation, and it's not convenient for us to comment on others. And for the Chinese market, the mid- and high-end markets, especially on the customer experience and acoustic and optics and haptics-driven market, generally speaking, I think it meets the expectation. And in some public information, you can also see this. But the shortage of chips and the concern of the market cannot be the overlapping concern. So this just a kind reminder.
And the statistics also support our opinions. If the functions cannot improve in customer experience, we make some adjustments on ourselves. It's also very normal. I think the 5G smartphone, it's very -- an active in the market. So whether this will boost the sales, it's not -- it's hard to say. So that's what we emphasize, the experience and acoustic drives and OS, optics drives, and also on other customer experience is similar in the acoustics.
In terms of the software and the hardware, we have reached the preliminary stage. The android haptics motor will have a great growth, and we think -- and this will be a very helpful sector in its sales. And with this development of haptics, it will boost the sales and increase the customer experience. And our efforts is very confirmed according to the results of our quarter results.
[Interpreted] Any supplements from management?
[Interpreted] No further comments. Operator, you can conclude this session.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]