Asustek Computer Inc

TWSE:2357

Earnings Call Transcript 2020-Q4

[Operator]

Hello, and welcome to the Fourth Quarter 2020 Financial Results Conference Call for ASUSTeK. This conference call will be divided into 2 parts. We will first hear from our CFO, Mr. Nick Wu, on the financial results of Q4, followed by remarks from our co-CEOs, S.Y. Hsu and Samson Hu, on operations and outlook. The second part is the Q&A. [Operator Instructions]

Let me now turn the call over to Mr. Nick Wu, CFO of ASUSTeK.

[Nick Wu, executive]

All right. Thank you very much. Let us turn our attention to Page 5 of the slides. Over here, we have the fourth quarter brand P&L for 2020.

In 2020 fourth quarter, we saw net revenue of TWD 113.7 billion, a decrease of 5% Q-o-Q and an increase of 27% Y-o-Y. In the fourth quarter, we continued to execute our 3-pillar brand strategy combined with our operation strategies, which drove strong growth in our overall operations. However, due to constraints in the supply chain, we saw overall shipments decreased slightly quarter-over-quarter.

In terms of gross margin, that stood at 17.7%. Operating margin, 7.2%. This is all looking very positive for the single quarter. We saw operating profit of TWD 8.2 billion, a decrease Q-o-Q of 13% and 728% decrease Y-o-Y. So for the fourth quarter, net profit was TWD 9.8 billion, down Q-o-Q 6%, up Y-o-Y 273%. EPS for the quarter was TWD 13.3.

Now let us turn our attention to Slide #6. This is our fourth quarter brand P&L pro forma, excluding phone's. For the fourth quarter, in terms of old models, we saw net revenue of TWD 1 billion. Operating profit of TWD 1.5 billion. This is due to recovery of value in inventories and adjustments. As for new models, net revenue for the quarter reached TWD 1.9 billion because we are still investing in our new models, and we are building up our brand value. So we saw operating loss or, in other words, investment of TWD 1.08 billion. So according to our pro forma, without the phone business, we saw a net revenue of TWD 110.7 billion. Operating profit was TWD 7.76 billion. Gross margin was 17.7%.

Now on to Slide #7. This is our brand non-op items. For the fourth quarter, total non-op items was TWD 3.07 billion. Driving down into the details, we saw TWD 418 million in investment income and around TWD 2.1 billion in exchange gain.

So now on to Slide 8, brand balance sheet. Overall, we adopt an aggressive attitude towards our planning and operations. However, due to constraints in the supply chain, we've increased our inventories in order to adapt and adjusted our strategies accordingly. So our inventories increased from TWD 85.6 billion from the last quarter to TWD 90.6 billion. In terms of accounts receivables and payables due to, again, constraints in the supply chain and adjustments, we saw these accounts receivables and payables go down slightly. So this is just a brief look at the changes in our balance sheet.

Now let us turn to Slide #9. Over here, we see the overall brand P&L for 2020, the full year. In 2020, we saw net revenue of TWD 382 billion. This is about a 15% increase Y-o-Y. Operating profit was TWD 25.3 billion. Operating margin, 6.6%. This is a 249% increase Y-o-Y. Net profit was TWD 26.5 billion, Y-o-Y growth of 119%. For the full year of 2020, EPS was TWD 35.8.

Now let us turn to Slide 11. Over here, looking at just the fourth quarter in terms of revenue mix, PC accounted for 66%. Components and other open platforms accounted for 34%. By region, we can see that Europe accounted for 34% of revenue; the Americas, 28%; and Asia, 38%.

Looking to Slide 12. This is the revenue mix for 2020, the full year. For PC, that accounted for 67%; component and others, 33%. And by region, Europe accounted for 35%; Asia, 40%; and the Americas, 25%.

And now let us turn our attention to Slide 13. This is our outlook for the first quarter of 2021, our goals and our guidance. Generally speaking, we see that our overall operations and market demand remain robust and healthy. It is -- continues to grow, and we project that with the pandemic driving a change in everyone's lifestyle towards a more digital lifestyle, we can see the PC industry to experience prolonged growth and become, again, a growing industry and a growing market. And ASUS will position itself accordingly as a growing company in the future and work towards that goal. However, in the short term, we can see that in the first half of this year, Q1 and Q2, we will continue to see demand outstrip supply. But we do expect that with the hard work of ASUS and our supply chain partners, from Q1 to Q2, we will see revenue and shipments grow.

Overall speaking, in the first quarter, we can see that shipments in terms of PCs will decrease 10%. But Y-o-Y, we will see a 70% growth. For components, we'll see a 5% decrease Q-o-Q, but about a 50% increase Y-o-Y.

And next, let us turn to strategy and outlook, and we'll have our co-CEOs talk about the outlook.

[Hsien-Yuen Hsu, executive]

Good afternoon to all of our institutional investors, I am S.Y. Hsu. I think we are all very familiar with this slide, but I think that in -- this will remain our business goals in the near term. There won't be any changes to these objectives.

So first of all, we'll continue to manage the market dynamics. Last year, I'm sure we can all agree that the biggest change factor was COVID-19 and the impact it has brought. Since Q4 of last year, we all felt the squeeze on the supply of components. And many in the industry are saying that those with the components and with the production capacity essentially can rule the world. So ASUS has invested a lot of time and effort into dealing with this challenge. But I do think that we have some advantages. We have a very strong internal R&D team in place. So if there are any shortages in components, we can find a second source or we can change our designs and introduce new suppliers into our supply chain. So we are very flexible on this front, and our team works very hard to achieve all of this. So this has really helped grow our sales. The second objective is to continue to expand the addressable market. And also, thirdly, to focus on areas of growth.

ASUS was relatively weaker in terms of the education and commercial segment. But starting last year, we began to pay a lot more attention to this area and invest more resources. So I think that we've delivered very good results in terms of Chromebook and commercial product development. In addition to our original PC product lines, we've also invested heavily last year in the AIoT business. We believe that AIoT will drive growth at ASUS and will contribute very much to our growth, and I'll elaborate on this later.

Next, let's take a look at revenue for the past year. In terms of revenue, we saw Y-o-Y revenue for open platform products grew 37%. For system products, 14%. And in terms of units, we saw Y-o-Y growth of around 20% for motherboards and graphics cards, and also 20% or so growth for PCs. We can see that there is a bit of a gap in terms of the revenue. And as I mentioned earlier, we invested a lot of effort in the education segment, and we saw good growth in Chromebooks. But we do know that as ASPs are lower for Chromebooks, so revenue for our systems products does not measure up to the revenue growth of open platforms.

So now let's take a look at our 3-pillar strategy. We've mentioned this before, and this is the strategy of all of our BUs within ASUS. The golden triangle includes design thinking, market position and NPS. All of the products at ASUS start out with design thinking. We seek to identify the pain points or unmet needs of consumers, and we find that out through design thinking to provide the very best products to our customers. And of course, we aim to continue to improve our market position, and we do that through customer relations management and connected service so that we can provide our customers with excellent after-sales experience. But to measure all that, we need to have a metric, and we use the Net Promoter Score to evaluate whether all of our efforts are having an impact. So all of these aspects are linked, and we will continue to fine-tune it to improve our products in our business.

As for AIoT, ASUS is a product-centric company and we are very strong in this regard. But of course, you can't rely only on products to develop AIoT. The main expertise is also very important. I'm sure you've all seen the news of ASUS' investment or acquisitions, and we do that to obtain the domain expertise necessary to improve our total solution in AIoT. Our solutions are focused on certain segments, including smart manufacturing, smart health care and smart retail. These are our current focuses within the market, and we'll continue to invest resources in that regard.

As I said earlier, all of our products are designed, starting from design thinking, and we are very user-centric. Users or consumers are the most important part of our business. They may be power users, they may be creators, commercial users or education segment users. And we continue to improve upon our products. We put in a lot of hard work in this, and our customers have recognized that effort.

So as you can see on the next slide here, last year, we were ranked a Business Choice Laptop Brand by PCMag. As I said, this is a result of all of the efforts that we've put in in our commercial segment, and this has been recognized. Another achievement is being ranked as a Most Admired Company by Fortune World Magazine for a sixth year in a row. Another is being ranked as the Top 100 Global Innovators by Clarivate. These are achievements that we are very proud of, and I think this just goes to show that our efforts are being recognized. And I hope that we will continue to see strong support from our institutional investors.

All right. I will turn it now over to Samson.

[Samson Hu, executive]

Okay. Thank you. Hi, everyone. I am Samson Hu, co-Chair of ASUSTeK. Next, let me talk briefly about our product strategies, some of the operational results of 2020 as well as outlook and guidance for 2021.

In terms of our differentiation strategy and our market target strategies, we are seeing growth in terms of shipments for our gaming PC lines. We see about 10% growth in Y-on-Y for regular PCs. For gaming PCs, we saw a 50% growth Y-o-Y. For commercial and education PCs, we see -- this includes Chromebook, of course, Y-o-Y growth reached 80%. As for 2021, we believe that while the pandemic may begin to recede because of vaccine rollouts, we think that this new mode of living and working will continue to take hold in this new digital era.

So for the 2021 outlook, we have a very positive outlook, and we adopt a very aggressive stance in terms of [ driving ] growth. As for our 3 major PC products, our goal for 2021 for regular PCs and gaming PCs, our goal is to reach Y-o-Y growth that is higher or 10% higher than the industry or average. As for commercial and education PCs, including Chromebooks, our goal for the year of 2021 is Y-o-Y growth of at least 100%. This is our goal for 2021 and also overview of results of 2020.

Let us move on now to Slide 22. Republic of Gamers has always been a focus of ASUS. Last year, we were able to see growth by leaps and bounds, and that was partly brought about by COVID-19 and the effect of more people playing from home. But I think more importantly, this growth was brought about by the overall competitiveness of ASUS, the brand, the gaming community that we've built up and this overall gaming brand. We've also done a lot of outreach and built up an ecosystem. We reached out to gamers, fans, and we also work closely with game title publishers. We also sponsor a lot of e-sports. I think all of these efforts contributed to growth in our gaming brand.

Moving on to the next page or the next slide. We've deployed aggressively. And I think we've built up the most comprehensive product portfolio in the industry. This includes GPUs, desktop computers, routers, gaming phones. We just released our newest gaming phone last week, ROG Phone 5, and we also have a lot of gaming accessories.

Moving on to the next slide. We can see that gaming product revenue as a share of our in-house revenue continues to increase over the year, and it reached of 40% last year, about TWD 150 billion. For 2021, we'll continue to push our gaming product portfolio and continue to drive growth.

Let us take a look at the next slide. If we look at Y-o-Y growth of ASUS gaming notebook shipments for 2020, we saw growth in the market grow 30%. But for ASUS, we saw Y-o-Y growth of 50%. If we drive down into the details in terms of region, we saw shipments grow in Europe and North America by 67% Y-o-Y. In China, we achieved growth of 34%. In the Asia Pacific, 52% growth Y-o-Y. So we see favorable results in all of these regions.

Moving on to the next slide. Of course, in addition to this momentum of growth in units or in quantity, we also focus greatly on quality and our brand positioning as a gaming brand. So if we look at the shipments of premium gaming notebooks, that is notebooks that are priced at above USD 1,200, the in-house share within ASUS is 31%, which is a lot higher than the market average of 24%.

Lastly, I'll talk a bit about Chromebooks. For Chromebooks, I think ASUS will continue to seize this growth momentum in the education segment. In 2020, we saw shipment grow 160%. In 2021, we will aim for 3-digit Y-o-Y growth. This is in terms of shipments. Of course, we also seek to improve the value and the positioning of our brand. So we also focused on the quality. On this slide, you will see some examples of strategic partnerships or cooperations that we've engaged in with other partners.

Right now, we can see that in the premium Chromebook segment that is ASPs of above USD 499, we can see that ASUS has about 35% of the market share. Chromebook is very important in the education segment, but I think ASUS will also be ready for when Chromebooks make inroads into other market segments.

So that is it for my briefing, and I will stop here.

[Operator]

[Operator Instructions] Our first question comes from Morgan Stanley.

[Unknown Analyst]

Is there a clearer picture of the gap between supply and demand? Has there been an improvement in Q1 compared to Q4 of last year? Another question is, will margins be impacted by supply chain shortages or component price hikes? Will these price hikes be reflected in the price of products and also in the costs?

[Unknown Executive]

We mentioned this earlier, demand remains strong in 2021. For Q1 and Q2 as well, we look at it positively for the second half of the year as well. The biggest challenge here is in the supply chain. I remember at our last earnings conference, we had still a 30% gap in Q4 of last year. For Q1 of this year, we will have to meet the deferred demand from Q1 as well as the robust demand for Q1 of this year. So overall, demand remains very strong, and supply remains tight.

If we talk numbers, I believe the gap for Q1 of this year will remain at 25% to 30%. So this remains a challenge to the supply chain. I'm sure you are all aware, some of the key components that are in short supply. The first one is panels and also ICs. For panels, there is a shortage because of the tight supply of materials in the upstream. And that is shortages in driver ICs and power ICs, which are all used in panels, and supplies remain tight. As for other types of ICs, this is also constrained by the overall semiconductor supply chain and also the foundry capacity. We are also seeing shortages in capacity for packaging and testing. So I see supply that includes power ICs or logic ICs. Supply again, remains tight.

I think this is a common challenge that everyone in the PC industry is facing. Again, as S.Y. mentioned earlier, we do have a lot going for us, and that is we have a very strong in-house R&D team. The alternative resources or components that our supply chain partners provide, we can verify them, verify the functions and the quality very quickly and incorporate them into our manufacturing process.

We've also positioned ourselves aggressively. We've worked together with some of our most important component suppliers, and we signed a long-term LTA. So this will be able to help us secure some of the components that we need. The semiconductor supply chain still remains dynamic. This includes foundry and packaging, and there's a lot of changes that we will need to adapt to. But again, we'll capitalize on our internal R&D team to respond. This is in terms of the supply side.

Of course, because of supply shortages, we'll have to -- we will see price hikes further upstream. I think for upstream supply chains to brands like ASUS and distribution channels and consumers, for all of us here, it's a challenge that we'll have to face. We adopt a positive attitude towards this. Shortages cause price hikes and that has to be reflected in a certain extent throughout the value chain because this allows us to adapt or expand our capacity to fulfill market demand. This is how we see it, price hikes allow us to better fulfill the demand. And as for ASUS' position in that value chain, I think we will, to a certain extent, reflect this shortage. But I think that we will be able to keep margins steady. Thank you.

[Operator]

The second question is from JPMorgan.

[Unknown Analyst]

First of all, congratulations on the record-high profits. I believe this is the highest we've ever seen since ASUS started operating as an independent brand. The question relates to the phone business. It looks like there will be new models of phones in 2021. How does the company see the profitability of the phone business? And also what's the progress on achieving the 3-year goal for the phone business, reaching economies of scale in terms of shipment and reaching breakeven?

[Unknown Executive]

I will answer that question. We released the ROG Phone 3 last year and ROG Phone 5 this year. But there was a bit of a difference. In the past when we released these gaming phones, we tried to align our phone launches with the launch of CPUs upstream because we want to couple our gaming phones with flagship CPUs. Last year, we released the ROG Phone 3 at a later date in the year. So it had a shorter product cycle. We discussed this internally on how to make adjustments to the volume due to the shorter product cycle. So in Q4 of last year, we were nearing the release of the next-generation CPU. So we made certain adjustments in terms of the volume. So some of the institutional investors pointed out the low profits of phones in Q4 of last year. And that reflects the adjustment that we made so that we could avoid overlap in terms of phone products.

But for ROG 5, which was just recently launched, we see very positive reactions in the market. In terms of customers and opinion leaders, they all have favorable reactions in terms of performance, battery life as well as touchscreen control. Prior to the launch, we also put an effort to hype up the market and create buzz. We held competitions, and we saw viewership grow exponentially. In ROG 5, we had about -- we had views of about 1 million. For ROG 5, we saw a growth of 8 times the amount of ROG 3 with 8.5 million views. So that's a very positive development. And we see the same reaction in terms of preorders through the e-commerce platform of China in jd.com. We saw orders -- online preorders reach 1.78 million. And orders are coming in at 1.5-fold growth. All of our products have been ordered, have been sold, and distribution channels are coming to us asking for more.

With the launch of ROG 5, we've released a standard version, a pro version and an ultimate version. These 3 versions were released to gain customer share. Based on the current size of the gaming segment in the market and sales, it would be difficult to achieve growth based on our previous product plans. So we work closely with our partners. We worked with Qualcomm, and we will also have certain adjustments or design adjustments made in -- for our ZenFone. But the time is not right yet. So I'll keep it under wraps for now. But I do ask our institutional investors to continue to pay attention to the release of our phones. I am sure that we will be able to deliver good results this year. Thank you.

[Operator]

This next question is from UBS.

[Unknown Analyst]

3 questions. Based on the 2021 shipment goals that was touched upon earlier, so can we expect the first quarter to be the lowest in terms of shipment volume? The second question is how ASUS will better manage its supply chains and component supplies for 2021 compared to 2020? The third question is the payout ratio for this year.

[Unknown Executive]

I'll answer that. For this year, the revenue of the 4 quarters of this year, I think, based on the visibility of the orders that we have now and also the supply chain environment that we see, we do believe that Q1 will see the lowest revenue of this year. We'll do better in the second quarter compared to the first quarter. Of course, a lot of uncertainties remain in our forecast for the latter half of the year. But we are optimistic about this. We remain optimistic about 2021 and the forecasts for the latter half of the year. But to answer your question, yes, Q1 will be the lowest revenue of the whole year.

As for your second question, our management of the supply chain, I think compared to last year, we are a lot more confident, and we have a much better handle on things. I think last year, not just for ASUS, but the whole industry and the supply chain, we are all facing brand-new challenges, and things were chaotic for all of us. For supply chain, it's like nothing we've ever encountered before. So I think for supply chains and for ASUS, we'll have to work together better to adapt to the dynamics. But I think we've learned a lot from our experience of last year. We're better equipped, and we are better able to work together. And we'll be able to adapt to any of the challenges this year.

At ASUS, we have some advantages. This includes our advantages in R&D and our ability to adapt and be flexible. So we are a lot more confident compared with last year.

As for the third question on payout dividends, I will turn it over to Nick.

[Nick Wu, executive]

So Nick here, we held a Board meeting today, and we approved the financial report for the fourth quarter as well as our payout dividends. Our policy is to pay out a cash dividend of TWD 26. As for the dividend payout ratio, that will be 73%.

[Operator]

This next question comes from KGI.

[Unknown Analyst]

On the goals alluded to on Slide 21, is that the goal for ASUS or the overall market? Could you clarify that for us?

[Samson Hu, executive]

Samson here. Apologies, if I was unclear earlier. Let me explain. As I mentioned, we have 3 product lines. And for regular PCs and gaming PCs, we aim to achieve growth that is 10% higher than the market average. We currently expect the overall market to grow at double digits for 2021, so about 10% to 15%. Based on that, we aim to achieve growth that is 10% higher than the market average. So that is an aggressive target of growth of 20% or above. Thank you.

[Operator]

The next question comes from JPMorgan.

[Unknown Analyst]

These questions are about graphics cards. In the first quarter, we saw the component guidance of a Q-o-Q decrease of 5%. Is this due to constraints in the supply of graphics cards? With the price hikes of 20% to 30% on the market, how will that affect business? We are currently also seeing growing demand for graphic cards due to mining. What is the percentage of demand for graphics cards for mining in your view? And what's the impact on revenue and profit? Also, what is your comment on NVIDIA CMP's GPU? What is its impact on pricing, cost and margin for ASUS? How should we look at this?

[Unknown Executive]

I will answer that. For GPUs, right now, of course, the most pressing issue is the shortage of NVIDIA GPUs. So there's a decreased Q-o-Q in shipment. Because of this shortage, we are seeing price hikes in GPU. And that's only natural with this shortage and supply prices will increase. For our graphics card BU, we are actually ahead in terms of achieving our goals, and that explains the margin increases.

As for demand-driven by mining, how should I put this? I think this is due to the skyrocketing cryptocurrency prices. A lot of people are getting involved in the mining. And it is really hard for us to say exactly how much of the GPU demand is being used for mining. We're even seeing some people using gaming notebooks to mine cryptocurrency. I mean from an economic perspective, it's not really economic to do that, to mine cryptocurrency using gaming notebooks. But because of the skyrocketing cryptocurrency prices, we are seeing people use all means to mine for cryptocurrency. So we can't really say for sure exactly how much of that demand or how much of those GPUs are being used for mining. These are consumer behavior that we can't really -- we don't really have a clear picture.

As for NVIDIA, I think their strategy is to position their products and adjust their prices to address different markets, the fact that mining has had -- may have affected their strategy for GPU applications. From NVIDIA's perspective, I think this is a reasonable move. And for those of us downstream at ASUS, the only thing we can do is to plant our products based on NVIDIA's strategy. I'll stop here.

[Operator]

This next question is from Nikkei Asia.

[Unknown Attendee]

Do we see any instances of overbooking in the industry? And can we differentiate between actual demand and overbooking in the industry?

[Unknown Executive]

I will answer that. In terms of overbooking, when we see a gap in supply and demand, we will see instances of overbooking. Currently, with this big gap in supply and demand, of course, there is overbooking. So take panels as an example.

We are in close contact with all of our supply chain partners. We keep in touch. We discuss developments regularly. We are also collecting information from our ODMs and also research units. And based on the information that we have gathered for panels, the total demand reported by supply chain vendors versus estimates provided by market survey organizations, estimates of market demand, it looks like there is overbooking of about 10%. So this is comparing total demand reported by supply chain vendors and also demand -- market demand reported by market survey organizations and estimates. My understanding is that this is normal. So the short answer to your question is, yes, there is overbooking.

[Operator]

The next question is from DIGITIMES.

[Unknown Attendee]

With the shortage of graphics cards and the price hike announced by ASUS of 10% to 20%, will we continue to see increase in the pricing in the first half of 2021? What's the supply gap? And when can we expect this to be solved?

[Unknown Executive]

I will take that. Due to the shortages, we have made some adjustments to GPU prices. And as alluded to earlier, we've announced the price hike. It looks like this shortage will continue in the short term. And we'll continue to discuss and adjust the pricing in the first half of the year. Demand for GPUs has been driven by crypto mining, and that will have an impact. ASUS has a very comprehensive product portfolio. We have systems, notebooks, desktops and GPUs. And I think we have an advantage in negotiating for components and materials.

As for when we can resolve this gap, that will be hard to say. Our guess is that the gap may be caused by the low-yield upstream, and that may be the reason for this gap. As for when they can increase that yield, that will be hard for us to predict accurately. But we will continue to discuss things closely with our partners such as NVIDIA and make adjustments accordingly.

[Operator]

This next question is from Commercial Times.

[Unknown Attendee]

Has the supply shortage situation improved compared to the fourth quarter of 2020? Or has it become more severe? For ASUS, will this result in crowding-out effect on the different product lines for ASUS. For instance, how do you allocate resources between regular and commercial notebooks or between PC and motherboards and graphics card?

[Unknown Executive]

I will answer that. Whether things have improved or worsened on the supply side, I think that we'll have to take a look starting from last year. So we started seeing challenges in the supply chain last year. And vendors upstream have responded swiftly to increase production capacity and also output. I think they've all been adapting swiftly since the latter half of last year to increase production capacity. Comparing 2021 to 2020, I'm sure that output has increased this year. From foundries to packaging and testing, I am confident that compared to last year, production capacity has improved but there is another factor at play here.

In addition to the PC industry, we are seeing demand from other sectors as well for semiconductors. For instance, phones, 5G phones will require ICs that are double the number of ICs required by 4G phones. And also, we are going to see more demand for electronics or ICs for automobiles. I'm sure everyone is familiar with that. So demand has increased on that side as well. So overall, I think output will increase compared to 2020. However, we are also seeing demand from other industries. And that will have a crowding-out effect to a certain extent on the PC industry.

As for how ASUS will allocate our finite resources across our products, I will put it this way. First of all, systems, products and component products use different materials, different resources. So I don't think we will see a crowding-out effect in terms of system products and GPUs or motherboard products. As for how we achieve the maximum benefit in terms of using our resources, we will work to maximize that and make sure we achieve the best results.

[Operator]

This next question is from KGI.

[Unknown Analyst]

Could you talk a bit more about how you view the collaboration with Portwell? And what will be its contribution in the future?

[Unknown Executive]

I will answer that. I alluded to it earlier in our presentation. Our AIoT business is an important focus. And this year, we'll invest more resources. In the past, I think ASUS would have preferred to see organic growth within our company, but there is a downside to this. We cannot adapt in a timely manner if we see some trends in the market. So this time, in terms of growing our AIoT business, we adopted a different measure. If we see a company that looks like it will be positive for our growth, then we will take measures to achieve a synergy effect. So we saw that in the Portwell. 2 of our VPs are now on the Board of Portwell. They will be acting as co-CEOs and we will be involved in the business operations of Portwell. And through this kind of collaboration, we hope to align their operations with ASUS' AIoT.

As we -- as I said before, we have advantages in products, but we lack the domain expertise. And through investments in companies such as Portwell, we will be able to obtain that domain expertise and make further inroads in our AIoT business.

[Hsien-Yuen Hsu, executive]

We've taken a look at all of the questions, and it looks like we've addressed most of them concerning operations, supply chains, AIoT, policies and strategies. We've touched upon all of that. I want to thank everyone for participating in this online conference call.

S.Y. here, I want to thank everyone for your support for ASUS. This year remains a challenging year. And so far, we are still working very hard to address the shortages in the supply chain and in components and so on. But as I said earlier, ASUS has a very strong R&D team to help us address these issues. And we hope that this year, even though it looks like the pandemic is receding, but we do see the new norm persisting in the market, and ASUS will make sure to seize that opportunity and make sure that translates into results for our investors.

[Samson Hu, executive]

Samson here. Thank you to all our institutional investors for your support. Since last year, we've seen the impacts brought about by COVID-19, the digitalization of our lives, of our work and also the new opportunities presented for the PC industry. I think another important aspect of this pandemic is the fact that it is accelerating the digital transformation of large corporations and also of SMEs. This acceleration in digital transformation will actually remain the solid driver of demand in the next couple of years.

I think that this accelerated digital transformation will actually have a bigger impact or be more of a driver compared to remote learning or remote working. Challenges will remain in the supply chain for this year. That's a given. But I do want to take this opportunity to ask that our institutional investors continue to support us, but I also want to take this opportunity to thank all of our partners in the supply chain. Let us work together to overcome these challenges and drive further growth. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]