Nanya Technology Corp
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Nanya Technology Corp
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[Foreign Language] Welcome to Nanya Technology's 2024 First Quarter Earnings Conference Call. [Operator Instructions] The conference will be held only in English for investors around the world. Today's conference will be approximately 60 minutes. And Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the first quarter of 2024, followed by our guidance for the next quarter and key messages. Then Nanya Technology's Executive Vice President, Dr. Lin-Chin Su; Vice President, Mr. Joseph Wu; and Financial Executive, Mr. Philip Jao, will join us as we open our Q&A session. Today's presentation materials are available for download at Nanya Technology's website at www.nanya.com. And as usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause the actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our presentation materials. Now I would like to turn the call over to Nanya Technology's President, Dr. Pei-Ing Lee, for the summary of operations and current quarter guidance. Dr. Lee, please begin.
Okay. Welcome to Nanya Technology's Q1 2024 Investor Conference. I'm Pei-Ing Lee. The content of this presentation will include Q1 '24 revenue and result, CapEx and bit shipment, market outlook, and conclude my business review and outlook. First, the Q1 2024 revenue and results. The financial results summary, as following: our net sales is Q1 TWD 9.503 billion versus Q4 last year, TWD 8.704 billion, is an improvement of 9.2%. And our gross profit come to minus TWD 277 million versus minus TWD 1.188 billion last quarter, is also a significant improvement with the gross margin minus 2.9% versus last quarter of 13.6% minus, is an improvement of more than 10%. Operating income, minus TWD 2.918 billion versus Q4 last year, minus TWD 4.05 billion, with the operating margin comes to minus 30.7% versus minus 46.5% in Q4 last year. It's also some improvement in operating income. EBITDA, TWD 1.156 billion; and non-operating income, TWD 1.375 billion; and income tax benefit comes to TWD 335 million. With the net income for Q1 2024 comes to a loss of TWD 1.209 billion at a net margin of minus 12.7% versus Q4 last year, our net income at minus TWD 2.48 billion and the net margin at minus 28.5%. Also seeing some improvement of more than 15% in net margin. Earnings per share comes to loss negative TWD 0.39 per share versus Q4 last year, TWD 0.8 minus. And book value comes to TWD 54.16 per share. Comes through a little more detail. For quarterly revenue result comparison Q-to-Q, we had revenue improvement of 9.2%. And within that shipment is improvement of low single-digit and ASP improved of high single digit with exchange rate decreased low single digit. And compared to Q1 last year, year-to-year comparison, revenue is an improvement of 47.9%, and mostly come from shipment improvement of increasing low 50s, with ASP still marginally lower than first quarter last year. For Q1 2024 versus Q4 2023 result comparison, the net sale, TWD 9.503 billion versus TWD 8.704 billion last quarter. And the remark is as described in the last year. When it comes to gross profit, gross profit for Q1 this year minus TWD 277 million with a gross margin of minus 2.9%. This is some improvement over Q4 last year, mostly due to higher ASP and lower idle costs and with the improvement of gross loss decreased by TWD 911 million. Operating expense, TWD 2.642 billion versus TWD 2.863 billion, has decreased TWD 221 million with a lower R&D spend. And operating income at minus TWD 2.918 billion, operating margin of minus 30.7% versus minus TWD 4.05 billion in Q4 last year with the Q-to-Q improvement of 15.8%. And this is due to operating loss decreased by TWD 1.132 billion. Net income comes to a loss of TWD 1.209 billion versus a loss of TWD 2.48 billion in Q4 last year. This is due to net loss decreased by TWD 1.271 billion. Within that, the exchange rate is favorable, is gain of TWD 810 million, with income tax is unfavorable NT dollars of TWD 715 million. For operating expenses, our SG&A expenses comes to TWD 583 million, which is in normal range compared to previous quarter, okay? And R&D expense TWD 2.059 billion compared to Q-to-Q, slightly down from Q4 last year, but in overall speaking, is an average number of R&D spend. For cash flow, beginning balance for Q1 2024, beginning balance is TWD 58.812 billion and with cash from operating activity, TWD 2.155 billion; and capital expenditure, TWD 2.851 billion, which comes to free cash flow of minus TWD 696 million. Our financial activity for the quarter comes to positive TWD 4.135 billion and end balance for the quarter, TWD 62.25 billion. And the cash flow rollout road map is shown in the right-hand side. Basically, very clearly described that our end balance is slightly improved from Q1 -- from Q4 last year.
And our net cash -- current net cash is -- comes to TWD 49.3 billion with the cash and equivalents minus short-term debt, we still have net cash of TWD 49.3 billion. For CapEx and bit shipment. Q1, our CapEx was TWD 2.9 billion. And for this year, we plan to spend up to TWD 26 billion. Within that, will be around 50% for wafer equipment and another 50%, mostly for the construction purpose. And bit shipment, Q1 bit shipment increased by low single digit and we are expecting for the whole year will be up to 20% improvement year-to-year compared to last year. For market outlook. The DRAM market, the price expected to grow in 2024 as demand for AI servers, HBM, and DDR5 increase as a driver; and also suppliers are accelerating, migrating to high-end products, particularly HBM, which may lead to overall output constraints; and market recovery momentum still subject to geopolitical conflicts and regional economic uncertainty. For supply side. The prioritized production of HBM and TSV products may cause constrained of supply in standard DRAM. Supplier increase CapEx mainly for HBM product. From the demand side; the server market: The overall shipment is expected to increase as AI and high-end server drive demand for DDR5 and high-density products. For mobile market: Smartphone sales recovered in China and shares of high-end model also increased. PC market: The AI PC launch may contribute to DRAM shipment and content growth. For consumer: Demands for IP camera, TV, industrial and automotive remain stable. And business review and outlook. For Nanya business, Nanya Q1 '24 still have net loss of TWD 1.209 billion with EPS of minus TWD 0.39 per share. The DRAM market are expected to recover continuously in 2024. And Nanya's second-generation 10-nanometer class or 1B products including 8-gigabit DDR4, 16-gigabit DDR5 is to enter mass production in second half this year. And for ESG activity, for last quarter, Nanya was selected in CDP's A lists both in Climate Change and Water Security. Nanya also selected as Top 100 Innovator by Clarivate. Nanya also received National Quality Management Award by Ministry of Economic Affairs, Taiwan. With that, I conclude my presentation, and we may move into question and answer. Thank you.
[Operator Instructions]
Our first question is coming from Haas Liu from UBS.
Dr. Lee and Joseph, my first question is regarding your current technology mix. Could you remind us how much it was in the first quarter and the trend in the second quarter between DDR3 and also DDR4? And also, if possible, could you share with us your view on the pricing trend for DDR3 and DDR4 with more and more capacity moving to DDR5 and HBM production?
Our market sector is still around 65% to 70% in the consumer market and with the low power around 10% to 15% and remaining mostly balanced by commodity and server. And for the pricing question you asked, we are seeing, in general, the overall market from a pricing point of view, is improving. And of course, that the high-end product may improve more than general standard DRAM. That's including DDR3 and DDR4. And also, each of the product from a pricing point of view, is different from different density also, okay? So for instance, that DDR3, you have 1 gigabit, 2 gigabit, 4 gigabit, okay? Each of our product momentum is different by its own demand and supply. So is the DDR4, the 4 gigabit and 8-gigabit DDR4 and 16 gigabit DDR4, okay? And as the DDR5 migration, most capacity wise, a lot of production capacity may be moving to HBM and DDR5. As a result, the output for DDR4 and DDR3 likely to be more constrained and more inventory digestion situation. So that help adjusting market balance. So as a result, we're seeing in general the market ASP trend is trending up.
Okay. Yes. So that's consistent with our current market observation, but I was just wondering if the legacy DDR3 and also DDR4 DRAM pricing upward trend will be more visible in the upcoming quarters because it has been lagging DDR5 and also HBM price uplift on trend in the past few months?
Yes. Like the Q2 will have some improvement for the DDR3 and DDR4 as well, okay? And many of those reasons is due to the customer purchasing terms. Some is in the quarterly term, some in monthly term. And for the uptrend, the quarterly term normally is behind pricing improvement, because the price was negotiated maybe 5 months ago, okay, or 4 months ago. Therefore, in the uptrend, the long-term contract will have a little bit lagging in terms of their pricing improvement.
Okay. So can we put this way, does you think DDR3 and also DDR4 because of the time difference that it can potentially outgrow the overall DRAM market price in the second quarter? Is that the right assumption?
I would say that assumption is a little bit too fast, okay? The overall pricing trend also depends on the market demand as well as the inventory situation from each of the suppliers, okay. As a result, as I described, that each of the suppliers and each of the density also product is different, behavior, even within DDR3, it may have different behavior from different density, okay? So I would say it's not a general term that all the consumer product will be performed better than overall in average, okay? Now with also HBM has a pretty high premium in DDR5 okay? So to out pass the DDR5 and HBM in terms of pricing, I think it's unlikely, okay? So overall, it's a balance if comes to, about the current situation will be a very, very wonderful situation already.
Okay. Yes. It was very helpful that you provide a mix by application for your business. But if we can have more detailed color on the technology mix as well between DDR3 and also DDR4?
Our DDR3 and DDR4 right now is about -- we also have our low-power business, okay? And low power takes about 15% and the rest of 80% -- 85% is balanced between DDR3 and DDR4. And also, this could be changed from month-by-month.
Okay. That is very helpful. And my second question would be your expectation on the CapEx. Compared with last quarter, you raised your CapEx. Should we expect the incremental CapEx will lead to higher depreciation on the equipment or these even will not be depleted until it starts production? Also, if possible, could you remind us your goal for operating breakeven?
So you have two more questions, one is the -- one is the depreciation, okay? And the other one is potential breakeven, okay. The depreciation situation for Nanya now is currently for the next few years. We're seeing the depreciation number will be coming down, okay? Now it's probably coming to the high point, okay? And we are expecting, by the end of next year, we have a substantial depreciation improvement, and that will continue until 2027, '28, until the next round of if we're adding more new equipment in the new fab, which is still under construction. So, currently, the depreciation situation monthly or quarterly probably already in a high point, okay? And as we speak, it will continue to come down gradually. And the breakeven point, this will be very much subject to ASP situation in second quarter. And this is yet to be seen, okay. At least all depends on the market situation, okay? And there are some momentum building up, okay? Also second quarter, a few factors we have to keep in mind. One factor is first quarter, we had pretty good help from exchange rate change. And also last quarter, we had less idle costs, okay?
And however, this quarter, we will have even more improvement in idle costs, but that's an improvement as marginal. Exchange rates, though, we don't know what is the trend going to be. On top of that is that on April 3, there are a major earthquake in Taiwan, okay, even though we already resumed production, okay? However, there are some damage to the equipment and wafer and those costs and expense has to be taken into account in Q2. Even though that is a controllable number, but still, it's adding expense to Q2. Fortunately, the ASP pricing maybe in uptrend a little more, okay? So that may be balanced out, hopefully, okay? So in terms of breakeven point, we are looking for maybe somewhere in the Q3, beginning of Q3.
Okay. If I could squeeze 1 more question before I go back in the queue? What is your current utilization and for the first quarter, if you could provide some more detail?
Utilization is almost back to normal, except the earthquake interruption, now with resumed normal.
Next up, we have Jay Kwon from JPMorgan.
I hope Nanya team and all of the families are well from the last week's earthquake. I'd like to first ask a bit more details about the operational impact from earthquake part. If there's any -- how are you managing it? And also, can you characterize the price negotiation after the earthquake? I think you mentioned that the pricing trend is moving up a little bit better. So are you actually seeing some changes in the customer sentiment? That's my first question.
On the April 3, earthquake 7.2 Richter scale. In our fab we also have the measurement locally in our -- within our fab. We measured the higher scale we ever experience since we construct the fab, okay? So with that magnitude of earthquake, likely most of semiconductor fab, if not all, will have some degree of damage in the equipment as well as in the wafer in production, okay? And that earthquake did interrupt us from April 3, okay, for a few days. We have resumed normal production for 2, 3 days already. So in general, that interruption is a little bit more than 5 days, okay? And as I said, the damage is controllable, okay? And as of ASP trend still that we need to wait a few more days for the market settlement. We still don't have a very detailed trend yet, okay? But as we know that most of the suppliers are expecting some sort of higher ASP improvement as they still have some margin -- profit margin issue currently.
I think you can -- and just a follow-up. If you mentioned that there are a couple of days of the impact. So if it impacts then, do you actually expect your -- since you mentioned your full year bit shipment is still above the 20%, and you started first quarter with a low single-digit increase. So is there any possibility that the Q2 may not see a big increase and most of the shipment increase will be more back half loaded into the Q3 and Q4?
Potentially that may be happening, okay? And overall speaking, the AI trigger, the cloud computation, although is helping out, okay? The demand for the mobile, PC as well as the consumer in general speaking, in Q2, maybe in a normal range, not as you expected -- as you just described that, maybe more towards second half of this year.
Okay. And my second and last question is, last call, I remember you were implying that the DDR5 first wafer taping will begin some point in late Q3 to early Q4. So it could become some part of your production in Q4. So I think that's implying R&D samples submitted in second quarter, qualification in Q3. So am I understanding your plan correctly? Are you still keeping this plan? Or are there any roadblocks to the DDR5 ramp that you're planning by the year-end? And also if you could share any of your DDR5 probably bit or shipment mix by end of the year, that would be really great?
Okay. Jay, the DDR5 is, our schedule is, expanded, okay? There's no major change, okay? And from the big demand point of view, as you indicated that we need to have some sampling, customer qualification, and then beginning of the shipment. So the shipment is likely towards the end of this year. So yes, we are expecting some shipments at the end of this year, okay? And that target, that working target still, in our mind, we're working hard to make that happen.
Our next question is coming from Anthony Lau from Yuanta.
Hi, Dr. Lee and the management team. I have 4 questions. So my first question is what is our like current sales share from China and do we see any recovery from like China clients recently?
Our sales to China is, in general, 20% plus or minus, okay? Sometime 15%, sometimes 20%, or even more than 20%, okay? So that's -- so far, that's normal. And we are -- we don't see any major issue in short term, okay? Okay. Anthony, second question?
Okay. So also, can you elaborate on our like non-China customers' condition? And also I want to ask that are like 1A or like 1B products like for the DDR4, DDR5 is only targeted to like non-China customers or maybe also still had some China clients will adopt our DDR5 products?
Our customer, in general, in China now is not from our observation still in largely influenced by regional economic situation. So the momentum still need to be watched closely, okay? And for our 1B DDR5, our customers, in general, we are not limited to regional customers for our product, except those products is some sort of shipment restrictions, okay? So we will welcome the DDR5 customers everywhere in the world, except those have shipment restriction.
Got it. I see. So talking about the 1A, 1B process node is like currently that proportion in our bit shipment have attained about like 5% or 10%. And when we maybe arrive to maybe end of this year, like do you think 1A and 1B process node, maybe like even will attain over 10% still in the end of this year? Do you think this number will attain?
We already stopped production in 1A, okay? So now it's only residual shipment on 1A, okay, very small number on 1A shipment. And 1B, we are -- as I answered the question in the last few questions, is we target for 1B shipment, okay, towards the end of this year, okay? And also, we target monthly -- if within the month that we can target for 10%, that will be a good target for us to look for, okay? So that's still under our scope. Our team is working hard for 1B shipment of up to 10% monthly by the end of this year, okay? And that's our working goal, our target, okay? And that depends on our qualification schedule in the customer side also. Customers need to verify and qualify our product.
Okay. So back to maybe second quarter outlook, do we like -- I remember that like previous analysts talking about maybe the consumer market or like the PC mobile market is stable or just mildly recovered. So do you think the Q-o-Q like a sequential increase of the price hike or shipments in, I mean, in the second quarter, will be higher or lower than like first quarter of this year level?
I think, each company may behave differently, each supplier may have different results. But talking about Nanya specifically, our first quarter ASP improvement, high single digit, okay? We are expecting our second quarter slightly better than Q1, okay? And again, that's our working target. And as I described to you that we had also a longer-term customer like quarterly or yearly customer, okay, and also monthly customers. And those were different one-by-one, okay? And the -- for the -- we are expecting that Q2 will be improved in Q1, particularly for those quarterly customers. okay? Because they enjoy Q1. Q1 pricing is relatively low because Q1 pricing was negotiated Q4 last year, some even beginning of Q4 last year, okay? And therefore, they enjoy pretty lower pricing compared to market average. So as I described to gentlemen that when the market is up trend, typically, the long-term customer has less price increasing, okay? And the short-term customers have more price increasing. However, vice versa and down trend will be different.
This is very clear. And maybe let me ask my final question is, so we just elaborate about our mix by different products like 15% from low-power like DDR and 80% to 85% of DDR3 and DDR4. Do we see any like new low-power DDR clients like maybe from DDR -- like LP DDR4 or maybe DDR3, do we see any new clients from maybe mobile vendors like maybe in China or other places?
Yes. We are expecting our low power and mobile business to improve gradually quarter-by-quarter too. And our low-power product portfolio, including low-power DDR4, low power DDR4X, and low power DDR3, low power DDR2. Okay? And also at different density, that's including from 1 gigabit, 2 gigabit, 4 gigabit, 8 gigabit to 16 gigabit, even 32 gigabit, low power DDR2 also include we're shipping MCP and eMCP together with NAND fresh, okay? So we are expecting to improve those business in the consumer side as well. But we may differentiate that low power by our product portfolio.
[Operator Instructions] Next, we have Simon Woo from Bank of America.
Number 1 question is would you recap the -- maybe -- you said the normal utilization ratio that was assuming the normal is 90% out of a total capacity otherwise is 55,000 or 70,000. So would you update the cut-on the wafer capacity and then the percentage of the wafer input versus capacity for maybe Q-on-Q too? And then I remember your previous comment, the utilization ratio was around 80%. So would you say call it maybe 90% versus last year, 80%. And then I will ask the follow-up question.
Okay. On normal utilization means that we don't intentionally shut down our production to adjust our output, okay? So in general speaking, that's a situation we are in now, okay? And the -- our capacity wise is, from our point of view, it's around 57,000, 58,000 per month or so. It depends on month-by-month. So it depends on 29-day or 31 days a month.
Sorry, but it's not -- isn't that even 60,000? You're saying high 50,000.
Output wise, output wise.
I'm asking for the growth capacity, I think you should be...
No. Growth is around 60,000, yes.
6-0.
Yes, 6-0, yes.
And then the last year when the industry was very top between the Q2, Q3, at the time, I remember your utilization ratio was around 80%.
Yes, yes, when we intentionally doing the adjustment on our inventory, everything, our utilization came down to a time 80%. Yes, plus/minus.
And so to, I think, maybe low 20% bit growth this year. How you're going to achieve this, maybe you're going to fully utilize your capacity and then you want to sell the older inventories? And then what could be the normal production cost, get 10% or 5%. So I want to calculate how you derive 20% target bit growth.
The 20% bit growth could be achieved nicely, okay? First of all, we don't have any utilization reduction, okay? So we are back to normal production, okay? So output likely will be slightly more. And also on top of that, we have some inventory we can balance on that.
Okay. All right. So then after the maybe 2024 then, what could be the normal your production growth rate, you are adding the 1B node of capacity, et cetera. What could be the normal, for me DRAM makers can do only maybe 10% to 15% production because even your competitors use EUV 2, et cetera. How do you offset the Nanya's overall, the long-term trend, the DRAM production volume growth, 10%, 15% or single digit?
Our new generation of the 1B generation production, likely the output with towards the second half or the end of the year, as I described. So this year's big growth impact by the new generation of the production, okay. It's not going to be very big, okay? It's going to be minor, okay? And maybe some impact will be next year, okay? And likely next year, our output capacity, output capability could improve by more than 10%.
Yes, yes. So you said 1A nano node stopped and then the new technology means 1B. And then obviously, 1C node will come, right, sometime next year.
Yes, we will be piloting sometime next year for 1C. And 1B is -- will be moving into mass production in second half this year. Okay? And I explained to you, Simon, that what do we mean by 1A 1B, 1C is that for each generation, we expect around 30% more output bit growth, okay? 1A, we expect 30% more output than 20-nanometer and 1B 30% more than 1A, et cetera. And that's general target that we are expecting for.
Yes. Sorry, maybe very quickly, would you update your -- after the groundbreaking for the $10 billion, what's the target CapEx spend for the new fab construction? Is it still under the construction or particularly...
The construction is normal, okay. We continue to construction without any interruption except natural interruption like something had to be slowed down by a big huge rain or something had to be slowed down by earthquake, except natural reason, we don't intentionally interrupt our construction.
So wafer input will start to late 2026 for the new fab?
Yes. Potentially, the fab will be ready for production in 2026, yes. Yes, 2026.
Okay. So lastly, sorry, you already mentioned that maybe 15% total DRAM revenue, right, is the low power, meanwhile, 85% DDR3, and DDR4, but your low-power DRAM was either DDR3 or DDR4, but right, so overall, your weapon is still maybe 50% DDR3, another 50% DDR4, right, overall?
For low power, you need a completely different product. It's the low-power DDR3 is different from DDR3. Okay? From a product point of view, you need to have a completely new concept of designing the chip, so they are completing new asset, okay? And you cannot say, in production right, in between you change from low power to regular DRAM. No, you have to start from very beginning point, okay? So it is basically a different product.
So low power means a smartphone and then possibly mobile.
Yes, any mobile application or low power consumption application.
Yes. But auto, no need low power, right, these days, automotive?
Automotive, there are some area of automotive use low power as well, okay? Now for instance, low-power DDR4, low power DDR5 also used in automotive as well.
Yes. So overall, your business is still consumer, right? Let's exclude industrial auto. So consumer electronics are around 66% or 50%, what's the...
Consumer in general, we are 65% plus minus. Yes. That's including -- Simon, that's including many different areas, okay? Anything other than server, other than PC, other than mobile, we call it all everything consumer, okay? So that's different. Consumer could be a different term for one company to the other company. And you know that how we define it.
65% for consumer includes the auto right? Auto and industry?
Yes, yes, including automotive, including industrial, including TV, including IP camera box, okay, networking and even with many different applications at home or a personal use, okay, watch, everything, okay?
So I think these are earlier not showing any great meaningful recovery. Only we do see some high-end DDR5, HBM demand growing. So I wonder, I hear your point, competitors focusing on HBM or DDR5, then the supply of the DDR, DDR4 will be tight. That's why you think maybe second quarter price momentum better than Q1 level. But the demand, I don't see any meaningful recovery in this consumer area. How do you see the -- you said they are stable, but I'm feeling weak. But do you think it's?
I think, I also commented on this point several times before, is that consumer market because we define it as in general, anything other than cloud computing, other than PC and mobile. So it's very -- many different applications. So usually, there are some area may not be as good seasonally and there will be some area encouraging, okay? So in general, you may have seen some up and some down. And those up may come down again, those down may go up again, okay? So in balance speaking, consumer, we've seen a relatively stable situation for Nanya, okay? And of course, yes, you are right, it's not exciting, okay? But it's not also very bad situation. For instance, industrial is pretty good now. For instance, the -- now the cloud computation is very heavy, right? So cloud computation needs HBM, DDR5, but it also need SSD. And SSD needs special type of DRAM to go with it. Okay? So SSD actually doing pretty good business as well. So there are some good times, some bad time and overall speaking, is a stable time.
Yes, very clear point. So then next coming quarter, your price increase could be higher than high single digits that proved in Q1, right? Higher?
We are expecting Q2 to be improved from Q1 in ASP. And we're looking for double digit in Q2. But again, that's not a guarantee, okay? That's based on current assessment of the market situation, okay, and customer demand.
Yes. Yes. Very clear. So double-digit price increase possible in Q2 versus a single digit Q1. That's maybe second quarter pricing management.
Yes.
Ladies and gentlemen, we thank you for your questions. Now we are going to move on to the webcast Q&A session. Dr. Lee, please proceed.
Okay. We're seeing the first question from SinoPac, Stanley. The question is, are the reasons for CapEx budget increase from TWD 20 billion to TWD 26 billion.
Actually, we are not increasing in a big way in terms of our CapEx, okay? And there are some scheduling shipping. Last year that we planned for a higher budget, but we didn't spend it. So some of the equipment spend, now moving to this year. Last year, expense move into this year. That's one reason.
And the other reason is that also price increasing as well, okay, in terms of not just construction, but also the equipment side is like increasing in pricing as well. The next question is from Vincent, Pro Capital. Q2 bit shipment guidance. Q2 bit shipment, currently, we are targeted for flat to Q1. We've seen some improvement in Q1 in shipments, okay? We're expecting flat to slightly improve in Q2, okay, bit shipment. And we are targeted for more bit shipment improvement towards second half of this year. That's a seasonality expectation.
Okay. So that's the end of the question from the line. That's all for today's question. Thank you.
Yes. Thank you, Dr. Lee. Ladies and gentlemen, that concludes our conference call today. Please be advised that the replay of the conference will be accessible within 3 hours from now, which will be available through Nanya Technology's website at www.nanya.com. We hope you will join us again next quarter. Thank you for your participation, and have a wonderful day. You may disconnect your lines now. Thank you.