Nanya Technology Corp

TWSE:2408

Earnings Call Transcript 2022-Q3

[Operator]

[Foreign Language] Welcome to Nanya Technology' 2022 Third 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. Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the third quarter of 2022, followed by our guidance for the next quarter and key messages. And 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 with opening 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 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.

[Pei-Ing Lee, executive]

Ladies and gentlemen, welcome to Nanya Technology's Q3 Investor Conference. I'm Pei-Ing Lee. Before I get started, I'd like to comment that the DRAM market is worse than expectation, the global economic issue, many concerns has come. And both the unit price and shipment went down quite substantially. As a result, Nanya's financial performance worse than expectation. Now let me start today's presentation in my report to you, starting with Q3 revenue and results, followed by CapEx and bit shipment, market outlook, and business review and outlook as usual.

First, our Q3 revenue and results. Our Q3 revenue comes to TWD 11.022 billion, which is minus 38.9% down from Q2, and I will explain the reasoning behind. Our gross profit comes down to TWD 3.597 billion at 32.6% versus TWD 7.958 billion at 44% last quarter. So operating income comes to TWD 920 million at 8.3% versus TWD 5.364 billion at 29.8%. When it comes to nonoperating income, TWD 2.242 billion versus TWD 1.741 billion. Our net income for Q3 comes to TWD 2.64 billion at 24% net margin versus TWD 6.575 billion at 36.5% last quarter.

So earnings per share for Q3 comes to TWD 0.85 per share versus TWD 2.12 per share last quarter. Our book value comes to TWD 59.29 per share versus TWD 57.4 per share last quarter.

For quarterly results comparison of Q-to-Q and year-to-year. Revenue comes down by 38.9% Q-to-Q. Shipment decreased by low 20s percentage, and ASP also decreased by low 20s percentage. Exchange rate increased by low single digits. Compared to last year, revenue down by 53.8%, and shipment also decreased by mid-30s, and ASP decreased by mid-30s.

For result comparison, our net sales of TWD 11.022 billion, came down by 38.9%. The reasoning is on the right-hand side. Bit shipment decreased by low 20s. ASP also decreased by low 20s with exchange rate positive favoring low single digits. Gross profit comes to TWD 3.597 billion versus Q2 of TWD 7.958 billion. The gross profit decreased by TWD 4.361 billion, mainly due to shipment and ASP decrease as reported just now.

Our operating expense, TWD 2.677 billion versus Q2 TWD 2.594 billion, is pretty stable. Operating income, TWD 920 million versus TWD 5.364 billion. The operating income decreased due to gross profit decrease. The net income comes to TWD 2.64 billion versus the Q2 TWD 6.575 billion. The net income decreased by TWD 3.935 billion as a result from operating income decreased by TWD 4.444 billion, and exchange rate favorable TWD 328 million, and interest rate income also favorable by TWD 246 million. Our quarterly financial highlight trend has indicated every quarter that this past quarter, Q3 has a substantial decline, both in revenue-wise, in net profit-wise, also in gross margin as well as our net operating margin as indicated in this chart. Our SG&A expense for last quarter, TWD 620 million, which is in the normal range. R&D expense on the right-hand side of the chart for last quarter, TWD 2.057, billion is also in the normal range for the year.

Our cash flow situation, our beginning balance for Q3, beginning balance is at TWD 94.973 billion, and with the cash from operating activities positive TWD 2.652 billion, and CapEx at TWD 7.175 billion, and also financial activity, this is mostly coming from the dividend payout, is at TWD 7.183 billion cash out. And the end balance for Q3 is TWD 82.925 billion. So looking on the right-hand side, our Q1 to Q3 cash flow situation. In the beginning of this year, our cash situation is about TWD 80.7 billion. Over the past 3 quarters, our cash from operating activity coming about TWD 20.296 billion, with CapEx TWD 14.061 billion, and financial activity mostly due to dividend payout at TWD 4.011 billion. The dividend payout for this year is TWD 11.47 billion, as a footnote on the left-hand bottom, the footnote. So at the end of Q3, our cash flow situation is coming to TWD 82.925 billion.

Now comes to CapEx and bit shipment. Our CapEx and bit shipment. On the left-hand side is our CapEx situation. Our original CapEx is, as announced before, it's TWD 28.4 billion. And now we're targeting, for this year, the CapEx will come to TWD 22 billion. And for Q3, the CapEx is around TWD 7.5 billion, as reported just now.

Bit shipment on the right-hand side. We are targeting this year bit shipment will be down to minus 20s. And this is due to unfavorable market situation as I just reported to you.

A little bit more detail on CapEx forecast. And these 2 charts here that you see, on the left-hand side is the chart describing this year, 2022, CapEx. Originally, we were expecting TWD 28.4 billion with 2 colors on the left-hand side chart, with the color on the bottom is the production wafer CapEx, and the rest of CapEx is only darker color. And now with the update to you that for this year, 2022, we are expecting total CapEx comes to TWD 22 billion with substantial reduction in wafer equivalent CapEx reduced by approximately 40%. And for next year, it's on the right-hand side, here we have a comparison between this year and next year. We are expecting the total CapEx is about same at TWD 22 billion. However, our wafer equipment CapEx will be further reduced by 20% year-over-year. And the CapEx trend on the right-hand side of 2023 is still subject to our Board of Directors approval.

For market outlook, we're seeing potential global macroeconomic recession, triggered by high inflation, interest rate hikes, Russian-Ukraine conflict, and China COVID control measures. As a result, we've seen electronic market demand weaker than expectation. However, we've seen some customer inventory gradually digesting.

For the supply side, we're seeing DRAM suppliers inventory may increase in Q3, although that the Q3 financial report here to be reported in a couple of days. And some vendors took actions on CapEx reduction, which potentially will slow down our supply growth in the upcoming years. Demand side, we see in server market, data center construction prolonged, and demand pushback due to rising energy prices and global economic slowdown. And for the mobile market, we're seeing average DRAM content increased. However, smartphone annual shipment may turn negative growth for the year. And due to high inflation and also China market weakness, we see high-end smartphone remain relatively healthy and overall the smartphone shipment decreased. For PC market, we've seen sluggish PC demand and annual shipment decline likely to widen. And for high-end PC, we're seeing it remain relatively healthy. Consumer market inflation and rising interest rates, reducing consumer processing power. For TV, set-top box, storage, demand becoming weak. However, networking and automotive DRAM demand stabilizing.

For our business review and outlook. Finance side, for Q3, our EPS is at TWD 0.85 per share. Accumulatively, Q1 to Q3, Nanya EPS comes to TWD 5.09 per share. From operations side, flexible approach in adjusting our product mix and CapEx to better response to weaker market demand. Our first generation 10-nanometer class product is in a small volume production, is currently under customer sample stage.

Nanya Technology's emission reduction goals also have been validated by Science Based Targets Initiative (SBTi). For the market outlook, we've seen weaker demand may continue, subject to macro uncertainty, thus including Ukraine conflict and China market stress and the inflation rate impact to the market.

With that, that concludes my report to you, and thank you. Let's start our questions and answers.

[Operator]

[Operator Instructions] First one to ask questions, J.J. Park from JPMorgan.

[J.J. Park, analyst]

Looking at the third quarter results, ASP decline looks much severe than the mainstream DRAM price decline. Is it mainly due to the weak demand? Or is there any like further price cut for the consumer electronic DRAM kind of niche product? And then your guidance for the full year bit shipment growth down 20%. So are you looking at further similar decline in the Q4? And then along with the Q4 shipment guidance, given the rising [indiscernible] at Nanya Tech, can you expect meaningful bit shipment growth in 2023?

[Pei-Ing Lee, executive]

Okay. Basically, J.J., let me refresh your question to see if this is what you asked. The first question is, Nanya Q3 ASP declined more than the market average. And the second question regarding Q4, what Nanya expects in ASP situation and bit shipment situation? And third question is 2023 market situation.

[J.J. Park, analyst]

Yes. That's correct.

[Pei-Ing Lee, executive]

Okay. The first question on ASP decline, the Nanya situation is higher than the market average. Basically, Nanya has product portfolio in all kinds of different products, including the DDR3, DDR4 and lower power D4. And from the percentage of shipment point of view, Nanya is more into consumer range, okay? And also into low density, including 4 gigabit, 2 gigabit, and 1 gigabit, or even lower density. And for those lower density, likely you will be seeing, in a total percentage, equivalent weighting is heavier than the other. For instance, 1 gigabit declined by TWD 0.01. When it comes to 8 gigabits, have to multiply by 8x. So percentage-wise, it's heavier in terms of low density.

And I would say, in general speaking, in each of the sector, that our percentage of decline is relatively similar to the market situation more or less. And Q4 situation, I'm seeing that -- at least from a Nanya point of view, I'm seeing that our ASP decline percentage may be smaller. And this is the current outlook. However, Q4 still has 3 months to go. We still have to deal with hundreds of purchasing order and customer negotiations. On the other hand, though, shipment-wise for Q4, Nanya expecting our shipment will be somehow slightly better than Q3, mostly because Q3 is already very bad in certain regions of the market.

Particularly, we're seeing that the overall consumer market in China is very bad as of today. And we believe that it couldn't be worse than today. It could be moving from a positive side, particularly when the government started to have some stimulation package and purchasing activity happening in China. We're seeing it's going to be becoming better than today. So that answer your question 1 and question 2.

As of 2023, this is actually a more complicated question, because overall speaking that you're seeing the supply and demand coming from 2 sides, both from the supply side and the demand side. And the supply side, we've seen that the supplier inventory may be increasing in Q3. However, supplier is taking action in cutting their CapEx, in cutting their future -- slowing down their future growth. And this will be balanced by market demand situation.

As of today, our market demand situation is basically impacted by a few factors, as I reported to you, the macroeconomic, including the Ukraine and Russian conflict, including global inflation issue, interest rate hiking issue, including COVID control in China issue. Although basically from a supplier point of view it is uncontrollable factor, it has to be adjusted by the external activities. See if the China COVID control situation getting better, is stimulation package getting better, then we will see some recovery. And interest rate beginning impact has already happened. How is that going to be impacted on upcoming quarter? And inflation is already pretty bad, and likely that couldn't be worse than today. However, the regional conflict between two different countries, those still continue to be a pessimistic outlook for the future. We don't know when that's going to be improved. So we still have to keep on watching all those negative factor outcomes from the next few quarters.

[Operator]

[Operator Instructions] Now the line is open to Simon Woo from Bank of America.

[Simon Woo, analyst]

Thank you, Dr. Lee. Number one question is, would you share your OEM customers memory chips inventory status. They are not really actively purchasing the chips these days, but that may suggest that there are potentially normalized chip inventory levels. So which quarter or which months do you think your customers for smartphone in the PC or even hyperscaler, so all the OEMs can say, normalized memory chip inventory internally. That's the first question. Thank you.

[Pei-Ing Lee, executive]

As I indicated that some of the customers already seeing their inventory gradually decline. But this is not the overall situation. It's a portion of the customers already had inventory adjusted. And also as a result of the price decline, many, many customers already took actions in terms of reducing their inventory. So that's already happened. So I'm seeing that the inventory side from the customer side would be even better. However, from the suppliers side, may be increasing from Q3 to Q2. But as I just also reported in the beginning of Q2, really the inventory level from the suppliers side is relatively healthy.

And as of the end of Q3, I believe even the inventory was increased, but still should be in a reasonable range. And the situation should be continued to be observed and watched out carefully at the end of Q4.

[Simon Woo, analyst]

Yes. Yes. Thank you, sir. Another question is, looking at your here the income statement, the revenue down more than 50% here, and sorry to say this, OP margin 8.3%. So if the DRAM price remains weaker and weaker for the rest of this year, how are you going to manage maybe potentially relative margin or operating loss? Or maybe one easier way is -- yes, you already mentioned CapEx costs. But how about your production CapEx, and also how to manage for the fab operation or cash flow risks if your operating income becomes negative. Sorry to ask this, but hopefully, we can hear your strategy. Thank you, sir.

[Pei-Ing Lee, executive]

Our revenue is down by 38.9%. So it's not 50% or 48%. Okay. So we don't have any plan to have any production cut, okay? That's not in our brand. Our strategy is to adjust our product portfolio. We have many different products, different customers, different sectors. We will make adjustments in between. So also, we will continue to improve our R&D in the process development and product development. So, so far we don't have any plan for production cut. And we don't see that we have an immediate need to consider any of those production cut matters. Actually shipment is decreased. And last year and a little before, our shipment is already flat. So from the output point of view in Nanya, it's not an issue compared to the market size, and our market share is small and our impact to the market balance is also relatively small.

[Simon Woo, analyst]

Yes. So that means that you are expecting maybe DRAM price recovery in maybe 2 quarters or...

[Pei-Ing Lee, executive]

Hopefully, that is -- from a analyst point of view, they are reporting that the market could be recovering in second quarter next year or second half next year. Although it potentially is possible, and it could come sooner, suppose those negative situations that I just reported to you become better sooner. And it could become even worse than those reticent if those negative factors that I just described to you prolong even longer. So the situation needs to be watched very carefully about those uncontrollable factors beyond what we can do. So I cannot give you a very precise point of when the market will be recovering.

[Operator]

Next one to ask questions is Jeff Ohlweiler from Macquarie.

[Jeffrey Ohlweiler, analyst]

First question for me. Can you give us an update on capacity? And for your 10-nanometer class capacity, where does CapEx get you as a percent this year? And where the additional TWD 20 billion plus gets you in terms of what percent of your capacity is that 10-nanometer ready by next year?

[Pei-Ing Lee, executive]

Our current capacity is around 65,000 output per month. That's not been changed much. Our CapEx is mostly to prepare our new fab as well as prepare our next-generation process and product, namely that's for 1A and 1B preparation, okay? And with the beginning of 1A and 1B, we don't see our output will be increasing substantially, due to the production adjustment and everything, the equipment down and equipment up situation, and new equipment contribution likely will not add too much on the output. And that situation may continue through most of the next year. And likely 2024, we will see some marginal output increasing as a result.

[Jeffrey Ohlweiler, analyst]

Okay. Then follow-up question. So I'd say, what percent of your capacity or how many thousand capacity can produce 1A, say, by end of this year or end of next year?

[Pei-Ing Lee, executive]

Today, we are expecting, by the end of this year, it's between 5,000 to 8,000 of 1A capacity. And hopefully by the end of next year that capacity will be slightly increased and move to 1B generation.

[Operator]

[Operator Instructions] Next one to ask questions is Julie Tsai from UBS.

[Julie Tsai, analyst]

Dr. Lee. Many of the technology-related questions have been asked by analysts. Actually, my question is quite simple. Given your earlier statement that there is a possibility of global recession ahead of us, how likely will Nanya Tech be running at loss, I'd say, previous cycle we have seen a loss happening, or do you think this time around it is a little bit different. Just want to get your perspective on this.

[Pei-Ing Lee, executive]

Julie, that's a very good question. Yes, I just reported that potentially, Nanya may be getting to a loss situation. However, Nanya's overall competitiveness and overall our ability to serve our customer, response to market situation due to our product portfolio, our market position, our basically technical service, everything, the situation of Nanya today is quite improved from, say, 10 years ago, or even as short as 7 years ago. So on the other hand though, if you look at the overall Nanya position in the market, if Nanya get into loss situation, likely there are going to be a couple of DRAM major suppliers in a very similar situation.

And the overall supplier side situation is that all the suppliers are now very, very heavily dependent on the DRAM business. All of them. And as a result, all the suppliers today are doing most of their, say, CapEx adjustment to what the market growth really needs. So this situation basically will gradually stabilize the market sooner or later. So I don't see Nanya's situation will be as bad as 10 years ago. Although we still cannot prevent Nanya from potentially getting to losing money situation instead of continuously profit-making for the last few years.

[Julie Tsai, analyst]

Understand. And Dr. Lee, just a follow-up on that. From the current data that you have on hand and visibility, which quarter is likely to be your 12th quarter in terms of the next couple of quarters ahead? What's your view on that?

[Pei-Ing Lee, executive]

Okay. There may be two potential directions to discuss on this matter. One is the ASP. The other one is bit shipment. Personally, I expect the 12 quarter was Q3 this year for the shipment. And likely, the shipment for Q4 may improve from Q3 from a shipment point of view. However, ASP may continue to come down for Q4. And as of ASP, will it continue to go down on Q1 next year, still yet to be seen. So that is what I see as of today to answer your question regarding the trough of Nanya business.

[Operator]

[Operator Instructions] Next one to ask questions, J.J. Park from JPMorgan.

[J.J. Park, analyst]

Okay, Dr. Lee, just a quick follow-up question. I mean, looking at the margin trend this quarter compared to the previous top quarter back in Q4 2000, also Q4 2019. I think the current margins were already below the previous trough level. And then I think you're guiding that the margin will continue to decline until Q4 or possibly Q1 next year. So I'm just wondering, ASP decline does not seem to be severe than the previous downturn cycle. So volume decline seems to be much severe than the previous downturn cycle. So what's the current problem? Is it mainly driven by the macro and weaker demand? Or is there any sentimental issue in the supply chain such as the price will continue to decline, so they do not buy any DRAM and hold the purchasing?

[Pei-Ing Lee, executive]

I always say the -- you're talking about margin-wise. Your question is, potentially, is it going to be worse than 2000 or 2019 margin-wise? Based on the ASP outlook, I would say there's a potential of worse in the margin. And from the market sector point of view, particularly, in terms of region of the market, I see that the China market is our key factor. Even though Nanya's shipment is around 20% to 30% shipment to Chinese customers directly.

However, indirectly, many of our customers like international customers, those customers in USA or in Europe or even in Japan, most of their production is in Canada. So indirectly, we are also hurt by those COVID shutdowns because of indirect customers -- because the customers have their manufacturing in China.

And we've also seen that our other region customers, they also have the Chinese customers as well. Basically, they are also impacted by their Chinese customer. So as a result, Nanya also impacted in this area because our customers had their very end customer in China also impacted.

[Operator]

Next one we have Simon Woo from Bank of America.

[Simon Woo, analyst]

This past Friday, U.S. government announced the new policies on the China studies. Yes, Nanya does not have any direct operation in China. But, Dr. Lee, don't you think that this can be the positive development for Nanya Tech itself if the local domestic chip makers cannot actively manufacture more advanced memory chips with the limited access for the new equipment, new chip designing process, et cetera. So you have already observed the China's efforts, right, for the new chip development, for the DRAM or NAND flash. But with the U.S. government's very arduous restrictions, do you think that it can be the positive thing for the memory chip industry and also the Nanya Tech itself?

[Pei-Ing Lee, executive]

Simon, I think from this issue, this topic, as a regard, first of all, those U.S. new restrictions to Chinese companies, the details we still need to do quite a bit of study on those details. So the outcome still needs to be studied. However, I can give you a general comment like following: Basically, the restriction is in 2 different kinds of the restrictions. One is a restriction to the DRAM makers. In this regard, the DRAM maker restriction, of course, it will favor market stability and also helping the market recovery. Now that's the impact not just to Nanya specific, but also to all the suppliers. And the second is a restriction to actually our customer, DRAM customer. And basically, in that regard, I would say that any restriction to the customer, shipment to the customer, it's going to be in a way a negative impact to the business. So again, that impacts also to all the suppliers. So U.S. restriction is actually covering both on the customer side and the DRAM maker side and which Nanya will have to do a lot more detailed study to understand how the detailed impact will be.

[Simon Woo, analyst]

Yes. Great point actually, but sorry to say this, but we don't see any meaningful OEM customers' names under the U.S. government's unverified list. If you are talking about previously known [indiscernible] list here, [ Power ADT ], et cetera, but this time, the U.S. government's public statement indicated only the 31 companies, which are mostly the chip makers [indiscernible] vendors. They don't purchase actively the chips, though.

[Pei-Ing Lee, executive]

Yes, there are some... Recently, just seen, 28 more companies were restricted, okay? So we still have to study those 28 companies being restricted.

[Sandra Liu, executive]

[Operator Instructions] We have first question that comes from [ Tae Mill of CGI Company ]. Hello, [ Tae Mill ] Your line is open now. You may ask your question now. We don't think we can hear you, and we will move on to the next question from SinoPac, Stanley. Stanley, your line is open now. Hello, Stanley? Please unmute your microphone.

[Pei-Ing Lee, executive]

Stanley, please unmute your microphone.

[Sandra Liu, executive]

And we will move on to the instant message question.

[Pei-Ing Lee, executive]

Okay.

[Sandra Liu, executive]

The first question comes from [indiscernible] Joyce.

[Pei-Ing Lee, executive]

Okay, Joyce. Your question is, do you see higher interest rate grow globally as a challenge for your business. The answer is, we don't see higher interest rate as a challenge. Higher interest rate may slow down macroeconomic growth, but that will take time to make impact. Now higher interest rates. From the financial operation point of view, Nanya is now cash positive. So we don't have any financial loan, interest-bearing loan. So it's not an issue for Nanya from our business operations side.

And your second question, is the strong U.S. dollar positive or negative for your business. Strong U.S. dollar actually currently is helping Nanya in terms of our overall operation.

Your number 3 question is, do you see European energy crisis as a problem for your business. Of course, European energy crisis has impact on general consumer side. However, for Nanya, Europe operation currently still remains healthy. It's actually as healthy as before the Ukraine and Russia conflict. So at this time, we don't see European energy crisis impact Nanya business.

Number four, do you expect your company earnings in July to December 2022 calendar year Q3 and Q4 to be lower or higher than July to December 2021. This, I don't remember July to December. Likely, 2022 will be worse than 2021. And by how much, this -- actually, 2021 July to December is on a peak. So that from the earnings and margin point of view likely is going to be a pretty substantial difference.

Okay. Now the next question is from [ Richa Shaw ] from Fubon Securities. Your first question from you, Richa, is 4Q 2022 shipment up or down. As I just reported just now that we are expecting Q4 shipment has a good opportunity of going up. And your second question is whether 4Q utilization is planned to be reduced. We don't have any plan to reduce our utilization.

And then the next question is from [ UII Capital, Mr. Chu ]. You say expected every quarter DRAM contract and stock price trend, when will be the ASP cost. And in this regard, we're seeing stock market price being stabilized. It's been stabilized for the last quarter. And from the contract pricing point of view, last quarter the contract price came down, and likely Q4 or the contract price will come down again. However, Nanya, specifically, we like to work hard for the price decline margin to narrow down. And we are actually expecting the price decline margin to come smaller.

The next question is from the SinoPac, Stanley. Your question is, Nanya 1A and 1B, the production schedule and implementation schedule. And the customer will reduce their demand to introduce Nanya 1A and 1B? And I just reported our 1A situation is now in customer sample. And 1B is now in a product piloting. And we're seeing the customers are actually pretty proactive and pretty encouraging us to continue to move on our 1A and 1B product. And your next question is 2023, 1A and 1B, the production ratio. And I just reported just now for the Macquarie question that we will gradually introduce 1A and 1B. However, the production ratio will not be impacting Nanya output significantly in 2023, and likely will have some impact on 2024.

And your second question is our peak growth. And as I say that our 2022 and also 2021 and 2020, our peak growth is not positive. As a matter of fact, it's 2 flat years, followed by a down year for peak growth in 2022. And 2023, we've seen that it couldn't be worse than that. Likely, 2023 will be slightly improved from 2022.

And your next question is, considering our supplier is gradually retreating from the legacy specialty market. And we've seen that the Chinese supplier is now also moving to DDR3, and is that going to impact Nanya's situation? If our price competition will be heavier? And what is Nanya's position on that. And here's the observation of that issue that the major supplier is gradually getting out with Chinese supplier is coming in. However, we see the major suppliers still have far more competitive in terms of their volume and price competitive point of view compared to the Chinese suppliers, okay? So we're still seeing that the specialty market will be remaining to the supplier and still going to be a very suitable market for Nanya. And we don't expect that the price competition will be as keen as the general market. We continue to expect this market still going to be better.

And also, in terms of this market wise, Nanya will continue to improve our market flexibility by introducing more product portfolio, by instituting into more customer base, aiding our flexibility, aiding our competitiveness.

So that's basically all the questions from the web, right?

[Sandra Liu, executive]

Thank you. Thank you for your questions. You may close the conference call today, and thank you. That concludes our conference call today. Please be advised that a replay of the conference will be accessible within 3 hours from now, which will be available through Nanya Technology's website, www.nanya.com. Hope you will join us again next quarter and coming quarters. Thank you for your participation and have a wonderful day, and you may disconnect now.

[Pei-Ing Lee, executive]

Thank you, and goodbye.