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Novatek Microelectronics Corp
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Good afternoon. Welcome to Novatek's 2020 third quarter online investor conference. This is David Chen, Vice President and Company's spokesperson. I will be the host for today's conference. Hope everyone is doing well and remaining healthy despite the challenging pandemic outbreak. To ward the spread of the coronavirus, we have switched our investor conference to live audio webcast. Please be reminded that you can still send your question to us by text.
The agenda for today's event will be as follows. First, I'll be reporting Novatek's third quarter results in English. After that, our Vice Chairman, Mr. Steve Wang, will provide more details on our third quarter results and Q4 guidance. Following that will be our Q&A session. As mentioned earlier, if you have questions, you can send them to us by text. Our IR Director, Mr. Tony, will be processing and reading out the investor questions one at a time, both in Chinese and English. And our Vice Chairman and our CFO and myself will try to answer all your questions in Chinese and will be later translated into English.
As usual, please take a look at our safe harbor notice.
So let's start with our 2020 Q3 financial highlights. Our net sales in Q3 was $22 billion, up QoQ 18.22% from $18.61 billion, YoY up 32.57% from $16.6 billion in 2019. Net gross profit in Q3 was $7.58 billion, up 21.66% from last quarter $6.23 billion and up 47% from $5.16 billion in Q3 last year.
Our gross margin in Q3 was 34.45%, up 0.97 percentage points QoQ from 33.48%; YoY, up 3.38 percentage point from 31.07%.
Operating income was $4.26 billion, up QoQ, 34.64% from $3.17 billion; YoY up 74.14% from $2.45 billion. Q3 net income was $3.4 billion, up QoQ 33.18% from $2.56 billion; YoY, up 67.69% from $2.03 billion. Overall, Q3 EPS was $5.60 versus last quarter, $4.20 and, last year, $3.34.
Let's look at our cash and cash equivalent. In Q3, it was $16.35 billion, decreased QoQ by 26.2% from $22.15 billion; YoY decreased by 10.26% from $18.22 billion. Account receivable, Q3 was $15.35 billion, up QoQ 17.59% from $13.05 billion and YoY up 10.17% from $13.93 billion. Our inventory level, Q3 was $7.67 billion; QoQ, down 18.85% from $ 9.46 billion; YoY, up 15.14% from $6.67 billion.
Short-term loans in Q3 was 0. The overall Q3 384 equivalent large display driver unit shipment was 851 million and is down QoQ 2.3% from 871 million and YoY up 6.78% from 797 million.
Next, let's look at our 2 major product line sales breakdown. SoC in Q3 was $7.75 billion, up Q-on-Q 25.37% from $6.18 billion; and up 46.66% from $5.28 billion in 2019. Display driver in Q3 was $14.27 billion, up QoQ 15.61% from $12.4 billion and up 26.13% from $11.31 billion in 2019.
Next is our October sales number. Our October net sales is $7.57 billion, month-on-month down 5.1% and YoY up 34.3%. Our SoC net sales is $2.39 billion, down month-on-month, 13%, but YoY up 36.73%. Driver IC is $5.30 billion, down month-on-month 2.89%, YoY up 31.22%.
Let's look at our 2020 monthly sales number. Our monthly sales in 2020 has outperformed 2019. Year-to-date, January to October net sales comes down to $65.07 billion, YoY up 22% from $53.48 billion in 2019.
Next, let's look at our first 3 quarters' income statement. Looking at net sales for the first 3 quarters is $57.5 billion, up 20.18% from $47.85 billion. Gross profit the first 3 quarters is $19.42 billion, up $27.04 billion -- 27.04% from $15.29 billion.
Operating expense, first 3 quarters $9.39 billion, up 19.3% from $7.87 billion. Operating income the first 3 quarters is $10 billion, up 35.25% from $7.4 billion.
Net nonoperating, the first 3 quarters, a loss of $29.87 million, whereas last year same period, there was a gain of $167.98 million.
Looking at net income. First 3 quarters is $8.17 billion, up 33.43% from $6.13 billion. The EPS for the first 3 quarters comes down to $13.43 versus last year $10.07.
Now let's look at our Q3 YoY numbers. Net sales, Q3 this year, $22 billion, up 32.57% from $16.6 billion last year. Gross profit, $7.58 billion, up 47.01% from $5.16 billion. The operating expense, third quarter, $3.3 billion, up 22.48% from $2.7 billion. Operating income third quarter is $4.26 billion, up 74.14% from $2.45 billion. The net bond offering, Q3 is the loss of $116.6 million compared to last year, a gain of $70.65 million. Net income, Q3 $3.4 billion, up 67.69% from $2.03 billion. The overall EPS for Q3, $5.60 versus last year's $3.34.
Now let's look at the Q3 QoQ numbers. Net sales Q3 $22 billion, up 18.22% from $18.6 billion. The operating expense, $3.3 billion, up 8.24% from $3.06 billion. The operating income, $4.26 billion, up 34.64% from $3.16 billion. The net nonoperating in Q3 is a loss of $116.6 million versus last quarter a loss of $43.83 million. The net income for Q3 of $3.4 billion, up 33.18% from $2.56 billion. Q3 EPS, $5.60 versus last quarter, $4.20.
Now let's look at the sales breakdown by product. As you can see that our SoC accounts for 35% of our total sales, whereas the Driver line accounts for 65%. And you can see that for this year, from Q1, Q2, Q3, we have the positive growth for each quarter. In Q1, it was 2%; Q2, QoQ, there was a 10%; and for Q3, there's an 18% growth.
Finally, let's look at some of our key financial numbers. Cash and cash equivalents comes out to $16.35 billion. Since there's no short-term loans, our net cash position comes out to $16.35 billion, QoQ change of $4.68 billion. Note that account receivable comes down to $15.35 billion; QoQ change of $2.295 billion. Inventory levels Q3 comes down to $7.67 billion, QoQ down by $1.78 billion.
Now I'll turn over the call to our Vice Chairman, Mr. Steve Wang to provide us more details on Q3 results and Q4 guidance. [Foreign Language]
[Foreign Language]
Okay. Let's -- now let me translate that into English. What just Steve mentioned was that the Q3 revenue, that was a record high, $22 billion. That was a record high for Novatek. The growth in Q3 was mainly driven by seasonality and strong SoC-related demand. And the strong IT-related demand brought by the pandemic also contributed to the growth in Q3. And we also see that the early pooling for the October 1 holiday for the mobile-related products also contributed to the growth in Q3 revenue. And the overall -- actually the overall revenue exceeded our earlier guidance because of the above 3 reasons.
And let's look at the Q3 margins. Q3 margin was 34.45%, up 0.97 percentage point QoQ, and this is mainly due to better and favorable product mix. And of course, this is also better than our earlier guidance.
Now looking at the Q4 outlook. The global pandemic is still far from over and is still spreading in various countries. Demand from work from home, learn from home, online entertainment, et cetera, is still strong. But we see the demand for notebooks, tablets, gaming monitors is maintaining its strength in Q4 and also expecting to maintain its momentum till Q1 next year. And we also see that the various events for holiday season promotion in Q4 like [ Devils 11 ] in China, Thanksgiving, Black Saturday, Christmas, New Year in Europe, North America, are expecting to boost for more demand. So based on the above outlook, we are expecting better than seasonality demand.
So our guidance for Q4 is as follows. The revenue for Q4, we are guiding for $21.8 billion to $22.5 billion, and this is based on the exchange rate of 1 to 2 point -- $28.80 so 1 -- $28.8. And the gross margin, we are guiding for 33% to 36% range. And this is mainly due to the better product mix and also because of the price adjustment. Operating margins, we're guiding for 17.5% to 20.5% range. So operating margin, 17.5% to 20.5% range, and that will be the outlook and the guidance for Q4.
Thank you, Steve, for the Q4 guidance.
And next, we'll move on to the Q&A session. And please be reminded to send in your question, and Tony will receive them and process them and deliver those questions one by one.
[Foreign Language]
[Foreign Language]
Okay. The question was ...
The first question is about congratulation to your very strong third quarter results in terms of both revenue, gross margin and net profit. Your gross margin of 34.5% continue to rise quarter-over-quarter and extending your guidance of 31.5% to 33.5%. Just wonder if you have raised any price for your product as well as could you provide amount for quarter 3 versus the first 2 quarters.
Okay. The better margin was mainly due to 2 reasons, as I mentioned earlier. First is the product mix. And the second is because some of the product, we did make some pricing adjustments, and that has contributed to the margin. And regarding the NRE, the Q3 NRE is around TWD 49 million versus last quarter it was TWD 186 million.
[Foreign Language]
[Foreign Language]
The 2 questions is about strong growth of SoC quarter 3, which was 25% quarter-over-quarter. Could you provide more color in terms of individual product line with SoC in terms of quarter-over-quarter growth.
The strong growth in the SoC lines actually contributed by various product. But the main product that contributed more is the TV SOC. And then also the surveillance SoC that really contributed to the growth in the SoC line.
[Foreign Language]
[Foreign Language]
The second question is about the driver business in third quarter. Just wonder if you can give the quarter-over-quarter growth for both large-sized drivers as well as the small, medium-sized driver. Also given your monthly data, also wonder why your large-sized driver shipment were down quarter-over-quarter in quarter 3.
Okay. The Q3 driver IC line, we've seen that the small and medium-sized driver unit shipment has grown up QoQ, but the large panel driver is kind of flattish. But if you look at the overall current large panel driver space, there is more adoption of gateless or [ gate on a rate ]. And that has reduced the demand for gate drivers. The source driver unit shipment actually is still maintaining its growth. But as you know, the source driver ASP is much higher than the gate driver. So that's why I see that kind of the revenue-wise, and ASP-wise was different in that area.
Also how about the OLED and the TDDI shipment quarter 3 versus quarter 2?
In Q3, we have seen that the TDDI unit shipment actually sequentially from QoQ has gone up. But as for the OLED, Q3 is kind of flat QoQ.
[Foreign Language]
[Foreign Language]
The next question is about the inventory dollar at the end of quarter 3. The amount came down about 20% quarter-over-quarter. Just wonder what's the major reason for this sequential decline.
Well, the decline in the inventory level was mainly due to 2 reasons. One is due to the holiday season pull-in in October first holiday. So there's a pull-in from our customer side. And the second thing is -- the second reason is that the wafer supply is relatively tight, and it takes a while for us to place order for the wafer to meet the demand.
[Foreign Language]
[Foreign Language]
The next question is about the nonoperating loss in quarter 3. I just wonder what the major reason to cause the larger nonoperating loss in quarter 3 versus the second quarter.
The main reason is basically due to the NT dollar appreciation in Q3.
[Foreign Language]
[Foreign Language]
Now the -- although the question is about the business sequential growth for the 3 major business lines fort quarter 4 versus quarter 3.
Well, regarding the Q4 revenue, the guidance, we are seeing that the SoC for the Q4, the revenue will go down slightly, and it's basically because the demand is very strong, but we don't have enough time -- or the lead time is not enough for us to meet the strong demand in Q4. So basically, the demand will be extended to Q1. We'll be able to supply them or ship those products in Q1. So some of those won't be able to meet the demand in Q4. So it would be extended to Q1.
And as for the large panel driver, QoQ, it will be a little bit -- it will be higher compared to Q3. The growth will be -- among the 3 product lines, I think the large panel driver will grow stronger than the other 2 lines. And as for the small and medium-sized driver, Q4 will move up slightly. So it will increase slightly.
[Foreign Language]
[Foreign Language]
In terms of auto, [indiscernible] large panel driver will outperform the rest. So the first question is about the pricing and the margins. So the first question is whether the 8-inch [indiscernible] will raise price again in quarter 4 or first quarter next year and also how about on the packaging side.
Okay. The overall foundry gating is very tight at this moment. So what we are doing is we are working with our customer and asking them for support to improve our competitiveness and secure the capacity from our foundry players or even the back end. So in that case, there's a possibility that there will be some [indiscernible] adjustment in order to secure the capacity.
And I also wonder any impact to your margin in quarter 4 or first quarter next year on a large size driver on the back of all these costs and the price adjustment.
Well, we are working closely with our customer, and they also understand the situation. So what we are doing is we try to pass on the cost to our customers. And the sole purpose is to secure more capacity.
[Foreign Language]
[Foreign Language]
Okay. The second question on the large size driver is about the foundry supply. I just wonder the supply situation for next year as well as some comments on your individual foundry supply and also your dynamic or your diversification into the 12-inch pad for your large-size driver.
As mentioned earlier, the 8-inch foundry capacity remains very tight. And we -- basically, the overall supply is pretty much settled for next year. But we're also working with a new supplier, hopefully, to increase more supply on the 8-inch side. And as for the 12-inch, as you know, most of our large panel drivers are adopting the 8-inch. It's still basically still an 8-inch. But we have been working on the 12-inch, and there will be some contribution from the 12-inch also moving forward.
[Foreign Language]
[Foreign Language]
Okay. The next question is about the outsourcing from Korea. Recently, we heard that Samsung has kind of reduced some of its payload capacity for internal usage. Just wonder if that will impact the outsourcing [ trail ] from a Korean customer. And also wonder if you already achieved around market share of 30%. Do you have any long-term market share target to further expand your position?
Regarding the Korean panel maker outsourcing trend, what we are seeing now is that the trend is still ongoing, and it is maintaining that kind of direction. But whether there will be any further change in the future, it's hard for us to give a comment on that. But what we're seeing is that like, for example, Samsung, the outsourcing percentage, I mean, continue to increase. That's what we see at this moment.
Well, as to the -- our market share for the large size driver, currently, we are pretty close to 30% global market share. But as to whether we need to increase that market share, it depends on supply and demand. So we'll see how things turn out. But basically for us, we'll continue to try our best to gain more share as long as there is enough supply and also able to maintain our margin.
[Foreign Language]
[Foreign Language]
Now we shift the gear to the small, medium-size driver. The first question is about the TDDI pricing. Just wonder if you have raised the price for TDDI in quarter 3 is for all product line or mainly for HD and also whether the packaging costs also increased in quarter 4.
As mentioned earlier, the 12-inch for the small-sized driver capacity is also very tight. So basically, if there is a price increase in the foundry side, and we'll work very closely with our customer and also we'll make a price adjustment accordingly. I think the main purpose, as mentioned earlier, is to-co work with our customer and try our best to secure the capacity. I think that's the most important thing. And the other thing is about the back end. The back end-price has also gone up recently.
Then also wonder if we -- there's another round of [indiscernible] cost increase in quarter 4 or next quarter -- or first quarter next year. If that's the case, will you also raise your TDDI pricing?
Well, this is the same, as I mentioned earlier, same question that you asked. Basically, when the foundry supply is tight, we have to compete for the capacity. And in order to compete, we have to work very closely with our customers. And our customers also understand the situation. Basically, based on the current situation, most of our customers willing to work with us in order to increase the pricing, to secure the capacity. So in the end, we will have to adjust our pricing also and which our customers definitely understand that.
Also, I wonder if -- can you also share with some foundry supply outlook for next year and also any impact to our margin if you move to some of the mentioned now for your TDDI product next year?
Well, the reason we are moving to more advanced [ node ], basically, the main reason is for the performance reasons. So because there are some specifications that you need to go to more advanced nodes. Otherwise, you can meet that kind of specification, for example, speed or consumption, et cetera. So as we move to more advanced nodes, I think the margin will maintain similar margin because the main reason is not for margin improvement. It's more for the performance reason.
[Foreign Language]
[Foreign Language]
The second question on the small size driver is about the market, TDDI market. Just wonder, last -- you mentioned last year, market size was about $600 million. Just wonder if you have any projection for this year. And any -- also share the color about the trend on HD versus 4 HD?
Well, the -- our projection for this year, TDDI is around $700 million. And currently, if you look at Q3, we've seen that the HD is strong -- demand is stronger than 4 HD in Q3. But as we move towards November and December, we are seeing this demand pick up on the full HD even on the high frame rate, 120 hertz. So they're seeing a trend of moving higher up.
Yes. [Foreign Language] Sorry. Can you also share your view our market share on TDDI?
Well, at this moment, we are seeing the -- there's still a pretty much a shortage in the TDDI market. So if we are able to secure more capacity of course, we'd love to increase our share. And as for the trend for next year, we are seeing that the 5G, even though now it's kind of ex China market, it's kind of slow. But basically, we still believe that next year, the 5G trend will continue to take momentum. And in that case, that will drive the full HD and the high frame rate of demand. And the other thing we're also seeing, the flexible OLED next year will be better than this year. That's what we are expecting.
Before we move into OLED, also wonder you can ship -- give some color about the competitiveness, particularly given the recent MediaTek disposal of [indiscernible] .
Well, we don't see much difference at this moment. I think the main thing is that we need to ensure that we can fulfill our customer needs and, in turn, maintain our competitiveness. I think that's the main thing we need to do. As for the rest, it's difficult for us to predict or comments on that.
[Foreign Language]
[Foreign Language]
Also, the next question is about the OLED driver. I wonder what's the trend for your quarter shipment in quarter 4 versus first quarter. Also wonder when you expect to see more meaningful quarter-over-quarter pickup for your OLED driver shipments.
Regarding the OLED shipment, what we are expecting is that the -- compared to Q3, Q4 will be down slightly. And at this moment, we are seeing that a lot of design-in activities going on. And so we're expecting that in next year Q1, a lot of these new design-ins will go into mass production. And also, we are seeing that the flexible OLED should have some recovery from Q1 next year.
Then also a couple of questions about any capability to potentially work with Samsung as the largest OLED [indiscernible] supplier? And also do you provide an update for your OLED TDDI product?
Well, for Novatek as the driver supplier it's our job to try to penetrate all the customers, and that's our goal. So there's always a possibility to work with everyone and all of them. That's our goal.
And as to the OLED TDDI, we are working very closely with our panel maker and will depend on the progress. So it's very difficult for us to comment as to the schedule. But so far, for Novatek, we already have our related technology rating. And so we are just working closely with our customer and depends on the progress we'll work along with them.
[Foreign Language]
[Foreign Language]
The next question is about the fingerprint. Just wondered on the schedule of the mass production timetable for your under-display OLED fingerprint, as well as the large area and also the integrated products such as FTDDI schedule.
Well, our under display of fingerprint was supposed to go into mass production but due to the delay on our customer side. So we basically need to design-in to new customers. So that has been delayed. So the new design-in should be ready soon. So we are expecting the ramp-up of the mass production will start from Q2 next year in the new customer side.
As for the large area OLED fingerprint, as I mentioned earlier, this will depend on the panel maintenance side, depends on the progress. For example, for the large area, you need to build in the dot-sensor dial onto the panel. So it depends on the progress on the panel maker's side. But as for our FTDDI, it is basically already ready, and we are just waiting for our customers' progress.
Lastly, can you also give some color about your competitiveness versus your major competitor on [ SPR ], such as [indiscernible] .
Well, it's hard for us to comment on our peers or competitors because the only thing we know is all others -- our -- I mean, product is ready. As for the others, it's hard for us to comment on them.
[Foreign Language]
[Foreign Language]
Also about some new product, [indiscernible] could you also provide some update on your available OLED driver as well as mini LED driver? And could you also provide some color in terms of either shipment or revenue contribution for next year?
Regarding our OLED variable driver IC, basically, it's already launched. And we are now designing in to various customer sites. So it's been very successful, and so far so good. So we are expecting it to go to mass production Q2 next year. And so far, I think the -- initially, the revenue contribution will not be that big. But the good news is that it has -- it is time to get into mass production of Q2. So far, everything is moving on very smoothly.
As to the mini LED, we have product for both backlight and display, and both of them are also getting to mass production very soon. But again, the revenue contribution at this moment is not significant.
[Foreign Language]
[Foreign Language]
We are shifting to the SoC product. The first question is about TV SoC. First is about the quarter-over-quarter growth in quarter 4. And also given the strong growth over the past couple of quarters, wonder if you have seen any inventory issues on the TV SoC.
Well, as mentioned earlier, the TV SoC demand is still very strong. But because of the short lead time, it's very difficult for us to fulfill those shipments in Q4, but it will be fulfilled in Q1. And currently, we don't think there is any inventory issues. So I think the inventory is very healthy. And we're also seeing that some of our customers, they're also gaining share in the market. So basically, all our TV SoC, we do believe the current situation is pretty healthy.
And can you also give some color about the outlook for next year? Last time, I think you mentioned about you are pretty positive for the outlook. And also wonder if there is a tight supply for your SoC foundry.
Well, yes, I mean the foundry for the advanced nodes, it is tight. I mean, everybody knows that. It's very tight. But we didn't plan on that. So currently, we've been working with our partner, and it is kind of a long-term relationship. So basically, what we see now is we should be able to fulfill and able to get the supply we need to fulfill the supply to our customers. So it shouldn't be a problem for us next year?
And also, how about your market share among your major customers in Korea, China or other areas, other regions?
Well, our major customers are from Korea, China and Europe. So far, a lot of the design activities that we are moving forward, it's pretty good. So we do have some expectations for next year.
[Foreign Language]
[Foreign Language]
The next question is about [indiscernible] SoC. You see the management just mention about this very strong in quarter 3. I just wondered the sequential growth to the quarter 4 and also provide an update on new customers and high-tier is the major player in the SoC market and you might benefit. Could you also share some initial outlook for next year?
The surveillance SoC market, the demand is really good and we are seeing strong demand in that market. So we're expecting Q4 to be better than Q3 in terms of shipments. But because a lot of those orders are rush orders basically, so we don't have enough lead time to really fulfill the supply. So we are trying our best to pull in at this moment. But, basically, we can fulfill the supply -- the demand 100%. So we are working on it. And as to 2021, the OLED demand also looks good. And recently, we are seeing a lot of inquiry from various customers asking for solution. So we do pretty positive next year.
[Foreign Language]
[Foreign Language]
Next question is about power of PMIC. I wonder what's the sequential growth outlook for quarter 4. And also, there's -- whether there's another round of the foundry cost increase as well as the price adjustment for your power product in quarter 4 or next -- first quarter next year.
Well, as everybody knows that the PMIC or the power IC basically mostly fabricated in 8-inch. Currently, the 8-inch supply is very tight. And we are seeing the pricing for the wafer price has also gone up. So we also did some ASP adjustments, accordingly, to reflect the cost. And they also, on the back-end side, for the [ pop ] power, the packaging and testing costs also went up. So that's the supply side. Due to the tightness in the supply, so we are expecting Q4 to be roughly flat compared to Q3.
Also, can you provide some outlook for your power business next year, given your strong performance this year? And would you also benefit from this [indiscernible] between the U.S., China for this business?
Well, the main efforts that we have to do is to increase the wafer supply for our -- the PMIC product line. If we're able to increase that, of course, that will bring in more business. And clearly, we're working on it. I do believe there will be some progress.
[Foreign Language]
[Foreign Language]
Last question on the [indiscernible] about TCAM. Wonder what the sequential growth into quarter 4. And also, how about the [indiscernible] supply situation for TCAM? And also if there is a close push-up on the foundry side will you also increased your selling price on TCAM?
Well, the TCAM] product basically it's fabricated both in 8-inch and 12-inch. And as you can see that the 8-inch is much tighter than 12-inch. So basically, we are trying our best to secure more capacity. But based on that, our Q4 revenue on the TCAM side, we are expecting it to increase slightly. And as I mentioned, because of the tightness, the cost for the foundry or the packaging also going up. So we are also planning to pass on the cost to a customer.
Now could you also share the initial [indiscernible] outlook for the next year as well as any plan for the new interface to IT, given the recent SoC plan we heard from your peers in Taiwan?
Well, as you know, the TCAM actually -- it's actually related to the panel. As the panel business increases, of course, demand for TCAM will also increase. So basically, we do see that the old TCAM should grow next year. And at this moment, there's a lot of new interface. We have a lot of plans working on various different interface.
[Foreign Language]
[Foreign Language]
Okay There's some also other questions, the first one is about the impact from one major customer in China. Just wonder what the impact to the overall business from quarter 4. And have you filed an application? And what's the basis for your application?
Well, the impact is relatively small because the reason is because we have other customers because the demand is actually redistributed. So basically, the impact is not that big. And as for the license approval, we already submitted our license application to [ BIS ] and we are now waiting for the final approval.
[Foreign Language]
[Foreign Language]
And the next question's about your gross margin trend. You have delivered sequential growth and also post record gross margin over the past couple of quarters. Just wonder if you can maintain the trend into the next year and also can provide some [ salt ] for your NRE and for next year.
Well, as a design house, I mean, our major goal is to continuously improve our margin to a reasonable level. And of course, the best of -- the one thing that's more important than the margin is how to develop more value-added products to our customers so that, in turn, we can improve our margin. So that's our major goal.
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Okay. The next question is about some initial -- for first quarter, given your strong momentum into quarter 4. Do you expect to see some inventory adjustment for the first quarter? Or what's your view on that?
Well, we don't have a Q1 number at this point. But looking at the inventory level, we are not that worried about the inventory level. So far, it's pretty healthy. But as you know, the pandemic is still not contained yet, and there's still a lot of variables. So I think it will be more appropriate -- it will be easier for us to look at the outlook in January. I think that will be the best time to look at it.
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[Foreign Language]
Okay. Senior management have mentioned about some comment about your individual lines and outlook into the next year, most of that are staying pretty positive. One of the key concern has been on the foundry supply side. Could you also provide more color on the OLED driver? Can the shipment grow year-over-year in 2001 (sic) [2021[ versus 2020?
Well, we do expect OLED to recover in Q2 next year. But no matter what, I mean, as long as there's demand for mobile from smartphone, it will be the display. So the display can be either a TDDI or for LCD display or OLED. It doesn't matter. As long as there is the demand for display, we will supply the solution for them. But basically, we do expect OLED to recover Q2 next year.
[Foreign Language]
[Foreign Language]
Okay. I'm just wondering if you have pretty positive outlook across your product lines. Just wonder if you can provide an order in terms of year-over-year growth for next year.
Well, I think the main job that we need to for next year is to try to secure more capacity. And so that's our main job. But as to the -- which line will grow faster, it's hard to tell at this moment. It's still too early.
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Congratulations to your really strong momentum in 2020. Just wondered if you will maintain your payout ratio similar to your past few years.
Well, as you can see that for the past many years, Novatek has been maintaining our payout ratio as a relatively high payout ratio, more than 80%. So I think so far, there is no change in the policy. But as to exactly how much payout ratio, it will depend on -- we have to wait for the Board to decide for the precise number. But in general, the policy, there is no change in the policy.
There are only a few minutes left. So I don't know whether there's any more questions. Maybe one more question. If there's any question, do let us know.
Okay. Since there is no more questions, we pretty much covered most of them. So thank you so much for taking part in this Q3 investor conference. I wish you all the best. Thank you so much.
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