AU Optronics Corp. (AUO) CEO Paul Peng on Q1 2021 Results - Earnings Call Transcript

AU Optronics Corporation (OTC:AUO) Q1 2021 Earnings Conference Call April 29, 2021 2:00 AM ET

Company Participants

Julia Chao - IR

Paul Peng - Chairman and CEO

Frank Ko - President and COO

James Chen - Senior VP of the Display Business

Benjamin Tseng - CFO

Conference Call Participants

Jerry Su - Crédit Suisse

Arthur Lai - Citigroup

Lisa Chen - Yuanta Securities

Operator

Welcome to AU Optronics First Quarter 2021 Results Conference Call. [Operator Instructions]

Now I would like to turn over the conference to Ms. Julia Chao of AUO's Department.

Julia Chao

Good afternoon, ladies and gentlemen. This is AUO's IR Officer, Julia Chao. On behalf of the company, I would like to welcome you to participate in our first quarter results conference call.

I'm joined by 4 executives. Mr. Paul Peng, Chairman and CEO; Mr. Frank Ko, President and COO; Mr. James Chen, Senior VP of the Display Business; and Mr.

Benjamin Tseng, our CFO.

The agenda of today is as follows. First of all, our CFO will go over our first quarter results and provide you with our guidance for Q2. And then our Chairman will have an opening remark. After that, we will proceed with questions and answers. We have collected questions before the meeting.

For the first part of the Q&A session, we will address these questions. Afterwards, if there are still more questions, we will open the line to take your questions. So that was the agenda.

Now before I turn over to Ben, I would like to remind you that all forward-looking statements contain risks and uncertainties. Please spend some time to read the safe harbor notice on Slide #2.

Ben, please.

Benjamin Tseng

Good afternoon. I would like to share with you our Q1 results. Overall, during the quarter, our operations were affected by a stronger NTD and component shortage, causing a drop in our area shipment. However, the stay-at-home economy momentum persisted, helping such a strong demand for TV and IT products. With ASP increases and our product mix optimization efforts, we achieved further improvements in the results.

During the quarter, net sales came in at TWD 82.9 billion, up by TWD 2.4 billion Q-o-Q. Gross profit improved to nearly TWD 18.3 billion. OP profit was TWD 12 billion. Net profit attributable to owners of the company, TWD 11.8 billion. EBITDA margin was 24.8%.

Balance sheet. At the end of Q1, cash was TWD 103.8 billion, up by TWD 13.5 billion. Debt was TWD 115.6 billion, down slightly by TWD 1.2 billion Q-o-Q. Inventory turnover was 39 days, up by 3 days, mainly due to component supply tightness. Also gearing ratio continued to drop, standing at 5.8%.

Cash flow. We generated from operating activities, TWD 21 billion. CapEx was TWD 3.3 billion. We made a debt repayment of TWD 2.3 billion.

Next slide, revenue breakdown. On a Q-o-Q basis, the degree of change was quite small. Each segment either lost or gain 1 percentage point Q-o-Q. Our priority is to overcome the constraints of component supply to meet the shipment holder of -- shipment demand of our customers.

Next slide, display revenue breakdown by size. Similarly, there wasn't much change quarter-on-quarter. Each segment either gained or lost 1 percentage point.

Shipments and ASP by area, as mentioned, due to component supply shortage, area shipment lowered by 6.3% Q-o-Q, but ASP increased by 2.7% Q-o-Q, which reflected the strong demand and a tight supply.

For our Q2 guidance, we expect that component supply will remain tight for Q2, but we will work our best to adjust our product mix to alleviate the impact. And we hope that area shipment will be up by low single-digit percentage Q-o-Q. Blended ASP denominated in the dollar is expected to be up by low teens percentage Q-o-Q, with solid demand for various applications. Q2 loading rates are expected to be maintained at high levels.

That was our update on Q1 results and guidance for Q2. Before we proceed with Q&A session, we would have Paul to have an opening remark.

Paul Peng

Ladies and gentlemen, good afternoon. This is Paul. Q1 traditionally is a slower season, but if you look at our revenues and our shipments, thanks to the strong stay-at-home demand, we still deliver strong performance for the first quarter.

Due to fewer working days and component supply tightness, our area shipment lowered slightly Q-o-Q. However, with panel supply shortage in the industry, product ASP increase was bigger than expected, which helped our revenue to grow 3% Q-o-Q, and even by 55% Y-o-Y, posting a new high since the third quarter of 2017.

For the first quarter, we reported OP profit of TWD 12 billion, returning to the TWD 10 billion New Taiwan dollar level for a single quarter.

In terms of balance sheet, given the component supply constraints and price increases, our inventory value increased. Inventory turnover rose by 3 days from the previous quarter. We will push for improvements in the inventory management and to make inventory level healthier.

On the back of the profit increase, we saw an increase in our cash position. Gearing ratio was very low at 5.8% in Q1 as a result.

Looking ahead at the second quarter, at the moment, demand still is very strong. We have all the visibility up all the way through the end of this year. As for the longer horizon, what we can say is that there is a big change happening. In the past, around October or November, we finalized the procurement plans of our customers. But this year, everything is happening ahead of time.

Customers are already coming to us to talk about supply availability. This shows that supply remains to be quite tight. For AUO, starting from the middle of last year, we are fully loaded. We have been fully loaded. And up until now, we still cannot fulfill every order that customer has for us.

Some of our fabs are undergoing annual maintenance at the moment. Although we had delayed annual maintenance in Q1, but in Q2, we still have to do the maintenance. So for Q2, we think that supply will likely still be quite tight across various applications and size segments. As a result, panel ASP may still be on the rise.

Under such market circumstances, as the panel supply constraints have been lasting for more -- nearly a year, I think investors may be interested in knowing whether there's some overbooking happening and how long the short supply would last.

I will try to answer these 2 questions because I think undersupply is quite severe at the moment. Some customers have a shortfall of 10% or even 30%. The situation varies across various companies.

We think double booking may happen maybe there. But based on the past 2 quarters, we don't see that as a big issue because, since the pandemic started, governments around the world started to push for digital transformation, especially promoting digital education.

Based on our observation, we think developing countries are the most aggressive. They are betting on digital education transformation in hopes of catching up with the developed countries. And the public tender projects could be quite still from -- with various countries. They may be asking for millions or even tens of millions of notebooks or desktop computers. Sometimes, we get repeated quotation requests from various customers.

But ultimately, we will know which exactly tender project they were asking for, and then we would make adjustments. So the issue isn't such a big problem for us.

Because of the strong demand, inventory levels tend to be lower than normal. And we think if the pandemic proceeds, especially when there have been some ups and downs in the recent days, the new lifestyles have already taken shape, and the stay-at-home economy fad will continue to play out and boost relevant applications and demand.

Currently, the shortage in raw materials or components was -- is quite severe. It is especially so for IC, glass, PC, boards, CCLs or even packaging materials. And on top of that, we are facing rises in upstream material prices and transportation costs. Because of these impacts, some capacities may be rendered invalid.

Even if there will be some additional, some little new capacity coming online this year or some competitors delaying their fab downsizing plans, they may not be able to ramp up their capacity because of the raw material supply tightness. That is why we don't think that the first question about overbooking would be a big problem. We think it should still be manageable.

As for the supply side, the over -- the undersupplied situation, I think this has to do with the changes to the industry structures. In China, for the past decade, the government has been investing in the panel industry to help companies boost their capacities.

And for other countries, the panel players are either risk drawing from the market or they are feeling the pain of a very long payback period, so they refrain from expanding their capacity.

From 6 to 7 years ago, we stopped from engaging in capacity or scale competition. Instead, AUO has been focusing on elevating our value and engaging in value competition. For the past 5 years, we've been focusing on expanding only quality capacity with our total investment amount exceeding more than TWD 100 billion.

At the moment, China, has accounted for more than 60% of the world's panel capacity, so the country has already achieved its import substitution goal. Moreover, it is now seeking to support the development of the semiconductor industry. So panel production capacity ramp-up will be less concentrated or speedy than in the past, and the industry competition scenarios will be less distorted. Instead, market will be competed in more market-oriented ways, and all the investment or capacity ramp-ups will be more -- in more prudent ways by Chinese panel makers, and they will be pursuing ROIs.

At the moment, supply is not there on par with demand, and panel makers will need to have new capacities. But based on the estimates, building a new fab would take 2 to 3 years. And for it to fully ramp up, it will take a longer period of time. And we still have the upstream component supply tightness issue to be resolved.

We believe that in the next few years, cyclicity in the panel industry will be not as volatile as they it is -- it was in the past. It has been working on improving our financial structure very rigorously, and we've been focusing on value transformation.

So we stand at a better chance to maintain stable profits. So we will take this opportunity to focus on our biaxial transformation strategy based on go premium and go vertical objectives.

Our 3-year efforts have been bearing fruit. Our exhibition at Touch Taiwan, which concluded last week, manifested just that. We showcased stunning products that are based on our core capability in LCD technology and combined with AIoT technology.

These were all the results that we achieved based on 3 years' efforts on fuel economy, supply chain development. And we also leveraged the advantages that we have as a group and the synergy that we created for our -- among our group members.

Moreover, we are inviting our partners to form ecosystems together with us and focus on 5 fields, including smart retail and smart entertainment education, smart transportation, smart health care and smart manufacturing. So we are working in line with market applications to create business opportunities.

Let me give you an example. In some of the verticals, such as the smart retail in software and hardware integrated solutions, we leverage TARTAN technology from AUO and AUO Display Plus. We also leverage content management system from ComQi and Space4Money; the human face recognition and traffic analysis technology from SkyREC; and the PC and media player technology from ADLINK; as well as the membership management system and post technology from WishMobile and ClearCompany. And all of these companies that I just mentioned are the company that we hold a stake in.

In terms of go premium, besides having LCD-leading technology, they will also showcase some very stunning products for various applications at Touch Taiwan. For example, micro LED display was on exhibition last week. We've been investing in the R&D of this technology for nearly 10 years, and we have showcased a full set of systems for wearables, automotive and large commercial applications using micro LED displays. And also at Touch Taiwan, we unveiled the next-generation LED display technology, and AUO has been fully -- well prepared.

Going forward, we believe that transformation will continue. We will leverage this foundation that we have built and continue to work on by actual information. Our hope is to be able to withstand the boom and bust cycles of the panel industry and to create stable profits, so as to reward our stakeholders. At the moment, if we look at the internal and external environment, we think we stand at a good chance at yielding good results. Thank you.

Julia Chao

Thank you, Paul. Now we would like to proceed with our Q&A session. We will address the questions that we have collected.

Question-and-Answer Session

A - Julia Chao

The first group of questions are about market updates and outlook. The first question that we have is an update on worldwide supply and demand for panels. Frank, please answer this one.

Frank Ko

Ladies and gentlemen, good afternoon. This is Frank. I would like to share with you the supply and demand dynamics for the time being and also for the midterm. As Paul just said, the panel industry has gone through some structural changes. Chinese panel makers' capacity ramps are slowing down, and the components supply tightness persists.

This has affected panel production and suppressed area shipment growth.

From the demand side, the stay-at-home economy has given rise to new lifestyles, and it has also given rise to some structural changes to how we live our lives. New demands are emerging across various fields, and digital transformation is happening.

For TV, because of the upcoming sports events, we think that TV demand will be boosted. So people are watching their TV for longer periods of time and, as a result, the demand for better specification, higher quality and picture quality will also increase, which will help drive the demand for high-end products. Given such dynamics, we think that the supply tightness will likely last for while.

Julia Chao

The next question is about TV sell-through in the first quarter and demand outlook for the second quarter. And also we have another question on TV and IT and other applications, inventory levels. Frank, would you please.

Frank Ko

Yes. Let me talk about TV first. In Q1, TV sell-through was quite different from previous years, in Q1 this year. And sales was quite strong, and sell-through increased by about 1% Y-o-Y. Average size increased by 1.5 inches.

If you look at different markets, developed markets, especially in North America, sell-through was quite strong, posting 4 quarters consecutively positive growth. And size migration was quite significant. An 85-inch TV set saw a growth that is multifold.

As for Mainland China, size migration is quite -- was quite strong. In the first quarter, 65-, 75-, 85-inch TV set sell-through grew by more than 60% Y-o-Y. 65-inch TV share as of the total sales amount also increased by -- increased to 30% from 90% from a year ago. So size migration was quite strong here.

As for emerging markets, because the pandemic impact was stronger and the government there did not have stimulus packages released, this has affected consumer demand. However, as sporting events are coming up such as the Euro Cup and Tokyo Olympics, the demand for watching sports event at home will likely boost a round of shopping spree.

As consumers are now staying at home watching TV for longer periods of time, they are asking for better picture quality, which will likely give a boost to achieving such sales.

About inventory levels from TV to IT, such as notebook computers and desktop computers, inventory levels have been quite low, or even going downward. This shows that demand remains to be very strong.

Julia Chao

Thank you, Frank. The next group of questions are financial ones. In Q1, our loading rates exceeded 95%. In Q2, we expect loading rates to be maintained -- also be maintained at high levels. For depreciation and amortization, the amount was nearly TWD 8.6 billion in Q1 and is expected to be no more than TWD 35 billion for the entire year of 2021. CapEx in Q1 was TWD 3.3 billion and is expected to be TWD 22 billion for the entire year.

About currency's impact on our margins, in the first quarter, New Taiwan dollar continued to strengthen, again about 2% against the dollar, and also gained by more than 2% against the Japanese yen. These factors combined had a negative 0.5 percentage point impact on our margin. So these were financial-related questions.

The next questions are about our key products and technologies. We received many questions from institutional investors. We will have chance to share with you the demand from TV and IT end markets that we have observed and how we are aligning with these requirements from -- with our products as well as the new technologies and the progress that we've made in terms of micro and Mini LED.

James, please.

James Chen

Ladies and gentlemen, good afternoon. This is James. I am in charge of the Display business. I would like to share with you the products and applications and some of the updates on various technology applications.

In terms of TV, today, people are staying at home for longer periods of time, and we are watching TV longer periods of time as well. So people are asking for better picture quality, larger screen sizes and higher-end specifications. AU has built our leadership position in the market, and we have been able to support the growth of our customers, especially in 8K, 85-inch and ultra-large size and bezel-less products.

We registered a nearly 50% growth in shipments Y-o-Y. We expect that the trend will continue. And as component supply shortage continues, brands are also inching toward larger-sized screens and bigger specifications. We believe that the demand for various sizes of TV sets will continue. And also the demand will strengthen for panel production capacity.

As for our IT products, as telecommuting and teleconferencing become the new normal, remote education and digital transformation are accelerating, and kids start to use computers at a much younger age. Elementary school students are using notebook computers today.

In the past, brands promoted that each household should have at least one computer. But today, everyone has a computer. As Paul and Frank mentioned, this reflects a change in industry structure and also a change in the demand structure.

As for laptop panels, today, the deployments of online education and smart classrooms are gaining traction. The scenario may not be that visible in Taiwan, but it's quite visible in other countries that are suffering from COVID. And the demand for Chromebook is also increasing. AUO has been a market leader in these segments. For Chromebooks, you need to have touch panels.

And for touch panel functions, AUO is a market leader. When you are using your computers for longer periods of time, you usually would have an extra monitor, a large-sized high-end monitor. What's more, in the first quarter, our gaming monitor and curve monitor shipments increased sharply Y-o-Y, doubling or even tripling from a year ago. So the growth trend is quite significant. And we believe the future working model and education model will go through structural changes. So these are some of the observations that we had on key markets and applications.

Also for our product highlights, we've been very positive about the prospects of Mini LED and micro LED as the next-generation display technologies. As Paul said, we've been investing in these technologies for 10 years. At Touch Taiwan, we showcased a series of Mini and micro LED display products, and we believe they will enjoy growth momentum in the following years.

In Mini LED, we launched the world's first 17.3 inch 4K Mini LED display last year. And this year, starting from the second quarter, we will deploy this technology to gaming notebook displays, and we will work with some customers to launch a series of Mini LED gaming displays. We will increase our investments and our efforts to secure a market-leading position.

Besides application in IT products, we are also leveraging such technologies to produce medical displays to provide more truth like -- more truthful images and help physicians make better diagnosis and surgical judgment.

As for micro LED applications, we start by working with customers to develop new TV technology. And by the end of this year, we will have mass production for micro LED-based TV panels.

As for automotive displays, as we have demonstrated at Touch Taiwan this year, we have been using micro LED and leveraging those advantages in high brightness, high contrast ratio, white color gamut, fast response and high reliability to produce automotive displays. And we've been engaging with carmakers to fulfill their requirements.

Today, as electric vehicles and self-driving technologies are become -- have become much more mature, hard picked space has increased, and people are demanding for larger screens and more screens in their car. In response to such requirements, we are leveraging our technology to provide car displays using Mini LED and micro LED technologies.

And going forward, we will provide more innovative products to fulfill market demand. Thank you.

Julia Chao

Thank you, James. Ladies and gentlemen, we will now open our line to take questions. [Operator Instructions]

Operator

[Operator Instructions] Our first question comes from the line of Jerry Su from Crédit Suisse.

Jerry Su

And congratulations for the wonderful results. You mentioned component supply tightness, and you think the situation is quite visible. Could you share with us when you expect that the situation -- the tightness situation will ease for some of the major components such as driver ICs, polarizers and glass?

And the second question that I have is about TV. You delivered strong performance for Q1. But at the same time, we have seen some prices increasing on the end market. I want to know what your view is for the impact on the end consumers purchasing power or willingness to purchase a higher price TV set.

Frank Ko

Jerry, this is Frank. First of all, about panel supply constraints, I think these were also structural issues. First of all, the end demand is quite strong, so the demand for panels has been rather robust. And also with some changes in product mix, this portion of IT products is now taking a bigger share from the panel shipments.

As a result, the utilization of other materials or other components is also higher than the past. So what we are seeing is that the capacity allocation plans of many companies cannot meet the demand of short-term market demand. And as we said, it really takes a long time to build and ramp up a new production line, so the tightness may continue for a while.

And actually, besides panel production, other sectors also are demanding more materials or components. For example, 5G electronic components for notebook computers and also automotive electronics, such as electrical vehicles and self-driving cars, all of these demands are driving strong demand for electronics components. So supply tightness is actually happening from IC all the way to foundries, so this is actually a structural issue. That was my answer to your first question.

For the second question on the end price of TV set, yes, indeed, panel ASP has been rising quite a lot starting from last year. And in the end market, some new TV sets also are having higher prices at the moment to reflect the rise in costs. But as we just shared with you, at the moment, end market demand remains to be quite strong.

On top of that, TV set sizes are increasing, and the demand for high-end TV sets is quite strong. So the rise in TV set prices is actually reflecting the increases in specifications and in screen sizes. I think these are quite favorable conditions.

Jerry Su

As a follow-up, you mentioned that you were discussing with your customers about their demand for next year. And based on what you're looking at right now, have some of your customers make some assurance, some commitments? Whether they change their requirements in the future, would it be -- will there be some negative impact on your business?

Paul Peng

This is Paul. Actually, at the moment, because the component supply is very tight, and our upstream vendors also demand us to give them a longer time for -- given some visibility for a longer period of time. So actually, at the moment, we are working with our customers to have their longer-term commitment, but the consensus at the moment is that the supply tightness issue will be resolved in -- at the short -- the initial term. That is why we are initiating the discussion for supply right now for the requirements next year.

Are these discussions conducted in simply good will or are they legally binding? Actually, for every customer, we have different kinds of negotiation model. For some, we do sign contracts but, basically, because we work with these customers for a very long period of time, and we have mutual trust in each other.

Operator

Our next question comes from Arthur Lai from Citigroup.

Arthur Lai

This is Arthur Lai from Citigroup. I have 2 questions. The first question is about your CapEx. You said that it will be about TWD 22 billion this year. How much capacity will you be increasing after debottlenecking? Could we expect that the same increase -- the same level of increase in capacity will emerge for next year?

Paul Peng

Arthur, this is Paul. For that TWD 22 billion CapEx, it actually consists of several initiatives. Some of the money will be used to improve our production capability for high-end products and some will be used to support our expenses for research and development. And the other parts will be used on making the class expansion for some production lines as we have announced in our previous Board of Director meetings.

But in terms of the expansion of some of those production lines, we will make the CapEx this year. Some of that will be made this year, but the majority will be made next year and probably in the middle of next year. And we are, at the moment, buying equipment from vendors, and we will not be able to fit them into the fabs probably in the middle of next year.

Arthur Lai

So with that expansion, you are looking at single percentage point increase.

Paul Peng

Yes. Correct. We've been working on value smart manufacturing initiatives. We have already boosted our capacity, and these are already factored into our shipment guidance.

Arthur Lai

Paul, you mentioned the strategic roadmap of the group. You talked about the companies that you've made investments in acquired stakes, such as ADLINK. I wonder if you could give us some color around how you expect to achieve synergies and alliances. And based on your public announcements, you have already increased your stake holding at Ennostar. Does that -- did that come from the same thought, same perspective?

Paul Peng

They are actually quite closely related to our biaxial transformation strategy and our plan to further improve our ecosystem development. So if we look at our different field application initiatives, we look at the entire industry from upstream, middle stream to downstream.

But of course, in terms of the stakes that we have in various companies, we decide upon using -- based on the actual conditions and the need or we would discuss with these companies that we are interested in buying stakes in -- buying a stake in. But the priority of ours is actually to have further collaborations with our partners and to really realize our mutual goals and to maximize the values for one another.

As for Ennostar, because Ennostar is actually a top company in Taiwan in the LED arena, and we have this opportunity to be investing in Ennostar, we think this should be able to help us to play a bigger role in the next-generation LED display technology development. That is why our Board of Directors gave us the approval to increase the stakeholding in the company. We didn't increase the stakeholding by too much, but we increased just a little.

Arthur Lai

Understood. My last question is on your perspectives from the structural change in the industry. If there is going to be some small-scale inventory adjustment, would you perhaps consider leveraging some flexible loading rate strategy to respond to the change?

Paul Peng

That is actually one of the measures to respond to industry cyclicity. Fundamentally, the industry is going through structural changes. In terms of structural changes, we don't think that the ups and downs, the boom and bust cycles will be that trusted as they were in the past. In addition, we are focusing on biaxial transformation, so we will be able to the plug the boom and bust cycles better than our competitors. So it has to do with the entire structural change of industry and also the structural change happening at AUO.

Operator

Ladies and gentlemen, in the interest of time, we will take one last question. The last question comes from Lisa Chen from Yuanta Securities.

Lisa Chen

Thank you, executives, for giving us such detailed information. I have 2 questions. First is about your annual maintenance. Did you estimate the impact on your capacity for Q2 or other quarters?

The second question is about your product breakdown, your revenue breakdown. I think you didn't have a big change this quarter from the previous quarter, and your PID, other and auto displays performed quite well. These are all your niche products. Could you give us some color -- more color about these products and also the performance of your high-end products?

Paul Peng

Lisa, this is Paul. On your question for our annual maintenance, what we've been working on is doing things in more efficient ways, and these -- the impact resulted from annual maintenance is already reflected on the area shipment guidance that we gave you. As you can see, the impact is manageable for us.

As for niche products, we will have Frank to address the question.

Frank Ko

Lisa, for your question on our niche products, actually, AUO has been working on these fields for a very long time. We have secured leading positions in the industry.

So in terms of medical, industrial, HD and POS displays, we are the world's #1 or the -- in one of the leading -- or the leading player in the industry. So given the circumstances, we set up AUO Display Plus on January 1 this year. The hope is that we can leverage our solid foundation in the specialized niche products and to extend our footprint into various fields, to also use our display technology, which is our core competence to combine with AIoT applications, so as to provide more system-oriented and solution-oriented, better solutions and products.

For smart education, besides laptops or Chromebooks that we talked about just now, these products used to be computers that people use for working or for entertainment. But today, even elementary school students are using such devices. And people are using their notebook computers at a younger age, and they start -- then when they started using their smartphones.

So we are seeing some hybrid modes of usage for computers such as online plus off-line and crafting as well as across various student groups that have formed an entire systems around such devices. And there's digital whiteboards, educational use terminals as well as laptop computers.

Similar trends will also be manifested in smart transportation security and all the applications, so that's around display technology. And we will be using AUO Display Plus technology to provide such solutions to fulfill and realize our go vertical strategy.

As for automotive displays, the pandemic has still an impact on the car making industry around the world. But at the same time, some structural changes are also materializing. More and more people are driving electric vehicles, and the self-driving era has come.

For self-driving cars, some of them are EV, some of them are fossil fuel-based cars. And how people are going to drive their cars or how the interiors of automobiles will change drastically in the future? Today, we are seeing more and larger panels being fitted into a vehicle.

Car displays have been a strong suit of AUO. At the moment, we remain to be the world's #1 in large-sized CID application. We are also leveraging Mini LED, micro LED displays and lamination technologies to provide better solutions and products. And we will be able to combine more technologies to develop more innovative solutions. Thank you.

Lisa Chen

You are the world's #1, or at least 1 of the top 2 car display providers in the world. But at the moment, car display only accounts for single-digit percentage of your revenue. Of course, the profit share may be more than that. Would you expect that the revenue share of your automobile displays would be more than 15% in the future?

Benjiamin Tseng

Lisa, this is Ben. Revenue share is decided by many factors, including the price range of other product categories and the level of integration. As Paul and Frank mentioned, for car displays, right now, they account for nearly 10% of our revenue. But within the car display segment itself, there's a lot of integration happening.

Many functions, such as lamination and touch function, could be factors that drive revenue contribution in the future. We do think that car display revenue contribution will increase. But in terms of the exact share, it really has to be viewed holistically.

Lisa Chen

You talked about PID and general display. Could you give us more information?

Benjiamin Tseng

Lisa, we actually have already -- Frank have already shared with you the updates.

Frank Ko

Lisa, could you elaborate PID and what? PID and general display segment, what are the products, what products are included. Correct?

Lisa Chen

Yes.

Frank Ko

Actually, we have listed the products on the slide. Based on our definition, PIDs and general displays include public information displays, displays that go into public displays or industry displays, ATM, POS, pachinko or medical displays.

Julia Chao

Thank you, Lisa and executive. Ladies and gentlemen, in the interest of time, this concludes our results conference call. If you have any other questions, please feel free to contact us at the IR Department at AUO. Thank you for your participation.