AUO Corporation (OTCPK:AUOTY) Q4 2022 Results Conference Call February 8, 2023 1:00 AM ET
Company Participants
Julia Chao – IR
Ben Tseng – CFO
Shuang Peng – Chairman and CEO
Fu-Jen Ko – COO
Chien-Pin Chen – SVP, AU Optronics
Conference Call Participants
Brad Lin – Merrill Lynch
Hong Ji Yang – Morgan Stanley
Jerry Su – Credit Suisse
Julia Chao
Ladies and gentlemen, good afternoon. I’m Julia Chao, AUO’s IR Officer. On behalf of the company, I would like to welcome you to participate in our 2022 fourth quarter results conference. We have 4 executives present here: Paul Peng, Chairman and CEO; Frank Ko, President and COO; James Chen, Senior VP of the Display Strategy Business; and Ben Tseng, CFO.
The agenda of today is this. First of all, Ben, our CFO, will go over fourth quarter results and provide you with the first quarter outlook. Our Chairman, Paul, will then have an opening remark. Later on, we will proceed with questions and answers. We have collected questions from analysts.
In the first part of the Q&A session, we will address these questions. Afterwards, we will open the floor for you to post questions.
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.
Ben Tseng
Ladies and gentlemen, good afternoon. In Q4 2022, net sales was TWD 52.6 billion, up by 5.9% Q-o-Q, mainly thanks to increased energy sales including PV module and EPC engineering sales. Display ASP was weaker in Q4 as customers purchase more lower-priced products such as TV and notebook panels. However, on the back of rush orders, AUO increased our loading rates and effectively lowered inventory of finished products. Leading to area shipment increased by 12% Q-o-Q, which help us to narrow loss.
In Q4, gross loss narrowed to TWD 4.6 billion. OP loss narrowed to TWD 10.9 billion. Net loss attributable to owners of the company was TWD 10.2 billion. EBITDA loss also improved with margin improving to negative 6%.
Next slide, full year results. Unlike 2021, which benefited from pandemic induced demand, 2022 was negatively impacted by inflation, conservative consumption and excess inventory digested by customers, causing panel purchasing to weaken area shipment and ASP, both went down significantly Y-o-Y. Net sales was TWD 246.8 billion, down by nearly 1/3 Y-o-Y. Gross profit TWD 16 billion. OP loss TWD 24 billion.
Net loss attributable to owners of company was TWD 21.1 billion. EPS was negative TWD 2.39. EBITDA was TWD 7.5 billion, margin, 3%.
Next slide, balance sheet. Cash was TWD 80.6 billion, flattish Q-o-Q. Debt, long-term and short-term combined was TWD 86.9 billion, up by TWD 19.2 billion Q-o-Q. Gearing ratio was very low at 3.3%. Inventory amount was TWD 30.3 billion, while absolute number-wise, amounts stay flattish Q-on-Q due to the increased shipment, turnover days was lower to 48 days.
Cash flow. We generated from operating activities TWD 8.9 billion. CapEx was nearly TWD 8 billion. Net change in debt, TWD 19.5 billion.
Revenue breakdown. In Q4, on the back of stable TV ASP and demand recovery, TV share increased by 2 percentage points to 13%. Mobile PC and device lost 4 percentage points to 24% due to higher end demand for lower-priced notebook panels causing ASP to drop. On the lower right bottom, others share increased to 21%, thanks to increased solar module shipments and engineering revenue.
Moving on to revenue breakdown by size. Changes on this slide echo those in the previous slide. 39-inch and above increased by 2 percentage points due to an increase in TV panel area shipment. 20- to 39-inch increased by 1 percentage point due to the increased volume of new automotive displays. 10- to 20-inch lost 3 percentage points due to weaker notebook panel demand, product mix changes and ASP slides.
Next slide, shipments and ASP by area. Area shipment increased by 12% Q-o-Q. Display ASP dropped by 14%, which echoed what we have already said about the shipment — of the increase shipment due to rush orders and market demand.
For our Q1 guidance, based on our current business outlook, we expect that area shipment to be down by mid-single-digit percentage points Q-o-Q. Blended ASP denominated in the dollar, is projected to be up by low- to mid-single-digit percentage points Q-o-Q. Loading rates in Q1 will be dynamically adjusted based on market conditions.
So this was a recap of our Q4 results and outlook for Q1.
Before we proceed with questions and answers, Paul will have an opening remark.
Shuang Peng
Dear, investors, analysts and journalists, good afternoon. First of all, I would like to wish a belated Happy Lunar New Year, we should prosperity and success in the Year of the Rabbit.
2022 was a very challenging year with the pandemic, the war, inflation, shortages in raw materials, causing the macro economy to take a hit. Central banks around the world rose rates to curb inflation. Therefore, the consumer market was negatively affected.
In the previous 2 years, due to the pandemic, demand was higher, causing consumers to spend ahead of time. However, recently, demand weakened. While inventory levels rose, the majority of brands focused on lowering inventory levels in the second half of last year causing the demand for panels to plummet and prices also fell to a historic low.
AUO’s revenue and profit were significantly affected negatively in Q3. The UT rate dropped to 50%. In the fourth quarter, it rose slightly to — slightly more than 60%. Recently due to the — it was mainly because of the rush orders and promotional activities by brands.
Area shipment increased. However, ASP continued to lower with most customers prioritizing clearing out excess inventory. In Q4, our energy business recorded a higher revenue aided by a lower NTD, our Q4 revenue rose slightly by 6%. For the entire year, ASP lowered. Area shipment also dropped significantly Y-o-Y.
Our full year revenue went down by TWD 120 billion.
In 2021, we recorded a record high profit. But in 2022, we went into loss. So this was a very drastic fluctuation. However, our financial structure remains very robust and healthy. The gearing ratio was very low.
In the second half of 2022, especially in Q4, the traditional peak season, our brands and the entire industry prioritize lowering inventory levels. At AUO, we have been very prudently and very aggressively controlling inventory. Our principle is to have no excess inventory at all. Since Q2 2022, we started adjusting the UT rates. Our inventory level is the most — the healthiest of all the industry — all the panel makers.
Inventory amount went from TWD 34.5 billion in the end of 2021 to TWD 30.3 billion, while the loading rates were lower, we took the opportunity to conduct annual maintenance, develop new technologies and new products in hopes of capturing new business opportunity as the market recovers.
After the adjustments for 4 or 5 quarters, some — the applications are seen their inventory levels recovering to a healthier state. TV was the first to see weaker purchasing. It was also the first to see demand recovering earlier than other applications. As for IT, we hope that demand will resume seasonal patterns in the second half, however, there are still many uncertainties this year, including macroeconomic conditions, the war, the inflation and a lower demand despite there’s an ease in the pandemic.
First, tech job cuts also play into the uncertainties. So there are many uncertainties this year. Most research institutes project that this year will be a year of high inflation and low growth. So AUO will aggressively control our inventory levels and seek to lower our cost of goods sold and CapEx. At the same time, we will accelerate by active transformation in hopes of capturing business opportunity as the market recovers and to become more immune to the boom-and-bust cycle of the panel industry.
Here, we are meeting for the first quarter results conference, and we’re meeting face to face because we hope that we can take this opportunity to provide you with more detailed information of our strategy. We have been focusing on by asset transformation for many years, which includes go premium and go vertical strategy.
Here, I have a few slides to go over the achievements that we have been seen in the transformation implementation. In terms of smart mobility at CES this year, we demonstrated smart cockpits with our ecosystem partners. This solution covers panels to fully integrated display module FIDM. FIDM includes not just display modules but also integrate sensors and other necessary technologies in 1 module.
Going forward, AUO will work with carmakers by providing not just displays, but also systems and solutions. And this module, the smart cockpits solution has been gaining encouraging recognition from customers and won’t accolade at CES this year. This photo here is a very innovative forward-looking smart cockpit. Moreover, we are still producing displays. However, we are working also very aggressively on next-generation technologies, such as LED display, which we’re seeing good progress being made.
For example, we engage renovation pictures. Together, we leverage advanced technology, display technology to deliver one-stop production services. TV show and movie filming today no longer requires the entire crew to go out in the field. Instead, the filming can be carried out in virtual studios, along with cost reduction, resulting in big cost reduction and making the unimaginable possible.
Moreover, we also work with a partner to build metaverse experienced gallery. If you have time, please visit the gallery, the museum [indiscernible] to experience the beauty of the metaverse. Now about micro LED, which we used to produce car displays. I have just introduced the smart cockpit solution, which we leverage in Mini LED. With micro LED, we are also building bigger lineup for [indiscernible], including transparent, stretchable and rollable displays.
A big advantage of micro LED is that it enables transparent displays. For example, at Asia Bay in Kaohsiung, we are developing space AR application. These are the actual cases using LED.
Besides these technologies, we also have many more enterprise use and education use applications. For example, we built a smart classroom at National Taiwan University, LED display business at AUO has exceeded TWD 100 million and is expected to past motor fold growth every year. When LED is supplied to indoors, the applications can be very pervasive, and the technology can be applied in making ultra large size and immersive fields and immersive applications.
Moreover, in vertical fields such as 3D medical imaging, we can also leverage LED technology. In December last year at the Taiwan Medical Technology Show, we engaged many partners to demonstrate medical solutions. In addition, in smart manufacturing, our smart manufacturing services have already been deployed to more than 100 customers. Our subsidiary AUO Envirotech is able to make technology transfer in the areas of water management and zero emission solutions.
In education, we are working with subsidiaries to set up future classrooms at National Taiwan University, and we have many more ongoing projects for the establishment of future classrooms and enterprise solutions. So these vertical applications and energy-related investments accounted for more than 10% of our revenue in 2022. These are non-pure display business. Together, they accounted for more than 10% of our revenue.
Absolute number wise, these businesses grew more than 20%. Going forward, we will join hands with our ecosystem partners to accelerate the growth in services and system delivery. We aim to make these products accelerate growth so as to become more immune to the cyclical patterns of the panel industry.
We also hope that the non-panel business could account for 20% plus revenue — of our revenue in the next 2 to 3 years. In 2022, the panel industry was downbeat, and we are seeing some recovery in the beginning of 2023. We hope that the market would resume its cyclical pattern this year. Of course, we will continue to accelerate transformation so as to deliver robust performance, we hope that we can deliver stronger results as well.
As ESG is getting more attention from enterprises and industry, AUO continues to implement our ESG strategy. For the 13th year in a row, we were included in DJSI, which was a rare feat because in Taiwan, only 23 companies can be included in a year, and we have done that for 13 years in a row. So we are ahead of many companies here in Taiwan.
So this was a review, a quick update of our performance last year, and a recap of our by asset transformation results. In the future, we will exhibit our solutions to demonstrate more of our results and our solutions. I would like to welcome you to visit our booths in the future in those exhibitions. For example, in April this year, we will be demonstrating many new panel and non-panel technologies at Touch Taiwan. I hope that we can have more opportunity to go into more detail with you.
Thank you.
Julia Chao
Thank you, Paul. We will now proceed with questions and answers. For the first part of the Q&A session, we will address the questions that we have collected. The first group of questions are about market updates and outlook. What are our views on 2022 panel supply and demand?
And what is our view about 2023? Secondly, could we give some color around Q4 TV sell-through and what is the demand outlook for the year ahead 2023? Frank, would you please.
Fu-Jen Ko
Ladies and gentlemen, good afternoon. I will answer these two — these first two questions. About 2022 supply/demand. As Ben and Paul said earlier, in 2022, demand weakened post the pandemic. The industry adjusted capacity allocation causing loading rates to lower significantly.
There were some capacity transition, but only at a few panel makers. So on the supply side, the industry adjusted capacity allocation in the face of demand fluctuations in an orderly manner.
From the demand side, the past 3 quarters were characterized by reductions of inventory levels, which was boiled by stay at on the economy and poor congestion. So inventory levels were very high from channels to end products as the demand weakened inventory turnover days surged.
On the back of inventory adjustments for the past 2 quarters and promotional activities in Q4, inventory levels have been improving. Some specific applications have been receiving rush orders. So demand overall is improving. For this year, several applications, including high-end medical displays, will likely fare better. Industrial panels would also enjoy more stable demand.
As for car displays, chip and material shortages have capped car sales for the past 2 years. This year, with chip shortage easing, car sales will likely pick up, which could help boost car display demand. So this was an update on supply and demand.
As for TV sell-through in Q4 last year, the U.S. has posted growth for several months in a row. During the peak buying season, growth was even as high as nearly 9%. Mainland China was capped by the lockdown measures, causing the Double 11 Festival sales to drop with large-sized models dominating the sales, average size reached nearly 63 inch.
In Q4 last year, with sports events, specifically the World Cup, the emerging markets got a boost with sell-through growing by nearly 20% Y-o-Y, which helped lower TV inventory levels. Currently, of all the applications, TV’s inventory level is at the healthiest level.
Julia Chao
Thank you, Frank, for giving us more information on TV sell-through. The next question would also be posed to Frank. Could you please talk about IT sales results and give us an outlook for Q1? And could you also talk about the circumstances with inventory adjustments?
Fu-Jen Ko
IT faced particularly strong headwinds. The inventory level was very high due to poor construction. In Q4, channels and brands aggressively clear out their excess inventories. In the end of Q4 — in the end of 2022, however, growth was in the negative range Y-o-Y. Notebook sell-through was down by 40% Y-o-Y.
Currently, channels and brands are relatively conservative about IT product sales. In Q1, IT inventory level has improved. However, it may still need a while for the industry to digest excess inventory in the pipeline.
Julia Chao
Thank you, Frank. The next group of questions are financial related. First of all, loading rates.
Ben Tseng
In Q4, our loading rates improved to nearly 65%. In Q1, we will adjust the loading rates based on market conditions and product mix. Depreciation and amortization in Q4 was TWD 7.7 billion. 2022 full year was — the number was TWD 31.5 billion. In 2023, as we will have new capacity ramp and AmLED will increase to TWD 34 billion.
For CapEx. In Q4, CapEx was TWD 8 billion. For the full year of 2022, CapEx was nearly TWD 36 billion. For 2023, we budgeted TWD 35 billion for CapEx. About currency’s impact on our margins.
In Q4, New Taiwan dollar depreciated about more than 4% against the dollar and weakened by 0.04% against the Japanese yen. Overall, currency fluctuations had a positive 1.4% impact on our margin.
Julia Chao
The next group of questions revolve around AUO’s major technologies and products. There are also more interest in car displays. Could James please share with our participants of our gross profits and the strategy that we have against these trends that we envision.
Chien-Pin Chen
Ladies and gentlemen, good afternoon. I would like to briefly share with you our progress made in products and applications as with technologies. Last year, consumer electronics demand was negatively affected by the macro conditions. The industry prioritized adjusting excess inventory. We think that in another 1 to 2 quarters, inventory levels will become healthier. Demand is still here, but momentum will gradually recover.
We are hopeful of stronger performance in the second half.
On the other hand, automotive demand is very strong. Under the trend of smart driving and electric vehicles the demand for smart cockpit has picked up. Carmakers increasingly regard smart cockpit as key differentiator of their products. With car displays sensors and human machine interface playing a bigger role, which helped to boost the demand for large-size free form design and smart displays.
New energy vehicles have been posted more than 60% annually. In the future, and very soon, we will probably see new energy cars accounting for more than half of all cars. More than 50% to 60% of our car displays are applied in new energy cars. So the growth prospects are very promising.
As Paul and Frank mentioned earlier at the CES this year, we partner with our partners to launch FIDM-plus solutions. With this new product, we are extending into barebone systems compared with traditional automotive LCD panels. This solution delivers multi-premium, and it is in line with the trend of electric vehicle and smart vehicles.
This year’s CES, we also demonstrated micro LED technologies. Micro LED enables transparent displays and flexible displays, allowing for many more smart cockpit scenario designs. So we expect that with AmLED and along with micro LED, we will be able to capture more opportunities to start design — co-design with our customers. As we are starting more projects with our customers for AmLED and FIDN, and with these projects, entry into meaningful volumes, we are expecting that in the next 2 to 3 years, they would together account for more than 50% of our car display revenue. Thank you.
Question-and-Answer Session
A – Julia Chao
Thank you, executives for your answers. We will now open the floor for you to post questions. To ensure equal opportunity for each participant, please be reminded to limit the number of your questions to 3 per person, and please say them all in 1 go. Before you start to ask your questions, please be reminded to state your name and your affiliation.
Brad Lin
I’m Brad Lin from Merrill Lynch. I have 2 questions regarding micro LED and non-panel business. You mentioned that non-panel business accounted for more than 10% of our revenue. This business relatively delivers stable ASP. But do they still — will they still be affected by the panel SP fluctuations and price pressure?
I understand that there are many processes involved in micro LED manufacturing. You mentioned that you have mass transfer technology. What sets you apart with your competitors?
You also mentioned new applications that you have developed such as Virtual Studio. I wonder if you are developing new technologies for smartphones or wearable?
Shuang Peng
Thank you, Brad, for your questions. Earlier, we mentioned that our non-panel business stood for more than 10% of revenue. Non-panel business includes not just panels, it is a non-pure panel business and includes systems and power plant construction, power plant investment, AUO crystals business and services, such as smart manufacturing. The combined revenue reached hundreds of millions of NT dollars.
Things like water management, we have AUO Envirotech to provide such services. With the revenue reaching TWD 4-plus billion, AUO Envirotech helps our customers to manage their water circulation and also recover materials that can be reused from the wastewater. So I’m not able to specify the ASP for this business because it is not a panel business anymore. It has go beyond panel ASP concept.
Although some businesses haven’t reached a certain scale and are not fully profitable, but we can expect high growth potential, and we are able to capture the business opportunity. Our hope is to expand non-panel business portion to become less susceptible to the boom-and-bust cycle of the panel industry. For pure panel business, when the market goes up and down, we cannot resist being affected or we cannot turn around the trend just by ourselves. But for non-panel business, we are able to do that.
For micro LED, to perform mass transfer, we need to leverage upstream and downstream partners. And mass transfer costs for a lot of expertise, including LED and back play design. We have our own ecosystem, we have our own value chain, ranging from LED chip and back played design. We are able to perform these activities on our own. So with mass transfer, we have the technologies in our own hand, and we are able to provide the most advanced and mature technology.
Some of the expertise will be provided by our subsidiaries and our investees.
Currently, for this year, we will have wearable solutions reaching commercialization and mass production. As for smartphones, we haven’t seen good business opportunity arising for applying micro LED. So for micro LED, we will first apply it in wearables and secondly in TV, and we’ll also use it more pervasively in car displays.
For example, at Asia Bay in Kaohsiung, we deployed micro LED panels as windows on cruise ships, which echoes with the Space AR concept and can be deployed in autonomous driving vehicles. And when these solutions are deployed in cars, demand could be very big, and it has been applied to many vertical applications.
I would like to add to what was said about the revenue. Long display business as we have disclosed, revenue was TWD 20.9 billion in 2022 compared with TWD 12.3 billion in 2021. The OP margin for the past 2 years range between 6% to 9%.
Hong Ji Yang
I’m Derrick from Morgan Stanley. For the past 2 years, Mini LED has attracted the attention of many people. Recently, there are rumors that some IT customers are transitioning towards a different kind of display technology. Could you provide us with some outlook for the opportunity on using Mini LED in other applications, including consumer electronics?
Shuang Peng
Mini LED has been consistently combined with LCD backlight display technology to deliver high contrast ratio, dynamic dimming, HDR to deliver ultra-high definition. It has been progressively used on TV. It has become a standard configuration of high-end TV sets.
As for IT, from gaming creator to productivity notebook panels and monitors, Mini LED has been applied in many high-end models. It has been adopted by many brands. And these — at the CES in the past 2 years, AUO has been conducting co-promotion with customers and implementing new products.
As for other applications such as industrial panels and medical panels as well car displays, Mini LED can also be used versatile. For example, in the high-end medical display sector, we are working with major customers to perform design in to deliver more precise color and enable more precision imageries for medical applications.
As for automotive solutions, as James said, the demand for electric vehicle is rising. For EVs, power efficiency and power savings are critical. Image quality is not the key point here. However, the travel mileage per charge is crucial. Mini LED combined with car displays are able to deliver the performance required by electric vehicles.
For car displays for automotive solutions, displays have to be high brightness under the sunlight. And in a day — in a nighttime, it also needs to be able to perform dynamic dimming and brightness adjustments, so as not to distract drivers.
So Mini LED technology is able to meet the requirements for image quality and power consumption profile. So we think Mini LED is the best technology for automotive solutions.
Jerry Su
I’m Jerry from Credit Suisse. Last year, you announced a dividend plan. With the sharp loss in 2022, would you sustain the dividend plan? What is your plan at the moment? Also, you announced to suspend the construction in Taichung.
Do you have any plans to resume the construction plan for the Taichung fab?
You mentioned that IT and PC products, we still need some time to clear out excess inventory. When would we see a visible recovery for IT products? Also, after the pandemic, what is your view about the PC market? Volume-wise, what do you expect to see IT accounts for 40% to 50% of our revenue, Derrick said that, some IT customers are shifting towards OLED. You have stopped making investments in the OLED field for several years.
Under this trend, if high-end notebooks and monitors start to adopt OLED, how would this affect your business in the long term? They are Chinese panel makers constructing Gen 8.6 oxide and LTPS fabs focused on IT application manufacturing. How do you attempt to tackle the competition in the high-end and mid-end products?
Ben Tseng
Thank you, Jerry, for your questions. Yes, last year, we announced a 3-year dividend plan. Last year, we distributed dividend of TWD 1 according to the plan. However, market conditions went beyond our expectations last year. However, due to our healthy financial structure and sufficient cash flow in hand, we are able to provide sufficient cash for our operating needs.
So this year, we would take into account our development needs and investor return requirements to distribute our dividends. And this decision will be made at the Board of Director meeting.
As for the Gen 8.5 fab in whole in Taichung, currently, we don’t have a timeline set for the resumption of construction. Given the low loading rates at the moment, we will prioritize improving our loading rates. And using the limited capacity to create more value for our products, meaning that we would provide more barebone systems, systems like integrated products.
For example, car displays account for half of the — more than half of the RFQs that we have received. For the products to be mastered and produced in the next 2 to 3 years, half of them are orders for barebone systems. As James mentioned earlier, these systems have the potential to help us boost our revenues by multi-folds, whereas having a limited increase for our area demand. Therefore, we are not in any urgency to increase the capacity from amorphous to low-10 capacity. What we have is sufficient for us to meet our business operation needs and premium model development needs in the next few years.
As for the question regarding IT, Frank, would you please?
Fu-Jen Ko
There are 2 questions about IT products. The first is about IT product demand post-pandemic. This is a question that’s calling for the attention of many people starting from last year. We have been doing a lot of research and consumer surveys in this regard.
In pre-pandemic days, PC and notebook were developing stably. However, with the pandemic user habits have changed significantly. Today post-pandemic, hybrid working and flexible working have become the norms. IT, especially, notebook has become the main productivity tool. We are using notebook products for a longer period of time, and we’re using a wider variety of devices.
Some customers told us that end users are using different kinds of devices at home, in the office. So they are using more than 2 devices a day. And all these devices are important productivity tools. From this perspective, IT, especially, notebook will see stronger growth pre-pandemic — compared to pre-pandemic days. As for inventory, that was we expect to see inventory level to resume normal seasonal changes starting from the second half.
Looking further down the road, what about the demand? What the demand will look like? What kinds of specifications or technologies would trigger replacement demand or repurchasing demand? Based on our observation, we believe that most critical feature will be power efficiency because these IT products are used most frequently and there are important productivity tools.
So super power saving notebook will be very helpful. You don’t have to charge over and over again just to use for a day. And with 1 charge, you can use the notebook for any time daily without having to carry an adopter with you. So LTPS, superpower saving panel technology will be a key focus. We will start making notebook products on Gen 8.5 and Gen 6 lines to improve the power efficiency profile of our products and to use more circular and recover materials as well as reduce the power consumption of our production lines.
So from the power consumption conservation at our production line to the power saving profile of our end products, we are working very hard. Our monitor and notebook products have gained the credit certification of the industry and have been adopted by IT products and brands in the industry.
For entertainment use devices such as for gaming, we have been in the leading position as well, and we continue to work with ecosystem partners, such as graphic card providers and CPU makers, and we are using Mini LED and deploying [hyper-threading] technology to improve the quality of our products.
Also, we are leveraging antireflection technology, eye care products to provide better IT products to help enable better power efficiency profile. As IT products become the main productivity tools, and are being used in wider and more diverse settings, we are going to meet consumers’ demand and focus on meeting the diverse needs of the market. Thank you.
Shuang Peng
When it comes to OLED, it seems to be very pervasically adopted. But actually, when you look at the numbers, OLED notebook only accounted for 3% of the market last year, and only 0.1% of monitors. So its application in IT segment has been very limited and it’s not as pervasive as people imagine. As Frank said, power saving feature remains to be the top priority for mobile products such as notebook computers. High-end products still are using low-10 poly panels predominantly.
Last year or 2 years ago, due to the shortage in low-10 panels, many OLED products were stuck at inventories at warehouses.
Julia Chao
In the interest of time, this concludes our investor conference. We will see you next quarter. Thank you.
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