校正紀錄
本檔為 AI 語音轉寫，落地前已校正下列轉寫誤植；未列出者為原文。Memo 與 Transcript 兩區塊同步改。 - 刪除站方募款宣傳行 - [數字存疑] 3Q26 EPS：Transcript 口述「NT$1.05」、Memo 區塊記「10.5 元」，兩者互相矛盾且與淨利不合。回推：稅後淨利約 41 億元（淨利率 10.9% × 營收 377 億）÷ 隱含股數約 5.13 億股（2Q26 淨利 38.05 億 ÷ EPS 7.42）≈ 8.0 元；且 3Q25 同口徑（EPS 6.69）淨利約 34 億，與「淨利率 YoY -0.7ppt」相符。Memo 區塊改記約 8.0 元並標存疑，待公告財報確認 - 營業利益「NT$8.41 billion／84.1 億元」→ NT$4.11 billion／41.1 億元（Memo 3 處、Transcript 1 處；營益率 11% ≈ 毛利率 47.4% − 費用率 36.5% = 10.9%，× 營收 377 億 ≈ 41.1 億；84.1 億將使營益率達 22%，與口述不合） - Transcript「Third quarter operating income was NT$606 million」→ non-operating income（與 Memo 區塊「業外收入 6.06 億元」一致）；「apex loss」無從判讀，標 [待確認：apex loss]，不臆測 - Memo 區塊「多口數汽車乙太網路滲透率超過 50%」→ 車用乙太網路在新車生產的滲透率逾 50%（AI 摘要誤把「多口數」與車用滲透率併為一句；逐字稿原意為 automotive Ethernet over 50% penetration in new vehicle production） - 英文術語音譯誤植：growth margin → gross margin（3 處）；real-time → Realtek（2 處）；HAI → Edge AI（2 處，JPM 問題）；Mansman → Realtek；root routers → home routers；small media business → small and medium business；prior authorization of AI servers → prioritization of AI servers；AI ethics／AI async → AI ASIC（3 處）；writing cost → rising cost；aging up → up - [數字存疑] IDC、Gartner 3Q26 全球 PC 出貨年減幅：簡報段口述「20.1% 與 22.4%」，Q&A 段口述「21.4% 與 22.4%」，兩處不一致（IDC 20.1% 或 21.4%），Gartner 22.4% 一致；原文未動，Memo 取簡報段 20.1% - [待確認] 存貨周轉天數上升原因：口述「build-up of non-good inventory for customers」，疑為語音轉寫（如 KGD 或 buffer inventory），未臆測還原，Memo 僅記為客戶備貨 - 其餘驗算：營收 377 億 ÷ 1.005 ≈ 375.1 億（2Q26 375.5 億，相符）；營業費用 138 億 ÷ 377 億 = 36.6%（口述 36.5%，相符）；營收 377 億 ÷ 1.279 ≈ 294.8 億（3Q25）
瑞昱_2026-10-29
警語：此 Memo 和逐字稿為 AI 生成，可能因為音檔品質導致轉錄逐字稿有誤，或是 AI 曲解原意／幻覺導致 Memo 內容有誤，請以原始音檔為準。
Memo 亮點 • 2026 年第三季營收達新台幣 377 億元，季增 0.5%，年增 27.9%。毛利率為 47.4%，季增 0.4 個百分點，但年減 2.3 個百分點。營業利益為 41.1 億元，營業利益率 11%，季增 1.1 個百分點，年增 0.4 個百分點。每股盈餘（EPS）約新台幣 8.0 元（[數字存疑]，原稿 10.5 元；2Q26 為 7.42 元、3Q25 為 6.69 元）。 [IR - 00:01:17] • 多數主要市場需求穩定，網通（Networking）動能強勁，Wi-Fi 7 滲透率 2026 年達 30%，預計 2027 年提升至 40%。車用乙太網路在新車生產的滲透率超過 50%，汽車業務穩健成長。 [VP - 00:07:46] [VP - 00:23:02] [VP - 00:39:43] • AI 伺服器與 Edge AI 相關業務（含汽車、機器人）目前營收佔比為高個位數百分比，中長期目標 2030 年提升至 30% 以上。 [VP - 00:32:58] • 2026 年第三季存貨週轉天數為 136 天，較上季 107 天增加，主因為主動建立客戶備貨以因應供應鏈不確定性。 [IR - 00:05:16] 總體經濟 • 管理層持續審慎觀察外部因素，包括供應鏈產能分配與上游成本持續上升對營運的影響。 [VP - 00:06:17] 產業循環週期 • 2026 年第三季營收維持高檔，與去年同期明顯不同，去年同期（2025Q3）進入明顯淡季，今年則未見明顯季節性下滑（依據音檔日期推估）。 [IR - 00:01:56] • 第四季通常為淡季，但今年在產品組合優化與價格調整下，可能不會出現過往的明顯營收下滑。 [VP - 00:14:19] 產業供需 • 整體訂單動能進入第四季仍維持穩定，PC 市場需求較弱，但其他主要業務線需求穩健。 [VP - 00:14:19] • 供應鏈仍具挑戰性，AI 伺服器需求造成產能瓶頸，公司持續認證新上游供應商以分散風險，預期 2027 年供應狀況將有明顯改善。 [VP - 00:20:35] 產業狀況 • 網通市場基礎需求穩健，基礎設施升級與高頻寬解決方案推動成長。多口數乙太網路、Wi-Fi 7、AI 伺服器、汽車乙太網路等新應用持續擴大滲透率。 [VP - 00:06:48] 獲利 • 第三季毛利率 47.4%，季增 0.4 個百分點，年減 2.3 個百分點。營業利益率 11%，季增 1.1 個百分點，年增 0.4 個百分點。淨利率 10.9%，季持平，年減 0.7 個百分點。 [IR - 00:02:23] 公司展望、未來成長動能 • 公司對 2026 年第四季維持審慎穩健展望，預期全年各主要業務線均可成長，2027 年預期營收穩健成長，主要動能來自產品規格升級與新產品上市。 [VP - 00:06:17] • 中長期成長動能包括網通核心市場規格升級、市佔提升、高效能運算（HPC）、Edge AI、汽車、AIoT 等多元應用。 [VP - 00:13:03] 市場競爭策略 • 在多口數乙太網路、Wi-Fi 7、AI 伺服器、汽車乙太網路等領域持續取得設計案與市佔提升，尤其在管理型交換器（Managed Switch）與高階乙太網路控制器領域持續擴大市佔。 [VP - 00:07:17] [VP - 00:27:45] 營收 • 2026 年第三季營收新台幣 377 億元，季增 0.5%，年增 27.9%。 [IR - 00:01:17] 訂單 • 進入第四季訂單動能穩定，未見明顯客戶拉貨或庫存異常。 [VP - 00:14:19] [Speaker01 - 00:20:21] 產品組合 • 高規格產品組合與價格調整推升平均售價（ASP），多口數乙太網路、Wi-Fi 7、AI 伺服器、汽車乙太網路等新應用佔比提升。 [IR - 00:02:23] [VP - 00:16:52] 上游廠商 • AI 伺服器需求造成供應鏈產能瓶頸，公司持續認證新上游供應商，預期 2027 年供應狀況將有明顯改善。 [VP - 00:20:35] 下游客戶 • 客戶端庫存水位健康，未見第四季有刻意拉高庫存現象。 [Speaker01 - 00:20:21] 存貨庫存 • 第三季存貨週轉天數為 136 天，較上季 107 天增加，主因為主動建立客戶備貨以因應供應鏈不確定性。公司將持續維持適當庫存水位並嚴格管理庫存健康。 [IR - 00:05:16] 出貨週期與交期 • OSAT 產能分配瓶頸仍在，部分製程交期延長，公司已啟動供應商多元化與設計可用性（design for availability）策略以降低受限材料依賴。 [VP - 00:20:35] 新產品／新技術 • Wi-Fi 8 產品預計 2027 年下半年量產，2028 年客戶產品將更廣泛上市。Wi-Fi 8 聚焦於超高可靠性與低延遲，預期成為長週期主流平台。 [VP - 00:24:48] • 100G 光收發器（PHY）預計 2027 年量產，400G/800G PAM4 DSP 產品開發中，預計 2027 年下半年推出。 [Speaker01 - 00:33:53] 產品價格 • 自 2026 年 6 月起，因成本上升，公司已與客戶逐案討論價格調整，考量產品類別、供應狀況與長期合作關係。 [VP - 00:22:03] 出貨量 • 多口數乙太網路解決方案出貨量持續成長，2026 年多口數乙太網路營收佔乙太網路總營收超過 40%。 [VP - 00:29:10] 成本毛利 • 上游成本壓力持續，部分成本上升已超過公司可吸收範圍，透過產品組合優化與價格調整維持獲利穩定。 [VP - 00:22:03] 銷售／管理／研發費用 • 第三季營業費用為新台幣 138 億元，OPEX 比率 36.5%，季減 0.6 個百分點，年減 2.6 個百分點。公司持續投入新產品與新市場機會，同時嚴控營運費用。 [IR - 00:02:50] • 短期內 OPEX 比率預期維持穩定，長期隨高附加價值產品擴展，營收成長將快於營業費用成長，實現營運槓桿。 [VP - 00:19:14] 擴廠規劃 • 積極拓展 AI 伺服器、Edge AI、汽車、機器人等新應用市場，並持續擴大產品組合與全球客戶基礎。 [VP - 00:32:29] [VP - 00:40:42] 營業利益 • 第三季營業利益為新台幣 41.1 億元，營業利益率 11%，季增 1.1 個百分點，年增 0.4 個百分點。 [IR - 00:03:47] 業外損益 • 第三季業外收入為新台幣 6.06 億元，季減 3,900 萬元，年減 3.26 億元，主因為業外損失與金融資產評價損失。 [IR - 00:04:17] Transcript Presentation Speaker01
(00:00:01)Good afternoon, everyone. Welcome to Realtek's 2026 third quarter earnings call. This call is hosted by Realtek's spokesperson Yee-Wei Huang and deputy spokesperson Ivy Chen. The presentation materials will be available on the company website before 6 p.m. today. At the beginning, our third quarter financial results will be reported by our deputy spokesperson. This will be followed by management's remarks presented by our spokesperson.
Speaker01
(00:00:30)After the prepared remarks, we will proceed to the Q&A session. You are welcome to type your questions in the box at the lower right corner on the screen. We will address the questions accordingly. During the call, you can browse through the pages of the presentation materials at any time. Please note that portions of what are presented in this call contain forward-looking statements. Investors are cautioned that forward-looking statements involve risks and uncertainty.Actual results may differ materially
Ivy Chen - Realtek, Investor Relation
(00:01:17)from those expressed or implied in such statements. Investors should not place undue reliance on such statements. Now, I'll turn this call over to our Deputy Spokesperson, Ivy. Good afternoon, ladies and gentlemen on the line. You are currently participating in the third quarter 2026 webcast earnings release hosted by Realtek Semiconductor Corporation. Now, let's go through the third quarter 2026 financial results. Third quarter revenue reached NT$37.7 billion, up 0.5 percent quarter over quarter and rising a noticeable 27.9 percent year over year. Overall, customer demand remained stable in the third quarter, led by solid momentum in networking segments.
Ivy Chen - Realtek, Investor Relation
(00:01:56)Soft demand in some end markets, including PC, had no material impact on our overall revenue. Following the two consecutive quarters of growth, third quarter revenue held at a high level, which differs from the seasonal pattern we saw last year when it began to drop noticeably in the third quarter. A higher average selling pricedriven by a variable product mix of higher spec products and pricing adjustments that partially pass through rising cost help offset soft demand in certain markets. Third quarter gross margin was 47.4 percent, up 0.4 percentage point from the previous quarter but down 2.3 percentage points year over year.
Ivy Chen - Realtek, Investor Relation
(00:02:50)As we noted during our second quarter 2026 earnings call, we expected gross margin to recover gradually in the second half of 2026 through a more favorable product mix and disappointing pricing. The third quarter result was largely in line with our expectations. Third quarter operating expenses amounted to NT$13.8 billion.Representing an OPEX ratio of 36.5 percent, down 0.6 percentage point quarter over quarter and 2.6 percentage points lower year over year. This reflects our balanced approach of continuing to invest in new products and new market opportunities to support long-term growth by maintaining disciplined operating expense control.
Ivy Chen - Realtek, Investor Relation
(00:03:47)This result underscored our focus on driving revenue growth and improving operational efficiency and effectiveness. Third quarter operating profits was NT$4.11 billion, representing an operating margin of 11 percent, up 1.1 percentage points quarter over quarter, and up 0.4 percentage points year over year. These sequential improvementreflect a higher gross margin and a lower OPEX ratio year over year. The lower OPEX ratio more than offset the decline in gross margin. Third quarter non-operating income was NT$606 million, NT$39 million decline quarter over quarter and NT$326 million drop year over year, mainly due to the [待確認：apex loss]
Ivy Chen - Realtek, Investor Relation
(00:04:47)and financial asset valuation loss. Third quarter net profit was NT$4.1 billion or 10.9 percent of revenue, a zero point percentage point increase quarter over quarter but a zero point seven percentage point decrease year over year. Third quarter EPS as a result was NT$ [數字存疑，約 8.0；原轉寫 1.05] compared to the NT$7.42 in second quarter 2026 and NT$6.69 in third quarter 2025. Moving on to the inventory, the third quarter inventory turnover days were 136 days compared to 107 days in the second quarter. The increase mainly reflects a build-up of non-good inventory for customers.
Ivy Chen - Realtek, Investor Relation
(00:05:46)This is a deliberate decision to ensure supply continuity for our customers amid ongoing supply chain uncertainties. We will continue to maintain appropriate inventory level as needed while closely managing our overall inventory health. This concludes Realtek's third quarter 2026 financial results. Thank you, Ivy. Now, our spokesperson Yee-Wei will give management's remark.
Yee-Wei Huang - Realtek, Vice President
(00:06:17)Thank you. Looking ahead to the fourth quarter, Realtek maintains a prudent and steady outlook for its operations and will closely monitor the impact of external factors, including supply chain capacity allocation and continued increases in upstream costs. Now, let's examine the key market segments Realtek serves.The networking market's networking demand remained fundamentally resilient in the third quarter, supported by steady infrastructure upgrades and an ongoing transition toward higher bandwidth solutions. Our multi-gigabit Ethernet solutions deliver healthy growth as adoption expanded across home routers,
Yee-Wei Huang - Realtek, Vice President
(00:07:17)small and medium business networks, and servers. Our managed switches continue to gain share across enterprise, SMB, and server control plan applications, narrowing the gap with our unmanaged portfolio. In Wi-Fi, the Wi-Fi 7 penetration in PCs and routers has progressedas expected and is on track to approach approximately 30 percent this year, while 2027 designs are increasingly shifting to Wi-Fi 7. Looking further ahead, development of our next generation Wi-Fi 8 solutions remain on track for mass production
Yee-Wei Huang - Realtek, Vice President
(00:08:13)In the second half of 2027, the automotive market, while overall vehicle shipments remained broadly flat, automotive Ethernet adoption continues to expand steadily in new car models. Realtek's automotive revenue is growing steadily, supported by structural increasesin more Ethernet ports per vehicle and higher dollar content, automakers transition toward zonal and software-defined architectures. Our industry-first Ethernet switches with excellent ASIL-D functional safety certification are securing steady design gains with leading global OEMs and tier one suppliers.
Yee-Wei Huang - Realtek, Vice President
(00:09:12)Transcending our leadership in automotive network ecosystem. The consumer electronics market performance across the consumer segments varied in third quarter, Realtek's IoT business posted solid quarter-over-quarter and year-over-year growth supported by resilient demandOur strong position in smart home devices and an expanding end market applications. Our IoT platform solutions, which integrated multi-modal AI, Wi-Fi, audio and imaging, continue to gain traction across smart home and connected edge devices. TV shipments slowed
Yee-Wei Huang - Realtek, Vice President
(00:10:08)After the mid-year FIFA World Cup replenishment and amid persistent component cost pressures, although Realtek's TV SoC business remained competitively positioned, game console hardware shipments also faced near-term headwinds from elevated memory and storage prices. Nevertheless,Realtek outperformed the broader market as our products gain wider adoption across major gaming platforms and peripherals. The PC market in the third quarter, our PC and non-PC products accounted for approximately 30 percent and 70 percent, respectively. The broader PC market
Yee-Wei Huang - Realtek, Vice President
(00:11:07)continue to face challenges in the third quarter. Against this backdrop, shipments of desktop and notebook solutions declined sequentially, while peripheral demand held up better. Preliminary data from IDC and Gartner indicate that worldwide PC shipments fell 20.1 percentand 22.4 percent year over year in the third quarter respectively. The decline reflected persistent component inflation, particularly in DRAM and CPU, which raised retail prices and weighed on consumer and entry-level purchasing power. Early order pulls in
Yee-Wei Huang - Realtek, Vice President
(00:12:05)Also distorted normal seasonality, IDC projects full-year 2026 PC shipments to decline by 11.3 percent, with weakness potentially extending into 2027. Despite these short-term headwinds, Realtek continues to outperform the broader marketthrough higher content value and specification upgrades, including 2.5 gigabit Ethernet, 5 gigabit Ethernet and 10 gigabit Ethernet. Advanced audio codecs and AI camera controllers. Now, meet at long term growth engines in this
Yee-Wei Huang - Realtek, Vice President
(00:13:03)We see why supply chain and cost uncertainties limit near-term visibility. We remain confident in our multiple medium to long-term growth prospects. Key drivers include specification upgrades and market share gain in our core networking segment. High-performance computing as a new growth driver engineand edge AI
Speaker01
(00:13:43)opportunity across automotive, unmanned vehicles, robotics, and broader AIoT applications. Thank you, Yee-Wei. Now we are entering the Q&A session. Please type your questions in the box at the lower right corner on the screen, we will reply accordingly.
Q&A Speaker01
(00:13:57)The first question is from Astoria CLSA regarding demand outlook. Fourth quarter is traditionally a slow season. Should we
Yee-Wei Huang - Realtek, Vice President
(00:14:19)expect a quarter over quarter decline as usual for the early pull in the first half or are you seeing end consumer demand hold up better than expected？ Overall, order momentum remains stable heading into the fourth quarter. We are working with all set partners to ease capacity constraints and better meet customers' demand. While the fourth quarter is typically seasonally softer, we may not see the usual revenue slowdown this year, supported by higher ASPs from a more favorable product mix and pricing adjustments.
Yee-Wei Huang - Realtek, Vice President
(00:14:56)Within this generally stable demand environment, the PC market remains relatively soft. We saw a notable year-over-year decline in the PC market in the third quarter and expect further weakness in the fourth quarter, consistent with our initial outlook for a full-year decline. Despite this near-term softness,
Yee-Wei Huang - Realtek, Vice President
(00:15:26)We continue to expect growth across all key segments we serve in 2026, including our PC business. The second question is from Pat Low, Bank of America, on 2027 initial outlook. Could you discuss on the end market outlook into 2027 compared to your view three to six months ago？ Are you seeing incremental strength or softness？ Now looking ahead to 2027, we expect steady topline growth in line with our view three to six months ago, driven by higher ASP's ongoing product specification upgrades and new product launches. At the same time,
Yee-Wei Huang - Realtek, Vice President
(00:16:22)We remain mindful of potential cost increases across the semiconductor supply chain. We believe that our broad and balanced end market exposure and our diversified product portfolio position as well to capture growth opportunities. Within our existing product portfolio, we expect wider adoption of Wi-Fi 7Multigigabit Ethernet and 10G PON to support a more favorable product mix. We are also gaining additional design wins in higher-end managed switches. Our automotive business is expected to grow steadily, supported by wider adoption of automotive Ethernet and switch solutions, as well as new product tracks.
Yee-Wei Huang - Realtek, Vice President
(00:17:22)Last but not least, we are advancing in both AI server and general server applications, while expanding our presence into a broader range of AIoT applications. The next question is from Kevin Wong, Mizuho, about the gross margin outlook. How should we expect gross margin range in fourth quarter 2026？Compared with third quarter 2026？ How should we expect your gross margin outlook after factoring foundry and offset cost hike and your price adjustments in 2027？ Now as we noted on our earnings call last quarter, we expect gross margin to gradually recover in the second half of 2026
Yee-Wei Huang - Realtek, Vice President
(00:18:20)And that remains our expectation. In 2027, our goal is to maintain stable growth chip while balancing revenue growth, market share and profitability. With foundry and outside costs remaining fluid, we will take a measured approach to pricingRather than pursue price increases solely to lift gross margin. We are working closely with our supply chain partners and customers to find mutually acceptable solutions to manage these cost pressures. Next question is from Haskell, Bank of America, about OPEX's trend.
Yee-Wei Huang - Realtek, Vice President
(00:19:14)Given a high proportion of your revenue growth coming from price expansion than unit demand growth, how should we think about the operating expense growth versus your sales growth？ Well first our growth actually comes from both price expansion and unit growth. As you see from our third quarter result, our OPEX ratio declined slightly from second quarter.While keen on investing in new product development, we are maintaining disciplined operating expense management. In the near term, we expect this ratio to remain broadly stable at current levels. Longer term, as we expand our value-added solutions and enter higher end markets,We expect to
Speaker01
(00:20:21)achieve greater operating leverage, allowing revenue to grow faster than operating expenses. The next question is from Richie Daworth regarding inventory across the value chain. What is the current channel inventory level？ Could you also share your perspective on customers' inventory management？ Now based on our current visibility, inventory levels across the value chain of a customer base remain generally healthy, with no signs of intentional customer inventory build-up in fourth quarter 2026. The next question is from Daniel Yen, Morgan Stanley, on supply conditions. Could you comment on recent pricing trends and industry supply conditions across mature no-fungibles Memory and OSAT？ On OSAT specifically, have OSAT allocation bottlenecks and lead times improved in third quarter, and did the elevated working process converted into finished goods as planned？ While true, overall supply chain conditions remain challenging, with no near-term relief in cost pressures. The prioritization of AI servers continues to create bottlenecks in supply chain capacity. To mitigate these constraints, we have been diversifying our supply base by qualifying additional upstream partners. Because supplier qualification and production transition takes time.
Yee-Wei Huang - Realtek, Vice President
(00:20:35)These efforts will continue throughout the remainder of 2026. We expect more meaningful supply improvements in 2027. From an engineering perspective, we are also applying design for availability principles to reduce reliance on constrained materials where feasible.Cost increases have exceeded what we can reasonably absorb. Since June, we have therefore begun engaging with customers to discuss price adjustments on a case-by-case basis, taking into account product categories, supply conditions and long-term relationships. Looking ahead to 2027,
Yee-Wei Huang - Realtek, Vice President
(00:22:32)We will continue to closely monitor cost trends, taking appropriate actions as needed, and optimize our product mix with the aim of maintaining stable profitability while pursuing healthy revenue growth. The next question is from Sunny Lin, UBS on Wi-Fi 7 penetration.As we are heading towards end of the year and with Wi-Fi 7's penetration for 2026 at 30 percent, how about outlook for 2027？ Well with adoption gaining momentum in 2026 and most major new customer designs now based on Wi-Fi 7We are increasingly optimistic about the outlook of Wi-Fi 7 in2027.
Speaker01
(00:24:15)2027. As these platforms ramp, we expect Wi-Fi 7 penetration to rise meaningfully to around 40 percent in 2027. The next question is from Rick Hsu, Taiwan, related to Wi-Fi 8. Market expectations for Wi-Fi 8 commercialization appear to be moving forward, with major chipset vendors preparing mass production in late 2026. Does Realtek believe the industry could enter a meaningful Wi-Fi 8 upgrade cycle in 2027？ And how well positioned is Realtek to capture this opportunity relative to
Yee-Wei Huang - Realtek, Vice President
(00:24:48)the Wi-Fi 7 penetration？ The Wi-Fi Alliance has locked in the following key milestones for Wi-Fi 8. After the Global Plugfest interoperability trial, the first large-scale pre-certification test event took place simultaneously in Beijing, Taipei, and California during September 7 to 11. The key milestones includeNext year by June, Wi-Fi Alliance targets completion of the certification test plan, and by September 2027, official Wi-Fi 8 certification will be launched. With that understanding, while expecting and preparing for additional rounds
Yee-Wei Huang - Realtek, Vice President
(00:25:47)of Wi-Fi 8 Plugfest, we are actively working with customers on Wi-Fi 8 design aims and expect our Wi-Fi 8 products to begin ramping up in the second half of 2027. We expect customer products based on these solutions to become more widely available in 2028.After the official Wi-Fi 8 certification launch, broader adoption will develop more meaningfully thereafter. Building on Wi-Fi 7, Wi-Fi 8 focuses on ultra-reliability and lower, more consistent latency in real-world conditions. We believe these enhancements
Yee-Wei Huang - Realtek, Vice President
(00:26:46)give Wi-Fi 8 the potential to become a widely adopted platform and have a long product lifecycle. Our Wi-Fi 8 solutions are being developed with industry-leading specifications. Combined with our active engagement with customers on design-ins, this positions uswell to benefit from the transition and create opportunities for further market share gain. In the meantime, we continue to capture the growing Wi-Fi 7 opportunities in 2027. The next question is from Sunny Lin, UBS, on Managed Switches. What's the latest progress of your shared gain and managed switches？
Yee-Wei Huang - Realtek, Vice President
(00:27:45)What's the split between managed and unmanaged switches for your switch sales and shipment？ Well, we have seen healthy growth in both our managed and unmanaged multi-gig switch products this year. We expect this momentum to continue into 2027 as we expand our customer baseand broaden our presence in router, SMB, and enterprise networks and servers. Within our switch portfolio, managed switch revenue is narrowing the gap with unmanaged switches. Beyond gaining market share with existing products, we are expanding our portfolio to offer higher speeds, greater bandwidth,
Yee-Wei Huang - Realtek, Vice President
(00:28:42)and more sophisticated features to meet increasingly demanding market needs. As we have previously highlighted, we believe our switch business will continue to be one of Realtek's growth over the foreseeable future. The next question is from Daniel Yen, Morgan Stanley, on Multigig Ethernet.How does demand tracking for high bandwidth 2.5G, 5G, and 10G Ethernet controllers and multi-gig Ethernet switches and edge networking deployment？ While our Ethernet business expands beyond PCs into a broader range of networking applications including routers, ports, and servers, we are seeing shipment growth and more pronounced shift
Yee-Wei Huang - Realtek, Vice President
(00:29:40)to higher speed connectivity. Rising adoption of 2.5G, 5G, and 10G Ethernet in these applications is supporting revenue growth. Our multigig Ethernet solutions account for more than 40 percent of our Ethernet revenue. At the same time, one gigabit Ethernet productcontinue to see healthy demand as our application coverage broadens. In client computing, bandwidth demand from local on-premises LLM processing is accelerating the transition toward multi-gigabit connectivity. We are seeing 5G Ethernet broaden its footprint
Yee-Wei Huang - Realtek, Vice President
(00:30:39)on desktop motherboards, while 10 gigabit Ethernet is gaining traction in AI-capable desktop studio PCs and next-generation prosumer systems where handling massive model checkpoints and large files demands near instantaneous network throughput.
Speaker01
(00:31:06)The next question is from Nicholas Ly, Citi, on AI server related progress. Could you share any progress
Yee-Wei Huang - Realtek, Vice President
(00:31:26)on your AI development or any AI angle Realtek might have？ Any AI sales exposure number you can share with us？ As AI expands across infrastructure and edge devices, Realtek sees growing opportunities to increase our content through connectivity, peripheral, and high-speed interconnect solutions. Today, we are making concrete progress in expanding our server presence, with products supporting management connectivity and peripheral functions, including Ethernet and switch solutions. xPON,
Yee-Wei Huang - Realtek, Vice President
(00:32:00)SSD controllers, IO bridges, and USB hub controllers. Building on this foundation, we are moving into higher speed service space interconnects, targeting opportunity in smart NICs, PCIe retimers, redrivers, and switches. Optical controllers and active optical cables.This expansion opens higher value opportunities in AI infrastructure. On the customer side, we are making inroads into major cloud service providers' AI server platforms while also engaging with leading traditional server brands and emerging system vendors. These engagements provide multiple avenues
Yee-Wei Huang - Realtek, Vice President
(00:32:58)to expand our presence across the server ecosystem. In terms of revenue exposure, HPC-related businesses and edge AI-related businesses including automotive and robotics currently account for a high single-digit percentage of our total revenue.Our medium to long term target is for these businesses to collectively contribute more than 30 percent of Realtek's total revenue by 2030. The next question is from Michelle Fubon on 100G and 400G and also 800G optical solutions.
Speaker01
(00:33:53)Please provide color on the ramp-up progress on our 100G optical PHY and the product development progress on 400G and 800G PAM4 DSP. Well, we are currently working with customers to qualify our 100G optical PHY solution and expect a more meaningful production ramp next year. In parallel, development of a 400G and 800G solution is underway steadily with launches planned for the second half of 2027. Next question is from Heffield, Bank of America, regarding AI ASIC opportunity. Could you update us the latest development of your potential opportunity in AI ASIC？
Speaker01
(00:34:49)How many projects are in the pipeline and if any of the projects
Yee-Wei Huang - Realtek, Vice President
(00:35:13)complete NRE stage and move into massive mass production？ Which nodes would these projects be designed or manufactured on？ What would be the use of these chipsets？ Training, inference, CPU or networking switches？ Our AI ASIC opportunities are currently at the early stage.Of customer engagement, building on our strengths in high speed connectivity and interface IPs. Given confidentiality requirements, we are not disclosing specific project counts, applications, or customer details. At this stage, our focus remains on disciplined execution against key design milestones
Yee-Wei Huang - Realtek, Vice President
(00:35:47)rather than providing mass production timelines. As we advance to leading edge technology nodes, we see 3nm as a key platform for developing high speed interconnect
Speaker01
(00:36:14)products for server applications and for creating synergies across our broader product portfolio. The next question is from Jennifer Xie, J.P. Morgan, related to Edge AI. When do we
Yee-Wei Huang - Realtek, Vice President
(00:36:36)expect more meaningful product upgrade driven by Edge AI demands given the very weak PC market？ Are we still seeing AI PC demand in next six to twelve months？ Now viewed edge AI including on-premises servers or edge servers as a structural opportunity to drive specification upgrades and increase our content per device rather than as a gross driver depending solely on a PC demand recovery. Our connectivity and peripheral portfolio enables devices to communicate among one another and support how users interact with them in the most natural manner.
Yee-Wei Huang - Realtek, Vice President
(00:37:17)As edge AI advances, evolving requirements for higher bandwidth, lower latency, optimal power efficiency, and richer multimodal interactions can create opportunities for higher value solutions across our portfolio. But the traditional PC market outlook remains uncertain.Our focus over the next six to twelve months is on specification upgrades and content gains in AI PCs, edge servers, and other AIoT devices, rather than relying on a broad-based increase in PC shipments. Beyond PCs, we are seeing opportunitiesin
Yee-Wei Huang - Realtek, Vice President
(00:38:20)wearable home appliances, edge servers, and a wide range of smart devices, as well as in the broadband infrastructure supporting these applications. Over the longer term, we also see potential in physical AI applications, including automotive unmanned vehicles and humanoid robots. Overall, we view Edge AI as a broad multi-year growth opportunity, with a pace of upgrades varying across applications. There are two questions related to automotive business. First, Daniel Yang from Morgan Stanley asks, could you provide an update on Ethernet adoption and the broader automotive business？ Particularly regarding new design wins for your SOD integrated Ethernet switch as OEMs migrate towards zonal architectures. So currently, we estimate that automotive Ethernet has achieved over fifty percent penetration in new vehicle production. While global automotive shipments remain flat-ish, our growth
Yee-Wei Huang - Realtek, Vice President
(00:39:43)not reliant on higher vehicle volumes, instead it is fueled by structural increases of Ethernet port counts per vehicle, alongside our continuous penetration into new OEM customers and steady design win momentum. As OEM double-E architecture evolves,their requirements naturally shift toward higher density, safety-critical solutions. Our product roadmap aligns closely with this trend. We are expanding our portfolio with more integrated higher-port-count automotive switches and developing advanced gateway controllers to address the demands of future software-defined vehicles.
Yee-Wei Huang - Realtek, Vice President
(00:40:42)These high integration solutions not only broaden our design win pipeline across global OEMs and tier ones, but are also expected to increase our content per vehicle. Looking ahead, we expect to maintain our leadership in automotive Ethernet and switches. We're using this strategic position
Yee-Wei Huang - Realtek, Vice President
(00:41:11)to accelerate adoption across our broader product portfolio and further expand our presence in the automotive market. Next, Sunny from UBS would like to ask： Why does Realtek's current market share for auto Ethernet globally and in China？ Any new designs for the tier one OEMs and are there updates from the Japanese auto OEMs？ But while we do not comment on specific market share figures, we are confident on our strong leading position globally in the China market. In terms of new customer traction, we are making encouraging design-in progress with tier-ones and global OEMs.
Yee-Wei Huang - Realtek, Vice President
(00:42:08)which continues to broaden our footprint across key regions including Japan's and China's supply chain. Our focus remains on deepening penetration across diverse international markets to maintain a balanced and resilient customer base. Next question is from Michelle Huang, Fubon, she would like to askWhen can we expect revenue contribution from robot related products？ Now as shared previously, our wired and wireless connectivity solutions are already deployed in the first wave of major commercial robots. It is worth repeating that robotics and automotive products
Yee-Wei Huang - Realtek, Vice President
(00:43:04)sheer great many technical requirements. For example, automotive one-pair Ethernet is well suited for robots in-body networking thanks to its lightweight, high quality, and safety emphasis. Humanoid robots nevertheless demand an additional level of sophistication.Humanoid robots have drawn significant market attention, though we believe market deployment will take time. We are actively collaborating with world-leading humanoid developers and already shipping solutions to support their prototype builds and early stage deployments.
Yee-Wei Huang - Realtek, Vice President
(00:44:01)This early involvement positions our products for integration into their next generation platforms. In parallel, we continue to expand our presence in the broader industrial and commercial robotics market to capture near-term business momentum. The next question is related to PC demand from Aaron Jen Nomura.The PC industry demand seems to deteriorate throughout the year.What's an initial view for next year？ While the latest industry data points to continued pressure on PC demand, IDC and Gartner reported year-over-year declines of 21.4 percent and 22.4 percent respectively.
Yee-Wei Huang - Realtek, Vice President
(00:44:59)in worldwide PC shipments in the third quarter of 2026. For 2027, IDC's September forecast projects a further 4.1 percent decline in worldwide PC shipments, following an expected 11.3 percent decline this year.Citing persistently high memory prices as a headwind. Against this backdrop, we remain cautious about a broad-based recovery in PC demand next year. We have also seen a noticeable slowdown in PC sell-through compared with the first half of the year.
Yee-Wei Huang - Realtek, Vice President
(00:45:55)Consequently, PC customers are adjusting year-end inventory in the fourth quarter, which is largely in line with our expectations. As noted earlier, we remain confident in our ability to outperform the broader PC market through specification upgrades and higher content per device.Beyond the traditional PC market, we are also seeing opportunities across the broader on-premises computing landscape. These efforts provide additional avenues for growth, rather than relying solely on a recovery in traditional PC demand. Realtek has weathered downturns in individual market segments
Yee-Wei Huang - Realtek, Vice President
(00:46:54)many times before and has emerged stronger each time. Barring a broad-based global downturn, we are confident in our ability to navigate
Speaker01
(00:47:19)sector-specific weakness, such as what we are currently seeing in traditional PCs. Thank you, Yee-Wei. Since there are no further questions, we will conclude the meeting now. Thanks for your participation today. Please feel free to contact our IR team if you have further questions after the meeting. The replay will be available on the IR page of the company website before 6 pm. Thank you and have a good afternoon.