活動_環球晶6488_2Q26法說逐字稿_20260804

原始紀錄

First, allow me to share our latest observations on the semiconductor market and provide further details on our operating performance this quarter and several important recent developments. Since our last earnings call in May, we have become more positive on the mid term to long term semiconductor outlook. AI and high performance computing demand continues to grow while customer inventories are returning to healthier levels. Demand is also improving across industrial power management, memory and other mature node applications. We see AI as more than a short term infrastructure cycle. It is rapidly entering work, daily life and physical applications, reshaping how business and industries operate. As AI expand from centralized cloud infrastructure to edge computing, smart devices, energetic AI and physical AI computing demand and semiconductor applications will continue to broaden creating stronger long term growth. At the same time, advances in advanced packaging, hbm Sequum photonics and process nodes are increasing wafer usage and packaging and technical requirements. This is driving demand for high purity, high flatness, low defect and specialty wafers, supporting long term growth in silicon wafers, SOI wafers and other high value products. Recent market improvements is already reflected in our operation. Excluding new capacities, our 12 inch lines, 8 inch lines, 6 inch lines, Ganon Silicon lines are almost fully loaded. Our silicon carbide utilization is improving very utilization rate is improving very rapidly as well. This shows that the recovery is expanding from AI and advanced applications to more wafer sizes and end markets. Our Japan operations also delivered very good result. The Niigata plant achieved record quarterly revenue in the second quarter of 2026 while its June and first half revenue were the second highest on record. Meanwhile, the recently expanded MJO Utsunomiya site set new record new shipment records for June, the second quarter and the first half. These results demonstrating that improving demand and new capacity and our long term Global expansion are translating into actual shipments and operating contributions. Global wafers is now entering a new stage of growth as new capacity moves into customer qualification and production ramp up. Our focus now is shifting from construction to qualification ramp up and investment returns. Our Global manufacturing footprint is strengthening supply capability and enabling closer customer support and sustainability sustainable long term growth. While sharing this market and operating updates, I would also like to provide further update on the recent fire incident at our Novara FAB in Italy. On July 20th local time, a fire occurred in part of the 8 inch wafer production line production area of our Novara Italy operation. We immediately activated emergency response, evacuation and site safety procedures. Most importantly, all employees were safely evacuated with no injuries or environmental impact. Based on our current assessment, the damage was mainly limited to part of the back end process area of our 8 inch production line. It did not affect the entire facility or the full 8 inch production line. Majority of the process areas and equipment were not directly damaged by fire or heat providing this providing a very important base for our recovery. The newly expanded 12 inch line in Novara was completely not affected and already resumed operations soon after safety checks were completed. Equipment installation, customer qualification and capacity expansion remains on schedule. Core system of our 300 millimeter silicon operation line also remain fully operational. We have begun a Global science to restore our operations safely and efficiency. Our goal is not only to recover existing operations but also to further strengthen safety, resilience and long term operational capability across all sites. Damage assessments, recovery activities and insurance claims are also underway. The Novara site is insured for property tax and business interruptions, so both of these Our Novara site have both property damage insurance and business interruption insurance which is expected to partly mitigate the finance the financial impact to us. Subject to policy terms and the insurer's final assessment, the restart schedule will depend on regulatory approvals, safety inspections and further progress to support our customers to support customer supply, we have already activated our Global manufacturing network, cross site qualification system and backup plans. Products already qualified at other sites will be immediately supported through alternative facilities where possible. For products not yet cross site qualified, we will work closely with our customers to accelerate validation and capacity transfer. Before the incident, improving demand and production trends supported our expectation of QOQ quarter on quarter revenue growth in the third quarter this fire the fire may cut down this growth. The actual impact will depend on the damage assessment, recovery progress, cross site support and customer qualification status. Our top priority remains employee safety, orderly recovery and supply continuity over the longer term. This event again highlights the strategic value of our diversified Global manufacturing footprint. Supply chain resilience is built through long term investment process qualification, technical expertise and close customer collaboration. We are confident in managing this event and continuing to serve our customers with a saver, stronger and more resilient operation platform. Now let me walk you through our overall financial performance for the second quarter and the first half of 2026. If you have our presentation materials, please Turn to page 4. Global Wafers reported second quarter revenue of 15.2 billion NT representing an 8.8% increase from the previous quarter. For the first half of 2026, revenue totaled $29.2 billion NT while gross profit was NT 6.1 billion with a gross margin of 20.7%. Please turn to page 5. For the first half 2026 operating margin stood at 9.9% while net profit margin was 19.4% primarily supported by non operational gains from the valuation of our investment in Siltronic shares. Page 6 please EPS for the second quarter came in at 7.9 NT per share and 11.87 NT per share for the whole first half which is over 80% a 0 80% higher than higher. YOY prepayment remained at 20.8 billion NT reflecting our continued fulfillment of long term supply agreement supply commitments based on customer delivery schedules. We are also discussing long term supply agreements with multiple customers to deepen partnership and improve future order and business feasibility. Page 7 please Global supply chain shifts are changing customers sourcing priorities beyond quality technology and cost. Customers increasingly value local supply stability, traceability and low carbon manufacturing. The advanced packaging and process technologies evolve. Wafer intensity, product specifications and qualification requirements are also rising. However, qualified suppliers with advanced products, a Global footprint and low carbon capabilities remain very limited. Global wafers manufacturing sites across Asia, American and European allow us to stay very close to our customers and provide long term supply solutions combining local production, cross regional backup, traceability and also low carbon manufacturing. Please turn to page 8 if you have our material with existing lines operating at healthy utilization and new capacity moving into customer qualification and mass production, our focus now is shifting to higher utilization, better efficiency and realizing the long term value of new capacity. Our manufacturing sites across Asia, American and Europe allow flexibility capacity allocation based on customer locations, demands and qualification progress supporting more local and resilient supply. We are also expanding SOI wafer, gallium nitride Gallium silicon line and 12 inch silicon carbide square wafers and other advanced wafer products. Most new and expanded sites focus on high spec and specialty applications. By improving capacity returns, Optimizing Global resource and upgrading our product mix, we will continue to strengthen long term growth and value. Next I will share our view on demand and across key applications. Semiconductor growth is supported not only by cyclical recovery but also by long term structural trends. AI infrastructure remains the main growth driver supported by higher capital spending and continued growth in agentic AI inference and cloud edge integration. Memory supply remains very tight while long term agreements provide better demand visibility. Smartphone and PC demand is broadly stable but AI devices and replacement cycles should increase semiconductor content per device. Industrial and power management should increase semiconductor content should demand remains very strong. Industrial and power management demand remains very strong supporting 8 inch wafer demand. Automotive demand is mixed but continue to trend upward. Adas software defined vehicles and smart features are increasing semiconductor content and wafer intensity per vehicle. Robotics and physical AI are also driving components demand Advanced Packaging HBM stacking Continue to raise demand for advanced and specialty wafers through more wafer layers, tighter specification and greater process complexity. Overall, AI remains the key structural growth driver while market improvement is expanding across more applications. This strengthens our confidence in mid to long term outlook for the silicon wafer industry or I should put it that way for silicon and compound wafer industry. With that I will hand over to Leah to take you through our overall company overview and our financial performance. Leah please thank you Doris. I will quickly update Global Wafers recent development and answer questions we have received so far. Page 12 AI continues to support long term industry growth. Since the start of this year, major hyperscalers have raised AI spending driving expansion in advanced logic, HBN and related capacity. More importantly, AI is expanding beyond cloud data centers into devices and physical applications, broadening semiconductor demand. This investment is translating into steady wafers demand as shown by recovering Global wafer shipment in page 13. As AI expands from the cloud to agent physical applications, it will drive broader demand for computing, sensing, connectivity and power chips, increasing wafer intensity. These trends align well with Global wafers. Portfolio Advanced computing, HB and packaging and process technologies will drive demand for high spec 12 inch silicon wafers. Silicon photonics, high speed connectivity, sensing, AR automotive and power systems will expand demand for SOI, GAN, SIC, advanced AP and polished wafers and square wafers while supporting 8 inch and 6 inch material node demand. Global Wafers Broad coverage across wafer sizes, materials and technologies allows us to capture AI driven demand, improve our product mix and increased product value. Please turn to page 14. Our Global expansion projects continue to advance with customer qualifications and production ramp up. Our takes aside, GWA has qualified with several tier one customers and continues to optimize process key customers. Long term agreement and strategic funding will further strengthen advanced wafer supply in US demand for new 12 inch silicon wafers and we also have a 12 inch soi capacity in Missouri and the demand is very strong. Customer sampling continues and several rf, SOI and silicon photonics products have entered small volume production. The new 12 inch line in Novara, Italy has completed major construction with initial qualifications progressing well. Productions will ramp up with customer demand. New capacity in Utsunomiya, Japan is fully in place. Shipments reach the record highs and while capacity utilization remains high and operating and the financial performance continue to improve. We will also apply for government subsidies at each project reach its respective milestones. More importantly, these investments strengthen our competitive age. Customers now look beyond price to local production, supply stability and the closer technological cooperation as supply chains become more Regional Global Wafers Diversify the Global footprint is a key advantage in page 15. Advanced packaging HBN and advanced nodes use more silicon and the required tighter wafer purity, Flatness, defect control, uniformity and tolerances. Scaling, stacking and integration increase variations can affect yield and performance, raising the value and high spec wafers. Global wafers continue to invest in R and D and align with customer roadmaps through capacity expansion, qualification and ramp up. We are expanding advanced and specialty wafer supply. Our products are advancing through expansion, qualification or commercialization, positioning us to capture high value growth. Please turn to page 17 for our Q2 financial highlights. Our Q2 revenue increased 8.8% quarter over quarter driven by higher shipment volume. However, the benefit was partially offset by the ramp up cost and additional depreciation associated with new capacity, including the commencement of GWA building depreciation in April. Also, higher siltronic shares price increased our pre tax profit and related bonus accruals, while higher freight and energy cost also weigh on our profitability. Despite these cost pressures, stronger shipment and improved capacity utilization supported our earnings growth together with higher non operating contribution from the Siltronics macro market. Valuation Our eps improved to 7.9 per share in Q2 in page 19. This is our first half performance. Our first half gross margin was 20.7% down by 5.5 percentage points. This mainly reflects pricing agreed during last year's weak market which has not yet fully captured the recent demand recovery as well as the higher qualification and the ramp up cost at our new sites compared with last year when new sites were mainly under construction and the initial equipment installation. More equipment capacity and staff are now in place, therefore increased validation, operating fixed and rebar cost. GWA also began recording its building depreciation in April this year, increasing the impact on the first half margin. As customer qualification progress and utilization rises, our cost absorption should gradually improve. Also, the movement in reported earnings were also influenced by non operating valuation items related to siltronic share price fluctuations. Global wafers hold siltronic shares while our German subsidiary also issued overseas bonds with warrants linked to siltronic shares. Under ifrs, both the investment and the warrant related liabilities are marked to market in the second quarter. Silotronic share price rose from around €80 at the end of April to over €100 at the end of May. This is an increase of more than 30%, therefore generating substantial unrealized valuation gains. However, the share price subsequently declined to approximately €82 by the end of June. This is a dropped more than 20%. This not only reduced the fair value gains recognized on the cotronic shareholding, but also resulted in additional mark to market impacts from the warrant linked liabilities associated with the overseas bonds. Therefore amplified the effect on the second quarter pre tax profit and eps. These valuation changes are non cash in nature and do not affect our operating cash flow. Excluding these non operating items, the underlying business continued to improve. Our second quarter revenue grow by 8.8% QoQ and the June revenue increased by double digit and increased by 16% mom reflecting the strengthening customer demand and higher shipment values and our first half EPS rose to nearly 12% per share. This is 80% higher than the first half 25 EPS here is our income statement. This table also shows a simulated CAS excluding major Global expansion projects. Our first half revenue would decrease from the current 29 billion NT to about 27.5 billion NT while gross margin will rise from 20.7% to 32.4%. The current financial pressure mainly reflects the early stage cost of new capacity which support future growth. These investments are essential to capture rising wafer demand and growth in advanced wafers. As qualifications, production and utilization increase, this benefit will gradually flow through revenue, product and profitability. Page 20 shows our balance sheet. At the end of the second quarter, our cash and cash related assets totaled about 52.9 billion NT with ample liquidity. Our current quick ratio also improved respectively and our debt ratio remained stable. As the Global expansion shifts from capital investment to qualification ramp up, our financial structure is becoming more stable. We will maintain prudent cash management and sufficient financial flexibility to support operations and long term growth. Now I would like to address both the questions we have received from investors recently and those we anticipate will be raised. Okay, the first question is about price. How does the company view current supply, demand and pricing trend in the silicon wafer market? Over the past two years the silicon wafer industry has faced pricing pressure. At the same time, rising energy, logistics, raw material and labor cost together with increasingly demanding product specs and technological requirements for advanced applications have driven up the overall cost structure. More recently, industry supply demand conditions have gradually improved and the order visibility strength. The demand outlook for the second quarter is meaningfully stronger than that of the first half. With sport based recovery and the strong growth momentum across all wafer sizes, industrial power management and energy related applications also continue to recover. Our utilization rate across all silicon all diameters remained at very high level and the gain is fully loaded and the SIC continues to improve steadily. On pricing, we are actively engaging with our customers we are communicating openly about the pressures from the above mentioned and communicating openly and fairly. So we aim to gain customers understanding and support. So as the condition vary by product and speak, so we do not comment on individual pricing or negotiation progress. So please understand the second question is regarding our lota. What's our LOTA current coverage ratio? Has customers willingness to make LOTA commitment increased beyond memory customers? Are you seeing largest customers entering into new lot agreements? How do you see the future evolution of LOTA in terms of pricing? Due to commercial confidentiality we are unable to disclose LTA specific coverage ratio. However, as the demand for AI, HBN and advanced nodes continues to grow, we are seeing an increasing number of customers actively discussing new LOTA with us to secure future supply capacity assurance and localized sourcing capability. Recently we have secured a 10 year LTA with a Global customer and we have received strategic financing support. This agreement represents the longest lot in our history and reflects customers commitment to secure a local supply. We have also observed that this trend is no longer limited to the memory segment. An increasing number of customers are actively engaging with us on long term partnership agreements and with discussion now extending beyond memory applications to include logic and specialty wafer products. Looking ahead, lots are no longer focused solely on pricing or volume commitments but are evolving toward longer term and more flexible partnership models encompassing price adjustment mechanism, flexibility and adaptability to changing market conditions. The next question is when will the supply demand reach balance or even undersupply in silicon wafer phase? We believe the supply demand tightening in the semiconductor wafer industry is already underway and is already happening. We continue to see high utilization rate across our all diameter production lines, stronger customer order activity, improved order visibility and a growing willingness among customers to secure capacity years in advance. Our recent long term agreement with customer 10 year long term agreement this is another clear indication of this trend. This development suggests that market conditions are continuing to tighten with supply for certain advanced 12 inch products and applications already become noticeably constrained. While it is difficult to define a specific point at which the entire industry enters under supply environment, the trend toward tighter supply demand condition is already evident and is already happening. The next question is that is about what do we see the next major growth opportunities in semiconductor materials? From our perspective, the most significant AI driven opportunities are concentrated in three areas. The first is 12 inch silicon wafers. This is a large source of demand growth supported by the expansion of advanced process technologies and AI infrastructure. The second is silicon photonics which has already emerged as one of the fastest growing applications. We are particularly optimistic about Silicon Photonics Based on SOI Wafers Global Wafers has established a strong position in the SOI market. Our Missouri based MEMC is the only US Supplier with proprietary technology and vertically integrated manufacturing capabilities and IP dependent layer transfer technology. So this position us well to benefit from the rising demand for these high speed optical interconnects in AI data center. In addition, we also see that AI requires not only computing power but also efficient power management and energy conversion. As a result, SIC and Gallium Nitron which is widely used in power management, power conversion and industrial applications offers substantial long term growth potential. Overall, we believe that 12 inch silicon wafers represent the largest demand opportunity. Silicon Photonics and SOI offer the fastest growth trajectory and again NSIC provides attractive long term value creation potential. This will be the key growth driver for Global wafers going forward. The next question is about gwa. Following the signing of the LOTA with the key memory customer, does this mean that the Phase two of your GWA has been confirmed? Okay, based on the scale of the demand reflected in this 10 year LTA, further capacity expansion is a natural and necessary next step. As we have previously communicated, Phase one and Phase two of our Texas facility are located within the same building. The overall Texas campus has been planned with six phases in total. During the construction of Phase one, we also complete the building shell for Phase two along with most of the shared infrastructure and utilities. As a result, future capacity expansion does not necessarily require constructing a new building. Instead, it will mainly evolve additional production equipment and enhance support infrastructure such as power supply, wastewater treatment and outer utility capacities. Compared with the initial phase of construction, future expansion are expected to be significantly more capital efficient and operational flexible. In addition, government incentives including chipset support and the investment tax credit AMIC are expected to further reduce expansion costs enhance overall project returns. In other words, our near term priority is to continue improving the productivity and output of Phase one while gradually utilizing the space and infrastructure that were originally reserved for Phase two. Therefore, we fully expect our capacity to increase over time and we will execute those expansions in the most efficient and disciplined manner based on customer demand and market conditions. Okay, the next question is about our Novara fire incident. So when do you expect Novara to resume operations? We are actively conducting damage assessment and recovery planning while leveraging our Global manufacturing network to mitigate customer impact through tolling arrangement under which selected process steps are supported by other Global wave resistor sites. Products already qualified for quart size manufacturing will be prioritized while qualification activities for additional products are being accelerated in collaboration with Customers. Actually, the incident mainly affected certain downstream process equipment within the 8 inch fab in Italy. It did not impact the entire production line. Therefore, we are implementing a phased recovery strategy allowing unaffected operations and recovered production areas to gradually resume manufacturing activities. The AP production building was not affected by the incident at all and the old AP reactors remain intact and are being progressively restored in accordance with the plan based on our current process AP operations. This could be resumed earlier than our original plan with certain production activities anticipated to restart in mid August. In parallel, other upstream manufacturing operations are undergoing equipment recovery and qualification activities and they will gradually resume production according to the plan as the incident mainly affected downstream operations. So now we are arranging for other sister sites to support selected process steps through tolling arrangement and we are working closely with customers to accelerate the product qualification and production transfers where appropriate. In addition, except a limited section surrounding the fire's point of origin that remains subject to final structural review, the main building has been confirmed safe for recovery activities and recovery work continues to progress as planned. As equipment recovery, customer qualification and cross site manufacturing support continue to advance. Production capacity and shipment capability are expected to improve progressively over time. So we will continue to implement recovery and supply chain support majors who restore customer supply chain as efficiently as possible. The next is about our insurance. So how much insurance compensation does the company expect to receive for the Novara fire incident? So we have already initiated the insurance claims process and relevant expert teams have already begun their investigation and assessment. The incident mainly affected certain downstream process areas, so the facility is covered by a comprehensive insurance policy including both property damage and business interruption coverage. Because the loose assessment and the claims process are still progressing as planned, the key factors including the cause of incident, the extent of the damage and the period of business interruption remain subject to further evaluation and confirmation by the insurers. The actual claim amount and the timing of any insurance related gain recognition will be determined based on the final assessment results and applicable accounting standards. So the next question is also about the Novara fire incident. What is the expected impact on revenue of the fire? So the incident is expected to have some impact on our operations and revenue. However, the actual magnitude remains under assessment. Given that the utilization rates across our major 8 inch manufacturing sites are currently at very high levels, immediately available spare capacity is limited and therefore some impact may be unavoidable. Prior to that incident, we expected the third quarter revenue to be higher than that of the second quarter. Now, we are continuing to work toward achieving sequential growth through various mitigation measures. To minimize the impact, we have activated our Sister sites and the Global manufacturing network. So we are using the cross site capacity allocation, production transfers and the supply chain coordination to support our customer and to mitigate the loose. Okay, that's the questions I received so far. So now we are open for the tax questions. Okay, let me start from some question in Chinese talking about that last conference call. We expect that the depreciation fee this year will be around 12 billion NT and the second quarter is only 2.4 billion. So does that mean that the second half depreciation cost will be significantly higher than H1? I think the answer is no because 2.4 billion NT, that's for Q2 only. Q1 is another somewhere around 2.3, 2.4, about this range. So the first half is Q, close to half, close to 5 billion NT depreciation. H1 though H2 will be higher, slightly higher than H1 because H2 will have more depreciation for GWA, new equipment, new depreciation. And also we will have more depreciation from St. Peter soi as well because our 300 millimeter soi start ramping up. So we expect that we have a little bit more depreciation. So the second half depreciation will be higher than H1 but it's not significant higher than that. It will be very just increasing as the production ramp up. So that's the first question and the second question is what capacity utilization is needed for Shearman phase one to break even. This depends on quite a lot of details and please allow me to keep this confidential for a while because we are having some pricing structure discussion with some of our customer right now. So there will be some factors which can affect the gross margin break even time. One is that the new ASP negotiation number two is that if we received AMIC on schedule or earlier than our expectation, actually our depreciation costs will reduce as well. So we are working with the related party to try to figure out that how much we can improve our asp. And also we try to figure out that if we can get the AMIC on schedule. So these are the factors. So sorry for not being able to give you more detailed information about this one. The next question is why 2026 second quarter 26 OPEC ratio was high and will it be a new norm or any reason behind. No, this will not be a new norm. The only reason for that is because Q2 we had a big profit, a big part of the profits from our Sochronic shares valuation market valuation. And this valuation will pop up our Other income. So our margin looks higher because of the valuation. And according to our company policy we have to recognize or reserve our bonus every quarter. So when the margin based on the margin the profit of that specific quarter. So if that quarter profit is high then we have to reserve higher amount of potential bonus. And this will be true up every quarter. When we finalize our quarterly report we will check the actual performance, actual profitability and also the updated especially other income of those mark to market valuation numbers. So this will not be the new norm. A matter of fact our expectation is to reduce our OPEX percentage when the operation is more stable because the volume is, our revenue volume is increasing. So of course we have more and more R and D expenses because a lot of advanced ones. But our goal is to remain flat or slightly lower than where we are today. So this will not be a new norm. And next question said, do you believe that the prepayment balance has already bottomed this quarter and could begin to increase from here? I think we have very high confidence that the answer is yes. Because we have, we as we announce several weeks ago that we signed a 10 year long term agreement with a very important AI memory company, Micron. And the prepayment link together with that one is over is US$500 million. So we haven't received the money yet. So we are still working on some detailed procedures. So when we receive the money then our prepayment I think we will have, I think now is the bottom and not only the LTA we signed, we have already concluded with Micron. Matter of fact we are working with several other new customers right now talking about new LTAs for new products. And our policy is that we still whenever we have new supply agreement, we will still follow our rule that we will have free payment to make sure both parties honor the lta. So yeah, so I think that now is the bottom and we will have new lta. We will conclude new LTA very soon. Okay. And next is. We would like to know the gross margin guidance as well as the depreciation pressure for gross margin guidance. Sorry. According our company policy, we don't comment too much about the specific number of price or margin. But in general I think and you know part of the reason, it's very hard to comment. As I said that we are working on the discussion with our customer for a new year. New year, new year, next year's older status. So maybe new price will be discussed and maybe product mix will be different from this year. So there are still a Lot of factors which is not finalized yet. So it's hard to comment the gross margin. But depreciation will keep increasing. This is very sure because quarter by quarter we have more and more. More and more tours meet the depreciation criteria. So we have to start depreciate our tools. So depreciation cost will increase in the next several quarter. That's the current trend and next one is Global Wafers continue benefit from demand. Under the same industry trends. How do you think about how do you view TSC Taiwan Specialty Chemical? How do you view TSC's current operating performance? I think TSC performance is very good. Matter of fact, up to June they have already achieved 17 months mom consecutive revenue growth chemicals especially chemical itself. I'm not talking about the consolidated revenue together with SGT. So chemical revenue only up to June already 17 months mom growth consecutively. And also TSC is going to make a further capacity expansion for Dysat and their main product by end of the year. Their current capacity is about 26 ton per year and they will reach they will increase to up to 30 ton per year by end of the year. That's Dicide and their number one most important product. And next year the plan is that by end of next year they will be able to further increase their total capacity of 40. So they are very aggressive. The reason for this aggressive expansion is that their utilization rates are super high right now. For chemical their utilization rate is almost 19% and for specialty chemical 90% utilization rate is really very high. So that's why they keep expanding capacity and they keep receiving more and more commitment from customer as well. So that's number one. I think TSC is doing very good revenue wise and also from capacity expansion wise you can see that they are very aggressive. Not only Dicilin but also some other product like ahf. AHF is a new product, one of the most important new product this year. The capacity. The capacity is good based just start ramping up right now. Although they just started ramping up but they have already made a decision to initiate to kick off the expansion for AHF and for precursor. Precursor is under qualification now so very soon the precursor will start ramping up as well. So they have a lot of good things about thc. Overall performance is very good. Okay, next question. Has the Novara fire affected the 10 year LTA with micron? No, totally no impact. As Leah and I explained that the incident, the fire incident in Novara is mainly for 200 millimeter and only the back end part of the 200 millimeter and the other even 200. The other parts basically not much impact. And for 300 meter that's totally a separate building, so it's not the same building. So totally no impact. And also the Micron lta, most of the wafers for that LTA will be from our US operation. So no impact will be. There will be no impact from Novara incident. And. What does economics of newer sites in the US and Europe look like? And how does it compare to existing sites? How does the company maintain its competitiveness? Okay, we believe the competitiveness of new manufacturing facilities should be evaluated based on the overall operating ecosystem rather than any single cost factor beyond serving local market demand. Our US and European expansion projects were supported by high levels of long term customer commitments prior to construction and also benefit from government incentives including the US Check Chip Act, EMIC or ipci. In Europe there are so many other subsidy programs which will enhance the overall investment returns. In addition, sustainability has become an increasingly important purchasing consideration for our customers. So renewable energy is more readily available and competitively priced in the US and both our US and Italy facilities are expected to progressively operate on 100% renewable energy once fully rented as customer place greater emphasis on localized supply chain resilience, product traceability and low carbon manufacturing. I think that our diversified manufacturing footprint will provide significant competitive advantage. So as the utilization rates improve and scale benefits emerge, we think that economic performance of these new fabs will continue to strengthened and this will enhance our competitiveness. Okay, the next question. Has the recent Kumamoto earthquake in Japan had any impact on GWC's operations? No impact. First of all, the Kumamoto we have one site, Tokoyama is very close to in Kyushu area but is still far away from Kumamoto. So operation facility, equipment wise were okay. And number two, we check our suppliers in Kumamoto. We have quite some suppliers and customers in Kumamoto area. So from suppliers standpoint we have enough inventory and our suppliers basically are doing okay. So the, the supply impact is very minimal and manageable. So basically we have no impact for supply but for customers we do have some customers in Kumamoto area who got some impact. So we work very closely with those customers to provide them a lot of support, urgent support to ship them some wafer for them to test their equipment. So we're working very close with them. So basically no impact with GWC overall operation in Japan. Okay, next one is can we know the current utilization rate of each product line? Roughly I think I just Mentioned this a little bit earlier. That 12 inch, 8 inch, 6 inch, you get in line, get on sig and soi. All these lines are fully loaded. Silicon carbide is utilization rate is high but it's not full. But it's getting, it's increasing. So I believe that cedar carbide will be fully loaded from second half this year as well. I'm talking about the existing fabric for the newly established brownfield greenfield. Many of them are under qualification or start ramping up. It's not fully loaded yet. Yeah. And next question is that is the cost of raw material. What's the price trend? Does it continue to increase and what is its way to your company's revenue percentage? Yeah, raw material. Raw material is increasing. You know when we calculate our cost, it's MLO material labor cost and overhead. We always we control, we manage our ML percentage very close minded this very closely. And right now material cost is increasing based on current ASP material cost. The weight of material cost keeps increasing. For example, as I shared, there's some raw material like gallium and many other materials are the price are increasing and our overall head like freight is increasing as well. So and energy cost is increasing. The reason energy cost is increasing is because we use more renewable energy year by year. So in renewable energy is expensive especially in Taiwan. So our overall energy cost is increasing. So cost increase is increasing percentage wise is a little bit heavier. As I said, this is based on this year current asp. But when we move to next year product mix will be different and also maybe different currency. Different, different. A lot of conditions will be improved. So I believe that next year maybe the situation will better than this year. That's our view. Depreciation wise. Depreciation cost will be still high next year. Thank you. And ladies and gentlemen, the floor is now open for live questions. If you have any inquiries, simply using the Webex rest hand feature. Once acknowledged, please be ready to accept the host invitation to unmute your microphone and share your thoughts with us. To make sure that everyone has the opportunity to participate, please limit yourself to two questions at a time. Okay. The first one is Sunny from ups. Hi Sunny. Please accept our invitation to unmute yourself. Hello, Good afternoon. Could you hear me okay? Hi Sunny. Hello. Thank you very much for taking my questions. So my first question if we look at. We cannot hear you. Sorry, could you hear me now? Hello, Sunny, we cannot hear you. Just one moment. Sunny. Sorry, I think there might be some technical issues. So could you please try to type your question in the Slido first and so we can address your question more efficiently. Sure, we can hear you. All right, thank you very much for your patience. So if we look at your sales in 2026, then I think it may still be like 10, 15% below the prior peak in 2022 and 2023, despite the capacity expansion in last few years. And now you are also running. Close. To a higher utilization rate already. So just want to understand where the decline now rates ago mostly due to lower pricing. And now that the utilization rate are back to higher level and you are negotiating with clients regarding pricing, when should we start to see more meaningful growth for yourselves also hopefully gross margin expansion? Yes, thank you for the question. Right, actually Q2 revenue already increased Q02, 8.8% in Q3, if there was no RFI actually would have more higher growth rate than Q2. So our revenue is increasing from this year the same better than our annual plan budget. So the growth is very firm. Of course now because of the incident, the Italy incident, although the impact for the tour equipment is minimum, but the recovery takes a little bit longer time. So there will be some impact. But I think in general our revenue should be flat or slightly higher than last year. That's the current status. That's because of the fire. Otherwise we're supposed to have much higher revenue than last year for the meaningful growth. Revenue growth definitely will be from 2027 if there was no impact from the Nomara fire. Actually we're seeing the improvement even with the fire. We are still working on a lot of work around. Maybe we can minimize mitigated the impact as well. But even a little bit more conservative for the recovery for our Italy revenue. I still believe that starting from 27 we will see meaningful improvement for two reasons. One is that I believe that next year our greenfield and brown fuel, especially secal photonics, SOI wafers and three, advanced GWA 300 millimeter wafer and Novara 300 meter wafers. These new expansions will start contributing more and more revenue quarterback quarter month by month. So that's number one growth, the source of the growth. And number two is that we will see Novara 200 meter back to cut the contribution. And number three is that I hope that because of the cost increase and I hope that we will be able to improve by product mix or by price increase. I hope that we'll improve, we'll be able to improve our asp. So that's why we believe that starting from next year we'll be able to see Some meaningful revenue growth. Thank you. Thank you Doris. Very clear. And my second question is around lta. And so now that you are already having great discussions with multiple clients, when should we think about one, the timing of most of your contracts expiring and therefore the client would need to negotiate anyways. And then secondly in terms of prepayment, when should we expect the timing for inflection point, meaning also for the significant increase, whether it will be in maybe first half of next year or should we wait until maybe second half of next year? How should you think about the timing for LTA engagement? Yeah, I think prepayment, meaningful prepayment increase should be starting from first half next year. That's our view because we have some LTA under discussion. And also as I said earlier that we have already signed 10 year agreement. 10 Year LT agreement attached with some financial support. So we will have that one as well. So yeah, I think it will be next year preparing wise. Thank you. Thank you very much, Sunny. Thank you very much. Okay, I also see Lucas from Morgan Stanley. Hi Lucas, Please accept our invitation to unmute yourself. Hello, can you hear me? Yes, hello Lucas. Yeah, good afternoon Doris and Liam. And thanks so much for taking my questions. So I think for the first. The. The first question is that I just want to know that how do you see the difference between previous upcycle in terms of the silicon wafer probably back into like 21 and 2022. No matter from customer inventory standard points or from the industry wise capacity exp standpoint, how do you see the difference this time compared to the last time? And when we trying to adjust the wafer pricing to next year, do you see this time would be more easier to reflect the price compared to 21 or 22? Or do you think it's more difficult? And this is my first question and yeah, probably I will start with the first one. Okay, first of all, both Leah and myself were reminded by our legal department that don't come in too much about pricing issues. So I think it's no matter where, no matter how strong the market, how strong the demand is, I think price negotiation is always very challenging. It's not easy, never been easy. But we believe that if this demand is stronger and if you can differentiate yourself, then you will have better opportunities to get a little bit more support from customers. That's our view. So sorry for not being able to comment about the price negotiation. But for the difference, what's the difference of this time? The LTA versus the last cycle, which is 202122 I think of course we just started negotiating the LTA's with several customers right now. So our view is that. Our view is that this time the demand is. The demand is covering basically very different from previous cycle. For example, this time we see much stronger Seagum Photonics. This is different from last cycle. And we are seeing much stronger demand for like gallium nitrate, ganon, silicon as well. This is different from last cycle. So product was different. And also 300 millimeter advanced wafers and very tight specs, those are very different from last cycle as well. So product specs, product categories, these are very different from last cycle and a very important difference. What we are seeing today is that it seems that. Our feeling is that it seems that our customers care starting from this run in the past several cycles. And we've been doing LTA type of business for almost 20 years. But in the past so many 15, 16 years, not like this time. We our customers make it very clear that where I want to get my wafers from in the past customer will tell you that this spec of wafers I need how many wafers this spec, this diameter and when I need this. So they make the spec everything. And what will be the price when you how many you have to deliver to me by when. So that's the conditions of the LTA last cycle. Last several cycle over the past 15 years. But this time for the very first time customer request. I know not only the product, not only the spare volume pricing and the delivery condition, but also they make it very clear how much percent of your wafers have to be from which country. This is very unique. And also it seems that starting from this time, this cycle, this lta, the tuner, the length of the period will be longer than last year. The last cycle. Last cycle most of the LTA is around three years. The longest will be five to eight years. But this time seems more is a bit longer than last time. But as I said that we just started signing LTA's with customer. I don't know, maybe six months later. If you ask me the same question, maybe I'll give you a little bit more precise answer at that time. Yeah, thank you. Yeah, maybe just a small follow up on this. Since you mentioned about the size, customer care more about the size this time. So I'm also wondering in terms of the new lta, would we have different pricing strategy in terms of the new capacity in GWA or in versus other existing capacity. And this is asking about when we have any different pricing strategy for Our new fabs like in GWA or in Novara to. Yeah, yeah. The higher cost. Yeah, yeah, exactly. Yes we communicate with this is this very case by case because new fabs of course the production cost is higher because of depreciation and also several overall economic issues. So the cost is higher. But at the same time if customers want to get the wafer from that specific site then the cost will be higher. But at the same time the transportation cost is lower and that some good and bad. So we will again we don't have a rule for every customer. We make it. We discuss the. It's very pretty much case by case. We talk with customer explain that who are you going to take care of this cause and are you going to agree this one. So give us some flexibility. So there are some quite some detailed discussions needed. So it's pretty much different case by it's case by case. There is no fix rule for the pricing. Okay, thank you Lucas. Then we will take our next questions. This is our last question. So Jimmy from JP Morgan. Hi Jimmy. Please unmute yourself. Good afternoon Jimmy. Hi Jimmy. We cannot hear you. Could you please snap down? Yeah, sure. Hello Chit. Yeah. Thank you so much Chairlady and Lia for taking my questions. I think first question is how do we expect repricing increase percentage versus previous LTA for your new lts? And do you think that memory and logic customers will have different pricing appetites means that maybe some customers can accept higher pricing but some customers maybe not. So just curious about the new LTA pricing change. Yeah, thank you. Thank you Lucas. That's a very difficult question for us. It's very hard for us to comment the pricing but just a general, general answer to your question. Every LTA is individual so the condition is different. So basically we'll check that the cost based on your request, this location and this product space we will work out a cost to our customer and costs are different because the product mix may be also different. So we'll come up with the package deal with every customer and to talk about the price. That's how we work together. And we know that the material costs keep increasing and labor costs also increasing as well. So we have no choice that we have to explain the our difficulties with our customer and try to get some support. But there is no specific rule that how much percent Foundry or memory which companies are more flexible to accept higher price. We don't have this kind of rule and every customers have different situations. So we have to discuss who is every each customer. Sorry about that for not being able to give you a firm answer. Yeah, thank you. Thank you so much, lady. May I have a quick follow up? I think based on your current. Yeah, thank you. Based on your current prepayment balance, could we say current LTS will still cover most of your 12 instruments until second half next year. And for the current LTS, are you able to change the pricing or you need to comply with the pricing for the current lts in the current period, I mean, in the current period,. Yeah, our shipments have. In the second half this year and maybe the first half of next year, our revenue will be basically coming from lta. And also we quite equate quite a certain percent of our revenues from spa business. That means that the rfq, ordinary RFQ business, they asked, they negotiate a price every six months and place the po we call RFQ business for that kind of business, we talk about price every six months or some even a little bit shorter every quarter. So for that kind of non lta wafers, I think it's very likely. I think the price is definitely, definitely higher than H1 this year. As I said that our utilization is very high. So that means that cost is increasing and utilization is high. So of course we will try to get our customer support to raise the price to cover our higher costs. So for a non lta price, I believe that second half this year and even Q1 next year, we'll see spot price increase. And for LTA price, usually we honor the price unless that we have some special terms in our lta. Then we will have some flexibility to have further discussion with our customers. Otherwise we will follow lta. Yeah. Thank you so much for your time and repai. Thank you. Thank you, Lucas. Thank you. Jimmy. Jimmy. Sorry. Jimmy. Thank you. Okay, so ladies and gentlemen, we would like to express our sincere appreciation to all of you. You for your valuable participation today. The earnings call concludes now. So thank you and have a wonderful evening. Thank you all.