祥茂光電 (AAOI) 2018 Q2 法說會逐字稿

Good day, I'll be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics' Second Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded. I now will turn the call over to Maria Riley, Investor Relations for AOI. Ms. Riley, you may begin.

您好，我將擔任您的會議接線生。現在，我歡迎大家參加應用光電公司 2018 年第二季財報電話會議。（操作員指示）請注意，此事件正在被記錄。現在我將把電話轉給 AOI 投資者關係部的 Maria Riley。萊利女士，你可以開始了。

Thank you. I'm Maria Riley, Applied Optoelectronics Investor Relations, and I'm pleased to welcome you to AOI's Second Quarter 2018 Financial Results Conference Call. After the market closed today, AOI issued a press release announcing its second quarter 2018 financial results and provided its outlook for the third quarter of 2018. The release is also available on the company's website at ao-inc.com. This call is being recorded and webcast live. A link to that recording can be found on the Investor Relations page of the AOI website and will be archived for 1 year. Joining us on today's call is Dr. Thompson Lin, AOI's Founder, Chairman and CEO; and Dr. Stefan Murry, AOI's Chief Financial Officer and Chief Strategy Officer. Thompson will give an overview of AOI's Q2 results, and Stefan will provide financial details and the outlook for the third quarter of 2018. A question-and-answer session will follow our prepared remarks. Before we begin, I would like to remind you to review AOI's safe harbor statement. On today's call, management will make forward-looking statements. These forward-looking statements involve risks and uncertainties as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. You can identify forward-looking statements by terminologies such as may, will, should, expects, plans, anticipates, believes or estimates and by other similar expressions. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this earnings call to conform these statements to actual results or to changes in the company's expectations. More information about other risks that may impact the company's business are set forth in the Risk Factors section of the company's reports on file with the SEC. Also, with the exception of revenue, all financial numbers discussed today are on a non-GAAP basis, unless specifically noted otherwise. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation between our GAAP and non-GAAP measures as well as a discussion of why we present non-GAAP financial measures are included in our earnings press release that is available on our website. Before moving to the financial results, I'd like to note the date of our third quarter 2018 earnings call is currently scheduled for Wednesday, November 7. Now, I would like to turn the call over to Dr. Thompson Lin, Applied Optoelectronics' Founder, Chairman and CEO. Thompson?

謝謝。我是應用光電投資者關係部門的瑪麗亞·萊利 (Maria Riley)，很高興歡迎您參加 AOI 2018 年第二季財務業績電話會議。今日收盤後，AOI發布新聞稿，公佈了2018年第二季的財務業績，並對2018年第三季的業績進行了展望。新聞稿也可在本公司網站 ao-inc.com 上查閱。本次通話正在錄音並進行網路直播。此錄音的連結可以在 AOI 網站的投資者關係頁面上找到，並將存檔 1 年。參加今天電話會議的有 AOI 創辦人、董事長兼執行長 Thompson Lin 博士和 AOI 財務長兼首席策略長 Stefan Murry 博士。湯普森將概述 AOI 第二季的業績，史蒂芬將提供財務細節和 2018 年第三季的展望。我們準備好的發言之後將進行問答環節。在我們開始之前，我想提醒您查看 AOI 的安全港聲明。在今天的電話會議上，管理階層將做出前瞻性陳述。這些前瞻性陳述涉及風險和不確定性以及假設和當前預期，這可能導致公司的實際結果與此類前瞻性陳述中預期的結果有重大差異。您可以透過可能、將、應該、預期、計劃、預期、相信或估計等術語以及其他類似的表達來識別前瞻性陳述。除法律要求外，我們不承擔在本次收益電話會議召開日期之後以任何理由更新前瞻性陳述的義務，以使這些陳述符合實際結果或公司預期的變化。有關可能影響公司業務的其他風險的更多信息，請參閱公司向美國證券交易委員會提交的報告的“風險因素”部分。此外，除收入外，今天討論的所有財務數據均基於非 GAAP，除非另有特別說明。非公認會計準則財務指標不應被單獨考慮或取代根據公認會計準則編制的結果。我們的 GAAP 和非 GAAP 指標之間的對帳以及我們為何採用非 GAAP 財務指標的討論均包含在我們網站上的收益新聞稿中。在討論財務結果之前，我想指出，我們 2018 年第三季財報電話會議的日期目前定於 11 月 7 日星期三。現在，我想將電話交給 Applied Optoelectronics 的創辦人、董事長兼執行長 Thompson Lin 博士。湯普森？

Thank you, Maria. Good afternoon, everyone, and thank you for joining us today. AOI deliver a strong second quarter with results,that exceeds our expectations driven by increased demand for our market-leading datacenter products. In the quarter, we generated revenue of $87.8 million, gross margin of 40.4%, net income of $12.9 million and $0.64 per diluted shares. Datacenter was a bright spot in the quarter as we achieved record revenue for our 100G products. In CATV, the debian environment continued to improve, and we remain encouraged by the customer activity and entrenchments we see in the market. We are pleased with the success we have achieved with our marquee customers, but still continue to work to diversify our customer base. In the quarter, we secured 7 new wins including 1 with a large datacenter operator in China. We are pleased with our results and continue started executions in the quarter as the demand environment improved. Looking ahead, we remain encouraged by the trend we see in the market, we can nearly expect 100G volume with more than double in the second half of this year over the first half, which is based largely on a committee order we announced in Q1 of this year. Additionally, we say we want the volume to double again next year over this year as their attribute continue to grow. Recording debt in operator to spend in datacenter and upgrade their infrastructure to keep up with bandwidth demand. In CATV we continue to expect additional Remote-PHY and fiber-optic sales that will drive growth in this segment later this year. We remain confident in our growth prospects and competitive position. AOI's debt developed and invested in technology and the manufacturing portfolio that are ours to be the cross leader in this evolving industry. All proprietary optical [perform] gross spent a number of years and was specifically designed to be made future scale with high degree of automation. All prevalent been applied to data rate from 40G to 200G, and we expect it to be used in our 400G products as well. We also continue to innovate across our optical platform and expand our vertical integration and optimize the cost structure of our transceiver products. For example, between now and the end of this year, we plan to in-source an additional 15% of the bill of materials for our 100G cost out DM transceiver products. We believe our [platform] proprietary manufacturing process and vertical integration are keys to our success in the market, and we remain focused on building on this strong foundation to position AOI for further success. With that, I will turn the call over to Stefan to review the details of our Q2 performance and outlook for Q3. Stefan?

謝謝你，瑪麗亞。大家下午好，感謝大家今天的參與。AOI 在第二季業績表現強勁，超出了我們的預期，這得益於我們市場領先的資料中心產品需求的成長。本季度，我們的營收為 8,780 萬美元，毛利率為 40.4%，淨收入為 1,290 萬美元，每股攤薄收益 0.64 美元。資料中心是本季的亮點，我們的 100G 產品實現了創紀錄的收入。在有線電視領域，Debian 環境持續改善，我們仍然對市場上的客戶活動和鞏固地位感到鼓舞。我們對我們的大客戶所取得的成功感到高興，但仍將繼續努力使我們的客戶群多樣化。本季度，我們獲得了 7 個新合同，其中包括與中國一家大型資料中心營運商的合約。我們對我們的結果感到滿意，隨著需求環境的改善，我們在本季繼續開始執行。展望未來，我們仍然對市場趨勢感到鼓舞，我們幾乎可以預期今年下半年 100G 的銷量將比上半年增長一倍以上，這主要基於我們在今年第一季宣布的委員會命令。此外，隨著其屬性的持續成長，我們希望明年的銷量能比今年再翻倍。記錄營運商的債務，用於資料中心的支出和升級其基礎設施以滿足頻寬需求。在有線電視領域，我們繼續預計遠端 PHY 和光纖銷售將在今年稍後增加，從而推動該領域的成長。我們對我們的成長前景和競爭地位仍然充滿信心。AOI 的債務開發和投資於技術和製造組合，使我們成為這個不斷發展的行業的交叉領導者。所有專有光學[執行]總共花了數年時間，並且經過專門設計，以便未來實現高度自動化的規模。所有流行的技術都已應用於從 40G 到 200G 的數據速率，並且我們期望它也能用於我們的 400G 產品中。我們也將繼續創新我們的光學平台，擴大我們的垂直整合並優化我們的收發器產品的成本結構。例如，從現在到今年年底，我們計劃將 100G DM 收發器產品物料清單的 15% 額外納入內部採購。我們相信，我們的[平台]專有製造流程和垂直整合是我們在市場上取得成功的關鍵，我們將繼續專注於在此堅實的基礎上，使 AOI 取得進一步的成功。說完這些，我將把電話交給史蒂芬，讓他回顧我們第二季的業績細節以及第三季的展望。史蒂芬？

Thank you, Thompson. Total revenue for the second quarter was $87.8 million, which was above our guidance range of $75 million to $81 million. As Thompson mentioned, the upside in the quarter was driven by increased demand for our market-leading datacenter products. Our datacenter revenue came in at $69 million compared with $99.3 million reported in Q2 of last year. Our performance this quarter was driven by record revenue for our 100G products. In the quarter, 58% of our datacenter revenue was derived from our 100G transceiver products and 39% was from our 40G products. We are encouraged by the customer traction we are generating with our 100G products. Looking ahead, we remain confident in our opportunities for growth. As Thompson mentioned, we continue to expect 100G volumes to more than double in the second half of this year over the first half, which is based largely on the committed orders we announced in Q1 of this year. We also expect volumes to double next year over this year. We believe this strong growth is a reflection of accelerating data traffic trends that will require datacenter operators to expand their datacenters and upgrade their infrastructure to keep up with the higher-bandwidth demand. We believe the new, innovative technologies and techniques that we have developed position us well to build on our momentum. The cost advantage, time to market and flexibility afforded us through our vertical integration is a significant factor in our success and sets us apart from the competition. As we continue to innovate, including our plan to in-source an additional 15% of the bill of materials for our 100G CWDM transceiver products by the end of the year. We remain focused on providing our customers with the best product, at the best cost and have a roadmap for continued cost reductions by additional manufacturing efficiency improvements and increasing the extent of our vertical integration. We are also adding additional testing steps that are required by certain customers. In the short term, these additional steps will constrain our manufacturing throughput somewhat, but we expect to once again have sufficient capacity to meet demand in Q4 of this year. As Thompson mentioned, our proprietary optical platform is also a key factor in optimizing the cost structure of our datacenter transceivers. The platform was specifically designed to be manufactured in an automated way that not only provides us with the levers to reduce cost but also provides a manufacturing process that can be leveraged across many product generations. The same platform has been leveraged across 40G, 100G as well as 200G, which we just started shipping in volume last quarter. And we expect to leverage this mature, high-quality and low-cost platform for many product generations to come. We also continue to maintain focus on diversifying our customer base and in the quarter had 7 design wins including a 100G design win with a large datacenter operator in China. We believe our cost leadership and track record of innovation will allow us to be successful in many of these new customer engagements. Turning to our cable television market. We generated revenue of $14.2 million, up 34% sequentially and similar to the $14.4 million we generated in Q2 of last year. We are pleased with the improving trends we are seeing in CATV and continue to expect growth in this market, especially later this year when demand picks up for our Remote-PHY product. We have 3 different customers moving into field trials with our Remote-PHY product and an additional customer who is in the demonstration phase with the technology. The broad-based interest in Remote-PHY by the MSO community is encouraging and our products has already been demonstrated to interoperate with several CMTS vendors. So we believe that we lead our competitors in terms of time-to-market for this technology. Our telecom products delivered a record $4.2 million in revenue representing 35% growth year-over-year, with demand coming from ongoing deployments of advanced mobile telecom networks around the world. For the quarter, 79% of our revenue was from datacenter products, 16% from CATV products with the remaining 5% from FTTH, telecom and other. In the second quarter, we had 3 10% or greater customers in the datacenter business that contributed 52%, 16% and 10% of total revenue respectively. Moving beyond revenue. We generated a gross margin of 40.4%, which represents an increase of 40 basis points compared with the 40% reported last quarter. Our gross margin was in line with expectations, and I'm pleased with our ability to continue to generate strong gross margins compared to the industry. Total operating expenses in the quarter were $20.8 million or 23.7% of revenue compared with $20.1 million or 30.8% of revenue in the prior quarter. The sequential increase was mostly due to higher R&D expense. As a reminder, we expect R&D to remain at this level over the next few quarters, while we invest in new production technologies that will enable further cost reduction on our transceiver products as well as our next GEN datacenter and CATV products. Operating income in Q2 was $14.7 million compared with operating income of $6 million in Q1 of 2018. Our operating margin increased in the quarter to 16.8% compared with 9.2% reported last quarter. Non-GAAP net income after-tax for the second quarter was $12.9 million or $0.64 per diluted share compared with $5.6 million or $0.28 per diluted share, in Q1 of 2018. GAAP net income for Q2 was $8 million or $0.40 per diluted share compared with GAAP net income of $2.1 million or $0.11 per diluted share last quarter. The Q2 weighted-average, fully diluted share count was approximately 20.1 million shares. We recognized approximately $0.3 million in tax benefit from employee options that were exercised and restricted stock that vested during the quarter. Turning now to the balance sheet. We ended Q2 with $77.9 million in total cash, cash equivalents, short-term investments and restricted cash compared with $83.3 million at the end of the previous quarter. As of June 30, we had $93.3 million in inventory, a slight increase from $92.6 million in Q1. We made a total of $21.2 million in capital investments in the quarter, including $9.9 million in production equipment and machinery and $9.5 million on construction and building improvements. This brings our total capital investments year-to-date to $30.9 million. We now expect our capital expenditures in 2018 to approach $90 million. The lower, revised CapEx forecast for the year reflects more efficient utilization of existing manufacturing equipment and does not reflect a reduction in expected production capacity. This figure also includes the beginning of construction of our new factory in Ningbo, still currently on schedule to be completed in early 2020. Lastly, I would like to make a few comments on the tariff situation with China. As you know, AOI operates 3 different manufacturing locations, only 1 of which is in China. All 3 locations are capable of manufacturing transceivers, with Taiwan and China both capable of manufacturing these products in high volume. Because of our vertical integration strategy, we also manufacture many of the components and subassemblies that are used in these modules. The diversity of our manufacturing operations both, geographically and in terms of the types of products manufactured, gives us significant flexibility in adapting our production location in order to maximize cost efficiency. As political conditions change, we believe that we are well-positioned to adapt and will continue to plan for such contingencies. Moving now to our Q3 outlook. We expect Q3 revenue to be between $82 million and $92 million. Non-GAAP gross margin is expected to be in the range of 40% to 41.5%. Non-GAAP net income is expected to be in the range of $11.1 million to $15.2 million, and non-GAAP EPS between $0.54 per share and $0.75 per share using a weighted-average, fully diluted share count of approximately 20.4 million shares. We expect our Q3 effective tax rate on our non-GAAP net income to be between 6% and 12%. With that, I will turn it back over to the operator for the Q&A session. Operator?

謝謝你，湯普森。第二季總營收為 8,780 萬美元，高於我們預期的 7,500 萬美元至 8,100 萬美元範圍。正如湯普森所提到的，本季的成長得益於我們市場領先的資料中心產品需求的成長。我們的資料中心收入為 6,900 萬美元，而去年第二季的營收為 9,930 萬美元。本季我們的業績得益於 100G 產品創紀錄的收入。本季度，我們資料中心營收的 58% 來自我們的 100G 收發器產品，39% 來自我們的 40G 產品。我們的 100G 產品所吸引的客戶令我們感到鼓舞。展望未來，我們對我們的成長機會仍然充滿信心。正如湯普森所提到的，我們仍然預計今年下半年 100G 的銷售量將比上半年成長一倍以上，這主要基於我們在今年第一季宣布的承諾訂單。我們也預計明年的銷量將比今年翻倍。我們認為，這種強勁的成長反映了數據流量趨勢的加速，這將要求數據中心營運商擴展其數據中心併升級其基礎設施以滿足更高的頻寬需求。我們相信，我們開發的新型創新技術和技巧將使我們能夠更好地保持發展勢頭。透過垂直整合，我們獲得的成本優勢、上市時間和靈活性是我們成功的重要因素，使我們在競爭中脫穎而出。隨著我們不斷創新，包括我們計劃在今年年底前為我們的 100G CWDM 收發器產品額外增加 15% 的物料清單。我們始終致力於以最優惠的價格為客戶提供最好的產品，並透過進一步提高製造效率和擴大垂直整合程度來製定持續降低成本的路線圖。我們也新增了某些客戶所需的額外測試步驟。短期內，這些額外的措施將在一定程度上限制我們的製造產量，但我們預計今年第四季將再次擁有足夠的產能來滿足需求。正如湯普森所提到的，我們專有的光學平台也是優化資料中心收發器成本結構的關鍵因素。該平台專門設計用於以自動化方式製造，不僅為我們提供了降低成本的手段，而且還提供了可在多代產品中利用的製造流程。同一平台已應用於 40G、100G 以及 200G，我們在上個季度剛開始大量出貨。我們希望在未來的多代產品中充分利用這個成熟、高品質且低成本的平台。我們也繼續致力於多樣化我們的客戶群，並在本季度獲得了 7 項設計勝利，其中包括與中國一家大型資料中心營運商簽訂的 100G 設計勝利。我們相信，我們的成本領先地位和創新記錄將使我們在許多新客戶合作中取得成功。轉向我們的有線電視市場。我們創造了 1,420 萬美元的收入，環比成長 34%，與去年第二季的 1,440 萬美元持平。我們對有線電視市場不斷改善的趨勢感到高興，並繼續期待該市場的成長，特別是今年稍後我們的 Remote-PHY 產品需求回升時。我們有 3 位不同的客戶正在使用我們的 Remote-PHY 產品進行現場試驗，還有一位客戶正處於該技術的演示階段。MSO 社群對 Remote-PHY 的廣泛興趣令人鼓舞，我們的產品已證明可與多家 CMTS 供應商互通。因此，我們相信，就該技術的上市時間而言，我們領先於競爭對手。我們的電信產品收入創下 420 萬美元的紀錄，年增 35%，需求來自全球先進行動電信網路的持續部署。本季度，我們的營收 79% 來自資料中心產品，16% 來自有線電視產品，其餘 5% 來自 FTTH、電信和其他。第二季度，我們的資料中心業務有 3 個 10% 或以上的客戶，分別貢獻了總收入的 52%、16% 和 10%。超越收入。我們的毛利率為 40.4%，與上一季的 40% 相比增加了 40 個基點。我們的毛利率符合預期，我很高興我們能夠繼續創造比行業更高的毛利率。本季總營運費用為 2,080 萬美元，佔營收的 23.7%，而上一季為 2,010 萬美元，佔營收的 30.8%。環比增長主要是由於研發費用增加。提醒一下，我們預計未來幾季的研發將保持在這個水平，同時我們將投資新的生產技術，以進一步降低我們的收發器產品以及下一代資料中心和有線電視產品的成本。第二季的營業收入為 1,470 萬美元，而 2018 年第一季的營業收入為 600 萬美元。本季我們的營業利潤率從上一季的 9.2% 上升至 16.8%。第二季非公認會計準則稅後淨利為 1,290 萬美元，即每股攤薄收益 0.64 美元，而 2018 年第一季為 560 萬美元，即每股攤薄收益 0.28 美元。第二季 GAAP 淨收入為 800 萬美元，即每股攤薄收益 0.40 美元，而上一季 GAAP 淨收入為 210 萬美元，即每股攤薄收益 0.11 美元。第二季加權平均完全稀釋股數約 2,010 萬股。我們從本季行使的員工選擇權和歸屬的限制性股票中獲得了約 30 萬美元的稅收收益。現在來看資產負債表。我們第二季末的現金、現金等價物、短期投資和受限現金總額為 7,790 萬美元，而上一季末為 8,330 萬美元。截至 6 月 30 日，我們的庫存為 9,330 萬美元，較第一季的 9,260 萬美元略有增加。本季我們共進行了 2,120 萬美元的資本投資，其中包括 990 萬美元的生產設備和機械投資以及 950 萬美元的建築和建築改進投資。這使得我們今年迄今的總資本投資達到 3,090 萬美元。我們現在預計 2018 年的資本支出將接近 9,000 萬美元。下調的年度資本支出預測反映了現有製造設備的更有效率利用，並不反映預期生產能力的下降。這一數字還包括我們在寧波的新工廠的開工建設，目前仍按計劃於 2020 年初完工。最後，我想就與中國的關稅情況談幾點評論。如您所知，AOI 經營 3 個不同的製造基地，其中只有 1 個位於中國。所有 3 個地點均能夠生產收發器，其中台灣和中國大陸都能夠大量生產這些產品。由於我們的垂直整合策略，我們也生產這些模組中使用的許多元件和子元件。我們的製造業務在地理位置和所生產產品類型方面都具有多樣性，這使我們能夠靈活地調整生產地點，從而最大限度地提高成本效率。隨著政治條件的變化，我們相信我們有能力適應，並將繼續為此類突發事件做好計劃。現在轉到我們的第三季展望。我們預計第三季的營收將在 8,200 萬美元至 9,200 萬美元之間。非公認會計準則毛利率預計在40%至41.5%之間。非公認會計準則淨收入預計在 1,110 萬美元至 1,520 萬美元之間，非公認會計準則每股收益預計在 0.54 美元/股至 0.75 美元/股之間（採用加權平均、完全稀釋股數約 2,040 萬股）。我們預計第三季非公認會計準則淨收入的有效稅率在 6% 至 12% 之間。說完這些，我會把話題交還給接線員，進行問答環節。操作員？

(Operator Instructions) And the first question comes from Simon Leopold with Raymond James.

（操作員指示）第一個問題來自 Raymond James 的 Simon Leopold。

I wanted to just follow up on your commentary around tariffs, in that I understand you've got some flexibility in terms of when you manufacture but it does appear you are investing in adding capacity in the China facility in a scenario that we now see in place, I think the $34 billion or so of existing tariffs. Do you have exposure to those? Or do you simply have exposure to proposed tariffs above and beyond that? I'm looking for a little bit more detail and an understanding of if tariffs come in place, could you manufacture what you need out of Taiwan and the U.S. without having a penalty?

我想跟進您關於關稅的評論，我知道您在生產時間方面有一定的靈活性，但看起來您正在投資增加中國工廠的產能，就我們現在看到的情況而言，我認為現有關稅約為 340 億美元。您接觸過這些嗎？或者您只是接觸過超出該範圍的擬議關稅？我希望了解更多細節，並了解如果徵收關稅，您是否可以在台灣和美國生產所需的產品而不會受到處罰？

So the initial $34 billion tariff list, none of our products are on there, at least none of our major products, we're still doing analysis on the smaller ones but there's basically no impact from the initial tariff list. Some of our products are on the subsequent larger $200 billion tariff list and the point of what we were trying to say in the prepared remarks is that we do have capability to manufacture those products in both locations, and we think there will be minimal impact from those tariffs on AOI's business.

因此，最初的 340 億美元關稅清單上沒有我們的任何產品，至少沒有我們的主要產品，我們仍在對較小的產品進行分析，但最初的關稅清單基本上沒有影響。我們的一些產品在隨後的 2000 億美元更大關稅清單上，我們在準備好的評論中試圖表達的重點是，我們確實有能力在兩個地方生產這些產品，我們認為這些關稅對 AOI 的業務的影響將微乎其微。

Okay. So minimal impact, I think that's the additional color I was looking for. I also was hoping you could update us on the competitive landscape and maybe some color in terms of at your top customers, are you the primary supplier, a secondary supplier? Does the secondary supplier always exist? And how has that changed over the last quarter or 2?

好的。影響如此之小，我認為這就是我一直在尋找的額外顏色。我還希望您能向我們介紹一下競爭格局，並就您的主要客戶提供一些信息，您是主要供應商還是次要供應商？二級供應商是否一直存在？那麼在過去一、兩個季度中，情況發生了怎樣的變化呢？

Yes. So as has been for the last several quarters, we believe we continue to maintain a leadership position with our major customers. I don't think there's been any major changes in our competitive positioning relative to the competition. And I do think that the tariff situation, since you brought that up, I think that customers are aware of those tariffs, it's certainly something that they are concerned about because anything that adds cost to their total cost of ownership for their equipment is something they're concerned about. And so I think AOI's flexibility is also something that they find attractive.

是的。因此，正如過去幾個季度一樣，我們相信我們將繼續在主要客戶中保持領先地位。我認為我們的競爭定位相對於競爭對手沒有任何重大變化。我確實認為，既然你提到了關稅情況，我認為客戶知道這些關稅，這肯定是他們關心的事情，因為任何增加設備總擁有成本的東西都是他們關心的事情。因此我認為 AOI 的彈性也是他們所重視的一點。

And you've talked about a customer who in the past was your largest customer, probably isn't today. That customer I believe was absorbing inventory and had also some architectural shifts, I think the adoption of smart mix was one of the factors of effecting some of the demand for transceivers. Can you give us a snapshot of where you see your previous top customers position today in terms of inventory and purchasing patterns, the outlook?

您談到的一位客戶過去是您最大的客戶，但今天可能就不是了。我相信該客戶正在吸收庫存並且也進行了一些架構轉變，我認為採用智慧組合是影響收發器部分需求的因素之一。您能否向我們簡要介紹一下您之前的頂級客戶在庫存和購買模式以及前景方面的情況？

Yes. So as we said last quarter, I think we expected the inventory to normalize with that particular customer. That's what we've seen, the inventory is down to what I would consider to be a normal level consistent with not a business that we see and expect to see from that customer.

是的。因此，正如我們上個季度所說的那樣，我認為我們預計該特定客戶的庫存將恢復正常。這就是我們所看到的，庫存下降到了我認為的正常水平，這與我們看到的和期望從該客戶那裡看到的業務不一致。

Great. And one last one, and this may be difficult to answer but maybe some blue-sky thoughts. When you look at these hyperscale operators and their CapEx investment, when they build a new datacenter, acquire the land, do the construction and have a shell of a building, how long -- what's the period of time that you've observed it takes them to then fill the building with electronics? How long is the tail for AOI once the structure is built?

偉大的。最後一個問題，這個問題可能很難回答，但也許是一些天馬行空的想法。當您查看這些超大規模營運商及其資本支出投資時，當他們建立新的資料中心、獲取土地、進行施工並擁有建築外殼時，您觀察到他們需要多長時間才能將建築物裝滿電子設備？一旦結構建成，AOI 的尾部有多長？

Well, Simon, I think that's not something that I can easily comment on. I think it probably depends customer to customer. And to be clear, we don't always have a lot of insight into which specific datacenter and what the building stage it is and that sort of thing. So I -- it's not really something I can speculative on. I know that the customers as anybody that's trying to make a large capital investment, the customers are very eager to get the datacenters turned on as quickly as possible. Oftentimes, there's a lot of pressure on us to deliver quickly in situations where they're building a lot of new datacenters. So I know that there's a need to get that CapEx deployed in operational as quickly as possible, but as to how long it takes, I couldn't speculative an exact length of timing.

嗯，西蒙，我認為這不是我可以輕易評論的事情。我認為這可能取決於客戶的具體情況。需要明確的是，我們並不總是了解哪個特定的資料中心、它處於哪個建設階段等等。所以我——這實際上不是我可以推測的事情。我知道，任何試圖進行大規模資本投資的客戶都非常渴望盡快啟動資料中心。很多時候，當他們建造大量新資料中心時，我們面臨著快速交付的巨大壓力。所以我知道需要盡快將資本支出投入運營，但至於需要多長時間，我無法推測確切的時間長度。

And the next question comes from Paul Silverstein with Cowen.

下一個問題來自 Cowen 的 Paul Silverstein。

First off, I assume a significant EPS spread of what's the concentration of your business and the lack of -- no better way to put it, lack of significant visibility? Or is there something else in that spread? And then I've got a couple of follow-ups.

首先，我假設每股收益的顯著差異與您的業務集中度以及缺乏——沒有更好的說法，缺乏顯著的可見性？或者其中還包含其他什麼東西？然後我還有一些後續問題。

No. I mean the spread is -- I figure you're referring to the spread between the lower end and the higher end of the guidance range being a little bit wider this quarter. I think it just reflects our desire to be prudent and make sure that given the uncertainties that we see that we're encompassing all the range of possibilities.

不。我的意思是，差距是——我想你指的是本季指導範圍的下限和上限之間的差距會稍微大一些。我認為這只是反映了我們希望謹慎行事，並確保考慮到我們所看到的不確定性，我們涵蓋了所有可能性。

So nothing extraordinary, Stefan?

那沒什麼特別的嗎，史蒂芬？

No.

不。

Maybe other than you're being more conservative than usual?

也許除了你比平常更保守之外？

I don't know if that's something more -- I guess you could say it's more conservative than usual. I think we're attending to try to encompass the range of possibilities that we see out there, and I guess you could say that's more conservative, sure.

我不知道這是否意味著更多——我想你可以說它比平常更保守。我認為我們參加會議是為了嘗試涵蓋我們所看到的各種可能性，我想你可以說這當然是比較保守的。

All right. And then 2 related questions. First off, pricing environment for the 100G, 40G, any update you can provide us with? If there's an update? And then on the other side of the equation, I heard your comments about cost reduction in general, I'm hoping you can give us some quantification of the recent or a reminder of the cost reduction to date and any quantification of cost reduction going forward in the future?

好的。然後是兩個相關問題。首先，您能為我們提供 100G、40G 的定價環境的任何更新資訊嗎？如果有更新？另一方面，我聽到了您對整體成本削減的評論，我希望您能給我們一些近期成本削減的量化數據，或者提醒一下迄今為止的成本削減情況，以及未來成本削減的任何量化數據？

So the pricing environment maintains -- it's consistent with what we expected, I wouldn't say there's anything surprising in the pricing environment that we've seen or what we're seeing in terms of our expectation for the pricing going forward. In terms of the cost reduction, I think we said is it -- we've had -- historically, we've obviously been able to reduce the cost at a rate that's very close to the price reduction and we expect to continue to be able to do so.

因此定價環境保持不變 - 它與我們的預期一致，我不會說我們所看到的定價環境或我們對未來定價的預期中存在任何令人驚訝的事情。在降低成本方面，我想我們說過——從歷史上看，我們顯然能夠以非常接近降價的速度降低成本，而且我們預計能夠繼續這樣做。

One final one for me. With respect to the 7 design wins especially the big one in China, I know it's hard predicting timing but any sense you can give us for when you expect that to rollout? Initial rollout in meaningful revenue? And I know that's not necessarily one and the same.

對我來說這是最後一個。關於 7 項設計勝利，特別是在中國的重大勝利，我知道很難預測時間，但您能告訴我們您預計何時推出它嗎？首次推出是否能帶來有意義的收入？我知道這不一定是一回事。

Just as a reminder, I mean for us a design win, when we announce the design win, it means we've already got orders. And in fact, we're already shipping to this customer right now. Now as with any large, new customer engagement, it doesn't happen overnight, it take some time but we have meaningful revenue that we expect to get from this customer in this quarter and I would anticipate that over time, they'll continue to grow.

提醒一下，對我們來說，設計勝利意味著當我們宣布設計勝利時，就意味著我們已經收到訂單。事實上，我們現在已經在向該客戶發貨了。現在，與任何大型新客戶合作一樣，它不會在一夜之間發生，需要一些時間，但我們預計本季度將從該客戶那裡獲得可觀的收入，而且我預計隨著時間的推移，收入將繼續增長。

And the next question comes from Alex Henderson with Needham & Company.

下一個問題來自 Needham & Company 的 Alex Henderson。

First question I'd like to ask is just on around the 400-gig time line, it seems like that it's gotten a lot of attention on the street but it still seems like it's kind of back half of next year before that starts to become a meaningful factor. So is that consistent with your expectations? And how would you expect the 100-gig trajectory to manage through that initial ramp of 400 gig? I would assume that 400 gig would be too small to really undermine the 100-gig growth anytime even in the '19 time frame? Is that the right way to think about it?

我想問的第一個問題是有關 400G 時間表的問題，它似乎已經引起了很多關注，但似乎要到明年下半年才會開始成為一個有意義的因素。這與您的預期一致嗎？您認為 100Gig 軌跡將如何達到 400Gig 的初始成長？我認為 400Gig 太小，不足以真正削弱 100Gig 的成長，即使在 19 年的時間範圍內也是如此？這是正確的思考方式嗎？

Yes. Alex, so I think the 400 gig -- it depends a little bit on which customer you talk to as to their urgency behind 400 gig. There are some customers who are pushing very hard for 400 gig. We've had customers in-house very recently, evaluating our 400 gig solution and I think that they're very interested in seeing that solution into production as quickly as possible. Then we have other customers that really, frankly, are still getting their feet wet in 100 gig and aren't likely be pushing 400 gig anytime soon. So I think there's a diversity among the different customers. I would say back half of next year is probably a reasonable time frame to see any kind of meaningful revenue from that. Although, again, some customers would like it earlier but I think realistically, as we saw with 100 gig, customer's desire to have it doesn't necessarily translate into the entire ecosystem being ready to actually supply it in meaningful quantity. So I think we're looking at back half of next year for some customers and longer than that for other customers. So which gets to your second question about kind of the tail or the time frame for shifting over. I think that 100 gig is -- has a long road in front of it. I think there's a long ways to go before that gets meaningfully supplanted by 400 gig. Again, certain customers may move a little faster, certain customers may move a little slower into that direction, but I think there's quite a lot of growth continuing in 100 gig for the foreseeable future.

是的。亞歷克斯，所以我認為 400 千兆——這有點取決於你與哪個客戶交談，了解他們對 400 千兆的緊迫性。有些客戶非常渴望 400Gig。我們最近有客戶來內部評估我們的 400 千兆解決方案，我認為他們非常有興趣盡快看到解決方案投入生產。然後，我們還有其他客戶，坦白說，他們仍在嘗試 100G，並且不太可能很快就會推廣到 400G。所以我認為不同的客戶之間有差異。我想說，明年上半年可能是看到任何有意義的收入的合理時間範圍。雖然，有些客戶可能更早想要它，但我認為，實際上，正如我們在 100G 中看到的那樣，客戶想要擁有它的願望並不一定意味著整個生態系統都準備好真正以有意義的數量提供它。因此，我認為對於某些客戶來說，預計要等到明年下半年，而對其他客戶來說，預計要等到明年下半年。所以這涉及到你的第二個問題，關於尾部或轉移的時間框架。我認為 100Gig 還有很長的路要走。我認為，要讓 400G 真正取代它，還有很長的路要走。再說一次，某些客戶可能會行動得更快一些，某些客戶可能會行動得更慢一些，但我認為在可預見的未來，100G 仍將保持相當大的成長。

Second question I had for you is really around the pricing structure and the rate of decline last year in the back half versus what seems like a more or somewhat of a moderation of that rate of decline in the first half, and it sounds like you're suggesting that, that moderation is going to persist into the back half still declining but at a more normalized rate. Have we seen some of the large players that have been trying to get into the market moderate the aggressiveness of their price? Or has it been a challenge for some of those players to deliver the product? How do you see the competitive landscape relative to their -- the ability to execute versus aggressiveness and pricing if you could press between those 2?

我想問您的第二個問題實際上是關於定價結構和去年下半年的下降率，而上半年的下降率似乎有所緩和，聽起來您是在暗示，這種緩和趨勢將持續到下半年，雖然仍會下降，但速度會更加正常。我們是否看到一些試圖進入市場的大公司正在緩和其定價的積極性？或者對於某些參與者來說，交付產品是否是一個挑戰？如果您可以在執行力、進取心和定價之間做出選擇，您如何看待他們的競爭格局？

Well, I think -- I guess, probably the best way for me to put it is there seems to be a number of competitors who perhaps have been very aggressive on price to try to get business, but really have had difficulties scaling up to the level of demand that's required. So when you talk about price pressure, I think you have to take both the quoted price, if you will, from the competitor and their ability to actually deliver. They have to have both of those conditions in order for it to be a meaningful threat for us and I think AOI's scale, our demonstrated track record over multiple product generations in the datacenter and the knowledge that we have in how to switch from 1 generation of products, say 40 gig to 100 gig and manage through those transitions, I think that's something that our customers find value in and not all of our competitors, I think, have that level of experience. And so I think some of them are perhaps struggling to meet the demand that they've encountered by their pricing.

嗯，我認為——我想，對我來說最好的說法是，似乎有許多競爭對手可能在價格上非常激進，試圖獲得業務，但在擴大到所需的需求水平方面確實遇到了困難。因此，當您談到價格壓力時，我認為您必須同時考慮競爭對手的報價（如果您願意的話）以及他們實際交付的能力。他們必須同時具備這兩個條件才能對我們構成有意義的威脅，我認為 AOI 的規模、我們在資料中心多代產品中展現出的良好業績記錄以及我們如何從第一代產品（比如 40G 到 100G）轉換並管理這些轉換的知識，我認為這是我們的客戶認為並非有價值的東西，但我認為並非所有競爭對手都具備這種程度的經驗。因此我認為其中一些公司可能正在努力透過定價來滿足他們遇到的需求。

And 1 last question then I'll cede the floor. Any comments around PSM? Is that now pretty much a non-- a de minimus portion of your business at this point? Or are you still involved with that?

最後一個問題，然後我就不再發言了。對 PSM 有什麼評論嗎？目前這是否已經基本上成為您業務中微不足道的一部分了？或者你仍然參與其中嗎？

We're still shipping PSM. I mean, as we've said for a number of quarters, I mean CWDM we feel like is a more attractive technology and most applications for most of our customers and we have expected for some time that CWDM products would predominate over PSM and would probably take even greater share. And that's what we're seeing and I don't expect that to change.

我們仍在運送 PSM。我的意思是，正如我們幾個季度以來所說的那樣，我們覺得 CWDM 是一種更具吸引力的技術，對於我們的大多數客戶來說，它適用於大多數應用，而且我們預計一段時間以來，CWDM 產品將比 PSM 佔據主導地位，甚至可能佔據更大的份額。這就是我們所看到的，我不希望這種情況改變。

And the next question comes from Mark Kelleher with D.A. Davidson.

下一個問題來自 D.A. Davidson 的 Mark Kelleher。

When you signed the contract, the supply contract with Facebook, the thinking I think there with Facebook was that there may be a situation where supply was in question. With the new deal you've got ramping in China, how close do you think you're going to be running to full capacity?

當你與 Facebook 簽署合約（供應合約）時，我認為 Facebook 當時的想法是，可能會出現供應出現問題的情況。隨著你們在中國的新交易不斷增加，你們認為你們離滿載生產還有多遠？

Well as we noted in our prepared remarks, I mean, we're basically running at full capacity this quarter. And we're going to be running -- our intention is to run very close to capacity. So we are investing in new production facilities. You noted in our prepared remarks as well that we continue to have a very aggressive capital expenditure planned for this year. Not quite as high as we had forecasted earlier, but that's because we think we can get more efficiency out of the existing expenditures that we're planning on making. But it's still a 40% increase or so over the last year in terms of the level of CapEx, and last year was our previous record year. So we're clearly continuing to invest in additional manufacturing, and our goal is to keep pace with the demand that we see as conditions improve.

正如我們在準備好的發言中提到的那樣，我的意思是，本季我們基本上處於滿載運轉狀態。我們將會全力以赴——我們的目標是盡可能地發揮產能。因此我們正在投資新的生產設施。您在我們的準備好的演講中也指出，我們今年將繼續計劃進行非常積極的資本支出。雖然沒有我們之前預測的那麼高，但這是因為我們認為我們可以從計劃進行的現有支出中獲得更高的效率。但就資本支出水準而言，仍比去年增長了 40% 左右，去年是我們創紀錄的一年。因此，我們顯然會繼續投資額外的製造業，我們的目標是跟上隨著條件改善而出現的需求。

And the China facility isn't due online until the end of 2019, is that correct?

中國工廠要到 2019 年底才會上線，對嗎？

Early 2020.

2020年初。

Early 2020. So you're looking to double volumes in 2019 without the China facility?

2020年初。所以，你們希望在 2019 年不依賴中國工廠的情況下將產量翻倍嗎？

That's correct.

沒錯。

Preferably what we want to do is adding more agreement, more important is automation, so that increases throughput a lot both in Taiwan and China. So the investments only for China works [through] we are invest a lot of CapEx in Taiwan too [for] special automation.

我們最希望做的是增加更多的協議，更重要的是自動化，這樣可以大幅提高台灣和中國的吞吐量。因此，僅針對中國大陸的投資有效，我們也在台灣投資了大量資本支出，用於特殊自動化。

Okay. And that leads me to my next question. Can you just kind of run us through the vertical integration plan that you've got? I know you've talked about certain components you're going to be manufacturing internally. Can you just review the timing of bringing those inside?

好的。這引出了我的下一個問題。您能否向我們簡單介紹一下您的垂直整合計畫？我知道您已經談論過您將要內部生產的某些組件。您能回顧一下將它們帶入室內的時間嗎？

Well, I don't want to get too specific on that. I think -- I'm sure many of our competitors would love to know our specific plans for how we're going to continue to reduce costs, so I don't want to provide that information publicly. But what I can say is look, there's a large amount of the bill of materials that we still do not manufacture in-house. We can bring more of that in-house. I think as Thompson mentioned, in addition to bringing those components in-house, and we did talk about on the call the fact that we plan to bring about 15% more of the bill of materials in-house by the end of the year. But in addition to just in-sourcing more parts, very important is continuing to improve the automation, improving the yields and making the manufacturing process more efficient. I think that's going to be an increasingly important part of our cost-reduction strategy moving forward and it's one, I think, we've spent a lot of time and a lot of effort fine-tuning over the last year or 2.

嗯，我不想對此說得太具體。我認為——我確信我們的許多競爭對手都想知道我們如何繼續降低成本的具體計劃，所以我不想公開提供這些資訊。但我可以說的是，我們仍然沒有在內部生產大量的物料。我們可以將更多這樣的產品引入公司內部。我認為，正如湯普森所提到的那樣，除了將這些組件帶入公司內部之外，我們在電話會議上也確實談到了我們計劃在今年年底前將約 15% 的物料清單帶入公司內部。但除了購買更多零件之外，持續提高自動化程度、提高產量和提高製造流程的效率也非常重要。我認為這將成為我們未來成本削減策略中越來越重要的一部分，而且我認為，我們在過去一兩年裡花費了大量的時間和精力對其進行了微調。

All right. And one last numbers question, just to check something. You said 58% of the datacenter revenue was 100 gig, 39%, 40 gig. I think that leaves 3%. Is that 3% 200 gig?

好的。最後一個數字問題，只是為了檢查一下。您說資料中心收入的 58% 是 100G，39% 是 40G。我認為還剩下 3%。那是 3% 200 千兆嗎？

Some of it's 200 gig and some of it is some 10 gig still remaining.

其中一些是 200 千兆，還有一些是剩餘的 10 千兆。

And next question comes from James Kisner with Loop Capital Markets.

下一個問題來自 Loop Capital Markets 的 James Kisner。

Just a quick housekeeping, did you guys disclose the cash from operations figure?

只是簡單的詢問一下，你們是否揭露了經營活動現金流的數字？

It's in our 8-K. You can look at it. I can give you the number if you want. Yes, it was $22 million --, sorry, minus $4 million for the quarter. That was Q1, I'm sorry gave you the wrong number. $22 million for the quarter, net cash use provided by operations, yes.

它在我們的 8-K 中。你可以看一下。如果您需要的話我可以給您這個號碼。是的，是 2200 萬美元——抱歉，本季減少了 400 萬美元。那是 Q1，很抱歉給了你錯誤的號碼。本季營運產生的淨現金使用量為 2,200 萬美元，是的。

Okay. so just want to clarify something, I think you said that -- you said multiple times now that 100 gig is like this double half-over-half and you've outperformed in this Q2 and it sounds like 100 gig was a big driver of that. I'm just wondering given that now you perhaps have outperformed, I mean, the volumes in the front half. Does that mean that your sort of forecast for the second half is sort of gone up what we thought it might be volume wise for 100 gig versus where it was a quarter ago?

好的。所以只是想澄清一些事情，我想你說過——你現在多次說過，100gig 就像是雙倍的一半，而且你在第二季度的表現非常好，聽起來 100gig 是其中的一個重要推動力。我只是想知道，鑑於現在你可能已經超越了前半部的表現。這是否意味著您對下半年 100G 容量的預測與上一季相比有所上升？

No. I don't think our outlook has changed much from a quarter ago. The fact that we have a large portion of our business that's coming from, I would say secure -- more secure contracts than what we've had in the past makes our visibility a little bit better typically, and so I think nothing has changed really in our outlook from before.

不。我認為我們的前景與一個季度前相比沒有太大變化。事實上，我們的很大一部分業務來自於比過去更有保障的合同，這使得我們的知名度通常會更好一些，所以我認為我們的前景與以前相比沒有任何改變。

Okay. Can you talk about the impact of currency on your margins, both gross and operating here or I guess any income margin in this last quarter and the impact on -- do you expect on your guidance?

好的。您能否談談貨幣對你們的利潤率（包括毛利和營業利潤）的影響，或者我猜想上個季度的任何收入利潤率以及對你們的指導的影響？

Yes. I mean the currency consideration doesn't change margin for us too much. We have most of our raw materials and things that we purchase are in US dollars and we have -- I would say exactly equal flow but we have flow both directions between dollars and renminbi and dollars and New Taiwan dollars. So it doesn't have a great impact on our gross profit.

是的。我的意思是貨幣因素不會對我們的利潤造成太大的改變。我們採購的大多數原料和物品都是以美元支付的，而且我們的流量——我想說是完全相等的，但我們的貨幣是美元和人民幣、美元和新台幣之間的雙向流動。所以它對我們的毛利沒有太大的影響。

Okay so, well the operating expense, although difficult in China.

好的，那麼，營運費用雖然在中國很難解決。

Yes. Yes.

是的。是的。

Okay. I think I heard that...

好的。我想我聽到了…

Thompson was pointing out that it does lower our -- that depreciating RMB lowers our labor cost obviously, in China.

湯普森指出，人民幣貶值確實降低了我們的勞動成本，顯然在中國是如此。

Okay. And also, this has been a topic in the past about your customers -- your kind of end run going to the manufacturing partners and making their own strip coat white box transceivers and this quarter obviously, I'm sure you saw that a competitor and other player in this space talked about that becoming a more serious effort again after kind of at [head fake] 18 months ago. I'm just wondering do you have any updated thoughts on that? Is that something that you aren't going to be worried about at all? Just need any updated thoughts on kind of white box transceiver idea would be helpful.

好的。此外，這在過去一直是關於您的客戶的一個話題——您的最終選擇是與製造合作夥伴合作，製造他們自己的條帶塗層白盒收發器，而本季度顯然，我相信您已經看到該領域的競爭對手和其他參與者談到在 18 個月前（假動作）之後再次進行更認真的努力。我只是想知道您對此有什麼最新的想法嗎？這是一件你根本不會擔心的事情嗎？只需要任何關於白盒收發器想法的更新想法都會有所幫助。

Well, I think making transceivers is a very technically difficult proposition. It's not like electronic manufacturing where it's kind of got a standardized process that virtually any factory can perform. In optical manufacturing, there are specialized processes and in particular, for us and for the designs of these very high performance high-speed modules, there's quite a lot of specialized equipment and know how that goes into doing it. So it's not as easy as it may seem to manufacture these transceivers, and I think some of the competitors that have attempted to do this in the past have had, let's just say, mixed results. I'm very confident in the work and -- that we put into cost reduction, automating our production, really fine-tuning those things and there's still more work ongoing in that respect. And so I think we're in a good place relative to the competitive business strategies that we see out there.

嗯，我認為製造收發器在技術上是一個非常困難的命題。它不像電子製造，電子製造幾乎有任何工廠都可以執行的標準化流程。在光學製造中，有專門的工藝，特別是對於我們和這些高性能高速模組的設計來說，有相當多的專用設備和技術訣竅。因此，製造這些收發器並不像看起來那麼容易，我認為過去嘗試過這樣做的一些競爭對手已經取得了好壞參半的結果。我對我們所投入的工作非常有信心，降低成本，實現生產自動化，真正微調這些事情，而且在這方面還有更多的工作正在進行中。因此我認為，相對於我們所看到的競爭性商業策略而言，我們處於有利地位。

And I can see something missing in this model is not radio. Who is responsible for the year loss for the automation? For the manufacturing processing improvement? Who’s responsible for the quality issue? That's not clear. I think there's still many issues in this model. I don't seeing it really work, all right? And I don't believe there comes a manufacturer like people in Taiwan. I don't believe they will be responsible for this kind of job, so who will be responsible? Will it be the end customer responsible for this? But I don't think really do they have the right people to take care of this issue because it’s difficult to have manpower. It’s not easy. And AOI is very quick, we always spent many years. So we know how to do automation. We know how to improve the process. This is very important. The year could be very bit different between company from 72% to 95%, there's a huge difference, so who is responsible? So there's many questions that need to be answered.

我發現這個模型缺少的不是收音機。自動化造成的年度損失誰來負責？為了製造製程的改進？誰對品質問題負責？這還不清楚。我認為這個模型還存在著很多問題。我覺得它沒什麼作用，好嗎？我不相信會有像台灣這樣的製造商。我不相信他們會負責這種工作，那誰來負責呢？最終客戶會為此負責嗎？但我認為他們確實沒有合適的人手來處理這個問題，因為人力很困難。這並不容易。而且AOI非常快，我們總是要花很多年的時間。所以我們知道如何實現自動化。我們知道如何改善這項流程。這非常重要。不同公司之間的年份可能會有很小的差異，從72％到95％，差別很大，那麼誰負責呢？因此有很多問題需要解答。

And the next question comes from Richard Shannon with Craig-Hallum.

下一個問題來自 Craig-Hallum 的 Richard Shannon。

Let’s see, a couple for me. First of all, Stefan, I think in your prepared remarks, you talked about a headwind in third quarter due to testing going on. Can you help us understand what's going on in there and when does that headwind evade?

讓我們看看，給我一對。首先，史蒂芬，我想在您準備好的發言中，您談到了由於正在進行的測試而導致的第三季逆風。您能幫助我們了解那裡發生了什麼事嗎？逆風什麼時候會消散？

Yes, so what we were saying in the prepared remarks is that we are implementing some additional testing procedures as we continue to diversify our customer base. Different customers have different requirements in terms of what they expect to see relative to design testing and so on and so forth. So we're undertaking some additional testing steps in the manufacturing. So that'll -- what it does is it adds a few days to our manufacturing throughput, it takes a little bit longer to manufacture the transceivers, it doesn't -- it's not going to meaningfully impact the cost of the modules but it will lengthen the time that it takes them to manufacture them. And so in this quarter, we expect that to constrain our production. In other words, there will be more demand than we can supply in this quarter. But as we said in our prepared remarks, by the fourth quarter, early in the fourth quarter, we expect that to be -- to normalize.

是的，我們在準備好的演講中說過，隨著我們繼續實現客戶群多樣化，我們正在實施一些額外的測試程序。不同的客戶對於設計測試等方面的期望有不同的要求。因此我們在製造過程中採取了一些額外的測試步驟。所以，它的作用是增加幾天的製造吞吐量，製造收發器的時間稍微長一點，它不會對模組的成本產生重大影響，但會延長製造模組所需的時間。因此，我們預計本季這將限制我們的生產。換句話說，本季的需求將超過我們的供應能力。但正如我們在準備好的發言中所說，到第四季度，也就是第四季初，我們預計這種情況將會正常化。

Okay. And is that referring to -- is that something you're doing for a current customer or a new one? And is that what one specific SKU? Or over across multiple ones?

好的。這是指－這是您為現有客戶還是新客戶所做的事情？那是一個特定的 SKU 嗎？或跨越多個？

It applies to multiple SKUs, and it applies to multiple customers. It's data that we need to take to get a large enough sample size for some of the statistical analysis that we need to do for certain customers, including some existing and new customers. And so we're doing that across-the-board.

它適用於多個 SKU，也適用於多個客戶。我們需要取得足夠大的樣本量的數據，以便針對某些客戶（包括一些現有客戶和新客戶）進行一些統計分析。因此，我們正在全面推行這項舉措。

Got it. Okay. Makes sense. Another question though again in datacenter, your 40 gig revenues have stayed, I would say, relatively flattish for a few quarters, even though you've talked about that product line eventually trailing off. Any updates on your thought process there? Does that continue to current levels? Or is that -- do you see any imminent decline there?

知道了。好的。有道理。不過，在資料中心領域還有另一個問題，我想說，你們的 40Gig 收入在幾個季度內保持相對平穩，儘管您曾談到該產品線最終會逐漸減少。您的思考過程有任何更新嗎？這種情況會持續到目前的水平嗎？或者說—您是否看到那裡即將出現衰退？

I think it's going to continue to tail off but I don't see an imminent falling off of a cliff. I think, we've said for some time that 40 gig -- actually 40 gig has been somewhat surprising in its resilience, but it's a testament to the fact that the economics of 40 gig in some instances for certain customers are still very good. So I wouldn't expect it to dramatically drop off any time in the near future. But I would expect over time to -- that it will continue to tail off gradually.

我認為它會繼續下降，但我並不認為它會立即跌落懸崖。我認為，我們已經說過一段時間了，40GbE——實際上 40GbE 的彈性有些令人驚訝，但這證明了在某些情況下，對於某些客戶來說，40GbE 的經濟效益仍然非常好。所以我預計它不會在不久的將來大幅下降。但我預計隨著時間的推移，它會逐漸減少。

Okay. Helpful. Next question from me, you mentioned that the expectation of doubling your volume in 100 gig in 2019 over 2018. When you say volume, is that sales or units? Comments?

好的。很有幫助。我的下一個問題是，您提到預計 2019 年的交易量將比 2018 年翻一番，達到 100G。您所說的數量是指銷售還是單位？評論？

That's units.

這就是單位。

Unit? Okay. And then follow-up on that specific topic is do you expect this doubling? Is that to happen over kind of a broader base of your customers? Or do you think it will be more narrow profile?

單元？好的。然後關於這個特定主題的後續問題是，您是否預計這個數字會翻倍？這是否會在更廣泛的客戶群中發生？或者您認為它的輪廓會更窄？

Well we see a number of customer -- I mean it's a combination of factors, right? We see some customers that I think are anticipating growth in their infrastructure. So that is purchasing more products from us next year and we also see new customers like the China datacenter customer that we talked about that we expect to come on board that will contribute. So it's not just one factor, it's a preponderance of multiple, different things that we're looking at.

嗯，我們看到了很多客戶——我的意思是這是多種因素共同作用的結果，對吧？我們看到一些客戶正在期待其基礎設施的成長。因此，明年我們會向我們購買更多產品，我們也會看到新客戶，例如我們之前談到的中國資料中心客戶，我們預計這些客戶將會加入並做出貢獻。因此，我們關注的不僅是一個因素，而是多種不同因素的綜合作用。

Okay. Last question for me, you mentioned 200 gig that your shipping, is this shipping into a design win for production volume or testing? And then what's your expectation of kind of ramp of that over some period of time next 2 to 4 quarters or so?

好的。最後一個問題，您提到了 200 千兆的出貨量，這是否代表了設計勝利，可以用於生產量還是測試？那麼，您預計未來 2 到 4 個季度左右的一段時間內這一數字會如何增長？

It's for -- I would say -- I guess you could call it field trials or sort of advanced deployment testing. And as far as the ramp up, at 200 gig, I think our viewpoint on 200 gig is that it's not going to be wildly used. I think there's going to be a few customers who have interest in it, many customers, it's not the direction that they're heading. 400 gig is clearly a bigger -- it's -- 400 gigs shares wider acceptance I would say in the customer base. But it's -- for us, 200 gig is important because it is a steppingstone for us to get to 400 gig. And I think that's probably the most significant part for us.

我想說的是，你可以稱其為現場試驗或某種高級部署測試。至於 200G 的成長，我認為我們對 200G 的觀點是它不會被廣泛使用。我認為會有一些客戶對此感興趣，但很多客戶都認為這不是他們前進的方向。400Gig 顯然更大 — — 我想說的是，400Gig 在客戶群中具有更廣泛的接受度。但對我們來說，200G 很重要，因為它是我們達到 400G 的墊腳石。我認為這可能是對我們來說最重要的部分。

And the last question is a follow-up from Paul Silverstein with Cowen.

最後一個問題是 Cowen 的 Paul Silverstein 提出的後續問題。

I just want to clarify or I hope you clarify with respect to the comment about you being maxed out on volume, on supply. I know you've got new supply that's going to be coming online, but Stefan, going back to your comments about China not being a meaningful risk in your ability to move manufacturing around. I'm just trying to reconcile if you are maxed out in all of your facilities, it doesn't -- what am I missing in terms of your room to move manufacturing around if need be?

我只是想澄清一下，或者我希望你能澄清一下關於你在數量和供應上達到極限的評論。我知道你們有新的供應即將上線，但是史蒂芬，回到你關於中國不會對你們轉移製造業的能力構成重大風險的評論。我只是想弄清楚，如果您的所有設施都已達到最大限度，那麼在必要時，您在轉移製造設施方面還缺少什麼呢？

Well, I don't want to get too specific on our plans, Paul, because there's a lot of -- there's a lot that's still up in the air here with respect to the tariff situation. I mean as I mentioned, the tariffs aren't even passed yet as you know. So what I am saying is, there's a number of different manufacturing steps that go into the manufacturing process for these transceivers as you know. Currently, we do all of those steps in several locations. One possible thing that we could do for example is do a portion of that manufacturing in one location and then move it to a different location to do the rest of the manufacturing -- we could also segregate it by customers. We do have significant customers in China and other parts of the world that are not subject to tariff. So for example many of our -- even our U.S. customers, many of them have operations in Europe or other places that would not be subject to the tariff. So we could potentially manufacture products for places or customers that are not coming back to the U.S. in China and do other customers or other geographical locations in Taiwan. So there's a lot of things that we can do. I was merely pointing out...

保羅，我不想對我們的計劃說得太具體，因為在關稅方面還有很多事情尚未確定。我的意思是，正如我所提到的，關稅尚未通過。所以我想說的是，正如你所知，這些收發器的製造過程涉及許多不同的製造步驟。目前，我們在多個地點執行所有這些步驟。例如，我們可以做的一件事是在一個地方完成一部分製造，然後將其轉移到另一個地方完成其餘的製造——我們也可以按客戶進行分類。我們在中國和世界其他地區確實擁有不受關稅影響的重要客戶。例如，我們的許多客戶——甚至是我們的美國客戶，其中許多都在歐洲或其他地方開展業務，而這些業務不會受到關稅的影響。因此，我們可以為中國那些不返回美國的地方或客戶生產產品，也可以為台灣的其他客戶或其他地理位置生產產品。所以我們可以做很多事。我只是想指出...

No, but the other point is that we still are in this space. We use all empty space in Taiwan and China, we can more than double our capacity for transceiver. And for us with the 4G going down, we can convert a 40G transceiver, make physical capacity into 100G next year. So otherwise that's an important thing about is that use of space and the new China facility will not be ready in the 2020 but that's not the point. We got a more equipment in Taiwan in quick capacity in Taiwan.

不，但另一點是我們仍然處於這個空間。我們利用台灣和中國的所有空閒空間，可以將收發器的容量增加一倍以上。對我們來說，隨著 4G 的下降，我們可以轉換 40G 收發器，明年將實體容量變成 100G。因此，否則，重要的一點是空間的使用和新的中國設施將無法在 2020 年準備就緒，但這不是重點。我們在台灣快速獲得了更多的設備。

Got it. One guys -- just one last clarification. Stefan, I heard your comments that you don't want to get into the details of the bill of materials in terms of in-sourcing, but I just want to clarify something. I think the last time you publicly referenced the percentage of your bond that you had brought in-house or were planning to, I thought the number was 60% to 65%, maybe my memory is not serving me, but the 15% you referenced today. Is that new addition top of what you previously announced? Or is that part and parcel of what you had previously announced?

知道了。各位——最後再澄清一點。史蒂芬，我聽到你的評論說你不想了解內部採購方面的物料清單的細節，但我只是想澄清一些事情。我認為上次您公開提到您已經帶入或計劃帶入的債券比例時，我認為這個數字是 60% 到 65%，也許我的記憶不正確，但您今天提到的是 15%。這個新增加的功能是否超越了您之前宣布的功能？或者這是您之前宣布的內容的一部分？

I think -- if I -- I don't have that statement in front of me either Paul, but I think what we were talking about previously was that we see ourselves being able to eventually in-source 60% to 65%. This 15% is what we have plans to do between now and the end of the year.

我認為 - 如果我 - 保羅，我面前也沒有這個說法，但我認為我們之前談論的是，我們看到我們最終能夠實現 60% 到 65% 的內部採購。這 15% 是我們計劃從現在到年底完成的。

15% additional on top of wherever you're at?

無論您所在的位置如何，還會額外增加 15% 嗎？

On top of where we are, yes. At the end of -- in other words, how much of the bill of materials, say we had $100 bill of materials, right? And at the end of Q2, say $50 of it was already in-sourced adding 15% additional to that, we got us up to 65% of the bill of materials in-source, right? That's what I'm trying to say, by the end of the year.

是的，就我們目前的情況而言。換句話說，最後，物料清單有多少，比如說我們有 100 美元的物料清單，對嗎？在第二季末，假設其中 50 美元已在內部採購，再加上 15%，我們就得到了 65% 的物料清單內部採購成本，對嗎？這就是我想說的，到今年年底。

All right. And are those the numbers? Or are you just giving us the hypothetical?

好的。這些就是數字嗎？還是你只是給我們一個假設？

No, no. That's just -- it's a mathematical example, I'm just trying to provide you clarity into the math that I'm trying to -- that I'm going through in the earnings call. Those are not...

不，不。這只是 - 一個數學例子，我只是想讓你清楚地了解我在收益電話會議上嘗試討論的數學問題。那些不是...

Understood. And you clearly don't want to provide those exact numbers. Is that correct?

明白了。而且您顯然不想提供這些確切的數字。對嗎？

Yes. I'm confident that there's a lot of people out there in our competitive universe that would love to know exactly what our cost is and what it'll be by the end of the year, but we're not going to give that information out.

是的。我相信，在我們這個競爭激烈的世界中，有很多人都想知道我們的成本到底是多少，以及今年年底的成本是多少，但我們不會透露這些資訊。

And this concludes our question-and-answer session. I would like to return the conference to Dr. Thompson Lin for any closing remarks.

我們的問答環節到此結束。我想將會議的閉幕詞交還給 Thompson Lin 博士。

Again, thank you for joining us today. As always, we thank our investors, customers and employees for your continued support.

再次感謝您今天加入我們。一如既往，我們感謝投資者、客戶和員工的持續支持。

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

謝謝。會議現已結束。感謝您參加今天的演講。現在您可以斷開線路了。