AXT Inc (AXTI) 2024 Q1 法說會逐字稿

Good afternoon, everyone, and welcome to AXT's first-quarter 2024 earnings call. During the call today is Dr. Morris Young, Chief Executive Officer; and Gary Fischer, Chief Financial Officer. My name is John and I'll be your coordinator for today. (Operator Instructions)

各位下午好，歡迎參加AXT 2024年第一季財報電話會議。今天參加電話會議的有執行長 Morris Young 博士和財務長 Gary Fischer。我叫約翰，我將擔任你們今天的協調員。（操作說明）

I would now like to turn the call over to Ms. Leslie Green, Head of Investor Relations for AXT.

現在我將把電話交給 AXT 投資者關係主管 Leslie Green 女士。

Thank you, John, and good afternoon, everyone.

謝謝你，約翰，大家下午好。

Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company, market conditions and trends, including expected growth in the markets we serve, emerging applications using chips or devices, fabricated on our substrates, our product mix, our ability to increase quarters -- orders in succeeding quarters to control costs and expenses, to improve manufacturing yields and efficiencies, to utilize our manufacturing capacity, the growing environmental health and safety and chemical industry regulations in China as well as global economic and political conditions, including trade tariffs and restrictions.

在會議開始之前，我想提醒各位，在本次電話會議期間，包括對各位提問的回答中，我們將提供預測或做出其他前瞻性聲明，涉及公司未來的財務業績、市場狀況和趨勢（包括我們所服務市場的預期增長）、使用我們基板製造的晶片或裝置的新興應用、我們的產品組合、我們提高後續季度訂單量以控製成本和費用、提高生產良率和效率、利用我們生產能力的能力、中國日益嚴格的環境健康與安全以及化學工業法規，以及全球經濟和政治狀況（包括貿易關稅和限制）。

We wish to caution you that such statements deal with future events are based on management's current expectations and are subject to risks and uncertainties that could cause actual results or events to differ materially. These uncertainties and risks include, but are not limited to, overall conditions in the markets in which the company competes, global financial conditions and uncertainties, COVID-19 and other outbreaks of contagious disease, potential tariffs and trade restrictions, increased environmental regulations in China, the financial performance of our partially owned supply chain companies, and the impact of delays by our customers on the timing of sales and their products.

我們謹此提醒您，此類涉及未來事件的聲明是基於管理層當前的預期，並受到風險和不確定性的影響，這些風險和不確定性可能導致實際結果或事件與預期有重大差異。這些不確定性和風險包括但不限於公司所處市場的整體狀況、全球金融狀況和不確定性、COVID-19 和其他傳染病的爆發、潛在的關稅和貿易限制、中國日益嚴格的環境法規、我們部分控股的供應鏈公司的財務業績，以及客戶延遲對銷售時間和產品的影響。

In addition to these factors that may be discussed on this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission. These are available online by link from our website and contain additional information on risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website at axt.com through May 2, 2025.

除了本次電話會議中可能討論的這些因素外，我們還建議您參閱本公司向美國證券交易委員會提交的定期報告。這些資訊可透過我們網站上的連結在線獲取，其中包含有關風險因素的更多信息，這些風險因素可能導致實際結果與我們目前的預期存在重大差異。本次電話會議的錄音將在我們的網站 axt.com 上保留至 2025 年 5 月 2 日。

Also, before we begin, I want to note that shortly following the close of market today, we issued a press release reporting financial result of first quarter of 2024. This information is available on the Investor Relations portion of our website at axt.com.

另外，在開始之前，我想指出，今天收盤後不久，我們發布了一份新聞稿，公佈了 2024 年第一季的財務業績。這些資訊可在我們網站 axt.com 的投資者關係部分找到。

I would now like to turn the call over to Gary Fischer for a review of our first-quarter 2024 results.

現在我將把電話交給 Gary Fischer，讓他回顧我們 2024 年第一季的表現。

Gary?

加里？

Thank you, Leslie, and good afternoon to everyone.

謝謝你，萊斯利，大家下午好。

Revenue for the first quarter of 2024 was $22.7 million, that's up from $20.4 million in the fourth quarter of 2023 and up from $19.4 million in the first quarter of 2023.

2024 年第一季的營收為 2,270 萬美元，高於 2023 年第四季的 2,040 萬美元，也高於 2023 年第一季的 1,940 萬美元。

To break down our Q1 '24 revenue for you by product category indium phosphide increased sequentially to $8.1 million. That's reflecting strong growth from data center applications, including AI and continued improvement in passive optical networks. Gallium arsenide also grew to $7.5 million with broad-based improvement across a number of applications. Germanium substrates were $1.4 million, up from the prior quarter with renewed strength in demand for satellite solar cells.

為了向您詳細列出我們 2024 年第一季按產品類別劃分的收入，磷化銦的收入環比增長至 810 萬美元。這反映了資料中心應用（包括人工智慧）的強勁成長以及被動光網路的持續改進。砷化鎵的銷售額也成長至 750 萬美元，這得益於其在多種應用領域的廣泛改進。鍺基板銷售額為 140 萬美元，較上一季有所成長，這得益於衛星太陽能電池需求的再次強勁成長。

Finally, as expected, revenue from our consolidated raw materials joint venture companies in Q1 was $5.8 million, down from Q4 as we consumed a greater portion of their output for our growing substrate demand. In the first quarter 2024, revenue from Asia-Pacific was 79%, Europe was 16%, and North America was 5%. The top five customers generated approximately 33% of total revenue, and one customer was over the 10% level. Non-GAAP gross margin in the first quarter was 27.3% compared with 23.2% in Q4 and 26.9% in Q1 of 2023.

最後，正如預期的那樣，我們第一季來自合併原材料合資公司的收入為 580 萬美元，低於第四季度，因為我們消耗了其產量中更大比例的產品以滿足我們不斷增長的基材需求。2024 年第一季度，亞太地區的營收佔 79%，歐洲佔 16%，北美佔 5%。前五名客戶貢獻了約 33% 的總收入，其中一位客戶的貢獻超過了 10%。第一季非GAAP毛利率為27.3%，第四季為23.2%，2023年第一季為26.9%。

For those who prefer to tracking results on a GAAP basis, gross margin in the first quarter was 26.9% compared with 22.6% in Q4 and 26.3% in Q1. Beyond the near term, we remain confident that we can get back to the mid-30% range as the environment strengthens through higher overall volume, favorable product mix, and the benefits of our recycling programs, along with continued efficiency improvements throughout our business.

對於那些喜歡以 GAAP 準則追蹤業績的人來說，第一季的毛利率為 26.9%，而第四季為 22.6%，第一季為 26.3%。展望未來，我們仍然有信心，隨著整體銷售成長、產品組合優化、回收計劃的實施以及業務效率的持續提高，環境將得到改善，從而恢復到 30% 左右的水平。

Moving to operating expense. Total non-GAAP operating expense in Q1 was $8.7 million compared with $7.5 million in Q4 of 2023 and $8.7 million in Q1 2023. On a GAAP basis, total operating expense in Q1 was $9.4 million compared with $8.2 million in Q4 and down from $9.5 million in Q1 of 2023. As you've seen from our quarterly run rate in 2023, we had put in a number of constraints in place for OpEx to align with market conditions as things are beginning to trend up, we're loosening up some of these constraints, which has brought OpEx up from the previous run rates.

轉入營運費用。第一季非GAAP營運總支出為870萬美元，而2023年第四季為750萬美元，2023年第一季為870萬美元。以美國通用會計準則 (GAAP) 計算，第一季總營運支出為 940 萬美元，而第四季為 820 萬美元，低於 2023 年第一季的 950 萬美元。正如您從我們 2023 年的季度運行率中看到的那樣，我們之前對營運支出 (OpEx) 設定了一些限制，以使其與市場狀況保持一致。隨著市場開始呈現上升趨勢，我們正在放鬆其中一些限制，這使得營運支出比之前的運行率上升。

We do expect to hold it at approximately this level throughout the rest of this year. Our non-GAAP operating loss for the first quarter of 2024 was $2.5 million compared with non-GAAP operating loss in Q4 2023 of $2.7 million and a non-GAAP operating loss of $3.5 million in Q1 of 2023. For reference, our GAAP operating line for the first quarter of 2024 was a loss of $3.3 million compared with an operating loss of $3.6 million in Q4 and an operating loss of $4.4 million in Q1. Non-operating other income and expense and other items below the operating line for the first quarter in 2024 was a net gain of $1.3 million.

我們預計今年剩餘時間裡，價格將維持在這個水準附近。2024 年第一季，我們的非 GAAP 營業虧損為 250 萬美元，而 2023 年第四季的非 GAAP 營業虧損為 270 萬美元，2023 年第一季的非 GAAP 營業虧損為 350 萬美元。作為參考，我們 2024 年第一季的 GAAP 營業虧損為 330 萬美元，而第四季的營業虧損為 360 萬美元，第一季的營業虧損為 440 萬美元。2024 年第一季非經營性其他收入和支出以及經營活動線以下的其他項目淨收益為 130 萬美元。

The details can be seen in the P&L included in our press release today. For Q1 2024, we had a non-GAAP net loss of $1.3 million or $0.03 per share compared with non-GAAP net loss of $2.8 million or $0.07 per share in the fourth quarter, and non-GAAP net loss in Q1 of 2022 was $2.4 million or $0.06 per share.

詳情請參閱我們今天發布的新聞稿中的損益表。2024 年第一季度，我們的非 GAAP 淨虧損為 130 萬美元，即每股虧損 0.03 美元，而第四季度的非 GAAP 淨虧損為 280 萬美元，即每股虧損 0.07 美元；2022 年第一季的非 GAAP 淨虧損為 240 萬美元，即每股虧損為 240 萬美元，即每股虧損。

On a GAAP basis, net loss in Q1 was $2.1 million or $0.05 per share. By comparison, net loss was $3.6 million or $0.09 per share in the fourth quarter and GAAP net loss in Q1 of 2023 was $3.3 million or $0.08 per share. The weighted average basic shares outstanding in Q1 2024 was 43.0 million shares. Cash and cash equivalents and investments were 41.4 -- $41.3 million as of March 31. By comparison at December 31, it was [52.3].

以美國通用會計準則計算，第一季淨虧損為 210 萬美元，即每股虧損 0.05 美元。相較之下，第四季淨虧損為 360 萬美元，即每股虧損 0.09 美元；2023 年第一季 GAAP 淨虧損為 330 萬美元，即每股虧損 0.08 美元。2024 年第一季加權平均流通基本股數為 4,300 萬股。截至 3 月 31 日，現金及現金等價物及投資為 4,140 萬至 4,130 萬美元。相比之下，截至12月31日，情況是：[52.3]

Cash is down for two main reasons. First, our revenue billings tended to be back-end loaded in the first quarter as most of China shuts down for Chinese New Years. As a result, in Q1 accounts receivable increased by $6.1 million. This is simply a timing issue as most of that cash can be collected in Q2.

現金流下降主要有兩個原因。首先，由於中國大部分地區都在春節期間放假，我們的收入結算往往集中在第一季末。因此，第一季應收帳款增加了 610 萬美元。這只是一個時間問題，因為大部分現金都可以在第二季收回。

The second reason for the decline in cash in Q1 was CapEx spending of $5.7 million. This is not new commitments to facilities. This was work done in 2023 for which payment was due in Q1. As we look to the balance of the year, we expect CapEx to be in the $2 million to $3 million range quarter per quarter, most of which goes towards of facilities work, which was done in 2023.

第一季現金減少的第二個原因是資本支出 570 萬美元。這並非對設施的新承諾。這是 2023 年完成的工作，款項應在第一季支付。展望今年剩餘時間，我們預計每季資本支出將在 200 萬至 300 萬美元之間，其中大部分用於 2023 年完成的設施建設工作。

One more note on cash. From time to time, we have had outside party approach us with an interest to invest in our supply chain companies. Currently, interest in China is growing, perhaps related to the change in the economic circumstances in China. We believe that there's real value in these assets to be unlocked and may consider monetizing a portion of this year. As a reminder, we now have over 10 companies in our supply chain where we have partial ownership shared with industry partners. Depreciation and amortization in the first quarter was $2.2 million. Total stock comp was $800,000. Net inventory was down $600,000 in the first quarter.

關於現金還有一點要說明。我們不時會遇到外部人士聯絡我們，表示有興趣投資我們的供應鏈公司。目前，人們對中國的興趣日益濃厚，這或許與中國經濟情勢的變化有關。我們相信這些資產蘊藏著巨大的價值，有待挖掘，並可能考慮在今年將其中的一部分變現。再次提醒大家，我們目前在供應鏈中有超過 10 家公司，我們與產業夥伴共同擁有部分股權。第一季折舊和攤銷費用為 220 萬美元。股票補償總額為 80 萬美元。第一季淨庫存減少了60萬美元。

This includes inventory added to our recycling program, 33% of the inventory is raw materials and WIP was 63%, finished goods makes up approximately 4%. The increase in WIP is primarily the result of increased crystal growth in anticipation of higher demand in Q2.

這包括添加到我們回收計劃中的庫存，其中 33% 的庫存是原材料，在製品佔 63%，成品約佔 4%。在製品增加主要是由於預計第二季需求增加而導致晶體生長量增加。

With improving demand, we hope to bring our total inventory down by approximately $10 million over the year. Okay. This concludes our discussion of our quarterly financial results.

隨著需求改善，我們希望在一年內將總庫存減少約 1,000 萬美元。好的。以上就是我們對季度財務表現的討論。

Turning to our plan to list our subsidiary, Tongmei in China on the STAR Market in Shanghai. We now believe that we have had some significant developments on the issue that the CSRC previously raised, and we believe the likely next step is that the CSRC can resume consideration of our application. As we've said, this is a lengthy process, but we continue to believe that Tongmei is an excellent candidate for listing.

接下來談談我們計劃將我們的子公司通美在中國上海科創板上市。我們現在認為，在證監會先前提出的問題上，我們已經取得了一些重大進展，我們相信下一步很可能是證監會可以恢復審議我們的申請。正如我們所說，這是一個漫長的過程，但我們仍然相信同美是個優秀的上市候選人。

With that, I'll now turn the call over to Dr. Morris Young for a review of our business end markets. Morris?

接下來，我將把電話交給莫里斯·楊博士，請他回顧我們的業務終端市場。莫里斯？

Thank you, Gary. We believe our business is on a firm path to recovery, as evidenced by the continued growth in our business as solid execution, which allowed us to exceed our Q1 revenue and profitability (technical difficulty). In the first quarter, we achieved 11% sequential growth in our revenues and 29% sequential improvement in non-GAAP net income. While certain parts of the demand environment remains somewhat soft, all three of our substrate product line showed improvement, including a 48% growth in indium phosphide revenue from Q4.

謝謝你，加里。我們相信，公司業務正穩步復甦，持續成長和穩健的執行力便是明證，正是這些因素促使我們第一季營收和獲利能力均超出預期。（技術難題）第一季度，我們的營收較上季成長了 11%，非 GAAP 淨收入較上季成長了 29%。儘管部分需求環境仍有些疲軟，但我們的三條基板產品線均有所改善，其中磷化銦營收較第四季成長了 48%。

Looking individually at these product lines. Indium phosphide once again became our biggest selling material in Q1. Sales was driven by continued recovery in the pound market and a meaningful increase in demand related to AI. We review AI as an exciting catalyst for indium phosphide in the years to come as AI requires high-speed lasers and detectors for rapid data transfer with increased bandwidth, low attenuation, and low distortion. Today, AI applications are primarily using gallium [wixos], which require a relatively small amount of substrate material. But as the industry moves to 800-gig and then 1.6-terabyte speed, we expect that there will be a necessary transition to indium phosphide.

逐一分析這些產品線。第一季度，磷化銦再次成為我們銷售量最高的材料。銷售額的成長得益於英鎊市場的持續復甦以及與人工智慧相關的需求的顯著增長。我們認為，人工智慧在未來幾年將成為磷化銦令人興奮的催化劑，因為人工智慧需要高速雷射和探測器來實現快速數據傳輸，同時提高頻寬、降低衰減和減少失真。如今，人工智慧應用主要採用鎵[wixos]，它只需要相對較少的基材。但隨著產業向 800 GB 和 1.6 TB 的速度發展，我們預計必然會過渡到磷化銦。

We're already seeing development work happening today with next-generation silicon photonics devices, electoral absorption modulated lasers or EMLs for high-speed data center transceivers. Revenue from these applications contributed to our strong indium phosphide growth in Q1 and will help drive our expected growth in 2024.

我們已經看到，下一代矽光子元件、用於高速資料中心收發器的電吸收調製雷射（EML）的研發工作正在進行中。這些應用帶來的營收促成了我們第一季磷化銦業務的強勁成長，並將有助於推動我們2024年的預期成長。

Our gallium arsenide revenue grew 24% sequentially in Q1, reflecting increased demand across a broad base of applications, including power amplifiers, HBT applications for wireless switches, high-power lasers, and LEDs. We believe much of the excess inventory in the supply chain has been defeated, and we are benefiting from a desire among our customer to diversify their supply base as the market recovers. For example, today, our share of the HBT market is relatively small, but we believe we have a great opportunity to increase our market share over time and are pleased with early customer traction.

第一季度，我們的砷化鎵收入環比增長 24%，反映出包括功率放大器、無線開關用 HBT 應用、高功率雷射和 LED 在內的廣泛應用領域的需求增加。我們相信供應鏈中的大部分過剩庫存已被消除，隨著市場復甦，我們的客戶希望實現供應基礎多元化，我們也從中受益。例如，目前我們在 HBT 市場的份額相對較小，但我們相信隨著時間的推移，我們有很大的機會提高市場份額，並且對早期客戶的成長感到滿意。

In addition, our 8-inch gallium arsenide development efforts have led to a groundbreaking advancement in both of our defect densities and yields. We believe this innovation can be applied to our 6-inch gallium oxide products, allowing us to further enhance our competitiveness across all of our market WE serve.

此外，我們在 8 吋砷化鎵開發方面的努力，在缺陷密度和良率方面都取得了突破性的進步。我們相信這項創新可以應用於我們的 6 吋氧化鎵產品，從而進一步增強我們在我們所服務的所有市場上的競爭力。

In germanium substrate, demand for satellite solar cells were down substantially throughout 2023,and is now beginning to recover. Sales increased 25% in Q1 over the prior quarter with renewed strength in Europe and Asia. And finally, coming off three quarters of strong sales in our raw material business as well as contributions from our recycling efforts, sales from our raw material business declined as we expected in Q1.

2023 年全年，鍺基板衛星太陽能電池的需求大幅下降，現在開始復甦。第一季銷售額比上一季成長了 25%，其中歐洲和亞洲市場表現強勁。最後，在原材料業務連續三個季度強勁銷售以及回收利用工作取得成效之後，正如我們預期的那樣，第一季原材料業務的銷售額有所下降。

This decline was primarily the result of our consuming a greater portion of the output from our consolidated joint venture as our substrate business has strengthened. In total, our portfolio joint venture companies continues to be a strategic value to our business, providing money of the critical material we use to make our products, allowing us to benefit from the cost efficiency advantages.

這一下降主要是由於我們的基材業務增強，我們消耗了合併合資企業更大比例的產量。總的來說，我們的投資組合合資公司繼續為我們的業務帶來策略價值，為我們生產產品提供關鍵材料，使我們能夠享受成本效益優勢。

Now in closing, we are optimistic about the coming year. The growth and expansion of our business. We are seeing tangible signs of recovery across all of our product lines with new catalyst such as AI, providing strong incremental opportunity. We've worked hard over the last two years to pave the way for exciting future by providing world-class products for a highly dynamic technology landscape, elevating our own business practices to meet the requirements of Tier-1 customers, delivering breakthrough innovations in the development of large diameter gallium arsenide and indium phosphide substrates and executing our recycling program that both advances our ESG commitments and improves our cost structure. We remain steadfast, focused on business efficiency and accelerating our return to profitability.

最後，我們對來年充滿信心。我們業務的成長和擴張。我們看到所有產品線都出現了切實的復甦跡象，人工智慧等新催化劑帶來了強勁的成長機會。在過去的兩年裡，我們努力為令人興奮的未來鋪平道路，為高度動態的技術環境提供世界一流的產品，提升我們自身的業務實踐以滿足一級客戶的要求，在開發大直徑砷化鎵和磷化銦基板方面取得突破性創新，並執行我們的回收計劃，這既推進了我們對環境、社會和治理的承諾，又改善了我們的成本結構。我們將繼續堅定不移地專注於提高業務效率，並加快恢復獲利能力。

With that, I will turn the call back to Gary for our second quarter guidance.

接下來，我將把電話轉回給 Gary，請他為我們帶來第二季業績展望。

Gary?

加里？

Thank you, Morris.

謝謝你，莫里斯。

In keeping with our comments today, we expect Q2 revenue to be between $25.5 million and $27.5 million. We expect our non-GAAP net loss will be in the range of $0.03 to $0.05, and GAAP net loss will be in the range of $0.05 to $0.07. Share count will be approximately 43.0 million shares.

與我們今天所作的評論一致，我們預計第二季營收將在 2,550 萬美元至 2,750 萬美元之間。我們預期非GAAP淨虧損將在0.03美元至0.05美元之間，GAAP淨虧損將在0.05美元至0.07美元之間。股份數量約4300萬股。

Okay. This concludes our prepared comments. Morris and I will be glad to answer your questions now. John, can you take it back?

好的。我們的發言到此結束。莫里斯和我現在很樂意回答你們的問題。約翰，你能把它收回去嗎？

(Operator Instructions)

（操作說明）

Charles Shi, Needham.

石正麗，李約瑟。

Hi, Morris, Gary. Congrats on the good Q1 results and very upbeat Q2 guidance. I want to start with the AI-related question that indium phosphide, I think last time when we speak -- when we spoke about this, you were talking about semi-insulating indium phosphide wafers potentially being used for some of the high-speed detectors application.

嗨，莫里斯，加里。恭喜貴公司第一季業績良好，並對第二季業績做出非常樂觀的預期。我想先問一個與人工智慧相關的問題，關於磷化銦，我想上次我們談到這個問題的時候，您提到半絕緣磷化銦晶片可能用於一些高速探測器應用。

But in your prepared remarks, it sounds like you are getting a little bit more upbeat about the high-speed laser type of applications for 800 gig, 1.6 tera those applications for the next generation, EML, et cetera. So can you provide us a little bit update your engagement on these AI applications so far? When do you see the laser application will start to contribute some meaningful revenues for the indium phosphide business?

但從你準備好的發言稿來看，你似乎對 800 G、1.6 Tera 等下一代高速雷射應用、EML 等應用變得更加樂觀了。那麼，您能否簡單介紹一下您目前在這些人工智慧應用方面的參與情況？您認為雷射應用何時才能開始為磷化銦業務帶來可觀的收入？

Thanks.

謝謝。

Charles, first of all, the order we received one customer specifically told us is for AI and that was from [indium] phosphide. And the fact that we're guessing if it was what detectors it was a guess, okay, because usually indium phosphide good semi-insulating are either for electronic applications or for high-speed detectors.

查爾斯，首先，我們收到的一位客戶明確告訴我們，我們收到的訂單是用於人工智慧的，而且是磷化銦。而我們只能猜測它是什麼探測器，這只是猜測，好吧，因為通常磷化銦這種良好的半絕緣材料要么用於電子應用，要么用於高速探測器。

However, recently in the industry, we also heard some of the EMLs required semi-insulating substrates. So this -- whether it is for lasers or for detectors, we all know from what we are making, the customer demand for our product is sort of a slight change from silicon-doped -- sulfur-doped semiconducting substrates usually good for lasers and now it's for semi-insulating iron doped indium phosphide. But whether it's for detectors or lasers, it's a guesstimate. We don't really know, I'm sorry. But we do hear from our customer, it's for a pretty large AI customer.

然而，最近在業界，我們也聽說一些 EML 需要半絕緣基板。所以，無論是用於雷射還是探測器，我們都知道，從我們正在生產的產品來看，客戶對我們產品的需求略有變化，從通常適用於雷射的矽摻雜硫摻雜半導體基板，變成了半絕緣鐵摻雜磷化銦。但無論是對於偵測器還是雷射來說，這都只是一個估計值。很抱歉，我們也不清楚。但我們確實從客戶那裡了解到，這是一個相當大的人工智慧客戶。

Got it. Thanks. Well, Morris, thanks for the color you provide. I guess, yeah, it's something we'll continue to chat. And obviously, we don't want to dig more if there's something about your customer you don't want to share.

知道了。謝謝。莫里斯，謝謝你提供的色彩。我想，是的，這是我們會繼續討論的話題。顯然，如果您不想分享有關您客戶的任何信息，我們也不想繼續深究。

So maybe a second question, maybe for Gary. I think in your prepared remarks, you talked a little bit more about the SAR listing. It sounds like you are making some progress on that front. Can you provide a little bit more color in terms of what kind of a progress exactly and give us a little bit better sense about why you think it's moving toward a little bit more at this time?

所以，或許可以問第二個問題，也許是問加里。我認為您在準備好的發言稿中更多地談到了SAR上市的問題。聽起來你在這方面取得了一些進展。您能否更詳細地說明一下具體的進展情況，並讓我們更了解您為什麼認為它目前正在朝著更大的方向發展？

So the process of communication with Shanghai Stock Exchange or CSRC is such that once we send in our applications, they will continue to ask questions. They want us to clarify a few things, and there are things which they express they have concerns with, and we provide them with answers. And we think we made some good progress on the questions they have, so now we think we are ready to go through the next step, which is go through their review process again and they will then look at our whole application and either continue to ask questions or on proof -- approve.

因此，與上海證券交易所或中國證監會的溝通過程是這樣的：一旦我們提交了申請，他們就會繼續提出問題。他們希望我們澄清一些事情，他們也表達了一些擔憂，我們會為他們解答。我們認為，對於他們提出的問題，我們已經取得了一些不錯的進展，所以現在我們認為我們已經準備好進入下一步，也就是再次經過他們的審核流程，然後他們會查看我們的整個申請，並要么繼續提出問題，要么在提供證據後予以批准。

All right, thanks for the update. Okay. That's all from me for now. Thanks so much and congrats again on the results and guide. Yeah.

好的，謝謝你的更新。好的。我今天就先說到這裡。非常感謝，再次恭喜你們取得好成績，也感謝你們提供的指導。是的。

Richard Shannon, Craig-Hallum.

理查德·香農，克雷格·哈勒姆。

Hi, guys. Thanks for taking my question as well, and congratulations on a really nice guide here. Great to see.

嗨，大家好。感謝您解答我的問題，也恭喜您寫出了這麼棒的指南。太好了。

To that point here on the guidance here. I wonder if you could elaborate in a couple of items here. First of all, just trying to understand the relative growth dynamics of each of your four revenue buckets here, I would assume your deposits are probably your best growth driver, but I wonder if you can rank those and whether you expect them all to be growing sequentially.

關於此處的指導意見。我想請您詳細說明以下幾點。首先，我只是想了解你們四個收入來源各自的成長動態。我猜想存款可能是你們最好的成長動力，但我想知道你們能否對這四個收入來源進行排名，以及你們是否預期它們都會逐一增長。

And then second of all, trying to get a sense of what's implied here for gross margins, given that you said that OpEx could generally be the same in the second quarters or first. I'm getting a number that's slightly higher than the first quarter, maybe as high as 30% but just wondering if I'm doing the right math on that one.

其次，鑑於您提到營運支出在第二季和第一季通常可能相同，我想了解這對毛利率意味著什麼。我算出的數字比第一季略高，可能高達 30%，但我只是想知道我的計算方法是否正確。

Yeah, so let me first try on the business conditions. Actually, the strongest growth we think next quarter is going to come from gallium arsenide and also germanium. Germanium seems to be very strong, and raw material is very strong as well. Indium phosphide actually at this point of the timing that we are projecting flat. And one other thing which is interesting about this business environment right now is that wherever the customer wants something it's the short -- the lead time is extremely short. I mean, we usually ask the customer to give us at least four weeks lead time because we need to process the wafers and sometimes we even have to grow the crystal, so the lead time issue is long. We don't have a standard product for offering.

好的，那我先來談談業務條件。實際上，我們認為下個季度成長最強勁的將是砷化鎵和鍺。鍺似乎非常堅固，其原料也非常堅固。磷化銦實際上在目前這個時間點上，我們預計會是平坦的。目前商業環境的另一個有趣之處在於，無論客戶想要什麼，交貨週期都非常短。我的意思是，我們通常會要求客戶至少提前四周通知我們，因為我們需要加工晶圓，有時甚至需要生長晶體，所以交貨時間比較長。我們沒有標準產品可供提供。

But nowadays, customer just want two weeks' lead time, which is great. However, it prevents us from having better visibility, but we can see that gallium arsenide is extremely busy and indium phosphide right now as we see now is a flat quarter, but things can change because we still got almost two months to go giving two weeks' lead time. We have six weeks to take orders and deliver.

但現在客戶只需要兩週的提前期，這很好。然而，這妨礙了我們更了解市場狀況，但我們可以看到砷化鎵市場非常繁忙，而磷化銦市場目前呈現平穩的季度態勢，但情況可能會發生變化，因為我們還有近兩個月的時間，給了我們兩週的提前期。我們有六週接收訂單並完成交付。

And on the margin, Gary?

那麼，加里，邊緣人物呢？

Maybe we can do this on a follow-up call, Richard because it gets complicated and I didn't understand exactly what your model is telling you, but we can work on it with you, so--

或許我們可以下次通話再討論這個問題，理查德，因為這有點複雜，我沒完全理解你的模型是什麼意思，但我們可以一起研究一下，所以——

Okay. Fair enough.

好的。很公平。

Morris, I didn't want to follow up on your comment regarding gallium arsenide being your highest growth driver here. To what degree is this maybe some inventory fill in some product areas that were driven down so hard in the last year and half? And then I think you also mentioned some pickup in the wireless/HBT markets. I'm wondering to what degree that's contributing in this quarter.

莫里斯，我不想就你關於砷化鎵是你們這裡最大增長動力的評論進行後續討論。這在多大程度上是為了填補過去一年半以來銷量大幅下滑的某些產品領域的庫存？然後，我想你也提到了無線/HBT市場的一些成長。我想知道這在多大程度上對本季業績產生了影響。

Well, first of all, I would say gallium arsenide was the first product coming down in terms of revenue, right? I mean, I remember it was the second quarter of 2022, gallium arsenide start to come down. So it takes usually six weeks before all the inventory got depleted, so now it is coming back. So because indium phosphide takes I think three longer weeks before it start to come down -- three, yeah, three quarters.

首先，我想說砷化鎵是第一個在收入方面下滑的產品，對吧？我的意思是，我記得是在 2022 年第二季度，砷化鎵的價格開始下降。所以通常需要六週時間庫存才能全部售罄，現在庫存又回來了。所以，因為磷化銦需要更長的三週才會開始下降——三週，是的，四分之三週。

So I expect the indium phosphide perhaps now to recover as quickly as gallium arsenide, although the pickup of indium phosphide last quarter I attribute that to the new business AI because I see PAM business is doing okay, but not really robust. The telecom business is not great and data center from what I see, there are still inventory out there. So I think the AI part of the data center, I think, is pulling the demand for us and increase our revenue by what, 40%-some odd --

所以我預期磷化銦現在可能會像砷化鎵一樣迅速復甦，儘管磷化銦上個季度的回升歸功於新的業務AI，因為我看到PAM業務表現尚可，但並不強勁。電信業情況不太好，但就我所見，資料中心領域仍有庫存。所以我認為，資料中心的人工智慧部分正在拉動我們的需求，並使我們的收入成長了約 40% 左右。--

48%--

48%——

--from Q4 to Q1, so--

從第四季度到第一季度，所以—

I didn't mean to interrupt, Morris, so please continue.

莫里斯，我不是故意打斷你的，請繼續。

No, I actually have forgotten what my --so what was the other part of question?

不，我其實已經忘了我的──所以問題的另一部分是什麼來著？

Sorry about that.

抱歉。

Yeah, I think so but there is an interesting follow-up to those comments here, which is like how much of your indium phosphide businesses there is AI today? It seems like given these growth rates, it's going to be a pretty substantial part now. Can you quantify that in any way?

是的，我也這麼認為，但是這些評論還有一個有趣的後續問題，那就是你們的磷化銦業務中，如今有多少是人工智慧應用的？按照目前的成長速度來看，它現在似乎將佔據相當大的比例。能用什麼方法量化一下嗎？

Well, I think last quarter was significant. I would say could be as much as 20%, although it is a little difficult for us to really nail it because some customers would tell us and some customers don't, okay? But as I said indium phosphide business is very interesting. I wanted to encourage analysts to help us to do that analysis.

我認為上個季度意義重大。我認為可能高達 20%，雖然我們很難準確估計，因為有些客戶會告訴我們，有些客戶則不會，好嗎？但正如我所說，磷化銦產業非常有趣。我想鼓勵分析師們幫助我們進行這項分析。

There are two parts of indium phosphide; one is semi-insulating and the other is semi-conducting. The semi-insulating is usually made for detectors and electronic applications. And the sulfur-doped semiconducting are usually low EPD and good for lasers. And they are the dominant demand for indium phosphide for many, many years. It is almost like eight-to-one in favor of semiconducting wafers, okay.

磷化銦由兩部分組成；一部分是半絕緣體，另一部分是半導體。這種半絕緣材料通常用於探測器和電子應用。硫摻雜半導體通常具有低電離勢，適用於雷射。而且在很多很多年裡，它們一直是磷化銦的主要需求來源。半導體晶片的優勢幾乎是八比一，好吧。

But the last two or three quarters, the trend is reverse. There's so much more demand on semi-insulating, ion-doped wafers. So it's as if the laser just didn't grow or maybe they still got too much inventory and this new demand of ion doped making either or some laser or more likely high-speed detector is growing very strong. So what I'm hoping for is that the sulfur-doped material will recover as inventory get consumed and will come back again but this ion-doped actually is a new application will continue its own trajectory of growth.

但最近兩三個季度，趨勢發生了逆轉。市場對半絕緣離子摻雜晶片的需求量大增。所以就好像雷射器沒有發展壯大，或者他們仍然庫存過多，而對離子摻雜製造雷射或更可能是高速探測器的新需求正在強勁增長。所以我希望硫摻雜材料能夠隨著庫存的消耗而恢復，並再次流行起來，但這種離子摻雜材料實際上是一種新的應用，它將繼續走自己的成長軌跡。

Okay. Very interesting dynamics there. I'm going to ponder that while I ask a couple of other questions here.

好的。那裡的動態非常有趣。我打算一邊思考這個問題，一邊再問其他幾個問題。

I guess just a quick one here. You had a 10% customer in the quarter. Can you identify that or at least sector and whether that they've been a 10% customer in the past?

我猜就簡單說一下吧。本季您的客戶佔比為 10%。您能否確定具體是哪個產業，或至少是哪個領域，以及他們過去是否曾是10%的客戶？

It was an [EPPIE] house, Richard, and (multiple speakers)--

那是一棟[EPPIE]房子，理查德，（多位發言者）——

It's actually related to the AI right?

這其實跟人工智慧有關，對吧？

Yeah. It's a historically long-term customer for use that does EPPIE, and we don't know for sure where that was going, but actually we do know but we can't say (laughter), I'm not going to lie to you.

是的。這是我們長期合作的客戶，他們使用 EPPIE 軟體，我們不確定它未來的發展方向，但實際上我們知道，只是不能說（笑聲），我不會騙你。

All right, fine. Fair enough, Gary.

好吧，沒問題。說得對，加里。

Maybe just a couple last questions here. I'll ask both of you put on your view long-term lenses here, or I guess we'll call it medium-term lens here, but just wanted to conjecture on the opportunity for getting back to breakeven level by the end of this year or early next year. And maybe just as a reminder, what that model looks like in terms of revenues and gross margins?

最後可能還有幾個問題。我希望你們兩位能從長遠角度，或者說從中期角度來看待這個問題，只是想推測一下，到今年年底或明年年初，是否有可能恢復到盈虧平衡點。或許還需要提醒一下，這種模式在收入和毛利率上是什麼樣的呢？

Well, we certainly think that it's a reasonable target and goal to do that maybe this year, so we're not giving up on it.

嗯，我們認為今年實現這個目標當然是合理的，所以我們不會放棄。

I would say it's this year.

我認為就是今年。

Yeah, it's probably somewhere between $28 million and $30 million a quarter, and we will need to get the gross margins to go up and maybe close to 28% and keep the OpEx somewhere around $9.3 million, $9.4 million, that's GAAP and OpEx by the way, so--

是的，大約每季在2800萬美元到3000萬美元之間，我們需要提高毛利率，爭取接近28%，同時把運營支出控制在930萬美元到940萬美元左右——順便說一下，這是按GAAP計算的運營支出，所以——

Yeah, and I think we do need some help from indium phosphide, I mean right now indium phosphide is only 50% of what we used to do at a peak.

是的，我認為我們確實需要磷化銦的幫助，我的意思是，目前磷化銦的產量只有我們過去峰值產量的 50%。

Yeah, I mean, that's probably the wildcard. And it's I would say that the indium phosphide surge, especially since it's centered in the artificial intelligence area, it's happening sooner than we expected. We thought it would -- we believed early on it was going to happen, but it is happening sooner.

是的，我的意思是，這可能是個變數。而且我認為，磷化銦的激增，尤其是在人工智慧領域，比我們預期的來得更快。我們早就預料到了——我們很早就相信它會發生，但它發生得比我們預想的要快得多。

So the question is, what's going to happen in the next two or three quarters, but it's a tremendous opportunity. And there's billions and billions of dollars that are being invested in the hardware side of the AI and the software side, so and of course, we play in the hardware side, so it's pretty amazing what's on the horizon, so--

所以問題是，未來兩三個季度會發生什麼，但這的確是一個絕佳的機會。目前，人工智慧的硬體和軟體方面都投入了數十億美元，而我們當然也涉足硬體領域，所以未來發展前景令人驚訝。

Okay. one last question. I'll jump out of line here, guys. On the short report that came out on your stock early last month. I think it's something -- I think we've established pretty well, there is a bunch of [malarkey] for the most part, but it does bring up an interesting topic that I think would be very interesting for you to address. And I think it's a risk that a lot of investors bring up with me, and that is related to the STAR listing and the investment by private equity investors. And if there's any rejection of the application for whatever reason here, what's the risk and how do you get around the risk of having to repay that money and then find other ways to finance the company?

好的，最後一個問題。各位，我得插一句。關於上個月初發布的關於貴公司股票的短期報告。我認為這件事——我認為我們已經很清楚地表明，大部分都是胡說八道，但這確實引出了一個有趣的話題，我認為你會很樂意談談這個話題。我認為這是許多投資人向我提出的風險，這與科創板上市和私募股權投資者的投資有關。如果申請因任何原因被拒絕，風險是什麼？如何規避償還這筆錢的風險，然後找其他方式為公司融資？

Well, as long as we're in the process, they have no right for redemption. And equally important, they don't want to be redeemed. I mean the last thing they want is their money back and so they're very willing to be patient and work with us. And everyone was disappointed that it's taken longer than we all expected, but--

嗯，只要我們還在進行這個過程，他們就沒有權利獲得救贖。同樣重要的是，他們不想被救贖。我的意思是，他們最不希望的就是拿回他們的錢，所以他們非常願意耐心配合我們。大家都很失望，因為比我們預期的要花更長時間，但是——

So let me try to help out a little bit here, Gary.

讓我來幫你一把吧，加里。

Look, I think I mean hard assets and doing manufacturing semiconductor or materials job industry is hot in demand in China. And that is showing up in the fact that we have other investors interested in acquiring a minority share of our other joint ventures. So although the IPO takes longer than we thought it is but I think our assets in China are highly valuable. I think the psychology or the thinking from a Chinese investor point of view, their money no longer can go into real estate to invest and doing materials and doing manufacturing and real fundamental business manufacturing is highly desirable.

我的意思是，在中國，硬資產以及半導體或材料製造業的就業需求非常強勁。這一點體現在，有其他投資者對收購我們其他合資企業的少數股權感興趣。所以，儘管IPO所需時間比我們預想的要長，但我認為我們在中國的資產非常有價值。我認為從中國投資者的角度來看，他們的心理或想法是，他們的錢不能再投資房地產了，而投資材料、製造業和真正的基礎性製造業才是他們真正渴望的。

So if we don't -- for whatever reason we don't go IPO, I would say one possibility is invest -- inviting other customer -- I mean, investors investing into our joint ventures, and we have several of them which are highly valuable. I mean, of course, the most valuable is [Tome] manufacturing substrates where we have the world ranking leadership in those fields, although they are small, but nevertheless is highly desirable but because we're going public in China, so we cannot separate them and then invite investor into the main body of the investment Tome, but for our joint ventures, we can certainly get other investors investing in those joint ventures.

所以，如果我們因為某種原因不進行IPO，我認為一種可能性是投資——邀請其他客戶——我的意思是投資者投資我們的合資企業，我們有好幾家合資企業，它們都很有價值。我的意思是，當然，最有價值的是[Tome]製造基板，我們在該領域擁有世界領先的地位，雖然規模不大，但仍然非常可取。但由於我們要在中國上市，所以我們不能將它們分開，然後邀請投資者加入Tome的主體投資，但對於我們的合資企業，我們當然可以吸引其他投資者投資這些合資企業。

Again, let me give you -- we have talked about this internally. So we're not worried about it. But as I said the PE companies want us to go public. They don't want to pull out. So these private equity investors are all large and premier institutions each with an investment of just under $5 million, which represents a relatively small part of their respective portfolios.

再說一遍，我們內部已經討論過這個問題了。所以我們並不擔心。但正如我所說，私募股權公司希望我們上市。他們不想退出。因此，這些私募股權投資者都是規模龐大、實力雄厚的機構，每家機構的投資額都略低於 500 萬美元，這僅佔其各自投資組合中相對較小的一部分。

And so far since they have to be patient, no matter what, they're being patient so and another thing that's probably interesting to note is that they don't any recourse or their investment is not collateralized. So that's why they need us to succeed so and we made some significant progress and some developments that we really can't give any details, but some very good steps are taken in the recent quarter, which continues to sustain our hope regarding the IPO.

到目前為止，由於他們必須保持耐心，無論如何，他們一直在保持耐心。還有一點可能值得注意，那就是他們沒有任何追索權，他們的投資也沒有抵押。所以這就是為什麼他們需要我們成功，我們也取得了一些重大進展和成果，雖然我們不能透露任何細節，但最近一個季度採取了一些非常好的措施，這繼續增強了我們對IPO的希望。

Well, great. I appreciate all that detail. I think a lot of investors wanted to hear that, and I think that's a great response, so appreciate the time, guys. That's all for me.

太好了。我很欣賞你提供的所有細節。我想很多投資人都想聽到這個消息，我認為這是一個很好的回應，感謝各位抽出時間。我就說這些了。

Tim Savageaux, Northland Securities.

Tim Savageaux，北地證券。

Hi, good afternoon and congrats on both the results and the outlook, and especially the growth in indium phosphide and I think there was a mention of peak levels that you had achieved in indium phosphide that's getting up towards $20 million a quarterly, maybe $18 million but at that point, you also had some additional consumer business.

您好，下午好，祝賀貴公司取得的業績和前景，特別是磷化銦業務的成長。我記得之前提到過，貴公司在磷化銦業務方面達到了季度峰值，接近 2000 萬美元，也可能是 1800 萬美元。但當時，貴公司還有一些額外的消費業務。

And I guess my question is, as you look at it now the market opportunity you're seeing, do you think there's AI optical data center opportunity can move you back toward peak indium phosphide levels by itself?

我想問的是，就您目前看到的市場機會而言，您認為僅憑人工智慧光學資料中心的機遇，能否使磷化銦的產量恢復到峰值水平？

And I have a follow-up.

我還有一個後續問題。

That's a good question, I -- the customer who use our product for consumer product at the time -- I mean, they still have one product using it for consumer product, by the way, they didn't go all completely. And we are, I believe, a big dominant supplier for that product. And we are also in negotiation and in qualification for yet other product, although I don't know what's the launch time and whatnot. And the other thing is that talking to their engineer, at one-time they told us they have 11 projects centered around using indium phosphide in their consumer product devices.

這是一個很好的問題，我——當時使用我們產品作為消費品的客戶——我的意思是，他們仍然有一款產品在消費品領域使用我們的產品，順便說一句，他們並沒有完全放棄。我相信，我們是該產品的主要供應商之一。我們目前還在就另一款產品進行談判和資格審查，雖然我不知道它的上市時間等等情況。還有一點是，我和他們的工程師談過，他們曾經告訴我們，他們有 11 個專案都圍繞著在消費性產品設備中使用磷化銦。

So I don't think I'm giving that up but indium phosphide just has so many different characteristics such as fire infrared and using as a detector, et cetera, et cetera. So it's unique in its place to be used as a technology device whereas AI application, I think it's a extension of what people use it for data center. If you want high-bandwidth, high-speed data transfer, low attenuation I mean, that's the perfect choice.

所以我覺得我不會放棄它，但是磷化銦有很多不同的特性，例如火災紅外線偵測和用作偵測器等等。因此，它作為一種技術設備具有獨特性，而人工智慧應用，我認為是人們將其用於資料中心的一種延伸。如果你想要高頻寬、高速資料傳輸、低衰減，我的意思是，這就是完美的選擇。

And if you have AI, that means you've got to access data much in 100 times, 1,000 times, even 10,000 times. And you have so many more data center, you want to exchange information, what's the best way to transfer the information, it's no-brainer. It has to be some optical device to transfer that data. So I think it's difficult for me to say when it's going to be so strong. And so how big but whether it's going to rival the consumer product but I think both of them do need indium phosphide.

如果你擁有人工智慧，那就意味著你必須存取資料 100 次、1000 次，甚至 10000 次。而你們還有更多資料中心，想要交換訊息，那麼傳遞訊息的最佳方式是什麼呢？這還用說嗎？必須使用某種光學設備來傳輸這些數據。所以我覺得很難說它什麼時候會這麼強。所以，它的規模究竟有多大，它是否能與消費品相媲美，目前還不得而知，但我認為它們都需要磷化銦。

Yeah, when Morris said optical, that means it's got to have the indium phosphide because the wavelengths can be read by indium phosphide, so but yeah, we believe we will get back to those levels, Tim. As Morris says, we're not sure on the timing and it very well could get back to that level sooner than we thought because of AI.

是的，當 Morris 說光學元件時，這意味著它必須含有磷化銦，因為磷化銦可以讀取波長，所以，是的，我們相信我們會回到那些水平，Tim。正如莫里斯所說，我們不確定具體時間，而且由於人工智慧的發展，它很可能會比我們預想的更快恢復到那個水平。

Six months ago, we didn't have this at expectation. I don't know for the people listening to it. I think last week there was really amazing article in the New York Times about the amount of money invested in AI in Q1 of this year. And it was, I think, $32 billion, and that's not just software ,that's hardware too. So it's data center stuff. So I mean -- we've all been around a long time.

六個月前，我們並沒有預料到這種情況。我不知道聽眾怎麼想。我認為上週《紐約時報》上有一篇非常精彩的文章，講述了今年第一季人工智慧領域的投資額。我認為是 320 億美元，而且這不僅僅是軟體，還包括硬體。所以這是與資料中心相關的內容。我的意思是──我們都存在很久了。

And so we've seen stuff, but I was very amazed by that and I said it to Morris and Leslie, and I said it to our Board of Directors because that's going to -- we know we're at the bottom of the food chain or the end of the train, but that's going to benefit indium phosphide substrates and so the dream or the hope is that the consumer comes back and it competes against AI for who's going to be the biggest contributor to indium phosphide revenue and we don't need a miracle for that to happen. I think it's very reasonable goal.

所以我們已經看到了一些東西，但我對此感到非常驚訝，我把這件事告訴了 Morris 和 Leslie，也告訴了我們的董事會，因為我們知道我們處於食物鏈的底端或列車的末端，但這將有利於磷化銦基板，所以我們的夢想或希望是消費者回歸，與人工智慧競爭，爭奪磷化銦收入的最大貢獻者，而我們不需要實現這一點。我認為這是一個非常合理的目標。

Got it. And I wanted to ask a little bit more about the improvement or the pretty dramatic growth that you saw in Q1 in indium phosphide. And you've already talked of -- you have a unique perspective in the ecosystem. And maybe I'm going to ask you to guess a little bit more here. But I guess my question is around the breadth and how would you characterize that strength? Obviously, you can sell to a lot of different folks in this arena, whether it's epi wafer suppliers or vertically integrated laser manufacturers or module manufacturer.

知道了。我想再問一下關於您在第一季看到的磷化銦的改進或相當顯著的增長。而且您之前也提到過—您對生態系統有著獨特的見解。也許我還要請你再猜猜看。但我的問題是關於廣度，您會如何描述這種優勢？顯然，在這個領域，你可以向許多不同的人銷售產品，無論是外延晶圓供應商，還是垂直整合的雷射製造商或模組製造商。

And I think you've done business with all of those types of guys. And so whether it's looking at the type of customers and we're looking at wafer sizes. So what does that tell you about the breadth of demand that you see as -- historically you've had a couple of major customers on the data center side. Or can you see if -- if the new customers are showing up? Or are there a couple of customers moving the needle for you when you see this extraordinary growth in Q1?

我認為你和所有這些類型的人都做過生意。因此，無論是考察客戶類型，或是考察晶圓尺寸。那麼，這說明了什麼？你認為市場需求的廣度如何？ ——從歷史上看，你在資料中心方面只有幾個主要客戶。或者你能看看——新客戶是否出現了嗎？或者，當您看到第一季出現如此顯著的成長時，是否有幾位客戶對您產生了重大影響？

The Q1 customer actually is new. I mean, they are a customer on other product. But for that application for AI was new and they're telling us they're a customer, but I can't repeat it. It's big, big customer.

第一季的客戶其實是新客戶。我的意思是，他們是其他產品的顧客。但人工智慧的那個應用是全新的，他們告訴我們他們是我們的客戶，但我不能重複他們的說法。這是個大客戶。

Well, there's a -- we know the players, right? There's Meta, there's Google, there's Microsoft. All of those data centers are going to -- where indium phosphide is going to have a play is rack to rack, rack to the aggregation point within the data center, and then the aggregation point to a different data center, all of that needs high speed. If you think of the data that's computed in AI then you've got to transfer it, and move it around in order to get an end result. And so within the rack, we don't think they'll go to AI --to indium phosphide, but rack to rack and beyond, that's where indium phosphide has a definite application, so--

嗯，我們都知道參賽者是誰，對吧？有 Meta，有 Google，有 Microsoft。所有這些資料中心都將——磷化銦將發揮作用的地方——是機架到機架、機架到資料中心內的聚合點，然後再從聚合點到另一個資料中心，所有這些都需要高速傳輸。想想人工智慧中計算出的數據，你就必須傳輸和移動這些數據才能得到最終結果。因此，在機架內部，我們認為它們不會採用磷化銦，但在機架之間以及更遠的地方，磷化銦肯定有其應用價值，所以——

Of course, Gary. You not saying anything different? Why is it AI? Data set is already doing this. But it's just that data center has to get so busy talking to each other and exchange information a 1,000 times or 10,000 times that requires higher speed highway. That is where indium phosphide come in.

當然，加里。你的意思就只有這些嗎？為什麼說是人工智慧？數據集已經實現了這一點。但正是因為資料中心需要頻繁地相互通訊和交換訊息，次數可能達到 1000 次甚至 10000 次，所以才需要更高速的高速公路。這時就需要用到磷化銦了。

The other thing that one of our marketing guys taught me is that some of the large data centers are now having a shortage of power, the electricity to run the thing. So they're downsizing in the future architecture to smaller -- more data centers that are smaller but are spread around and that's going to benefit us.

我們行銷部的一位同事也告訴我，一些大型資料中心現在面臨電力短缺，也就是運作資料中心所需的電力不足的問題。因此，他們正在縮小未來架構的規模——更多的小型資料中心，但分佈更廣，這將使我們受益。

Got it. Well, okay, it sounds like there was a big customer helping to drive that growth in Q1. And the rest of the color I was looking for I know there's only so much you can say, but clearly, you're at the substrate level, you've got an epi wafer supplier who maybe selling into a module manufacturer. I mean, I imagine that you're maybe not all the way up to the cloud provider level, but you have customer touchpoints all along that ecosystem.

知道了。好吧，聽起來好像有一個大客戶推動了第一季的成長。至於我正在尋找的其他顏色，我知道你能說的也就這麼多，但很明顯，你現在處於基板層面，你有一個外延片供應商，他可能正在向模組製造商銷售產品。我的意思是，我猜你們可能還沒有達到雲端服務提供者的水平，但你們在整個生態系統中都擁有客戶接觸點。

And I was just looking for, as you see the pieces move around, what you're seeing in terms of opportunity at any of those levels, right, whether it's going directly to a chip supplier. Obviously, you used to do a lot of business with Intel and their module assets are over at Jabil now. Are you seeing different customers show up at different parts of the food chain, I guess, in driving this AI growth?

我只是想看看，隨著各個環節的變動，你在這些層面上看到了什麼機會，對吧，無論是直接對接晶片供應商。顯然，你們過去與英特爾有很多業務往來，而他們的模組資產現在都歸捷普所有了。我想，您是否注意到，在推動人工智慧發展的過程中，不同的客戶群出現在了產業鏈的不同環節？

Not yet. In fact, I think if I -- I mean, we have some China customer which is showing up, taking a lot of wafer as well but they're not telling us anything. I mean, I think the customer base seems to be shifting somewhat before these things all happen, it's a consumer product that went away. And then there was a data center that you were talking about which was taking a lot of wafer they are not prime customer at the table right now. There's a new Chinese customer coming in, but we don't know where that is coming from and this new customer is taking this -- indium phosphide and we know, they're telling us it's going to AI but I wish I can see that's the second one, the third one company, that would be great.

還沒有。事實上，我覺得如果我——我的意思是，我們有一些中國客戶出現了，也採購了很多晶圓，但他們什麼也沒告訴我們。我的意思是，我覺得在這些事情發生之前，客戶群似乎已經發生了一些變化，這是一款已經消失的消費品。然後還有你剛才提到的資料中心，它消耗了大量的晶圓，但他們目前不是談判桌上的主要客戶。有一位新的中國客戶即將到來，但我們不知道他來自哪裡，這位新客戶正在採購磷化銦，我們知道，他們告訴我們這將用於人工智慧領域，但我希望看到這是第二家、第三家公司，那就太好了。

We think we understand the architectural needs well enough that there's little doubt in our mind. There's no doubt, frankly, that we're going to end up benefiting and getting into multiple data centers along the big names that I just ran off, so--

我們認為我們對建築需求的了解已經足夠透徹，對此幾乎沒有任何疑問。坦白說，毫無疑問，我們最終會受益，並能與我剛才提到的那些大公司一起進入多個資料中心，所以——

Dave Kang, B. Riley Securities.

Dave Kang，B. Riley Securities。

My first question is actually on gallium arsenide. So you're expecting that to be the main driver from first quarter to the second quarter. Just wondering if there are any applications or customers driving this strong growth?

我的第一個問題其實是關於砷化鎵的。所以你預計這將是第一季到第二季的主要驅動力。想知道有哪些應用程式或客戶推動了這種強勁成長？

LED is strong for automobile, lasers is strong, but not as high as at the peak, I would say it's about 50% of the peak level. Automobile is probably 70%, 80% of the peak. And HBT is a new, I believe, opportunity for us, and we're trying very hard to getting -- get ourselves back into it. And if we are successful, we can expect more revenue growth for HBT as well. And the China market seems to be really strong in gallium arsenide.

LED 對汽車來說很強，雷射也很強，但不如峰值那麼高，我覺得大概只有峰值的 50%。汽車產業可能占到高峰的 70% 到 80%。我認為，HBT 對我們來說是一個全新的機遇，我們正在努力讓自己回到這個領域。如果我們成功了，我們也可以預期 HBT 的營收也會進一步成長。中國市場對砷化鎵的需求似乎非常強勁。

Got it.

知道了。

And just wondering how sustainable your expectation is on gallium arsenide. Are we talking just a few quarters or a multi-year cycle?

我只是想知道您對砷化鎵的預期有多大可持續性。我們說的是幾季還是幾年的周期？

Oh, I cannot guarantee multi-year. I would say we have probably good visibility at least to Q3. I mean, demand is strong. But as you know that I do worry about the world economy, I mean, I think but then people are saying there's a recession, but it never come, right? It's --

哦，我不能保證多年有效。我認為至少到第三季度，我們的能見度應該都比較好。我的意思是，需求很強。但你也知道，我一直很擔心世界經濟，我的意思是，雖然有人說會出現經濟衰退，但衰退從未到來，對吧？它是--

Yeah, (multiple speakers) most of our cycles are more than one quarter. So gallium arsenide is more robust than we expected it to be, but we're not thinking like, oh, then it's going to drop back down in July.

是的，（多人發言）我們的大多數週期都超過一個季度。所以砷化鎵比我們預期的更穩定，但我們不認為，哦，那麼它在7月就會回落。

Got it.

知道了。

And then just on the indium phosphide for AI applications. Is there any data on market share? How big that is, and the market share between you versus our competitors?

然後是用於人工智慧應用的磷化銦。是否有市場佔有率方面的數據？這個規模有多大？你們與競爭對手相比，市佔率是多少？

No, we don't know.

不，我們不知道。

There is some public projections on markets that [coherent] shared publicly in one of their presentations. If you haven't seen that, you might want to take a look because there's some stuff in there that might give you some information.

[連貫性] 在其一次演講中公開分享了一些關於市場的公開預測。如果你還沒看過，不妨看看，因為裡面有些內容可能會對你有幫助。

Just on the market share, I mean, you think should we expect maybe one-third each for you and your competitors or somebody has a dominant market share just for on the AI. Any color on that?

單就市場份額而言，我的意思是，你認為我們應該預期你和你的競爭對手各佔三分之一的市場份額，還是說有人在人工智慧領域佔據了主導市場份額？上面有顏色嗎？

Yeah, the customer we have I think they are giving us all to order, but I don't know whether our competitor is taking order from a different customer. In other words, the order we got we know we've got 100% of that order from that customer and they told us it's for AI, but I don't know whether our competitor are serving yet out of China.

是的，我認為我們目前的客戶會為我們下訂單，但我不知道我們的競爭對手是否正在接受其他客戶的訂單。換句話說，我們知道我們已經從那位客戶那裡拿到了 100% 的訂單，他們告訴我們這是用於人工智慧的，但我不知道我們的競爭對手是否已經從中國發貨了。

Matt Bryson, Wedbush Securities.

馬特‧布萊森，韋德布希證券公司。

On the HBT side of things. If you're successful in getting traction and any idea what the size of that opportunity might be?

就 HBT 方面而言。如果你成功獲得了市場認可，並且對這個機會的規模有什麼想法嗎？

Say it again, I didn't quite hear -- the expected value--

再說一遍，我沒聽清楚——期望值——

How big is the HBT market?

HBT市場規模有多大？

-- (multiple speakers) what could that look like on a quarterly or annual revenue run rate, assuming you're successful in getting traction in that market?

（多人發言）假設你成功地在該市場獲得了市場份額，那麼季度或年度收入運行率會是什麼樣子？

Okay. I would say close to $20 million a year.

好的。我估計接近每年2000萬美元。

Got it.

知道了。

So that's a nice big round number. Similarly, or slightly different question, I think a lot of the focus on indium phosphide has been around the AI opportunity. But do you have any sense of how close to the point where inventory is normalized? We are -- so is that two, three quarters out? Is it a year out?

所以這是一個很大的整數。同樣地，或稍微不同的問題是，我認為人們對磷化銦的關注點大多集中在人工智慧的機會上。但您是否大致了解庫存距離正常化還有多遠？我們現在──所以，還剩兩分之三嗎？還要一年嗎？

And then any idea in terms of how much revenue you think you're losing because there's inventory out there right now or what might your revenue look like if that inventory didn't exist, any thought?

那麼，對於目前庫存造成的收入損失，您有什麼想法嗎？或者，如果沒有這些庫存，您的收入會是什麼樣子？

Yeah, I think -- right now, it's very difficult for me to estimate. Because I don't even know whether they are in full production or not, although the amount of substrate we are buying doesn't look like it's pilot. I think they're making something. But we haven't seen. I mean, the first thing I'd like to see is -- the last order was two or three months. If they give us another six-month order, if they are increasing then I can estimate and better yet is if there's a second customer, solo coming, wants the same thing, then that's even better. At this point--

是的，我覺得──現在，我很難做出估計。因為我什至不知道他們是否已經全面投產，儘管我們購買的基質數量看起來不像是在試生產。我覺得他們正在製作什麼東西。但我們還沒看到。我的意思是，我首先想看到的是──上次下單是兩三個月前的事了。如果他們再給我們下六個月的訂單，而且訂單量還在增加，那我就可以估算了；如果還有第二個顧客，單獨來訂購同樣的東西，那就更好了。在此刻 -

Sorry to interrupt, Morris.

不好意思打擾一下，莫里斯。

I'm actually -- I'm asking on that traditional indium phosphide business, like where you know you have inventory kicking around in supply chain. If you have any idea, so not so much the AI side, but the traditional business, if you have any idea how -- what the impact on your revenue is today, how much it's holding it off? And then any thoughts on when that inventory might get worked out, you might resume normal revenue run rate on that older business?

實際上，我問的是傳統的磷化銦業務，例如你知道供應鏈中會有庫存的情況。如果您有任何想法，不僅僅是人工智慧方面，而是傳統業務方面，如果您有任何想法——它對您目前的收入有何影響，它阻礙了您多少收入成長？那麼，您認為庫存問題何時才能解決，舊業務何時才能恢復正常的營收水準？

I think that's -- because the business is right now just beginning, it's hard for me to tell, but I mean, I think we have the capacity. We can definitely make 3 or 5 times of what they are ordering now or even 10 times if giving us a little bit time to increase our facility. So I think the volume is no problem. And I think our product quality really fits well with what they wanted.

我覺得——因為這項業務現在才剛起步，我很難說，但我的意思是，我認為我們有這個能力。我們絕對可以生產他們現在訂購量的 3 到 5 倍，如果給我們一些時間來擴大我們的設施，甚至可以生產 10 倍。所以我覺得音量應該沒問題。我認為我們的產品品質完全符合他們的需求。

So at this point is I think I don't know whether I'm answering your question or that. I think I'm excited about it. We're trying to get as much information as we can. And we know the customer, end customer, which is larger. I don't think they're [fooling] around. So hopefully be coming back with increased order or somebody else is going to come in following their leads, so I think that's the best I can.

所以現在我覺得我不知道我是否在回答你的問題。我覺得我很興奮。我們正在努力獲取盡可能多的信息。而且我們知道最終客戶，也就是規模更大的客戶。我不認為他們是在開玩笑。所以希望訂單量能增加，或者其他人會效仿他們的做法，我想這就是我能做的最好的了。

Yeah, I've had some of these conversations with our marketing guys and I think they expect that we're going to continue to work through the inventory into the second half of this year.

是的，我和行銷部的同事也討論過這些問題，我認為他們預計我們會在今年下半年繼續消化庫存。

But that's not AI--

但那不是人工智慧——

No, no. It's not AI, it's just in general.

不，不。這不是人工智慧的問題，只是普遍現象。

--data center.

數據中心。

Data center, yeah (multiple speakers) yeah, so that's what I was referring to. So yeah, there's still some out there but yeah (multiple speakers)--

資料中心，對（多人）對，這就是我指的。是的，市面上還有一些，但是…（多位發言者）——

But you're getting clearing out and then restoring normal level. That's probably in early 2025-type phenomenon is your thinking right now.

但你正在清除雜質，然後恢復到正常水平。你現在的想法可能是，那大概會在 2025 年初出現。

Maybe Q4 this year, but definitely in 2025, so it's going to happen, so we can't wait. We're so excited about it (laughter).

或許今年第四季就能實現，但肯定會在 2025 年實現，所以這件事一定會發生，我們等不及了。我們對此感到非常興奮（笑聲）。

Yeah. I guess last one from me, Gary. I completely understand that customers don't want to hold inventory and so they're putting in rush orders, which makes it hard on your end to clear out your inventory because you don't want to turn down business.

是的。我想這是我最後一個發言了，加里。我完全理解客戶不想持有庫存，所以他們會下加急訂單，這讓你很難清理庫存，因為你不想拒絕生意。

But I guess given that environment, how confident are you, you can take down inventory by $10 million or what are the dynamics involved in that where you're not effectively having to turn down business because you can't meet those rush orders?

但我想，在這種環境下，你有多大信心減少 1000 萬美元的庫存？或者說，在不因無法滿足緊急訂單而不得不拒絕業務的情況下，其中涉及哪些動態因素？

Well, I wanted to take it down $10 million last year in a -- it came down last year, but not as much as our target. However, I have a couple of reasons that I think it's a realistic target. One is if you look back at our historical inventory levels, compare it to our revenue run rate levels, it was -- the inventory was in the $60-million level range, $65-million level range. So the difference is we have more inventory in the consolidated joint ventures now because they have different added product lines and things like that.

嗯，我去年想讓它減少 1000 萬美元——去年確實減少了，但沒有達到我們的目標。但是，我認為這是一個現實的目標，原因有二。一是回顧我們歷史庫存水平，並將其與我們的收入運行率水平進行比較，就會發現——庫存水平在 6000 萬美元到 6500 萬美元之間。所以差別在於，現在合併後的合資企業庫存更多，因為它們增加了不同的產品線等等。

And our recycling program, which is good, it helps us on gross margin and helps us with ESG but you're converting, what I would call, scraps of materials or slurry, which has a little or no book value and then you bring it in at standard cost. So your inventory goes outside -- it's counterintuitive? But even so I'm absolutely convinced we can take money out of the inventory. Is it going to be $10 million? That's my target.

我們的回收計劃很好，它有助於提高我們的毛利率，也有助於我們在 ESG 方面取得成功，但是你轉化的是我所謂的邊角料或廢料，這些材料幾乎沒有賬面價值，然後你卻以標準成本將其投入市場。所以你們的庫存都放在室外——這聽起來有點違反直覺？但即便如此，我仍然堅信我們可以從庫存中取出資金。會是1000萬美元嗎？那就是我的目標。

If revenue grows for us, then it makes it a little easier to take the inventory down. So I don't need a miracle to have that happen. I just need some good business decisions and it was easier, frankly, when I could go to China because I would hold inventory review meetings (laughter) and I haven't been there for a while because of the COVID thing. But I'm going to go this year, so we're getting back in that cycle, but it's a good question, so thanks.

如果我們的收入成長，那麼減少庫存就容易一些。所以我不需要奇蹟就能實現這件事。我只需要一些好的商業決策，坦白說，以前我可以去中國的時候更容易些，因為我可以在那裡召開庫存審查會議（笑），但由於新冠疫情，我已經有一段時間沒去過那裡了。但我今年要去，所以我們又回到了這個循環裡，但這確實是個好問題，謝謝。

As there are no further questions at the queue this time, this concludes our Q&A session. I would like to turn the call over back to Dr. Morris Young for closing remarks.

由於這次排隊的人沒有其他問題了，我們的問答環節到此結束。我謹將電話轉回給莫里斯·楊博士，請他作總結發言。

Thank you for participating in our conference call. This is a quarter where we participate in the Northland Security Growth Conference on June 25. I hope to see you there. As always, please feel free to contact me, Gary Fischer or Leslie Green, if you would like to set up a call with us. We look forward to speaking with you in the near future.

感謝您參加我們的電話會議。本季我們將參加 6 月 25 日舉行的北地安全成長會議。希望在那裡見到你。如有任何疑問，歡迎隨時與我聯絡、Gary Fischer 或 Leslie Green，如果您想和我們安排通話。我們期待在不久的將來與您聯繫。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線了。