AXT Inc (AXTI) 2024 Q3 法說會逐字稿

Good afternoon, everyone and Welcome to AXT's third quarter, 2024 financial conference call.

大家下午好，歡迎參加 AXT 2024 年第三季財務電話會議。

Leading the call today from China is Dr. Morris Young Chief Executive Officer and Gary Fisher, Chief Financial Officer. In addition, Tim Bettles AXT's Vice President of Business Development will be participating in the Q&A portion of the call.

今天在中國主持電話會議的是執行長 Morris Young 博士和財務長 Gary Fisher。此外，Tim Bettles AXT 業務開發副總裁將參加電話會議的問答部分。

(Operator Instructions)

（操作員說明）

And I would now like to turn the call over to Leslie Green Investor Relations for AXT.

我現在想將電話轉給 AXT 的 Leslie Green 投資者關係部門。

Thank you Christina. And Good afternoon, everyone.

謝謝克里斯蒂娜。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, emerging applications using chips or devices fabricated on our substrates.

在我們開始之前，我想提醒您，在本次電話會議期間，包括針對您的問題發表的評論。我們將提供預測或做出其他前瞻性陳述，其中涉及公司市場狀況和趨勢的未來財務表現、使用我們基板上製造的晶片或設備的新興應用。

Our product mix, global economic and political conditions including trade tariffs and import and export restrictions. Our ability to increase orders in succeeding quarters to control costs and expenses, to improve manufacturing yields and efficiencies or to utilize our manufacturing capacity. 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 events or results to differ materially.

我們的產品組合、全球經濟和政治狀況，包括貿易關稅和進出口限制。我們有能力在接下來的幾個季度增加訂單，以控製成本和費用，提高製造產量和效率或利用我們的製造能力。我們希望提醒您，此類涉及未來事件的陳述是基於管理層當前的預期，並受到可能導致實際事件或結果產生重大差異的風險和不確定性的影響。

In addition to the matters just listed, these uncertainties and risks include but are not limited to the financial performance of our partially owned supply chain companies, increased environmental regulations in China and COVID or other outbreaks of a contagious disease. In addition to the factors just mentioned or that may be discussed on this call.

除了剛剛列出的事項外，這些不確定性和風險包括但不限於我們部分擁有的供應鏈公司的財務業績、中國環境法規的加強以及新冠病毒或其他傳染病的爆發。除了剛才提到的因素或本次電話會議可能討論的因素之外。

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 expectations.

我們請您參閱該公司向證券交易委員會提交的定期報告。這些可透過我們網站的連結在線獲取，並包含有關可能導致實際結果與我們的預期產生重大差異的風險因素的附加資訊。

The conference call will be available on our website at axt.com through October 31, 2025. I also want to note that shortly following the close of market today, we issued a press release reporting financial results for the third quarter of 2024. This information is available on the investor relations portion of our website at axt.com. I would now like to turn the call over to Gary Fisher for a review of our third quarter 2024 results.

電話會議將於 2025 年 10 月 31 日之前在我們的網站 axt.com 上發布。我還想指出，今天收盤後不久，我們發布了一份新聞稿，報告 2024 年第三季的財務表現。此資訊可在我們網站 axt.com 的投資者關係部分取得。我現在想將電話轉給加里費雪 (Gary Fisher)，以審查我們 2024 年第三季的業績。

Gary, Thanks Leslie and Good afternoon to everyone.

加里，謝謝萊斯利，大家下午好。

Revenue for the third quarter of 2024 was $23.6 million compared with $27.9 million in the second quarter of 2024 and $17.4 million in the third quarter of 2023. Break down our Q3 '24 revenue for you by product category, indium phosphide was $6.8 million reflecting continued demand and data center applications including AI as well as passive optical networks. Gallium arsenide was $6.6 million in line with the pullback we expected after the strong growth in Q2.Germanium substrates for $1.6 million down from the prior quarter based on our decision to walk away from certain low margin business opportunities, finally, revenue from our consolidated raw material joint venture companies in Q3 was $8.6 million based on continued healthy demand.

2024 年第三季的營收為 2,360 萬美元，而 2024 年第二季的營收為 2,790 萬美元，2023 年第三季的營收為 1,740 萬美元。按產品類別細分我們為您提供的 24 年第三季收入，磷化銦為 680 萬美元，反映了持續的需求和包括人工智慧和無源光網路在內的資料中心應用。砷化鎵為660 萬美元，符合我們在第二季度強勁增長後預期的回調。收入由於需求持續健康，第三季材料合資公司的銷售額為 860 萬美元。

In the third quarter of 2024 revenue from Asia Pacific was 77% Europe, 12% and North America 11%. The top five customers generated approximately 29.4% of total revenue and no customer was over the 10% level. Non-GAAP gross margin in the third quarter was 24.3% compared with 27.6% in Q2 '24 and 11.3% in Q3 of 2023. For those who prefer to track results on a GAAP basis, gross margin in the third quarter was 24.0% compared with 27.4% in Q2, 2024 and 10.7% in Q3 of 2023.

2024 年第三季度，來自亞太地區的營收佔 77%，歐洲佔 12%，北美佔 11%。前五名客戶產生的收入約佔總收入的 29.4%，沒有客戶超過 10% 的水平。第三季非 GAAP 毛利率為 24.3%，而 2024 年第二季為 27.6%，2023 年第三季為 11.3%。對於那些更喜歡以 GAAP 計算業績的人來說，第三季的毛利率為 24.0%，而 2024 年第二季為 27.4%，2023 年第三季為 10.7%。

On the operating expenses total non-GAAP operating expense in Q3 was $9.0 million compared with $8.9 million in Q2 of 2024 and $7.8 million in Q3 of 2023. On a GAAP basis total operating expense in Q3 of 24 was $9.1 million compared with $9.5 million in Q2 and $8.6 million in Q3 of last year, we expect OpEx to be holding up at approximately this level throughout the balance of 2024.

在營運費用方面，第三季的非公認會計準則營運費用總額為 900 萬美元，而 2024 年第二季為 890 萬美元，2023 年第三季為 780 萬美元。以GAAP 計算，24 年第三季的總營運費用為910 萬美元，而去年第二季為950 萬美元，第三季為860 萬美元，我們預計營運支出在2024 年餘下時間將維持在大約這一水平。

Our non-GAAP operating loss for the third quarter of 2024 was $2.6 million compared with a non-GAAP operating loss in Q2 of $1.2 million and a non-GAAP operating loss of $5.8 million in Q3 of 2023. For reference, our GAAP operating line for the third quarter of 2024 was a loss of $3.4 million compared with an operating loss of $1.99 million in Q2 of 2024 and an operating loss of $6.7 million in Q3 of 2023.

我們 2024 年第三季的非 GAAP 營運虧損為 260 萬美元，而 2023 年第二季的非 GAAP 營運虧損為 120 萬美元，2023 年第三季的非 GAAP 營運虧損為 580 萬美元。作為參考，我們 2024 年第三季的 GAAP 營運虧損為 340 萬美元，而 2024 年第二季的營運虧損為 199 萬美元，2023 年第三季的營運虧損為 670 萬美元。

Non-operating other income and expense and other items below the operating line for the third quarter of 2024 was a net gain of $469,000. The details can be seen in the P&L included in our press release today. For Q3 2024 we had a non-GAAP net loss of $2.1 million or $0.05 per share compared to the non-GAAP net loss of $800,000 or $0.02 per share in the second quarter of 2024.

2024 年第三季的非營運其他收入和支出以及營運線以下的其他項目淨收益為 469,000 美元。詳細資訊可以在我們今天新聞稿中包含的損益表中看到。2024 年第三季度，我們的非 GAAP 淨虧損為 210 萬美元，即每股 0.05 美元，而 2024 年第二季度的非 GAAP 淨虧損為 80 萬美元，即每股 0.02 美元。

A non-GAAP net loss of Q3 2023 was $4.9 million or $0.12 per share. On a GAAP basis net loss in Q3 was $2.9 million or $0.07 per share. In comparison, net loss was $1.5 million or $0.04 per share in the second quarter of 2024. GAAP net loss in Q3 of 2023 was $5.8 million or $0.14 per share. The weighted average basic shares outstanding in Q3 of 2024 was $43.2 million cash and cash equivalents and investments decreased by $4.5 million to $38.8 million as of September 30.

2023 年第三季的非 GAAP 淨虧損為 490 萬美元，即每股 0.12 美元。以 GAAP 計算，第三季淨虧損為 290 萬美元，即每股 0.07 美元。相比之下，2024 年第二季的淨虧損為 150 萬美元，即每股 0.04 美元。2023 年第三季 GAAP 淨虧損為 580 萬美元，即每股 0.14 美元。截至 9 月 30 日，2024 年第三季已發行加權平均基本股現金及現金等價物及投資為 4,320 萬美元，減少 450 萬美元，至 3,880 萬美元。

By comparison at June 30 , it was $43.3 million. Depreciation and amortization in the second quarter was $2.3 million total. Stock comp was $0.8 million. Net inventory was up slightly in the second quarter to $86.1 million this includes inventory added through our recycling program. 36% of the inventory is raw materials and wip is 61%. Finished goods makes up approximately 3%.

相比之下，截至 6 月 30 日，這一數字為 4,330 萬美元。第二季的折舊和攤提總額為 230 萬美元。股票補償為 80 萬美元。第二季淨庫存略有增加，達到 8,610 萬美元，其中包括透過我們的回收計劃添加的庫存。庫存的 36% 為原料，在製品為 61%。製成品約佔3%。

Okay. This concludes the discussion of our quarterly financial results. Turning to our plan to list our subsidiary Tongmei in China on the star market in Shanghai. Let me give you a brief update on the IPO status. We have continued to keep our application current last year and part of this year, the total value of the Shanghai Stock Exchange struggled as the China economy slowed and the real estate sector moved down significantly. This trend resulted in much fewer IPO's it also led to weaker IPO applicants being removed from the in-process category.

好的。關於我們季度財務表現的討論到此結束。談到我們計劃在中國的子公司同美在上海科創板上市。讓我向您簡要介紹 IPO 的最新情況。去年和今年部分時間，我們繼續保持我們的申請最新，但隨著中國經濟放緩和房地產行業大幅下滑，上海證券交易所的總市值陷入困境。這一趨勢導致 IPO 數量大幅減少，也導致實力較弱的 IPO 申請人被從正在進行的類別中剔除。

We are encouraged that Tongmei was not one of those companies. We are still part of the in-process group and it is a much more selective and smaller group than a few years ago. More recently, the substantive stimulus package in China has helped the economy and boosted the total value of the Shanghai Stock Exchange. And we believe these movements may be generating positive momentum for IPO's and for Tongmei.

令我們感到鼓舞的是，同美並不是這些公司之一。我們仍然是正在進行中的團隊的一部分，與幾年前相比，這是一個更具選擇性和規模較小的團隊。最近，中國的實質刺激計劃幫助了經濟並提振了上海證券交易所的總價值。我們相信這些舉措可能會為首次公開募股和同美國際帶來積極的動力。

We have continued to lead the team with a diligent energy as we think that to me is a good IPO candidate. We'll keep you informed and hope to have good news to deliver to you. With that I'll turn it over to Dr. Morse Young for a review of our business and markets, Morse.

我們繼續以勤奮的精力領導團隊，因為我們認為對我來說這是一個很好的 IPO 候選人。我們將隨時向您通報情況，並希望有好消息傳遞給您。接下來，我將把它交給莫爾斯·楊博士，讓他對我們的業務和市場進行審查，莫爾斯。

Thank you Gary, '23 came largely in line with our expectations coming off a stronger than expected. Q2, the primary difference from our guidance is our lower German structure which reflected our choice not to participate in certain low margin opportunities.

謝謝加里，'23 的表現基本上符合我們的預期，比預期的要強。第二季度，與我們指導的主要區別是我們較低的德國結構，這反映了我們選擇不參與某些低利潤機會。

I outside of this data center related demand remains solid for indium phosphide substrates and we are beginning to show to grow our market share in HPT devices for wireless headsets. Looking individually at our paradise. Indium phosphide data center, high speed optical connectivity and AI continues to be our strongest drivers.

在該資料中心之外，對磷化銦基板的相關需求仍然強勁，我們開始在無線耳機的 HPT 設備中展現出不斷增長的市場份額。單獨審視我們的天堂。磷化銦資料中心、高速光纖連接和人工智慧仍然是我們最強大的驅動力。

In particular growth in demand for high speed pixels of 100 gig or faster per line is opening a Greenfield market opportunity for indium phosphide photo detectors, a 400 and 800 gig multimode optical interconnects for short distances.

特別是對每線 100 GB 或更快的高速像素的需求增長，為磷化銦光電探測器（用於短距離的 400 和 800 GB 多模光學互連）開闢了新市場機會。

We saw indium phosphide orders related to 800 gig applications in Q1 and Q2 and have received a follow up order in Q4 which puts us on track for healthy growth in 2035. In addition to photo detector applications, we know that any phosphide will be a necessary material for high-speed lasers as the industry moves to 800 gig and 1.60 pluggable transceivers for median to longer distance transmission beginning in 2025. We're working with a number of customers and are already seeing exciting opportunities with next generation silicate photonics devices and electro absorption modulated lasers or EML's.

我們在第一季和第二季看到了與 800 台應用程式相關的磷化銦訂單，並在第四季度收到了後續訂單，這使我們預計在 2035 年實現健康成長。除了光電探測器應用之外，我們知道，隨著業界從 2025 年開始轉向 800 gig 和 1.60 可插拔收發器以實現中長距離傳輸，任何磷化物都將成為高速雷射的必要材料。我們正在與許多客戶合作，並且已經看到了下一代矽酸鹽光子裝置和電吸收調製雷射或 EML 的令人興奮的機會。

For example, we're seeing growth in demand with increased orders in Q3 and Q4 from one of our larger silicon atomics customers for optical transceivers. In addition, we have developed a new in the prospect product targeting silicate for targets and EML's.

例如，我們看到，隨著第三季和第四季來自我們較大的矽原子客戶之一的光收發器訂單的增加，需求也在增加。此外，我們也開發了一種新的前景產品，以矽酸鹽為目標和 EML。

We have our first design win with our leading customer and multiple ongoing qualifications with additional customers. Our galling off that revenue pulled back in Q3 as expected after growing more than 20% in Q2. Overall, the market recovery is somewhat lumpy particularly given the weak economic conditions in China.

我們贏得了領先客戶的首個設計勝利，並獲得了其他客戶的多項持續資格認證。在第二季成長超過 20% 後，我們的營收在第三季出現了預期的回落。總體而言，市場復甦有些崎嶇，特別是考慮到中國經濟狀況疲軟。

But new fiscal stimulus in China announced in September could provide a catalyst for an improving market environment. This will benefit demand across a broad base of applications including power amplifiers, HPT applications for wireless switches, high-speed, high-speed power industrial lasers and LED's. We continue to be encouraged by our relatively new traction in HPT applications. By bringing the learnings from our product that's advancing in our eight-inch single-element development to our six inch single-element outside labor production.

但中國九月宣布的新財政刺激措施可能為改善市場環境提供催化劑。這將有利於廣泛應用的需求，包括功率放大器、無線開關的 HPT 應用、高速、高速功率工業雷射和 LED。我們繼續對 HPT 應用中相對較新的吸引力感到鼓舞。透過將從我們在 8 吋單元件開發中取得進展的產品中學到的知識帶到我們的 6 吋單元件外部人工生產中。

We believe we can improve our cost structure and provide a highly competitive solution to a market where our penetration historically slow initial shipment into our leading customers gives the confidence that we can be successful in gaining additional share. We expect our revenue from this application to grow in 2025 as we continue to write.

我們相信，我們可以改善我們的成本結構，並為市場提供極具競爭力的解決方案，因為我們對主要客戶的初始出貨量歷來緩慢滲透，這讓我們有信心成功獲得更多份額。隨著我們繼續寫作，我們預計該應用程式的收入將在 2025 年增長。

In addition, our gallium arsenide (GaAs) that recycling effort continue to be successful. We're now fully licensed and processing material that we have collected over time but did not have the capability to recycle.

此外，我們的砷化鎵（GaAs）回收工作持續取得成功。我們現在已獲得完全許可，可以處理我們長期以來收集但沒有能力回收的材料。

This is visible to the investment community in both our of our revenue and gross margin at Gmail. One of our real material venture companies. These efforts also advance our ESG commitment and drive meaningful efficiency in our manufacturing.

投資界可以透過 Gmail 的收入和毛利率看到這一點。我們真正的材料創投公司之一。這些努力也推進了我們的 ESG 承諾，並顯著提高了我們的製造效率。

Turn to the subject, with director, meaning all mature pricing which negatively affects our growth models. We are being highly in the opportunity we choose to participate in this impacted our revenue in Q3 and will bring our revenue down meaningfully again in Q4. We expect that they will drop in Q4 with limited overall contribution so that they will no longer be headwind to our growth as we expand in other areas of our business.

轉向主題，與總監一起，意味著所有成熟的定價都會對我們的成長模式產生負面影響。我們非常有機會選擇參與這項活動，這影響了我們第三季的收入，並將使我們第四季的收入再次大幅下降。我們預計它們將在第四季度下降，但總體貢獻有限，這樣當我們在其他業務領域擴張時，它們將不再成為我們成長的阻力。

We do believe that the market for low office satellite, those promised in the coming quarters and we will participate in those activities where we can derive corporate level business values. And finally, our raw material business grew again into three increasing demands. Stable gallon prices and the success of our recycling efforts.

我們確實相信低辦公衛星市場，也就是未來幾季所承諾的市場，我們將參與那些可以獲得企業級商業價值的活動。最後，我們的原物料業務再次成長，帶來了三個不斷增長的需求。穩定的加侖價格和我們回收工作的成功。

Our joint our portfolio of joint ventures of raw material companies continue to be a strategic value to our business and continually to contribute positively to our results. In closing, we are optimistic about the growth and expansion of our business over the coming quarters.

我們的原材料公司合資企業組合繼續對我們的業務具有策略價值，並持續為我們的業績做出積極貢獻。最後，我們對未來幾季業務的成長和擴張感到樂觀。

Data center represents a great opportunity for us in our indium phosphide business and we see further tailwinds in 2025 with recovery of telecom CapEx spending for pound and back occupations. Our gallium arsenide business is poised to benefit from the growth in HPT applications and we believe a strengthening of the economy in China in 2035 is likely to be positive capitals for improvement in wide variety of applications including industrial laser and LED's. We remain highly focused on accelerating our return to profitability and look forward to reporting to you, our progress.

資料中心對我們的磷化銦業務來說是一個巨大的機會，隨著英鎊和後面職業的電信資本支出的恢復，我們預計 2025 年將出現進一步的順風車。我們的砷化鎵業務將受益於 HPT 應用的成長，我們相信 2035 年中國經濟的增強可能會成為改善包括工業雷射和 LED 在內的各種應用的積極資本。我們仍然高度專注於加速恢復盈利，並期待向您報告我們的進展。

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

說到這裡，我把電話轉回給加里，詢問我們的第四季指導，加里。

Thanks Morris.

謝謝莫里斯。

In keeping with our comments today, we expect Q4 revenue to be slightly improved coming in between $23.0 million and $25.0 million. This takes into consideration growth in our indium phosphide substrates driven by data center applications. As well as approximately consistent contribution from our gallium arsenide substrates and stronger raw material revenues. Growth in these areas is expected to be partially offset by a decrease in German revenues which are likely to bottom out in Q4.

根據我們今天的評論，我們預計第四季營收將略有改善，達到 2,300 萬美元至 2,500 萬美元之間。這考慮到了由資料中心應用驅動的磷化銦基板的成長。以及我們的砷化鎵基材和更強勁的原材料收入的大致一致的貢獻。這些領域的成長預計將被德國收入的下降部分抵消，而德國收入的下降可能會在第四季度觸底。

We are pleased by the growth in the most strategic parts of our business and we believe we're positioning ourselves strongly for 2025. In terms of the rest of our guidance, with the expectation of changing healthy gross margin performance, 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 $43.1 million shares.

我們對業務中最具戰略意義的部分的成長感到高興，我們相信我們為 2025 年做好了強有力的定位。就我們的其餘指導而言，隨著健康毛利率表現的預期發生變化，我們預計非 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 美元範圍內。股票數量約為 4,310 萬美元。

Okay. This concludes our prepared comments. We'd be glad to answer your questions. Christina operator.

好的。我們準備好的評論到此結束。我們很樂意回答您的問題。克里斯蒂娜接線生。

Yes, Thank you. (Operator Instructions)

是的，謝謝。（操作員說明）

Your first question comes from the line of Richard Shannon from Craig-Hallum. Your line is open.

你的第一個問題來自 Craig-Hallum 的 Richard Shannon。您的線路已開通。

Well, Hi, Morrison Gary. Thanks for taking my questions here. I guess there's a number of them that seem important to ask here. Let me, just look back into the third quarter here real briefly and understand the dynamics relative to the germanium business here. How big of a surprise was this of the I would assume is a difficult pricing environment? Is this a business you expect to hope to continue and compete in and generate revenues like you have in the past or is this a seriously lower level of revenue you expect in this business over time?

嗯，嗨，莫里森·加里。感謝您在這裡提出我的問題。我想這裡有很多問題似乎很重要。讓我簡單回顧一下第三季度，了解與鍺業務相關的動態。我認為這是一個艱難的定價環境，這有多大的驚喜？您是否希望這項業務能夠像過去一樣繼續競爭並產生收入，或者隨著時間的推移，您對該業務的預期收入水平是否會嚴重降低？

Yeah, I think that the main raw material price more than doubled during the third quarter and it's difficult to increase price to our customers because most of our customers are satellite. Yeah, to build this and so they have their own budget. So we opted not to quote those yeah, now very attractive margin.

是的，我認為第三季主要原物料價格上漲了一倍多，很難向我們的客戶提價，因為我們的客戶大多是衛星客戶。是的，為了建造這個，他們有自己的預算。所以我們選擇不引用那些現在非常有吸引力的利潤。

So we're going to decline some more business in Q4. So that will reduce our expectation of germanium. However, the germanium substrate business I believe still has a, we have a solid footing in that business other than the fact that it's very much dependent on the cost of raw material. But what I see is our competitors will have the same problem as we are.

因此，我們將在第四季度減少更多業務。這將降低我們對鍺的期望。然而，我相信鍺基板業務仍然存在，除了它非常依賴原材料成本之外，我們在該業務中擁有堅實的基礎。但我認為我們的競爭對手也會遇到和我們同樣的問題。

So we think as the market settles down and everybody start to come, we believe we're highly competitive. So as the market settles down, we will come back to the market as you know that low office by business is booming and it is scheduled to have, I think even months, it should have 40,000 low, low satellite, low altitude satellite and China is going to launch a number of satellites up there as well. So I think that market eventually will come back, but we will see how the pricing structure evolves.

因此，我們認為，隨著市場穩定下來，每個人都開始加入，我們相信我們具有強大的競爭力。因此，隨著市場穩定下來，我們將回到市場，因為您知道，低空辦公室業務正在蓬勃發展，並且預計，我認為甚至幾個月，它應該有 40,000 顆低空衛星，低空衛星和中國也將在那裡發射一些衛星。所以我認為市場最終會回來，但我們將看到定價結構如何演變。

Okay. That, that's helpful and good to know. Thanks for that, Morris. Let's touch a question or two on indium phosphide probably the most strategic business here. I just wanted to get the sense of the drivers here you're talking about for growth here. I mentioned data centers that mean you know, photo detectors or silly Photonic or maybe just be more clear on what the growth drivers are.

好的。這很有幫助，而且很高興知道。謝謝你，莫里斯。讓我們來談談一兩個關於磷化銦的問題，這可能是這裡最具戰略意義的業務。我只是想了解您所說的成長驅動因素。我提到的資料中心意味著你知道，光電探測器或愚蠢的光子，或者可能只是更清楚成長動力是什麼。

Yeah, so yeah, I can take that.

是的，所以是的，我可以接受。

Yeah, go ahead.

是的，繼續吧。

Sorry, thanks. Thanks for your question. This is Tim. Yeah; we believe that you know AI and data center revenues will be strong growth for us. And we think we're seeing the beginnings of that right now. We're seeing some good increases in demand in Q3 and Q4.

抱歉，謝謝。謝謝你的提問。這是蒂姆。是的;我們相信您知道人工智慧和資料中心收入將為我們帶來強勁成長。我們認為我們現在正在看到這一切的開始。我們看到第三季和第四季的需求出現了一些良好的成長。

So what we're really looking at here is we're looking at indium phosphide based high speed photo detectors that go into a pixel’s photo detector pair for a for a multi-mode transceiver. So we all know that the short distance multi-mode transceiver market is growing quickly at the moment. And as the speeds of the pixels go to 100gig per line and higher doesn't need to move to an in gallium arsenide (GaAs) photo detector. So we're seeing quite a lot of increase in that and we're participating well in that.

因此，我們真正關注的是基於磷化銦的高速光電探測器，該探測器可用於多模式收發器的像素光電探測器對。所以我們都知道，短距離多模光模組市場目前正在快速成長。隨著像素速度達到每行 100gig 甚至更高，不需要移動到砷化鎵 (GaAs) 光電偵測器。因此，我們看到這方面的成長相當多，並且我們很好地參與其中。

And so we believe that's a Greenfield opportunity for us that is only set to grow through the rest of this year and then into next. We're also participating strongly and we've chosen to focus on the silicon photonics and the EML applications where are substrate benefits really count to these devices. So we've penetrated some key silicon photonics customers and also some EML customers and we're seeing growth in there as well.

因此，我們相信這對我們來說是一個全新的機會，只會在今年剩餘時間和明年繼續成長。我們也大力參與，並選擇專注於矽光子學和 EML 應用，這些元件的基板優勢確實非常重要。因此，我們已經滲透到一些關鍵的矽光子客戶以及一些 EML 客戶，我們也看到了這些客戶的成長。

Okay and Tim just to follow up on this just to be clear on this last topic here, silica the photonic these are basically four lasers and that photo detectors. Is that correct?

好的，蒂姆只是想跟進這個問題，只是為了澄清最後一個主題，二氧化矽光子，這些基本上是四個雷射和光電探測器。這是正確的嗎？

Yeah, that's correct. It's predominantly CWDFB lasers or other lasers that go into that silicon photonics business, correct?

是的，這是正確的。進入矽光子業務的主要是 CWDFB 雷射或其他雷射器，對嗎？

Okay. Fair enough here. And how would you characterize the breadth of engagements and visibility into that growth? Do we have wins in place? We have forecasts in place. How do we think about the kind of general trajectory here? And what could this mean for a [ T ] over the next say one to two years?

好的。這裡很公平。您如何描述這種成長的參與廣度和可見性？我們有勝利嗎？我們有適當的預測。我們如何看待這裡的一般軌跡？這對 [T] 在接下來的一到兩年內意味著什麼？

Right. So, yeah, we're, definitely participating heavily in that. I think we're in a number of the key customers in this space.

正確的。所以，是的，我們肯定會大力參與其中。我認為我們是這個領域的許多關鍵客戶。

And what we're seeing so far is we're seeing growth in our silicon photonic sector over the next one to three years as being one of the largest sectors of the data center business and specifically at this time for the transceiver product, we are, as they say, participating heavily with a number of customers in that market already for their lasers. We've still got some more work to do.

到目前為止，我們看到的是，我們看到矽光子產業在未來一到三年內將成長，成為資料中心業務最大的產業之一，特別是目前對於收發器產品而言，我們正在正如他們所說，已經與該市場的許多客戶積極參與其雷射。我們還有更多工作要做。

We've still got some other customers that we need to get qualified with. But as Morris said in the discussion, we have a design win with a new product that we've launched specifically for silicon photonics and EML. And we're qualifying a number of other customers. So we see the opportunities there of being really big.

我們還有一些其他客戶需要獲得資格。但正如 Morris 在討論中所說，我們透過專門針對矽光子學和 EML 推出的新產品贏得了設計勝利。我們正在對一些其他客戶進行資格審查。所以我們看到了發展壯大的機會。

Okay, wonderful. Thanks for that detail. Tim Let me one last question. I'll jump out of line. Morris, you mentioned your prepared remarks about some opportunities here with HPT's. You know, noting as I think most of us know that it's been a very a market you've been under penetrated for quite some time. Maybe talk to where and how you're getting design wins.

好吧，太棒了。謝謝你的詳細資料。提姆 讓我問最後一個問題。我會跳出隊伍。Morris，您提到了您準備好的關於 HPT 的一些機會的評論。你知道，我想我們大多數人都知道，這是一個你已經滲透了相當長一段時間的市場。也許可以談談您在哪裡以及如何獲得設計勝利。

What kind of, again, what kind of visibility you're seeing here? What kind of share if possible, in this market. Again, it's one where you haven't been and I would imagine the incumbents here might be, might resist losing share here. So I just want to get a sense of how big we can see this market getting over time.

您在這裡看到的能見度是什麼樣的？如果可能的話，在這個市場上佔有什麼樣的份額。再說一次，這是一個你沒有去過的地方，我想這裡的現任者可能會抵制失去這裡的份額。所以我只是想了解這個市場隨著時間的推移會變得有多大。

Yeah, this market size is about [$80 to $100 million] and it's a sort of a steady business and depending on how much more 5G form I build because they require more HPT's per phone. And I think the interest in our participation in the HPT market really comes from a number of China customers who worried about because of the gallium restrictions from exporting out of China.

是的，這個市場規模約為 [80 至 1 億美元]，這是一項穩定的業務，取決於我構建了多少 5G 形式，因為每部手機需要更多的 HPT。我認為我們參與 HPT 市場的興趣確實來自於一些中國客戶，他們擔心中國出口鎵的限制。

So they want a diversified supplier. So we got sort of that door opening for us. And we believe, we spend a lot of development effort into the age development. We think that was very successful. We have been able to improve our yield as well as our characteristic of the age. But unfortunately, that age program has slowed, but we find that what we learned on the age, we can just easily apply into the six inch program so that we should be able to reduce our cost, improving our yield.

所以他們需要一個多元化的供應商。所以這扇門為我們敞開了。我們相信，我們在時代發展上花費了大量的開發精力。我們認為這是非常成功的。我們已經能夠提高我們的產量以及我們的時代特徵。但不幸的是，該年齡計劃已經放緩，但我們發現我們在該年齡上學到的東西，我們可以輕鬆地應用到六英寸計劃中，這樣我們應該能夠降低成本，提高產量。

And with the new demand for the HPT for six inch, I think we're highly competitive because I mean, I think right now we have approximately 10% of their market share. And as you know, there are only three players in this competitive landscape. So we believe that we have plenty of opportunity to increase our share.

隨著對 6 吋 HPT 的新需求，我認為我們具有很強的競爭力，因為我的意思是，我認為現在我們擁有他們大約 10% 的市場份額。如你所知，這個競爭格局中只有三位參與者。因此，我們相信我們有很多機會增加我們的份額。

Okay, appreciate those details. I will jump on the line guys. Thank you.

好的，欣賞這些細節。我會插隊的。謝謝。

(Operator Instructions)

（操作員說明）

Okay. And we do have another question from Richard Shannon from Craig-Hallum . Your line is open.

好的。我們還有來自 Craig-Hallum 的 Richard Shannon 的另一個問題。您的線路已開通。

Well, great. I'm not sure I got out of line but thanks for another opportunity here. Maybe just one or two quick one’s guys. Morris, you talked about the stimulus opportunity in China. Maybe you can talk to which product or product line or lines you expect to see impact how fast that might happen. And then if we're trying to judge you on your China based revenues over say the next couple of quarters, how should we think about where that can go?

嗯，太棒了。我不確定我是否超出了界限，但感謝您再次提供機會。也許只有一兩個速度快的人。莫里斯，您談到了中國的刺激機會。也許您可以談談您希望看到哪種產品或一條或多條產品線會影響這種情況發生的速度。然後，如果我們試圖根據您未來幾季在中國的收入來判斷您，我們應該如何考慮它會走向何方？

Yeah, I think our indium phosphide opportunity mainly our direct customers we believe are mainly Western customers, although we sell to customers, but where do, where do they go? They probably go through one or two layers of device makers, but they could then go into the hyper centers in the United States. And although China Data Center, I believe the speed is slower. But that's definitely they will also enjoy that market when they expand.

是的，我認為我們的磷化銦機會主要是我們的直接客戶，我們相信主要是西方客戶，雖然我們賣給客戶，但他們在哪裡，他們去哪裡？他們可能會經過一層或兩層設備製造商，但隨後可能會進入美國的超級中心。而且雖然是中國資料中心，我相信速度還是比較慢。但毫無疑問，當他們擴張時，他們也會享受這個市場。

I mean, China market really, I think from what we know the laser market, high power laser market is really very sensitive to the economic activities as you know, that lasers are mainly used for high power cutting tools and so both in battery manufacturing, as well as the automobile manufacturing, when the economy slow a bit, their demand dries up and LED is another example. And if you make a whole lot more cars, I think the LED demand is going to go up.

我的意思是，中國市場確實，我認為從我們對雷射市場的了解來看，高功率雷射市場確實對經濟活動非常敏感，如您所知，雷射主要用於高功率切割工具，因此都用於電池製造，還有汽車製造業，當經濟稍微放緩時，他們的需求就會枯竭，LED就是另一個例子。如果生產更多汽車，我認為 LED 需求將會上升。

So is cell phones was sort of having a recovery sometime early this year coming from a really low selling volume during COVID. But I think the economy in China right now, especially second half of the year is not really strong. So we believe that anything related to consumer industrial activities and cell phone in particular, I think if they goes up that should help us.

因此，今年早些時候，手機銷量在新冠疫情期間銷量極低的情況下有所復甦。但我認為中國現在的經濟，特別是下半年，並不是很強。因此，我們認為，任何與消費者工業活動，特別是手機相關的事情，我認為如果它們上升，應該對我們有幫助。

So I think, you know, the stimulus package will not only help us in terms of our product offering activities, but also I believe will possibly impact us to help us to go IPO because the Shanghai Stock Exchange, the index has moved from the bottom I last I saw was almost like 30% up. So I think that if the momentum builds, I think that should clear the way for us to go public in China.

所以我認為，你知道，刺激方案不僅會幫助我們提供產品活動，而且我相信可能會影響我們，幫助我們進行IPO，因為上海證券交易所的指數已經從底部移動我上次看到的價格幾乎上漲了30%。所以我認為，如果勢頭增強，我認為這應該為我們在中國上市掃清道路。

Okay. That is helpful. Thanks for that, Morris.

好的。這很有幫助。謝謝你，莫里斯。

I'm going to touch on my last question related to that in a second here, but I just want to touch on again. I mean, you classified, I think you made a brief comment relative to the telecom market which we haven't heard about in a little while here. It sounds like you're seeing some signs of visibility in that market. I assume again, that's to be clear is excluding the pond market if you can. If that's the case, please be clear on that one. But are you getting any sense of visibility in terms of orders or other things that indicate telecom is going to be an improvement next year?

我稍後將討論與此相關的最後一個問題，但我只想再次討論。我的意思是，您分類了，我想您對電信市場做了一個簡短的評論，我們已經有一段時間沒有聽說過這個市場了。聽起來您在該市場上看到了一些可見的跡象。我再次假設，需要明確的是，如果可以的話，排除池塘市場。如果是這樣的話，請說清楚這一點。但是，您是否對訂單或其他方面的可見性有所了解，表明電信明年將會有所改善？

Richard, I think right now, I think it's steady but it's not going down. I mean, it's not like last year. Last year was all dried up. Everybody said they got too much inventory. But right now we gauge that by looking at our palms market activity and they are, if I would say the boom time is 100 the low was maybe 20, we were around 30.

理查德，我認為現在，我認為它很穩定，但不會下降。我的意思是，這不像去年。去年已經全部枯竭了。大家都說庫存太多了。但現在我們透過觀察我們的棕櫚市場活動來衡量，如果我說繁榮時期是 100，低點可能是 20，那麼我們大約是 30。

Okay.

好的。

All right. That's fair. One last question here just kind of hitting on the topic of China as it relates to the potential star listing, you mentioned the market regulator, whatever winnowing out some of the weaker opportunities there and HTP has been left in here, I guess maybe if there's any positive signs or interactions, you can suggest that we're seeing some progress moving forward. Obviously, you've been talking about this for more than a couple of years and want to get a sense of if there's any positive signals here rather than just a lack of negatives.

好的。這很公平。最後一個問題有點觸及中國的話題，因為它與潛在的明星上市有關，你提到了市場監管機構，無論篩選出一些較弱的機會，HTP 都留在這裡，我想也許如果有的話任何積極的跡象或互動，都可以表明我們正在看到一些進展。顯然，你已經談論這個問題好幾年了，並且想了解這裡是否有任何積極信號，而不僅僅是缺乏負面信號。

Yeah, Richard, that's it's a good question, but it's a hard question for me.

是的，理查德，這是一個好問題，但對我來說這是一個很難的問題。

I think that the one of the difficulty, I mean, I think when we first applied, we were fairly optimistic because at that time, China Stock Exchange was approving something like 3 to 4 companies going public per week. Okay. But everything early 2020. But we got some questions with the China Stock Exchange. They go through each of the companies all the way from executive personal finances.

我認為困難之一，我的意思是，我認為當我們第一次申請時，我們相當樂觀，因為當時中國證券交易所每週批准大約 3 到 4 家公司上市。好的。但一切都在2020年初。但我們向中國證券交易所提出了一些問題。他們從高階主管個人財務一直到每家公司。

They look very thoroughly on your account payable, account receivable as well as your inventory and who you sell to. And they do, I would say 100% more due diligence on everything what you do. But ever since COVID happened and the market collapsed, especially in real estate. And that drives up all the Shanghai Stock Exchange, public market activities.

他們會非常徹底地檢查您的應付帳款、應收帳款以及您的庫存以及您的銷售對象。我想說的是，他們確實對你所做的一切進行了 100% 的盡職調查。但自從新冠疫情發生以來，市場崩潰了，尤其是房地產市場。這推動了上海證券交易所的所有公開市場活動。

So they start to blame and say, hey, don't bring any more public company public unless they are stellar in performance as well as there they are needed for the to drive the economic advancement, especially in high technology. I think we fit on the letter bill. But however, with the revenue run down for us for the last two years definitely didn't help.

因此，他們開始指責並說，嘿，不要讓更多的上市公司上市，除非它們表現出色，並且需要它們來推動經濟進步，特別是在高科技領域。我認為我們符合信件法案。但是，隨著過去兩年我們的收入下降，這絕對沒有幫助。

But I think our revenue is coming back and the Shanghai Stock Exchange because of the stimulus package is coming back of it as well as we have resolved that I was saying a major issue with one of their concerns in the last quarter or so and hopefully that we are seeing the light at the end of the channel. Here is that I think sort of dancing a little bit because I, although I think I'm fairly optimistic, but it's really very much up to them. They have to check all the boxes; they have to approve everything before they let us go.

但我認為我們的收入正在恢復，上海證券交易所由於刺激計劃正在恢復，我們已經解決了我在上個季度左右所說的一個重大問題，他們擔心的一個問題，希望我們看到了通道盡頭的曙光。這是我認為有點跳舞的原因，雖然我認為我相當樂觀，但這實際上很大程度上取決於他們。他們必須檢查所有的方框；他們必須批准一切才能放我們走。

Right? Okay. Well, I appreciate all that detail. Morris Young I will jump on the line again. Thank you.

正確的？好的。嗯，我很欣賞所有這些細節。莫里斯·楊（Morris Young） 我會再上線。謝謝。

Thank you. And with no further questions, I'll turn the floor back over to Dr Morris Young.

謝謝。沒有其他問題了，我將把發言權交還給莫里斯·楊博士。

Thank you for your participation in our conference call. Before we report earnings to you again, we will be participating in the Needham Growth Conference. We hope to see you many of you there. As always, please feel free to contact me, Gary Fisher 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。在我們再次向您報告收益之前，我們將參加尼達姆成長會議。我們希望在那裡見到你們。一如既往，請隨時聯繫我，加里·費舍爾或萊斯利·格林。如果您想與我們通話，我們期待在不久的將來與您交談。

Thank you. And this does conclude today's conference call. You may now disconnect. Have a great day.

謝謝。今天的電話會議到此結束。您現在可以斷開連線。祝你有美好的一天。