Diodes Inc (DIOD) 2017 Q4 法說會逐字稿

Good afternoon, and welcome to Diodes Incorporated's Fourth Quarter and Full Year 2017 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded today, Wednesday, February 7, 2018. I would now like to turn the call over to Leanne Sievers of Shelton Group, Investor Relations. Leanne, please go ahead.

下午好，歡迎參加 Diodes 公司 2017 年第四季和全年財務業績電話會議。 （操作員說明）謹此提醒，本次電話會議將於今天（2018 年 2 月 7 日星期三）進行錄音。我現在想將電話轉給 Shelton Group 投資者關係部門的 Leanne Sievers。莉安，請繼續。

Good afternoon, and welcome to Diodes' Fourth Quarter and Full Year 2017 Financial Results Conference Call. I'm Leanne Sievers, President of Shelton Group, Diodes' Investor Relations firm. Joining us today from Taiwan are Diodes' President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Rick White; Vice President of Worldwide Sales and Marketing, Emily Yang; and Director of Investor Relations, Laura Mehrl.

下午好，歡迎參加 Diodes 2017 年第四季和全年財務業績電話會議。我是 Leanne Sievers，Diodes 投資人關係公司 Shelton Group 的總裁。今天從台灣加入我們的是 Diodes 總裁兼執行長 Keh-Shew Lu 博士；首席財務官，里克懷特；全球銷售與行銷副總裁 Emily Yang；和投資者關係總監 Laura Mehrl。

Before I turn the call over to Dr. Lu, I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and completion of the annual audit by the company's independent registered public accounting firm. As such, these results are subject to revision until the company files its annual report on Form 10-K in the fiscal year 2017.

在我把電話轉給盧博士之前，我想提醒我們的聽眾，今天公佈的結果是初步的，因為這些結果取決於公司最終確定其關閉程序以及公司獨立註冊公共會計完成年度審計公司。因此，在公司提交 2017 財年 10-K 表格年度報告之前，這些結果可能會進行修訂。

In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, February 7, 2018. Diodes assumes no obligation to update these projections in the future as market conditions may or may not change.

此外，管理層準備的言論包含前瞻性陳述，這些陳述存在風險和不確定性，管理層可能會針對您的問題做出額外的前瞻性陳述。因此，該公司聲稱受到 1995 年《私人證券訴訟改革法案》中包含的前瞻性陳述安全港的保護。實際結果可能與今天討論的結果有所不同，因此，我們建議您參閱更詳細的討論公司向美國證券交易委員會提交的文件（包括表格10-K 和10-Q）中的風險和不確定性。此外，有關公司未來業績的任何預測均代表管理層截至今天（2018 年 2 月 7 日）的估計。由於市場狀況可能會或可能不會發生變化，Diodes 不承擔未來更新這些預測的義務。

Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations to GAAP and non-GAAP items, which provide additional details. Also, throughout the company's press release and management's statements during this conference call, we will refer to net income attributable to common stockholders as GAAP net income.

此外，該公司在本次電話會議期間的新聞稿和管理層聲明將包括以公認會計原則和非公認會計原則術語討論某些措施和財務資訊。該公司的新聞稿中包括對 GAAP 和非 GAAP 項目的定義和調節，其中提供了更多詳細資訊。此外，在本次電話會議期間公司的新聞稿和管理層聲明中，我們將歸屬於普通股股東的淨利潤稱為 GAAP 淨利潤。

For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 60 days in the Investor Relations section of Diodes' website at www.diodes.com.

對於目前無法收聽整個電話會議的人士，可在 Diodes 網站 www.diodes.com 的投資者關係部分透過網路廣播提供為期 60 天的錄音。

And now, I'll turn the call over to Diodes' President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.

現在，我將把電話轉給 Diodes 總裁兼執行長 Keh-Shew Lu 博士。盧醫生，請講。

Thank you, Leanne. Welcome, everyone, and thank you for joining us today. 2017 was a milestone year for Diodes in which we reached our goal of achieving $1 billion in annual revenue, commanded with achievement of record revenue and gross profit as well as increased market share.

謝謝你，莉安。歡迎大家，感謝您今天加入我們。 2017 年對 Diodes 來說是具有里程碑意義的一年，我們實現了年收入 10 億美元的目標，收入和毛利創歷史新高，市場份額也不斷增加。

Our solid results reflect continued strength across all of our geographies in the target end market as well as growth from Pericom. In fact, we reached record revenue levels in our automotive, industrial and communication end markets, which served as primary growth driver in 2017. We also ended the fourth quarter achieving a 210 basis point sequential increase in GAAP gross margin to 35.9%, demonstrating the ability to expand margins above our prior model of 35% and toward our next target of 40%.

我們的穩健業績反映了我們在目標終端市場的所有地區的持續實力以及 Pericom 的成長。事實上，我們在汽車、工業和通訊終端市場上達到了創紀錄的收入水平，這些市場是2017 年的主要成長動力。在第四季度結束時，我們的GAAP 毛利率環比增長了210 個基點，達到35.9%，這表明我們的能夠將利潤率擴大到我們之前 35% 的模型之上，並實現我們下一個 40% 的目標。

For the past several years, we have been highlighting our continued investment and focus on new products as well as process and packaging technologies to expand our customer content and gross margin opportunities. Today, we continue to accelerate the pace at which we are transitioning old generation products to new higher margin products that provide higher value to our customers.

在過去的幾年裡，我們一直強調我們的持續投資並專注於新產品以及製程和包裝技術，以擴大我們的客戶內容和毛利率機會。今天，我們繼續加快將舊一代產品過渡到利潤率更高的新產品的步伐，為客戶提供更高的價值。

In terms of our manufacturing operations, we complete the shutdown of the KFAB facility in mid-November, as planned. As we stated in the past, this action should result in annual savings of between $10 million and $15 million beginning this year. Also, during the quarter, we completed the needed KFAB wafer fab process in SFAB 1 and are starting to ramp production. We also completed the 8-inch wafer fab qualification in SFAB 2 and expect ramping to 3,000 wafer per month by the end of this quarter and to 8,000 to 10,000 wafers per month by the end of this year. This capacity expansion aligns with our gross projection for 2018 and the overall favorable market environment.

在我們的製造業務方面，我們按計劃於 11 月中旬完成了 KFAB 工廠的關閉。正如我們過去所說，從今年開始，這項行動將每年節省 1,000 萬至 1,500 萬美元。此外，在本季度，我們在 SFAB 1 完成了所需的 KFAB 晶圓製造工藝，並開始提高產量。我們也完成了 SFAB 2 的 8 吋晶圓廠資格認證，預計到本季末每月產能將增至 3,000 片，今年底將增至每月 8,000 至 10,000 片。此次產能擴張符合我們對 2018 年的整體預測以及整體有利的市場環境。

With our achievement of $1 billion in annual revenue in 2017, we recently established our next long-term goal of $1 billion in gross profit. In support of this objective, we are increasingly focused on key end market opportunities, that including automotive, industrial, high-end smartphones, IoT and high-end computing with our Pericom products. Further, we continue to expand market share with our higher-value new products and remain committed to increase profitability as we benefit from solid operating leverage to drive earnings expansion and cash flow for the company and our shareholders.

隨著 2017 年年營收達到 10 億美元，我們最近制定了毛利 10 億美元的下一個長期目標。為了支持這一目標，我們越來越關注關鍵的終端市場機會，包括使用 Pericom 產品的汽車、工業、高階智慧型手機、物聯網和高階運算。此外，我們繼續透過更高價值的新產品擴大市場份額，並繼續致力於提高獲利能力，因為我們受益於堅實的營運槓桿，推動公司和股東的獲利擴張和現金流。

Before I turn the call over to Rick, I would like to take this time to welcome Emily Yang, who was appointed Vice President of Worldwide Sales and Marketing in mid-December and is joining us on today's call. Emily has been with Diodes since acquisition of Pericom in November 2015, where she was Vice President of Global Sales and also held a number of sales managing positions covering Asia, North America and Europe since 1998.

在將電話轉給 Rick 之前，我想藉此機會歡迎 Emily Yang，她於 12 月中旬被任命為全球銷售和行銷副總裁，並參加今天的電話會議。 Emily 自 2015 年 11 月收購 Pericom 以來一直在 Diodes 工作，擔任全球銷售副總裁，並自 1998 年起擔任亞洲、北美和歐洲的多個銷售管理職位。

With that, let me now turn the call over to Rick to discuss our fourth quarter financial results and our first quarter 2018 guidance in more detail.

現在，讓我將電話轉給 Rick，更詳細地討論我們第四季的財務表現和 2018 年第一季的指導。

Thanks, Dr. Lu, and good afternoon, everyone. Let me first mention that as stated in today's press release, the impact on Diodes of the Tax Cuts and Jobs Act enacted in December 2017, is estimated to be an approximately $46 million increase in GAAP tax expense, which has been excluded from the fourth quarter and full year 2017 non-GAAP results. We do not anticipate that this increased tax expense as a result of the tax bill will have a cash impact.

謝謝盧博士，大家下午好。首先我要提一下，正如今天的新聞稿中所述，2017年12月頒布的減稅和就業法案對Diodes的影響估計將導致GAAP稅收費用增加約4600萬美元，該費用已被排除在第四季度之外以及 2017 年全年非 GAAP 業績。我們預計稅收法案導致的稅收支出增加不會對現金產生影響。

Revenue for fourth quarter 2017 was $268.4 million, a decrease of 5.9% from the $285.2 million in the third quarter 2017 and an increase of 15.7% from the $232.1 million in the fourth quarter 2016. Revenue in the quarter decreased sequentially, reflecting typical seasonality, and increased year-over-year due to continued strength across all of the company's target end markets and geographies. For the full year 2017, revenue was $1.05 billion, an increase of 11.9% over the $942.2 million in 2016.

2017 年第四季營收為2.684 億美元，比2017 年第三季的2.852 億美元下降5.9%，比2016 年第四季的2.321 億美元成長15.7%。該季度營收季減，反映了典型的季節性，由於公司所有目標終端市場和地區的持續強勁，較去年同期成長。 2017年全年營收為10.5億美元，比2016年的9.422億美元成長11.9%。

Gross profit for the fourth quarter was $96.4 million or 35.9% of revenue, compared to $96.3 million or 33.8% of revenue in the third quarter 2017 and $67.3 million or 29% of revenue in the prior year quarter. The 210 basis point increase in gross profit margin was due primarily to continued improvements in product mix, combined with strong margin contribution from our Pericom business as well as the reduced impact of the KFAB closure. For the full year, gross profit was a record $356.8 million or 33.8% of revenue as compared to the $286.9 million or 30.5% in the prior year.

第四季的毛利為9,640 萬美元，佔營收的35.9%，而2017 年第三季的毛利為9,630 萬美元，佔營收的33.8%，去年同期的毛利為6,730 萬美元，佔營收的29%。毛利率成長 210 個基點主要是由於產品組合的持續改善，加上 Pericom 業務的強勁利潤貢獻以及 KFAB 關閉的影響減少。全年毛利達到創紀錄的 3.568 億美元，佔營收的 33.8%，而前一年為 2.869 億美元，佔營收的 30.5%。

GAAP operating expenses for the fourth quarter 2017 were $72.9 million or 27.2% of revenue and $64.3 million or 24% of revenue on a non-GAAP basis, which excludes $4.7 million of amortization of acquisition-related intangible asset expenses and $4 million of restructuring charges. This compares to GAAP operating expenses in the third quarter 2017 of $72.6 million or 25.5% of revenue and $63.9 million or 22.4% of revenue on a non-GAAP basis.

2017 年第四季的GAAP 營運費用為7,290 萬美元，佔營收的27.2%；以非GAAP 計算，營運費用為6,430 萬美元，佔營收的24%，其中不包括470 萬美元的收購相關無形資產攤銷費用和400 萬美元的重組費用。相較之下，2017 年第三季 GAAP 營運費用為 7,260 萬美元，佔營收的 25.5%；非 GAAP 營運費用為 6,390 萬美元，佔營收的 22.4%。

Looking specifically at selling, general and administrative expenses for the fourth quarter, SG&A was approximately $44.7 million or 16.7% of revenue. This compares to $43.5 million or 15.3% of revenue in the previous quarter and $39.1 million or 16.8% of revenue for the fourth quarter 2016. Investment in research and development for the fourth quarter was approximately $19.7 million or 7.3% of revenue. This compares to $20.4 million or 7.1% of revenue last quarter and $17.7 million or 7.6% of revenue in the fourth quarter 2016. Combined, SG&A plus R&D for the fourth quarter 2017, was $64.4 million or 24% of revenue, compared to $63.9 million or 22.4% of revenue in the previous quarter and $56.8 million or 24.5% of revenue in the fourth quarter 2016.

具體來看第四季的銷售、一般和管理費用，SG&A 約為 4,470 萬美元，佔營收的 16.7%。相較之下，上一季的營收為4,350 萬美元，佔營收的15.3%；2016 年第四季的營收為3,910 萬美元，佔營收的16.8%。第四季的研發投資約為1,970 萬美元，佔收入的7.3%。相較之下，上一季為2,040 萬美元，佔營收的7.1%；2016 年第四季為1,770 萬美元，佔營收的7.6%。2017 年第四季的銷售、行政管理費用加上研發費用合計為6,440 萬美元，佔營收的24%，而2016 年第四季的銷售費用為6,390 萬美元。佔上一季營收的 22.4%，5,680 萬美元，佔 2016 年第四季營收的 24.5%。

Total other income and expense amounted to approximately $2.7 million for the quarter, including a $1.3 million negative currency impact. Income before taxes and noncontrolling interest in the fourth quarter 2017 amounted to $20.8 million compared to $19.8 million last quarter and $2.6 million in the fourth quarter 2016.

本季其他收入和支出總額約為 270 萬美元，其中包括 130 萬美元的負面貨幣影響。 2017 年第四季稅前和非控股權益前收入為 2,080 萬美元，而上一季為 1,980 萬美元，2016 年第四季為 260 萬美元。

Turning to income taxes. Our effective income tax rates for the fourth quarter and full year 2017 were approximately 243.7% and 99.6%, respectively. Excluding the new tax reform impact of $45.9 million, our effective income tax rate would have been approximately 23% for the fourth quarter 2017 and approximately 26% for 2017.

轉向所得稅。我們2017年第四季和全年的有效所得稅率分別約為243.7%和99.6%。排除新稅制改革帶來的 4,590 萬美元影響，我們 2017 年第四季的有效所得稅率約為 23%，2017 年約為 26%。

GAAP net loss for the fourth quarter 2017 was $30.7 million or a loss of $0.62 per diluted share. The GAAP net loss included $45.9 million or a loss of $0.93 per diluted share in tax-related expenses not in our original guidance due to the recently passed Tax Reform Act. Excluding the tax law impact, net income would have been $15.2 million or $0.31 per share compared to GAAP net income of $14.5 million or $0.29 per diluted share in the third quarter 2017 and net income of $1.3 million or $0.03 per share in the fourth quarter 2016. The share count used to compute GAAP diluted EPS for the fourth quarter 2017 was 49.4 million shares. GAAP net loss for the full year 2017 was $1.8 million or a loss of $0.04 per diluted share, compared with net income of $15.9 million or $0.32 per diluted share in 2016. Excluding the tax law reform impact, 2017 represented our 27th consecutive year of profitability.

2017 年第四季 GAAP 淨虧損為 3,070 萬美元，攤薄後每股虧損 0.62 美元。由於最近通過的稅收改革法案，GAAP 淨虧損包括 4,590 萬美元或稀釋後每股 0.93 美元的稅務相關費用損失，這些費用未包含在我們最初的指導中。排除稅法影響，淨利潤將為1,520 萬美元或每股0.31 美元，而2017 年第三季GAAP 淨利為1,450 萬美元或稀釋每股0.29 美元，2016 年第四季淨利為130 萬美元或每股0.03 美元用於計算 2017 年第四季 GAAP 攤薄每股收益的股票數量為 4,940 萬股。 2017 年全年GAAP 淨虧損為180 萬美元，或稀釋後每股虧損0.04 美元，而2016 年淨利為1,590 萬美元，或稀釋後每股虧損0.32 美元。排除稅法改革的影響，2017 年是我們連續27 年獲利。

Fourth quarter 2017 non-GAAP adjusted net income was $21.6 million or $0.42 per diluted share, which excluded, net of tax, $3.8 million of noncash acquisition-related intangible asset amortization cost; $2.6 million of restructuring charges; and $45.9 million tax expense due to the tax law reform impact. This compares to non-GAAP adjusted net income of $22.6 million or $0.45 per diluted share last quarter, and $7.7 million or $0.15 per diluted share in the fourth quarter 2016. Non-GAAP adjusted net income for the full year 2017 was $69.1 million or $1.37 per diluted share compared to $38.4 million and $0.77 per diluted share in 2016.

2017 年第四季非 GAAP 調整後淨利為 2,160 萬美元，即稀釋後每股收益 0.42 美元，不包括稅後 380 萬美元的非現金收購相關無形資產攤銷成本； 260 萬美元的重組費用；由於稅法改革的影響，稅收支出為 4590 萬美元。相較之下，上一季非GAAP 調整後淨利為2,260 萬美元，即稀釋後每股收益0.45 美元，2016 年第四季為770 萬美元，即稀釋後每股收益0.15 美元。2017 年全年非GAAP 調整後淨利為6,910 萬美元，即1.37 美元稀釋後每股收益為 3,840 萬美元，2016 年稀釋後每股收益為 0.77 美元。

We have included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income, which provides additional details. Included in the fourth quarter 2017 GAAP net income and non-GAAP adjusted net income was approximately $3 million, net of tax, of noncash share-based compensation expense. Excluding share-based compensation expense, both GAAP diluted EPS and non-GAAP adjusted diluted EPS would have increased by an additional $0.06 per diluted share in the fourth quarter and $0.24 for the full year.

我們在收益報告中納入了 GAAP 淨利潤與非 GAAP 調整後淨利潤的調整表，其中提供了更多詳細資訊。 2017 年第四季的 GAAP 淨利潤和非 GAAP 調整後淨利潤約為 300 萬美元（稅後）、非現金股票補償費用。不包括基於股票的補償費用，GAAP 稀釋後每股收益和非 GAAP 調整後稀釋後每股收益第四季度每股額外增加 0.06 美元，全年每股額外增加 0.24 美元。

Cash flow generated from operations was $74.8 million for the fourth quarter and $181.1 million for the full year 2017. Both were at record levels. Free cash flow was $45.5 million for the fourth quarter, which included $29.3 million of capital expenditures and $70 million for the full year 2017, which included $111 million of CapEx. Net cash flow was a positive $2.6 million, including the paydown of approximately $57.8 million of long-term debt and $8.7 million for the share repurchase. Net cash flow for the full year 2017 was a negative $44 million, including the paydown of $159.9 million of long-term debt and the share repurchase.

2017 年第四季營運產生的現金流為 7,480 萬美元，2017 年全年營運產生的現金流為 1.811 億美元。兩者皆創歷史新高。第四季的自由現金流為 4,550 萬美元，其中包括 2,930 萬美元的資本支出，2017 年全年的自由現金流為 7,000 萬美元，其中包括 1.11 億美元的資本支出。淨現金流為正 260 萬美元，包括償還約 5,780 萬美元的長期債務和 870 萬美元的股票回購。 2017 年全年淨現金流為負 4,400 萬美元，其中包括償還 1.599 億美元的長期債務和股票回購。

Turning to the balance sheet. At the end of the fourth quarter, cash and cash equivalents plus short-term investments totaled approximately $208.4 million. Working capital was approximately $415.2 million. And long-term debt, including the current portion, was $268.1 million.

轉向資產負債表。截至第四季末，現金和現金等價物加上短期投資總計約2.084億美元。營運資金約 4.152 億美元。長期債務（包括當前部分）為 2.681 億美元。

At the end of the fourth quarter, inventory increased by approximately $5.1 million from the third quarter 2017 to approximately $217 million. The increase in inventory reflects a $21.8 million increase in finished goods, a $1.7 million increase in work in process and an $18.4 million decrease in raw materials. The increase in finished goods inventory is due to preparation for the Chinese New Year slowdown. Inventory days were 114 in the quarter compared to 102 days last quarter. At the end of the quarter, cash receivables were approximately $200 million, a decrease of $30.3 million from last quarter. AR days were 74 compared to 73 last quarter.

截至第四季末，庫存較2017年第三季增加約510萬美元，達到約2.17億美元。庫存的增加反映了成品增加了 2,180 萬美元、在製品增加了 170 萬美元以及原材料減少了 1,840 萬美元。產成品庫存增加是因為為農曆新年放緩做準備。本季庫存天數為 114 天，而上季為 102 天。截至本季末，應收現金約2億美元，較上季減少3,030萬美元。 AR 天數為 74 天，而上季為 73 天。

Capital expenditures for the fourth quarter were $29.3 million or 10.9% of revenue, and $111.2 million or 10.5% of revenue for the full year. As we projected, full year 2017 CapEx was above our target model of 5% to 9% of revenue, with the majority of expenditures related to newer, advanced packaging capacity expansion in our assembly test operations in China and to support the KFAB process transferred to SFAB 1, as well as our 8-inch capacity expansion in SFAB 2. We expect CapEx for 2018 to return to our target model of 5% to 9% of revenue. Depreciation and amortization expense for the fourth quarter was $24.5 million and $95.7 million for the full year 2017.

第四季資本支出為 2,930 萬美元，佔收入的 10.9%；資本支出為 1.112 億美元，佔全年收入的 10.5%。正如我們預測的那樣，2017 年全年資本支出高於我們佔收入5% 至9% 的目標模型，其中大部分支出與我們在中國組裝測試業務中更新、先進的封裝產能擴張有關，並支持KFAB流程轉移到SFAB 1，以及 SFAB 2 的 8 英吋產能擴張。我們預計 2018 年的資本支出將恢復到佔收入 5% 至 9% 的目標模式。第四季的折舊和攤提費用為 2,450 萬美元，2017 年全年的折舊和攤提費用為 9,570 萬美元。

Now turning to our outlook. For the first quarter of 2018, we expect better than typical seasonal results due to continued strength in our target end markets. Revenue is expected to range between $261 million and $277 million or down 2.8% to up 3.2%. At the midpoint, this is flat to fourth quarter and represents a 13.8% increase year-over-year. We expect GAAP gross margin to be 36%, plus or minus 1%. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 23.2% of revenue, plus or minus 1%. We expect interest expense to be approximately $3 million. Our income tax rate is expected to be 31%, plus or minus 3%. And shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 51 million. Not included in these non-GAAP estimates are purchase accounting adjustments of $3.8 million, after tax, for Pericom and previous acquisitions.

現在轉向我們的展望。由於我們的目標終端市場持續走強，我們預期 2018 年第一季的業績將優於典型的季節性表現。營收預計在 2.61 億美元至 2.77 億美元之間，即下降 2.8% 至成長 3.2%。中位數與第四季持平，年增 13.8%。我們預期 GAAP 毛利率為 36%，上下浮動 1%。非 GAAP 營運費用（即針對收購相關無形資產攤銷進行調整的 GAAP 營運費用）預計約為收入的 23.2%，上下浮動 1%。我們預計利息支出約為 300 萬美元。我們的所得稅稅率預計為31%，正負3%。用於計算第一季攤薄每股收益的股票預計約為5,100萬股。這些非 GAAP 估計中不包括 Pericom 和先前收購的 380 萬美元稅後收購會計調整。

With that said, I will now turn the call over to Emily Yang.

話雖如此，我現在將電話轉給艾蜜莉楊。

Thank you, Rick, and good afternoon. It's a pleasure to be joining you all today as Diodes' Vice President of Worldwide Sales and Marketing, and I look forward to meeting some of you in the coming months and quarters.

謝謝你，瑞克，下午好。很高興今天能夠以 Diodes 全球銷售和行銷副總裁的身份與大家見面，我期待在未來幾個月和幾個季度與你們中的一些人見面。

Let me begin my comments with a summary of the quarter. Fourth quarter revenue was down 5.9%, reflecting typical seasonality following 2 quarters of strong sequential growth of 8% last quarter and 12% in the second quarter. Due to tight supply, we focused on supporting immediate demand, resulting in our distributor POP being down 4.8%. We had record POS globally, up 3.7%, was record high both in Asia and North America. Channel inventory dropped by 2% quarter-over-quarter and is very clean and healthy.

讓我先對本季進行總結。第四季營收下降 5.9%，反映了典型的季節性因素，上季營收季增 8%，第二季季增 12%，連續兩季強勁成長。由於供應緊張，我們專注於支援即時需求，導致我們的經銷商 POP 下降了 4.8%。我們的全球 POS 成長了 3.7%，創下歷史新高，在亞洲和北美均創歷史新高。通路庫存季減 2%，非常乾淨健康。

Customer and design activity remained strong across all regions, positioning Diodes for continued growth in 2018. We also gained further traction with the Pericom product line, in particular in the computing market. We set revenue record in 5 product categories during the quarter, including MOSFET, battery management, digital power, interface and switch, while also continue our strong design win momentum in CMOS LDO, LED driver, hall sensors and connect ASIC. Going forward, we expect to make continued progress with design wins, new product introductions and margin expansion with new higher-value products.

所有地區的客戶和設計活動仍然強勁，這為 Diodes 在 2018 年的持續成長奠定了基礎。我們也透過 Pericom 產品線獲得了進一步的吸引力，特別是在計算市場。本季我們在 MOSFET、電池管理、數位電源、介面和開關等 5 個產品類別中創下了收入記錄，同時在 CMOS LDO、LED 驅動器、霍爾感測器和連接 ASIC 方面也繼續保持強勁的設計獲勝勢頭。展望未來，我們預計將在設計獲勝、新產品推出以及透過新的高價值產品擴大利潤率方面取得持續進展。

Turning to global sales in the fourth quarter. Asia represented 80% of the revenue; Europe, 11%; and North America, 9%. In term of our end markets, consumer represented 26% of the revenue; communication, 26%; industrial, 22%; computing, 18%; and automotive, 8% of the revenue.

轉向第四季的全球銷售。亞洲佔收入的80%；歐洲，11%；北美為 9%。就我們的終端市場而言，消費者佔收入的26%；溝通，26%；工業，22%；計算，18%；和汽車業，佔收入的8%。

Let me now provide more detail within each of the end markets. In the consumer market, we continue to gain strong traction from our hall sensor, CMOS LDO and switching products, as well as increasing design wins for AC/DC power supply controllers for battery chargers and adapter applications in the smart devices, including voice-enabled speakers. We've also secured a number of wins for our low dropout voltage regulators in highly integrated battery chargers for IoT applications. Ultra low IQ CMOS LDO are also gaining design-in momentum in IoT applications, like trackers.

現在讓我提供每個終端市場的更多細節。在消費市場，我們繼續從霍爾感測器、CMOS LDO 和開關產品中獲得強大的吸引力，以及智慧型裝置中電池充電器和適配器應用（包括語音功能）的交流/直流電源控制器的設計成果不斷增加揚聲器。我們的低壓差穩壓器在物聯網應用的高度整合電池充電器中也獲得了許多勝利。超低 IQ CMOS LDO 也在物聯網應用（例如追蹤器）中獲得設計動力。

In the communication market, we also have another quarter of solid design-in activity with our logic, TVS, MOSFET, CMOS LDO, switching, timing and connectivity products across multiple applications, including telecom gateways, routers, switches, set-top boxes, wireless devices and chargers especially in new wireless charging solutions. As a key focus for the coming year, we are working to expand our customer contact in high-end smartphones specifically. As an example, during the quarter, our 12-gigabit per second differential MUX with MIPI switches are being designed into smartphones to help multiplex MIPI port. Our chip offers extremely low insertion loss and minimal skew between the channels to enable fast switching between the ports.

在通訊市場，我們還有另一個季度的紮實設計活動，涉及多種應用的邏輯、TVS、MOSFET、CMOS LDO、開關、定時和連接產品，包括電信閘道、路由器、交換器、機上盒、無線設備和充電器，尤其是新的無線充電解決方案。作為來年的重點，我們正在努力擴大高階智慧型手機領域的客戶聯繫。例如，本季度，我們採用 MIPI 開關的每秒 12 Gb 差分多工器被設計到智慧型手機中，以幫助復用 MIPI 連接埠。我們的晶片提供極低的插入損耗和通道之間最小的偏移，以實現連接埠之間的快速切換。

For mobile communication applications, including charging of portable devices and wearables, Diodes launched several new TVS products for general panel surge protections. One in particular was a general protector from an active secure transmission for some major mobile devices, which resulted in an immediate design-in. Our low-voltage MOSFET product were also featured in this market space with two new CSP products for the applications, such as battery protection featuring high-power density in small footprint. Also new were a range of 6 new single-phase bridge rectifier devices, ranging from 1 amp to 3 amp. These innovative devices feature operate in ranges up to 1,000 volts in a very low profile, small footprint package and are also suitable for consumer and industrial LED lighting applications.

對於行動通訊應用，包括可攜式裝置和穿戴式裝置的充電，Diodes 推出了幾款用於通用面板突波保護的新型 TVS 產品。其中一個特別是針對一些主要行動裝置的主動安全傳輸的通用保護器，這導致了立即設計。我們的低壓 MOSFET 產品也在該市場領域佔據一席之地，其中兩款新的 CSP 產品適用於這些應用，例如在小尺寸中具有高功率密度的電池保護。另外還有一系列 6 種新型單相橋式整流器設備，電流範圍從 1 安培到 3 安培。這些創新元件的工作電壓高達 1,000 伏特，採用非常薄型、小尺寸封裝，也適用於消費性和工業 LED 照明應用。

For computing applications, we continue to see new design win activity for our signal integrity, interface, logic and LDO products. Signal integrity activity was led by our new ReDrivers for USB Type C connectors, combo ReDrivers of PCIe3, SATA3 and USB 3.0 in server and storage applications as well as ReDrivers for Display Port 1.4 applications. We secured several new wins for our CMOS LDO products, along with multiple new designs for our new interface products in server market. We also introduced our translating transceiver targeted at server and storage systems to provide level translation and buffer needs in the system.

對於運算應用，我們繼續看到我們的訊號完整性、介面、邏輯和 LDO 產品的新設計贏得活動。訊號完整性活動由我們用於 USB C 型連接器的新型 ReDriver、伺服器和儲存應用中的 PCIe3、SATA3 和 USB 3.0 組合 ReDriver 以及用於 Display Port 1.4 應用的 ReDrivers 主導。我們的 CMOS LDO 產品贏得了許多新勝利，同時我們的新介面產品在伺服器市場也獲得了許多新設計。我們還推出了針對伺服器和儲存系統的轉換收發器，以提供系統中的電平轉換和緩衝區需求。

Also, for computing applications, Diodes launched several TVS products, including a surge protector for Type C connectors, a quick charging application, as well as a low CJ TVS for USB 3.x and Thunderbolt 3.0 applications. In addition, we launched 13 100-volt to 150-volt Trench Schottky parts aimed at power supply applications in notebooks and servers that are also suitable for consumer application.

此外，針對運算應用，Diodes 推出了多款 TVS 產品，包括用於 C 型連接器的突波保護器、快速充電應用，以及用於 USB 3.x 和 Thunderbolt 3.0 應用的低 CJ TVS。此外，我們也推出了13款100伏至150伏溝槽肖特基器件，針對筆記型電腦和伺服器的電源應用，也適用於消費性應用。

For industrial applications, during the quarter, Diodes launched 12 60-volt to 100-volt MOSFET based on our Shielded Gate technology for applications such as power supply, charging and brushless DC motor applications. We also introduced 4 new additional devices in Diodes' recently-launched range of gate drivers ranging from 50 volts to 600 volts aimed at industrial motor driving. Industrial trend increasingly favor brushless DC motor due to their superior efficiency and compact size, and Diodes' small form factor products are ideally suited for this market. Complementing the 600-volt gate driver portfolio was Diodes' first 650-volt IGBT device, enabling Diodes to provide evaluation port and present a complete power stage for motor driving applications.

對於工業應用，本季度，Diodes 推出了基於我們的屏蔽閘極技術的 12 個 60 伏特至 100 伏特 MOSFET，適用於電源、充電和無刷直流馬達應用等應用。我們還在 Diodes 最近推出的閘極驅動器系列中推出了 4 種新的附加裝置，電壓範圍從 50 伏特到 600 伏特，旨在工業馬達驅動。由於無刷直流電機卓越的效率和緊湊的尺寸，工業趨勢越來越青睞無刷直流電機，而 Diodes 的小型產品非常適合該市場。 Diodes 的首款 650V IGBT 裝置是對 600V 閘極驅動器產品組合的補充，使 Diodes 能夠提供評估連接埠並為馬達驅動應用提供完整的功率等級。

Additionally, during the quarter, we continued to expand our LED lighting portfolio for the industrial market by adding a universal PWM dimmable buck converter for the connected and tunable LED lighting applications. In fact, key LED lighting consumers have realigned effort toward connected lighting, where our newly released parts are being used.

此外，在本季度，我們透過為連接和可調的 LED 照明應用添加通用 PWM 調光降壓轉換器，繼續擴展我們的工業市場 LED 照明產品組合。事實上，主要的 LED 照明消費者已經重新調整了對互聯照明的努力，其中使用了我們新發布的零件。

And lastly, in the automotive market, Diodes launched a number of new products for this fast-growing market segment from several significant product families, including MOSFET, bipolar, pre-biased transistors as well as linear LED drivers. Our focus and momentum in this market continues as we design in new products for applications such as infotainment, motor drive, advanced driving assistance systems. Additionally, our recently released family of Hall sensors are being designed-in for several motor drive applications. We also released a unipolar Hall sensor switch family for proximity and precision spacing for applications such as seat position, seatbelt detection, gearshift position and tailgate door positions. Once again, Diodes showed that gate MOSFET technology with a class-leading power packaging capability and 175-degree-C temperature rating drove significant customer qualifications and design-in activity across major automotive customers in Europe, U.S. and Asia. Finally, we also began sampling our first high-side IntelliFET device that is generating large consumer interest.

最後，在汽車市場，Diodes 針對這個快速成長的細分市場推出了多個重要產品系列的新產品，包括 MOSFET、雙極、預偏壓電晶體以及線性 LED 驅動器。隨著我們為資訊娛樂、馬達驅動、高級駕駛輔助系統等應用設計新產品，我們對這個市場的關注和動力仍在繼續。此外，我們最近發布的霍爾感測器系列專為多種馬達驅動應用而設計。我們還發布了單極霍爾感測器開關系列，用於座椅位置、安全帶檢測、換檔位置和後擋板門位置等應用的接近和精確間距。 Diodes 再次展示了具有一流功率封裝能力和 175°C 溫度額定值的閘極 MOSFET 技術，推動了歐洲、美國和亞洲主要汽車客戶的重要客戶資格認證和設計活動。最後，我們也開始對我們的首款高階 IntelliFET 裝置進行取樣，該元件引起了消費者的極大興趣。

In summary, Diodes closed out 2017 with record results, setting the stage for continued revenue growth and margin expansion in 2018. Our new product initiatives, combined with additional Pericom products, have proven to be consistent contributors to our strong results. As Dr. Lu mentioned, our focus going forward would be on key end market opportunities that includes automotive, industrial, high-end smartphones, IoT and high-end computing.

總而言之，Diodes 以創紀錄的業績結束了2017 年，為2018 年的持續收入成長和利潤率擴張奠定了基礎。事實證明，我們的新產品計劃與其他Pericom 產品相結合，為我們的強勁業績做出了持續貢獻。正如陸博士所提到的，我們未來的重點將是關鍵的終端市場機會，包括汽車、工業、高階智慧型手機、物聯網和高階運算。

With that, I'm opening the floor to questions. Operator?

現在我開始提問。操作員？

(Operator Instructions) Our first question comes from Tristan Gerra with Baird.

（操作員說明）我們的第一個問題來自 Tristan Gerra 和 Baird。

Could you talk about the inventory outlook for Diodes into the first half of this year? Do you expect to further increase internal inventory days? And also, when should we expect the POP to exceed POS as you start replenishing some of the larger OEM demand as you undershipped real end demand in Q4?

您能談談 Diodes 今年上半年的庫存前景嗎？您預計會進一步增加內部庫存天數嗎？而且，當您開始補充一些較大的 OEM 需求（因為您在第四季度的實際最終需求不足）時，我們應該何時預期 POP 會超過 POS？

This is Emily Yang. I think overall, we're seeing strong POS results, as I reported earlier. So we actually see a year-to-year significant growth from our POS result. For the inventory point of view -- and we'll continue to really focus on supporting the immediate needs from the customers and we are strategically expanding our capacity as well. So for the inventory position, the number of days, we'll definitely monitor very closely.

這是艾米麗·楊。我認為總體而言，正如我之前報導的那樣，我們看到了強勁的 POS 業績。因此，我們實際上看到 POS 業績逐年顯著成長。從庫存的角度來看，我們將繼續真正專注於支援客戶的即時需求，並且我們也在策略性地擴大我們的產能。因此，對於庫存狀況、天數，我們肯定會非常密切地監控。

I mentioned before is we're going to have the Chinese New Year in 1Q. In this Chinese New Year, we have no choice but a lot of the workers in China are going to go home. And therefore, we're strategically building up some inventory. We actually start our Chinese New Year action, which is changing 4-shift to 2-shift operation, start from December last year. And 4-shift operation means they're working 12 hours and 4 day a week and then rest 3 days. Another operation will be working 3 day and 4 days alternate. And 4 -- 2-shift operation means working 6 days, rest 1 day, every -- all the teams. So this is the way we gear up to prepare for the Chinese New Year. Typically, it was done during the Chinese New Year when we don't have enough people. But this time, because the market is tight -- or the market is good, capacity is tight, I decided to take in portion of a very bottleneck operation to this 2-shift operation, start from December 1 last year. And therefore, we prepare and build us some inventory, finish good inventory, prepare for Chinese shutdown and to stock for (inaudible) customer who really face very tight support issues. So -- and -- so anyway, the key themes are POS is very, very strong and POP -- POS is actually better than POP, and we do have some inventory prepared for the Chinese New Year to support the customer need.

我之前提到過，我們將在第一季過中國新年。今年農曆新年，我們別無選擇，但中國很多工人要回家。因此，我們正在策略性地建立一些庫存。我們其實從去年12月開始就開始了春節行動，將四班制改為兩班制。四班制意味著他們每週工作 4 天，工作 12 小時，然後休息 3 天。另一項手術將交替工作 3 天和 4 天。而4-2班制意味著所有團隊工作6天，休息1天。這就是我們為農曆新年做準備的方式。通常，這是在農曆新年期間進行的，當時我們沒有足夠的人手。但這次，因為市場緊張——或者市場好，產能緊張，我決定把一部分非常瓶頸的操作放到這個兩班制操作中，從去年12月1日開始。因此，我們準備並建立一些庫存，完成良好的庫存，為中國停產做好準備，並為真正面臨非常緊張的支持問題的（聽不清楚）客戶儲備庫存。所以——而且——所以無論如何，關鍵主題是 POS 非常非常強大，而 POP——POS 實際上比 POP 更好，而且我們確實為農曆新年準備了一些庫存來支持客戶需求。

Okay. And then given the tightness that you're experiencing currently and, as you've mentioned, the Chinese New Year's impact on production, what's the time frame in 2018 where you expect lead times to stop coming down and where you're expecting to have supply catch up with demand?

好的。然後，考慮到您目前所經歷的緊張狀況，以及正如您所提到的，農曆新年對生產的影響，您預計2018 年交貨時間將在什麼時間範圍內停止下降，以及您預計的交貨時間將達到多少？供應趕上需求嗎？

Well, I think I mentioned that before. I see this time, the tight situation is not going to loosen up in near futures, okay. And so far, we still see very tight in first half of this year. And now, visibility for the second half is not clear, but we do work in on putting up some needed capacity to support the growth of this year. And -- but that really -- majority of the -- we need to put the capacity is really because we'll continue gaining the market share. I think during the speech, you notice we gained the market share in all the regions, Asia, North America and Europe. And we actually have the record revenue again this year for all our end markets, especially for automotive. You can see now we continue 2 quarters now at 8% of our revenue. So we are working, continue toward to our goal this year to 9% of our revenue. So all the market gain and all the growth, we do need to prepare the capacity for it, okay. So we -- I don't think that capacity expansion from us going to be overcapacity because I -- so far, I still see a very strong market growth at least for Diodes.

嗯，我想我之前提到過這一點。我看這次緊張的局勢短期內是不會鬆脫的吧。到目前為止，我們認為今年上半年仍然非常緊張。現在，下半年的前景尚不清楚，但我們確實致力於提供一些必要的能力來支持今年的成長。但實際上，我們需要投入產能的大部分實際上是因為我們將繼續獲得市場份額。我想在演講中，你注意到我們在所有地區、亞洲、北美和歐洲都獲得了市場份額。事實上，今年我們所有終端市場的收入再次創下紀錄，尤其是汽車領域。您可以看到，我們現在已經連續 2 個季度保持收入的 8%。因此，我們正在努力，繼續實現今年收入佔 9% 的目標。因此，所有的市場收益和所有的成長，我們確實需要為此做好準備，好吧。因此，我認為我們的產能擴張不會導致產能過剩，因為到目前為止，我仍然看到至少 Diodes 的市場成長非常強勁。

Our next question comes from Gary Mobley with Benchmark.

我們的下一個問題來自 Benchmark 的 Gary Mobley。

Hope it's not too early for you over there in Taiwan.

希望台灣那邊的你還不算太早。

Yes.

是的。

So I'm curious to know if we should think of the 36% gross margin you're predicting for Q1 as the new base of which you can further expand gross margin as you get into your seasonally strong second and third quarters of fiscal year '18.

因此，我很想知道我們是否應該將您預測的第一季毛利率 36% 視為新的基礎，當您進入季節性強勁的第二季和第三季財年時，您可以進一步擴大毛利率。 18.

Well, I typically don't get the forecast beyond the current -- the first quarter or beyond the current quarter. But so far, we see the market, at least the first half, is still very strong. And therefore, you can assume that. You can assume that but you can see now, right, in 4Q, we were running 35.9%, which is almost 36%; and 1Q, we guide 36%. And actually, if we continue the seasonality of 2Q and -- which typically, seasonality to growth, then if we have even -- if we have the growth, then yes, the GP will increase. And second thing is we are ramping up SFAB 1 to support the KFAB shutdown. And you remember, we shut down KFAB November -- mid of November on schedule. And we are now installing the equipment from KFAB, and the schedule is everything should be -- start to qualify online all of the equipment from KFAB install in SFAB 1 should be by end of the -- end of this month, we should be -- everything ready and we start to ramp. And I think we said if we start to ramp, then we have more output, lower cost from SFAB 1 and that at the same time, I think the 8-inch fab in the -- well, okay. I'll stop. Just the KFAB shutdown, we all state that synergy will be $10 million to $15 million, start of 1Q. So you -- if you see it continue that area, yes, the GP will continue to improve. And then the 8-inch fab, I think we had mentioned we'll ramp it to 3,000 wafers by end of this quarter and, by the end of the year, go to about 8,000 to 10,000. And that ramp will improve the GP, too. So overall, if the market continues the strength, Diodes will continue gaining the market share, our assembly cost for underloaded shipping not exist and that GP will be good. And then with the SFAB 1 synergy and with SFAB 2 8-inch ramp, I feel, okay -- like I said, I'm not making the forecast here, but 36%, and it should be continue and improve, too.

嗯，我通常不會得到當前第一季或當前季度之後的預測。但到目前為止，我們看到市場，至少上半年，仍然非常強勁。因此，你可以這樣假設。你可以假設，但你現在可以看到，對吧，在第四季度，我們的運行率為 35.9%，幾乎是 36%；第一季度，我們指引 36%。實際上，如果我們繼續第二季的季節性——通常是成長的季節性，那麼如果我們有成長——如果我們有成長，那麼是的，GP將會增加。第二件事是我們正在加強 SFAB 1 的力度以支持 KFAB 關閉。你還記得，我們​​在 11 月——11 月中旬——按計劃關閉了 KFAB。我們現在正在安裝 KFAB 的設備，時間表應該是——開始在線鑑定所有來自 KFAB 的設備安裝在 SFAB 1 應該在——月底，我們應該—— - 一切準備就緒，我們開始加速。我想我們說過，如果我們開始增加產量，那麼我們就會從 SFAB 1 獲得更多的產量和更低的成本，同時，我認為 8 英寸晶圓廠 - 好吧，好吧。我會停下來。就 KFAB 關閉而言，我們都表示，從第一季開始，協同效應將為 1000 萬至 1500 萬美元。所以你——如果你看到它繼續這個領域，是的，全科醫生將繼續改進。然後是 8 吋晶圓廠，我想我們已經提到過，我們將在本季末將其產能增加到 3,000 塊晶圓，到今年年底，將增加到大約 8,000 到 10,000 塊。而且這個坡度也會提高 GP。因此，總的來說，如果市場繼續走強，Diodes 將繼續獲得市場份額，我們不存在輕載運輸的組裝成本，並且 GP 將會很好。然後，透過 SFAB 1 的協同作用和 SFAB 2 8 英寸坡道，我覺得，好吧——就像我說的，我不是在這裡做出預測，而是 36%，而且也應該繼續並改進。

Okay, all right. And Rick, can you share with us your goal in reducing debt for 2018 based on your cash flow assumptions and whatnot? And can you share with us your outlook for the tax rate for the year under the new tax plan?

好吧，好吧。 Rick，您能否根據您的現金流假設等與我們分享您在 2018 年減少債務的目標？您能否與我們分享您對新稅收計畫下本年度稅率的展望？

Sure. So from a debt perspective, since we bought Pericom, we paid down about $200 million. We paid $160 million last year. And so I don't have a detailed forecast of how much we're going to pay down. It depends on the investment we need to make in certain assembly test and wafer fab places. So it's going to be in the $100 million range, would be my guess. From a tax perspective, we guided 31%. The issue here is not the lower tax rate. The issue has to do with 3 parts of the tax code. There's a part of the code called guilty and it's basically -- if a non-U.S. sub earns over 10% of its assets, the U.S. government taxes it anyway. There's a disallowance of interest deduction. And then Taiwan adjusted their tax rate from 17% to 20%. So those 3 pieces are included in that 31%. So we're going to have to go do some things, make some changes in the structure and also the way we do business processes to make it go down. And so we're in the process of doing that. I'm not going to give you a rate for the rest of the year because we're still studying it and we're still looking at what impact we can have.

當然。所以從債務角度來看，自從我們收購 Pericom 以來，我們已經還清了大約 2 億美元。去年我們支付了 1.6 億美元。因此，我無法詳細預測我們將支付多少費用。這取決於我們需要在某些組裝測試和晶圓廠進行的投資。所以我猜測它的價格將在 1 億美元範圍內。從稅務角度來看，我們指導為31%。這裡的問題不是較低的稅率。該問題與稅法的三個部分有關。該準則中有一部分被稱為“有罪”，基本上是——如果非美國子公司的收入超過其資產的 10%，美國政府無論如何都會對其徵稅。不允許扣除利息。隨後台灣將稅率從17%調整為20%。所以這 3 件作品包含在 31% 中。因此，我們將不得不做一些事情，對結構以及業務流程的方式進行一些改變，以使其下降。我們正在這樣做。我不會給你今年剩餘時間的利率，因為我們仍在研究它，我們仍在考慮我們可以產生什麼影響。

Got you, okay, all right, appreciate that.

明白了，好吧，好吧，謝謝。

Let me add on this one. If you look at our debt, $250 million...

讓我補充一下這一點。如果你看看我們的債務，2.5 億美元...

$268 million.

2.68 億美元。

$268 million, and our cash is at almost $200 million.

2.68 億美元，我們的現金接近 2 億美元。

$200 million.

2億美元。

Okay. So we should able to bring more money back plus the money we make for operations to pay off the debt, okay. So my aggressive plan is hoping by end of next year, try to pay off our debt. Now we may not be able to do it, but if this will go down to -- the cash needs to be much more than the debt. That's the point.

好的。所以我們應該能夠帶回更多的錢，再加上我們為償還債務而運營的錢，好吧。所以我的積極計劃是希望到明年年底，盡力還清我們的債務。現在我們可能無法做到這一點，但如果這歸結為——現金需要比債務多得多。這才是重點。

All right, okay, don't make any more acquisitions.

好吧，好吧，不要再進行收購了。

Well, that's a different story, right. Gary, if our net operating -- acquisition...

嗯，那是一個不同的故事，對吧。加里，如果我們的淨營運——收購…

All bets are off.

所有的賭注都落空了。

Then whatever we talk -- are talking about is off. But I'm still -- today, I don't have very obvious one under the radar screen yet, okay. So -- but the goal is really try to use that tax to a very minimum and have more cash against the debt.

那麼我們所談論的一切就都結束了。但我仍然——今天，我在雷達屏幕下還沒有非常明顯的一個，好吧。所以，但我們的目標實際上是嘗試將稅收降至最低限度，並用更多現金來償還債務。

Our next question comes from Shawn Harrison with Longbow Research.

我們的下一個問題來自長弓研究中心的肖恩·哈里森。

This is Gausia Chowdhury on behalf of Shawn. Can you remind us of what the normal seasonality is for the first quarter with Pericom? And then any color that you could provide regarding the end markets. Which ones would be the best in the first quarter and 2018 aside from automotive, please?

我是高西亞·喬杜里，代表肖恩。您能否提醒我們 Pericom 第一季的正常季節性是什麼？然後是您可以提供的有關終端市場的任何顏色。請問除了汽車產業之外，第一季和 2018 年哪些產業最好？

Okay. Let me give the answer first, okay. This seasonality, we call it, is 1Q, we were down from 4Q previous year, about 5% to 10%. That is a typical. And then second quarter typically grow 5% to 10%; and then third quarter, another 5%; and then fourth quarter, typically down 3% to 5%. That is the typical seasonality. But this year, really, there are 2 things. One is we really continue gaining the market share. Second, the market is still very good for us, at least the markets we participate. Therefore, we are able to guide the -- our 1Q from (inaudible) period is spread from the 4Q. And so that is better than seasonality these quarters, okay. Now if you are asking which market, for us, we almost see each market is very good; for example, computing, due to the Pericom acquisition and Pericom products, very strong, and we -- Diodes products, actually, one notch higher. And therefore, their computing for us started getting quite good. And automotive, I don't [have many to say]. Industrial, we're still quite strong. And even the communication, since we focus on high-end form of smartphones and -- that actually give us a very good growth in that area okay. And that's on communication. On consumer, we focus on IoT and different IoT pop up in different applications. So if you look at Diodes, we almost -- that's one. We're saying we gain the market share. We grow at record revenue on all different market segments. It is because the growth for Diodes in all the end markets. So if you see we grow in record revenue in all the regions and markets, then all the end markets will participate.

好的。我先給答案，好。我們稱之為季節性，即第一季度，比去年第四季度下降了約 5% 至 10%。這是一個典型。然後第二季通常會成長 5% 到 10%；然後第三季又增加了 5%；然後是第四季度，通常會下降 3% 到 5%。這就是典型的季節性。但今年，確實有兩件事。一是我們確實繼續獲得市場佔有率。第二，市場對我們來說還是非常好的，至少是我們參與的市場。因此，我們能夠引導──我們的第一季（聽不清楚）時期是從第四季開始的。所以這比這些季度的季節性要好，好吧。現在如果你問哪個市場，對我們來說，我們幾乎看到每個市場都非常好；比如說計算，由於Pericom的收購，Pericom的產品非常強大，而我們——Diodes的產品，實際上高了一個檔次。因此，他們對我們的計算開始變得相當好。至於汽車，我沒有[有很多話要說]。工業方面，我們還是很強的。甚至是通信，因為我們專注於高端智慧型手機，這實際上讓我們在該領域取得了非常好的成長。這就是溝通。在消費者方面，我們專注於物聯網，不同的應用會出現不同的物聯網。所以如果你看看 Diodes，我們幾乎——就是這樣。我們說我們獲得了市場份額。我們在所有不同細分市場的營收均創歷史新高。這是因為 Diodes 在所有終端市場的成長。因此，如果您看到我們在所有地區和市場的收入都創紀錄地成長，那麼所有終端市場都會參與其中。

Okay. And then can you break down the components behind the gross margin improvement? Just roughly how much was it between Pericom versus mix versus the KC fab?

好的。那麼您能分解一下毛利率改善背後的組成部分嗎？ Pericom 與 mix 與 KC 晶圓廠之間的差距大約是多少？

The gross margin contribution?

毛利率貢獻？

No, with the impact, which of those individual pieces was, Pericom (inaudible). We don't have that. We don't disclose that.

不，從影響來看，這些單獨的作品中哪一個是 Pericom（聽不清楚）。我們沒有那個。我們不透露這一點。

Yes, we don't disclose. But we do know that before we acquired Pericom, Pericom gross margin is very high. There are 2 market segments, okay. One is a crystal, an oscillator called (inaudible) called FCP, frequency controlled product. That is slightly to do margin somewhere around 30-something percent. And their IC portion of the Pericom business is very good. It's in 50%, 60% GPs. And when Diodes take over, we put a lot of effort to increase the market share in that IC area. And IC, I think if you're reading through Emily's speech, like ReDrivers and like...

是的，我們不透露。但我們確實知道，在我們收購 Pericom 之前，Pericom 的毛利率非常高。有兩個細分市場，好。一種是晶體，一種稱為（聽不清楚）稱為 FCP 的振盪器，頻率控制產品。利潤率約為 30% 左右。 Pericom 業務中的 IC 部分非常好。 50%、60% 的全科醫生都有這種情況。當 Diodes 接手後，我們投入了大量精力來增加該 IC 領域的市場份額。 IC，我想如果你正在閱讀 Emily 的演講，像是 ReDrivers 之類的…

(inaudible) MUX.

（聽不清楚）多工器。

(inaudible) MUX. And those, it's really going up quite well, and USB Type C area. So if you look at -- Pericom had very strong product portfolio, bring us one step higher from PC to server to data center. And those is -- are very good, high GP type of products, and their growth is better than other areas. And so this is how we helped Diodes to improve the GP and in the computing area to gain the market share, okay. Emily, you can...

（聽不清楚）多工器。這些，USB Type C 領域的發展確實非常好。因此，如果你看看 Pericom 擁有非常強大的產品組合，讓我們從 PC 到伺服器再到資料中心更上一層樓。這些都是非常好的、高 GP 類型的產品，它們的成長比其他領域更好。這就是我們幫助 Diodes 改進 GP 並在計算領域獲得市場份額的方式，好吧。艾米麗，你可以...

I think on top of that, we continue to focus expanding our customer contacts, gaining the market share, focused really on the higher-value products and provide a higher value to the customers. So we believe this strategy and focus will continue to enable Diodes' growth in the margin expansion area.

我認為最重要的是，我們繼續致力於擴大客戶聯繫，獲得市場份額，真正專注於更高價值的產品，並為客戶提供更高的價值。因此，我們相信這項策略和重點將繼續促進 Diodes 在利潤率擴張領域的成長。

Okay, great. And one last clarification, if I may. The KFAB closure synergy, did I hear correctly that you said you'll start seeing it at the end of this quarter? And would it be back-half-weighted? Or how should we think about the weighting through the year?

好的，太好了。如果可以的話，還有最後一點澄清。 KFAB 關閉協同效應，我沒聽錯吧，你說你會在本季末開始看到它？它會是後半加權嗎？或者我們應該如何考慮全年的權重？

Yes. So the -- we've said all along that the impact is going to be between $10 million and $15 million, and that's based on the lower cost associated with SFAB 1 output versus KFAB. And so you're going to see that impact as KFAB -- as SFAB 1 ramps up. And as Dr. Lu said, we're just going to start that in March. So it will be moved through the quarters as they increase production.

是的。因此，我們一直說過，影響將在 1000 萬至 1500 萬美元之間，這是基於 SFAB 1 產出相對於 KFAB 的較低成本。因此，隨著 KFAB 和 SFAB 1 的增強，您將看到這種影響。正如盧博士所說，我們將於三月開始。因此，隨著產量的增加，它將在各個季度內轉移。

Yes, that's synergy -- actually, let me put this. Number one, SFAB has better yield, better performance than KFAB. Number two, the cost is low. And number three, now, it's capacity is actually increased, okay, because originally, you have KFAB -- SFAB capacity is limited. But now, we put in KFAB equipment in SFAB and boost SFAB capacity one notch higher. And the last one is when you combine 2 fabs into 1, that utilization actually -- because before we shut it down, those are running 70%, 80%. Now after one go away, the other one, even at higher capacity due to in stock KFAB equipment, we still worked at running somewhere around 95% utilization in SFAB with higher capacities. So based on that, we're confident our synergy from the combined 2 fabs should be $10 million to $15 million.

是的，這就是協同作用——實際上，讓我這麼說。第一，SFAB 比 KFAB 具有更高的產量和更好的性能。第二，成本低。第三，現在，它的容量實際上增加了，好吧，因為最初，你有 KFAB - SFAB 容量是有限的。但現在，我們在 SFAB 引進了 KFAB 設備，將 SFAB 產能提高了一個檔次。最後一個是當你將 2 座晶圓廠合併為 1 座時，實際上利用率很高——因為在我們關閉它之前，這些晶圓廠的運行率為 70%、80%。現在，在一台設備消失後，另一台設備消失，即使由於 KFAB 設備庫存而導致產能更高，我們仍然致力於在產能更高的 SFAB 中實現 95% 左右的利用率。因此，基於此，我們相信合併後的兩家晶圓廠的協同效應應為 1,000 萬至 1,500 萬美元。

Our next question comes from Edgar Roesch with Sidoti & Company.

我們的下一個問題來自 Sidoti & Company 的 Edgar Roesch。

So I joined a little late. I know you gave some commentary about automotive, but I wanted to understand something about that end market. As you have success there, does the qualification process get shorter or, in any way, easier for Diodes?

所以我加入的有點晚了。我知道您對汽車發表了一些評論，但我想了解有關該終端市場的一些資訊。當您在那裡取得成功時，對於 Diodes 來說，資格認證過程是否會變得更短或更容易？

The qualification is not going to be shorter, okay, especially the new spend they put it up for the copper wires. The qualification is even tougher, okay. But don't forget we started this investment or this focus back to 2013. And I think I make that statement several times in different -- with the different investors we're talking about. In 2013, I started to focus on automotive drive, and 3% of our revenue in 2013 coming from automotive; and 4%, 2014; 5%, 2015, and going up. And it's the reason we are able to grow like 20%, 30% a year. It's due to gradually (inaudible) automotive part ramping up to production. So you are going to see an even higher speed of the growth later on because more and more product is ready to ramp, okay. So that we can time the ramp to not getting shorter. And many fab is more copper, especially for the 30 type of product -- for the 30 type of system, it is making tougher. But virtually, we take this action, where it was before to where is now. And therefore, it enable us to continue a very fast speed of the growth.

資格不會更短，好吧，尤其是他們為銅線投入的新支出。資格就更嚴格了好嗎。但不要忘記，我們從 2013 年就開始了這項投資或這一重點。我想我已經在不同的場合多次發表過這樣的聲明——我們正在談論的不同投資者。 2013年我開始關注汽車驅動，2013年我們收入的3%來自汽車； 4%，2014 年； 5%，2015 年，而且還在上升。這就是我們能夠每年成長 20%、30% 的原因。這是由於汽車零件逐漸（聽不清楚）投入生產。因此，稍後您將看到更快的增長速度，因為越來越多的產品已準備好投入使用，好吧。這樣我們就可以安排斜坡的時間，使其不會變短。而且許多晶圓廠更多的是銅，特別是對於30類型的產品——對於30類型的系統來說，它的製造更加艱難。但事實上，我們採取了這個行動，從以前的地方到現在的地方。因此，它使我們能夠繼續保持非常快的成長速度。

And as a follow-up, Dr. Lu, how intensive are packing innovations in winning business there? Is that -- I know, obviously, quality is a big factor, but you guys use packaging innovations to win a lot of business. Is that as intense on the automotive side? Or is it more standardized?

盧博士接著問，為了贏得業務，包裝創新的強度有多大？我知道，顯然，品質是一個重要因素，但你們利用包裝創新贏得了許多業務。汽車方面的情況也如此激烈嗎？還是更加標準化？

Yes, especially the power package. I feel like I've been talking about Diodes' focus on 2 directions. One is power packaging have smaller but have higher energy delivery, power efficiency. So power package is one direction area. Another area is small geometry getting smaller and smaller and -- like CSP, like DDFN in both direction. And so for the powertrain area of automotive, yes, it's that area we get in our power packaging, our assembly. We're getting there. And obviously, like you said, Diodes is -- have a very good packaging capability. Therefore, our quality can -- our own manufacturing can pass the audit of all the automotive company. All the automotive company, before they're really using high volume of your product, they need to audit our facility. And our packaging site, our CIP SAP and even at Neuhaus which is in Europe, they all pass automotive audit. So those is the one enable us to enter into automotive and highly grow in the market.

是的，尤其是電源套件。我覺得我一直在談論 Diodes 的重點在兩個方向。一是電源封裝尺寸較小，但具有更高的能量傳輸、電源效率。所以功率封裝是一個方向領域。另一個領域是小幾何形狀變得越來越小——就像 CSP，就像雙向的 DDFN。因此，對於汽車動力總成領域，是的，這就是我們在動力包裝、組裝中所涉及的領域。我們快到了。顯然，正如您所說，Diodes 擁有非常好的封裝能力。所以我們的品質可以——我們自己的製造可以通過所有汽車公司的審核。所有汽車公司在真正大量使用您的產品之前，都需要審核我們的設施。我們的包裝工廠，我們的CIP SAP，甚至在歐洲的Neuhaus，它們都通過了汽車審核。因此，這些是我們進入汽車領域並在市場上實現高度成長的關鍵。

And on top of that, I think we're also driving our technology improvement. And also, with connected cars, we're definitely seeing a compact expansion crossing to higher technology level. So we see significantly Pericom contacts with a higher technology expanding into this area. So I think what Dr. Lu mentioned over the years, we feel a very strong pipeline from the demand creation point of view. We believe with our technology, our packaging technology improvement will really enable us to continue to grow in the segment.

最重要的是，我認為我們還在推動技術改進。而且，對於連網汽車，我們肯定會看到跨越更高技術水平的緊湊擴展。因此，我們看到 Pericom 與更高技術的接觸顯著擴展到這一領域。所以我認為盧博士多年來提到的，從需求創造的角度來看，我們感受到了一個非常強大的管道。我們相信，憑藉我們的技術，我們的封裝技術改進將真正使我們能夠在該領域繼續成長。

Yes. This connected car or infotainment, all those Pericom products can bring Diodes products into that area.

是的。對於連網汽車或資訊娛樂系統，所有 Pericom 產品都可以將 Diodes 產品帶入該領域。

Yes.

是的。

Okay. And then one other question. I know you don't give a lot on products category, whether power semis or connectivity and timing or where your strength is coming from, but could you -- ostensibly, power semis was a good business in 2017. And do you see that as a strength again in '18? Could you -- could you give us a little bit of color on categories?

好的。然後還有一個問題。我知道您並沒有對產品類別給出太多信息，無論是功率半導體還是連接性和時序，或者您的優勢來自何處，但是您可以嗎- 表面上看，功率半導體在2017 年是一項不錯的業務。您是否認為這一點18年再次強勢？您能為我們提供一些有關類別的資訊嗎？

Yes, definitely. Connectivity product, it really covers a lot of PCI Express, we call the package switch, basically expanding PCIe ports for different applications. We're definitely seeing a very strong adoption rate, which we just mentioned a little bit earlier, even into the automotive segment, right. PCIe, which covers a lot of high-speed muxing technologies from Pericom, we're also seeing that being adapted in multiple market segments. I think the other strong area is actually timing, and timing really covers both from the clock IC point of view as well as frequency controls, which usually people are familiar with crystals and crystal oscillators. And we believe with the leverage that we have with the strong Diodes leading position across multiple segments that we can actually leverage and cross-selling this kind of product into our key customers' area and key end market focus, including automotive, industrial, IoT applications, high-end computing as well as high-end smartphone areas. So we do see a lot of synergies to leverage between the product lines within Diodes' product families.

當然是。連接產品，它確實涵蓋了許多PCI Express，我們稱之為封裝交換機，基本上為不同的應用擴展了PCIe連接埠。我們確實看到了非常高的採用率，我們剛才提到過，甚至在汽車領域也是如此，對吧。 PCIe 涵蓋了 Pericom 的許多高速多路復用技術，我們也看到它在多個細分市場中得到了應用。我認為另一個強領域實際上是時序，時序實際上涵蓋了時脈 IC 的角度以及頻率控制，這通常是人們熟悉的晶體和晶體振盪器。我們相信，憑藉 Diodes 在多個領域的強大領先地位，我們實際上可以利用這種產品並將其交叉銷售到我們的主要客戶領域和關鍵終端市場重點，包括汽車、工業、物聯網應用、高端運算以及高階智慧型手機領域。因此，我們確實看到 Diodes 產品系列內的產品線之間存在許多協同效應。

Well, as well as -- for example, USB Type C and power delivery, we actually, from different group, chose this area. Pericom is leading in the USB Type C type of product. But if you look at Diodes portion from BCD acquisition, AC-to-DC, they are focused on the power -- Type C. With Diodes, we have our product in the Type C. And from the power delivery point of view, our MOSFET is very strong in that area. So now when you combine BCD's tech knowledge, AC-to-DC charger, that technology, one side of the cable, then you're talking about how Pericom is in the other side of the cable. And the -- those MOSFETs is old, those side of the cables. We spend on very strong position to address the Type C power delivery, that kind of thing. So...

嗯，例如，USB Type C 和電力傳輸，我們實際上來自不同的團隊，選擇了這個領域。 Pericom 在 USB Type C 類型的產品方面處於領先地位。但是，如果您查看BCD 採集（AC-to-DC）中的Diodes 部分，您會發現他們專注於電源——C 型。對於Diodes，我們的產品屬於C 型。從電力傳輸的角度來看，我們的產品MOSFET 在這方面非常強大。因此，現在當您將 BCD 的技術知識、交流轉直流充電器、該技術、電纜的一側結合起來時，您就會談論 Pericom 在電纜另一側的情況。那些 MOSFET 是舊的，位於電纜的那一側。我們在解決 Type C 電力傳輸等問題上投入了非常強大的資金。所以...

Right. One of the product actually also extremely strong in this kind of application or protocol is actually our signal integrity product lines. So we do see very strong momentums in Type C, in PCIe, infotainment, different areas that we see picking up activities. So we're very happy with that and we (inaudible) believe that will support our future growth.

正確的。實際上，在此類應用或協議中也非常強大的產品之一實際上是我們的訊號完整性產品線。因此，我們確實看到了 Type C、PCIe、資訊娛樂等不同領域的強勁勢頭，我們看到這些領域正在蓬勃發展。所以我們對此非常滿意，我們（聽不清楚）相信這將支持我們未來的成長。

Yes. (inaudible) too much detail on the product portfolio is because Diodes plus Pericom, we have so much -- so many products, so very difficult to just talking about one area. So I'll typically just say we gain the market share. But if you (inaudible), we do have a lot of product portfolio to cover different end market and different system solutions.

是的。 （聽不清楚）產品組合的細節太多，因為 Diodes 加上 Pericom，我們有太多的產品，所以很難只談論一個領域。所以我通常只會說我們獲得了市場份額。但如果您（聽不清楚），我們確實有很多產品組合來涵蓋不同的終端市場和不同的系統解決方案。

Did we answer your question?

我們有沒有回答你的問題？

Did that answer your question?

這回答了你的問題嗎？

I don't see any (inaudible)

我沒有看到任何（聽不清楚）

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back over to Dr. Lu for closing remarks.

謝謝。目前我不會再提出任何問題。我想將電話轉回給盧博士做總結發言。

Okay. Thank you for your participation on today's call. Operator, you may now disconnect.

好的。感謝您參加今天的電話會議。接線員，您現在可以斷開連接了。

Thank you. Ladies and gentlemen, this concludes today's conference. Thanks for your participation. Have a wonderful day.

謝謝。女士們、先生們，今天的會議到此結束。感謝您的參與。祝你有美好的一天。