Ecarx Holdings Inc. (ECX) 2024 Q2 法說會逐字稿

Good morning, and welcome to Ecarx' second quarter 2024 earnings conference call. With me today from Ecarx are Chairman and Chief Executive Officer, Ziyu Shen; Chief Operating Officer, Peter Cirino; and Chief Financial Officer, Phil Zhou. Following the prepared remarks, they will all be available to answer your questions during the Q&A session that follows.

早安，歡迎參加 Ecarx 2024 年第二季財報電話會議。今天與我一起參加 Ecarx 的有董事長兼首席執行官沉子宇 (Ziyu Shen)；營運長彼得·西里諾；和財務長 Phil Zhou。在準備好發言後，他們將在接下來的問答環節回答您的問題。

Before we start, I would like to refer you to our forward-looking statements at the bottom of our earnings press release, which also applies to this call. Further information on specific risk factors that could cause actual results to differ materially can be found in our filings with the SEC.

在我們開始之前，我想請您參閱我們收益新聞稿底部的前瞻性聲明，該聲明也適用於本次電話會議。有關可能導致實際結果出現重大差異的特定風險因素的更多信息，請參閱我們向 SEC 提交的文件。

In addition, this call will include discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to GAAP financial measures can be also found at the bottom of our earnings release.

此外，本次電話會議也將討論某些非公認會計準則財務措施。非 GAAP 財務指標與 GAAP 財務指標的調整表也可以在我們收益報告的底部找到。

With that, I'd like to hand the call over to Ziyu. Please go ahead.

說完，我就把電話轉給子玉了。請繼續。

Thank you, Rene. Hello, everyone, and thank you for joining our second quarter earnings call today. We maintained robust growth momentum during the second quarter, building upon the strong performance we had at the start of the year. The automotive industry continues its rapid evolution towards software-defined vehicles, which Ecarx remains at the forefront of.

謝謝你，雷內。大家好，感謝您參加今天我們的第二季財報電話會議。在年初強勁表現的基礎上，我們在第二季度保持了強勁的成長勢頭。汽車產業繼續向軟體定義汽車快速發展，Ecarx 仍處於領先地位。

Let me start with a brief market update here. While the sector faces some global headwinds, the overall trajectory remains positive, particularly for electrical vehicles and intelligent-car technologies. Global car sales were mixed but remain on track, on which around 88 million vehicles in 2024, an increase of almost 2% to 3% year-over-year.

讓我先簡單介紹一下市場最新情況。儘管該行業面臨一些全球阻力，但整體軌跡仍然樂觀，特別是對於電動車和智慧汽車技術而言。全球汽車銷量喜憂參半，但仍處於正軌，2024 年銷量約 8,800 萬輛，年增近 2% 至 3%。

China's automotive sector was similar with mixed sales during the first half of the year but resilient exports. China vehicle sales were 12 million during the first half of the year with exports reaching 2.8 million, up 6% and over 30% year-over-year, respectively. Chinese electrical vehicle sales, in particular, were robust, hitting 4.9 million during the same period, a 32% year-over-year increase.

中國汽車業的情況類似，上半年銷售參差不齊，但出口堅挺。上半年中國汽車銷售1,200萬輛，出口280萬輛，較去年成長6%及30%以上。中國電動車銷量尤其強勁，同期達到 490 萬輛，較去年同期成長 32%。

The market continues to yield significant opportunities for us. Our evolving product portfolio, diverse customer base, and the strategic global partnerships and operations uniquely position us to capitalize on the enormous opportunities in this space. The scale of our business is key to building a sustainable path to profitability, and I'm pleased to report that we made substantial progress in this regard.

市場持續為我們帶來重大機會。我們不斷發展的產品組合、多元化的客戶群以及策略性的全球合作夥伴關係和營運使我們能夠利用這一領域的巨大機會。我們的業務規模是建立可持續獲利之路的關鍵，我很高興地報告，我們在這方面取得了實質進展。

By the end of the quarter, there were over 6.9 million vehicles on the road incorporating Ecarx technology, with 472,000 vehicles added in this quarter alone. This translates into an increase of almost 32% year-over-year or 7% sequentially. We now serve 17 automotive OEMs across 26 brands, maintaining our reach from first quarter and deepening relationships with existing customers. This can also be seen in our financials with revenue increasing 31% year-over-year to RMB1.3 billion.

截至本季末，道路上已有超過 690 萬輛採用 Ecarx 技術的車輛，光是本季就增加了 47.2 萬輛。這相當於年增近 32%，比上一季成長 7%。我們現在為 26 個品牌的 17 家汽車原始設備製造商提供服務，從第一季開始就保持了我們的覆蓋範圍，並加深了與現有客戶的關係。這也可以從我們的財務數據中看出，營收年增 31% 至 13 億元。

We continue to expand our customer base and broaden our project pipeline with five new design wins during this quarter, primarily for overseas projects. These wins demonstrate the appeal of our unified computing platforms, both overseas and in China. Our relationships are deepening across the board, with a new design win from a well-known European automaker that builds upon our existing mass production projects from last quarter and four additional projects from Geely ecosystem for vehicle targeting overseas markets.

我們繼續擴大我們的客戶群並拓寬我們的專案管道，在本季度贏得了五個新的設計，主要是針對海外專案。這些勝利證明了我們統一運算平台在海外和中國的吸引力。我們的關係正在全面深化，一家知名歐洲汽車製造商贏得了新的設計，該設計建立在我們上個季度現有的量產項目的基礎上，以及吉利生態系統針對海外市場的汽車的另外四個項目。

Discussions are also underway with FAW Group for additional projects beyond two currently in development. We are also currently working on five global RFQs beyond the Geely ecosystem. Our diverse ecosystem of partnerships is fueling our project pipeline with cutting-edge innovation that sets new industry benchmarks and keeps automakers at a forefront of technology change.

目前正在開發的兩個項目之外，還正在與一汽集團就其他項目進行討論。我們目前也正在吉利生態系統之外制定五個全球詢價。我們多元化的合作夥伴生態系統正在透過尖端創新為我們的專案管道提供動力，這些創新樹立了新的行業基準，並使汽車製造商始終處於技術變革的最前沿。

Building upon our initial collaboration in 2019, we strengthened our partnership with Tencent Smart Transportation in June. This partnership is intended to jointly different intelligent driving and cockpit solutions, which seamlessly integrate their robust suite of technologies and service for domestic China market.

在2019年初步合作的基礎上，我們於6月加強了與騰訊智慧交通的合作關係。此次合作旨在聯合不同的智慧駕駛和座艙解決方案，無縫整合其針對中國國內市場的強大技術和服務套件。

For overseas markets, we began working with DXC Luxoft to accelerate the development of in-vehicle capabilities with our focus enhancing the user experience of our full-stack of infotainment, digital cockpit, and advanced driver assistance, hardware and software.

針對海外市場，我們開始與DXC Luxoft合作，加速車載功能的開發，重點提升資訊娛樂、數位座艙、高級駕駛輔助、軟硬體全端的使用者體驗。

Continued technical innovation is critical for showcasing our strengths and maintaining a distinctive edge in the market. As our customer base grows, we are creating opportunities to replicate and scale our existing solutions for different vehicle models in the markets. I'll let Peter go into specifics in more details, but I want to highlight that our technology, versatility, and adaptability makes it the ideal solution for global automakers looking to offer the best user-experience and keep bill of materials cost low.

持續的技術創新對於展示我們的優勢並保持市場獨特優勢至關重要。隨著我們的客戶群不斷增長，我們正在創造機會來複製和擴展針對市場上不同車型的現有解決方案。我會讓Peter 更詳細地介紹細節，但我想強調的是，我們的技術、多功能性和適應性使其成為全球汽車製造商尋求提供最佳用戶體驗並保持較低材料成本的理想解決方案。

I'm highly confident in our ability to drive significant growth going forward. Our technology is mature and ready to be deployed more widely as our relationships with auto manufacturers deepens. Our comprehensive product portfolio and the ability to innovate and scale solutions across multiple brands and markets underscores our competitive edge and is accelerating our global expansion.

我對我們推動未來顯著成長的能力充滿信心。隨著我們與汽車製造商關係的加深，我們的技術已經成熟，可以更廣泛地部署。我們全面的產品組合以及跨多個品牌和市場創新和擴展解決方案的能力凸顯了我們的競爭優勢，並正在加速我們的全球擴張。

With our profile growing globally, we are well positioned to generate sustainable growth and create long-term value for our shareholders, and I look forward to building on this momentum in the second half of the year and beyond.

隨著我們在全球範圍內的知名度不斷提高，我們有能力實現可持續增長並為股東創造長期價值，我期待在今年下半年及以後繼續保持這一勢頭。

I will now pass the call over to Peter, who will go through the operating results of the quarter in more detail.

我現在將把電話轉給彼得，他將更詳細地介紹本季的經營業績。

Thank you, Ziyu and good day, everyone. Our customer base continues to diversify and grow as our business scales and gain momentum. We secured five new design wins during the quarter, primarily for overseas projects. These wins directly reflect the unique value proposition we offer automakers with our unified computing platforms for markets in China and across the world.

謝謝你，子宇，大家好。隨著我們業務規模的擴大和發展勢頭的增強，我們的客戶群不斷多元化和成長。我們在本季贏得了五項新設計，主要針對海外項目。這些勝利直接反映了我們為汽車製造商提供針對中國和全球市場的統一運算平台的獨特價值主張。

A number of these wins were generated from deepening relationships with existing customers, which are opening the door to additional opportunities. As Ziyu said, one of those five design wins was from a well-known European automaker that builds upon our existing mass production project from last quarter. The remaining four projects are for various brands in the Geely ecosystem targeting overseas markets.

其中許多勝利都是透過加深與現有客戶的關係而產生的，這為更多機會打開了大門。正如子宇所說，這五項設計勝利之一來自一家著名的歐洲汽車製造商，該製造商建立在我們上季度現有的量產項目的基礎上。其餘四個項目則針對吉利生態系中針對海外市場的各個品牌。

Beyond the Geely ecosystem, discussions are also underway with FAW Group for additional projects in China beyond the two previously announced projects, which are still progressing smoothly through the development process and remain on track to begin to start our production later this year.

除了吉利生態系統之外，除了先前宣布的兩個項目之外，我們還在與一汽集團討論在中國的其他項目，這些項目的開發過程仍在順利進行，並有望在今年稍後開始生產。

We're also actively participating in five global RFQ processes, synergies created through strategic partnerships form a key part of our strategy to reshape the global automotive technology value chain. We're working with partners to develop innovative, intelligent cockpit, and intelligent driving solutions for our broader range of automakers and brands.

我們也積極參與五個全球詢價流程，透過策略夥伴關係產生的綜效構成了我們重塑全球汽車技術價值鏈策略的關鍵部分。我們正在與合作夥伴合作，為更廣泛的汽車製造商和品牌開發創新的智慧座艙和智慧駕駛解決方案。

In June, we strengthened our partnership with Tencent Smart Transportation, the smart mobility division of Tencent to jointly develop intelligent, driving, and cockpit solutions. This will reinforce our position in the China market by seamlessly integrating our unified computing platforms with Tencent's robust suite of technologies and services and big data, cloud computing, artificial intelligence, mapping services, and infotainment ecosystems.

6月，我們加強了與騰訊智慧出行部門騰訊智慧交通的合作，共同開發智慧、駕駛和座艙解決方案。透過將我們的統一運算平台與騰訊強大的技術和服務以及大數據、雲端運算、人工智慧、地圖服務和資訊娛樂生態系統無縫集成，這將鞏固我們在中國市場的地位。

Together, we will initially focus on integrating Tencent's fully cloud-based lightweight maps products and broader ecosystem of apps and services. Over the longer term, we intend to develop a sophisticated platform to train and operate large language models that can be deployed in intelligent cockpits for our broader range of automakers worldwide.

我們首先將重點放在整合騰訊完全基於雲端的輕量級地圖產品和更廣泛的應用程式和服務生態系統。從長遠來看，我們打算開發一個複雜的平台來訓練和操作大型語言模型，這些模型可以部署在全球範圍內更廣泛的汽車製造商的智慧駕駛艙中。

For international markets, we partnered with DXC Luxoft in June, a trusted global automotive software systems integrator to jointly accelerate the development of in-vehicle capabilities. Ecarx's full stack hardware and software offerings will now support a wider range of services with the addition of DXC's, Luxoft's expertise in software integration and engineer and its ability to develop customized solutions for automakers globally.

針對國際市場，我們於 6 月與值得信賴的全球汽車軟體系統整合商 DXC Luxoft 合作，共同加速車載功能的開發。隨著 DXC、Luxoft 在軟體整合和工程方面的專業知識以及為全球汽車製造商開發客製化解決方案的能力的加入，Ecarx 的全端硬體和軟體產品現在將支援更廣泛的服務。

Put simply together, we will be able to help automakers integrate our world-leading hardware and software stack according to their individual needs, developing a bespoke user experience. Our technological leadership is further evidenced by our robust intellectual property portfolio with 598 registered patents and 656 pending patent applications globally as of June 30.

簡而言之，我們將能夠幫助汽車製造商根據他們的個人化需求整合我們世界領先的硬體和軟體堆疊，開發客製化的使用者體驗。我們強大的智慧財產權組合進一步證明了我們的技術領先地位，截至 6 月 30 日，我們在全球擁有 598 項註冊專利和 656 項正在申請的專利。

On the product side, we had several exciting new vehicles launched this quarter that showcase our technological strengths and demonstrate our remarkable versatility to replicate and scale our solutions across various brands and models.

在產品方面，我們本季推出了幾款令人興奮的新車，展示了我們的技術優勢，並展示了我們在不同品牌和車型上複製和擴展我們的解決方案的卓越多功能性。

Following the successful launch of the Lynk & Co 08 last year, we rapidly adapted its solution powered by the Antora Pro computing platform and integrated with Flyme Auto to several other high-profile models, including the Lynk & Co 07 in May and the LEVC L380 in June. The two FAW projects moving through the various stages of development will also use the same solution. The Lynk & Co 07 and 08 in particular, come integrated with our full-stack solution, which includes the Skyland Pro ADAS computing platform.

繼去年成功推出領克08之後，我們迅速將其由Antora Pro運算平台提供支援並與Flyme Auto整合的解決方案應用於其他幾款備受矚目的車型，包括5月的領克07和LEVC L380六月。處於不同開發階段的兩個一汽專案也將使用相同的解決方案。尤其是 Lynk & Co 07 和 08，整合了我們的全端解決方案，其中包括 Skyland Pro ADAS 計算平台。

This shows the popularity of the solution and its ability to meet the needs of multiple automakers and also helps us focus on iterating and improving this platform with feedback from multiple launched vehicles. The integration of our dashboard in in-vehicle systems with the mobility ecosystem such as Flyme Auto is one way that we can work to future-proof the driving experience. We are also driving innovation in other areas to ensure that our offer to automaker and drivers remains at the cutting-edge. As an example, this year, we will see the first vehicles using our pioneering Makalu computing platform entering the market.

這顯示了該解決方案的受歡迎程度及其滿足多家汽車製造商需求的能力，也有助於我們根據多款上市車輛的回饋，專注於迭代和改進該平台。將車載系統中的儀表板與 Flyme Auto 等行動生態系統集成，是我們努力打造面向未來的駕駛體驗的一種方式。我們也在其他領域推動創新，以確保我們為汽車製造商和駕駛員提供的服務始終處於領先地位。例如，今年，我們將看到第一批使用我們開創性的 Makalu 運算平台的車輛進入市場。

Makalu was powered by the AMD Ryzen Embedded V2000 processor and is the first platform to offer automakers the power of this advanced chip. Makalu is not only able to support ambitious applications, including unparalleled 3D graphics, AAA gaming, and other powerful entertainment and security features, but it also provides the processing headroom to allow automakers to continue to upgrade the driver experience with software upgrades well into the future for a deeper relationship with their customers.

Makalu 由 AMD Ryzen 嵌入式 V2000 處理器提供支持，是第一個為汽車製造商提供這種先進晶片功能的平台。Makalu 不僅能夠支援雄心勃勃的應用程序，包括無與倫比的 3D 圖形、AAA 遊戲以及其他強大的娛樂和安全功能，而且還提供處理空間，使汽車製造商能夠在未來透過軟體升級繼續升級駕駛員體驗與客戶建立更深入的關係。

The new Lynk & Co flagship BEV, the Z10, will be the first car to bring the advanced features of Makalu to the road with vehicle deliveries expected to begin next month. The Smart #5, which debuted in April at the Beijing Auto Show will also be driven by the power of Makalu. That's just become more powerful and capable, we also have an opportunity to create more efficient and inexpensive systems that meet infotainment, assisted driving, and security requirements in a single unit.

全新領克旗艦純電動車 Z10 將成為第一款將 Makalu 先進功能帶上道路的汽車，預計下個月開始交付。4月在北京車展首次亮相的Smart#5也將搭載馬卡魯的動力。這變得更加強大和有能力，我們還有機會創建更有效率、更便宜的系統，在一個單元中滿足資訊娛樂、輔助駕駛和安全要求。

The Geely Galaxy E5, the first vehicle to integrate digital cockpit and parking capabilities into a single board using the Antora 1000 platform under Geely's new E/E architecture will significantly reduce the bill of materials cost for the vehicle and serve as the foundation for their next-generation vehicles. It's clear that our Antora computing platform is increasingly broadening the appeal to the market, and we plan on replicating the solution to other vehicles in the future.

吉利 Galaxy E5 是吉利新 E/E 架構下第一款使用 Antora 1000 平台將數位座艙和停車功能整合到單板中的車輛，將顯著降低車輛的材料成本，並為其下一代奠定基礎。車輛。顯然，我們的 Antora 運算平台正在日益擴大對市場的吸引力，我們計劃將來將解決方案複製到其他車輛上。

By providing scalable, replicatable, and cost-effective solutions, we are clearly becoming a crucial partner for automakers in their transition towards the software-defined vehicles. Our ability to commercialize and deliver the integrated vehicle solutions at scale, globally maximizing cost efficiency and accelerate speed to market for automakers globally.

透過提供可擴展、可複製且經濟高效的解決方案，我們顯然正在成為汽車製造商向軟體定義汽車轉型的重要合作夥伴。我們有能力大規模商業化和交付整合汽車解決方案，在全球範圍內最大限度地提高成本效率並加快全球汽車製造商的上市速度。

We achieved a significant milestone with the start of our production at our Fuyang facility in April. This new manufacturing facility marks a crucial step in our strategy to vertically integrate our manufacturing and supply chain capabilities. The Fuyang factory has already begun contributing to production capacity, enhancing our ability to control product quality, further reduce costs, and streamline operations. This vertical integration allows us to better manage the entire process from research and development to manufacturing and sales, strengthening our competitive edge in the market.

隨著四月富陽工廠投產，我們實現了一個重要的里程碑。這個新的製造工廠標誌著我們垂直整合製造和供應鏈能力策略的關鍵一步。富陽工廠已經開始貢獻產能，增強我們控制產品品質、進一步降低成本、簡化營運的能力。這種垂直整合使我們能夠更好地管理從研發到製造和銷售的整個流程，並增強我們的市場競爭優勢。

As we continue to ramp up production and optimize operations there, we expect this to increase efficiencies and cost savings, which will ultimately benefit our customers and shareholders and build a sustainable path towards profitability.

隨著我們繼續提高產量並優化運營，我們預計這將提高效率並節省成本，最終將使我們的客戶和股東受益，並建立可持續的獲利之路。

To echo what Ziyu said earlier, I am very confident and optimistic that we will continue to see tremendous growth based on the progress we have made so far, especially as we lean into our investments in technological innovation, diversifying our customer base, and expanding our business globally.

正如子玉之前所說，我非常有信心和樂觀地認為，我們將在迄今為止所取得的進步的基礎上繼續看到巨大的增長，特別是當我們致力於技術創新的投資、多元化我們的客戶群以及擴大我們的業務時。

I will now turn the call over to Phil, who will go through our financial results.

我現在將把電話轉給菲爾，他將審查我們的財務表現。

Thank you, Peter and hello, everyone. Our strong start of the year continued into the second quarter as our business continues to grow and our financials improved. Total revenue for the quarter was RMB1.3 billion, an increase of 31% year-over-year. Computing hardware goods revenue was RMB944 million, up 41% year-over-year, driven by growing global demand and shipments, mainly for the Volvo EX30 and Polestar 4, as well as the ramping up of sales volume for the Antora series digital cockpit and autonomous driving control unit. This contributed approximately 14% and 8%, respectively, to total revenue.

謝謝你，彼得，大家好。隨著我們的業務持續成長和財務狀況改善，我們今年的強勁開局一直延續到第二季​​。該季度總收入為人民幣13億元，較去年同期成長31%。計算硬體產品營收為人民幣9.44億元，年增41%，主要受全球需求和出貨量成長（主要是沃爾沃EX30和Polestar 4）以及Antora系列數位座艙和自動駕駛控制單元。這分別佔總收入約14%和8%。

Software license revenue came in at RMB57 million, down 50% year-over-year due to a decrease in intellectual property licenses revenue, which was RMB80 million during the same period last year. Service revenue increased 45% year-over-year to RMB257 million. This was primarily due to the launch of the new Antora series vehicle programs and the continued growth of our overseas TSP business, which accounted for approximately 9% of the service revenue.

軟體授權收入為人民幣5,700萬元，年減50%，主要是因為智慧財產權授權收入（去年同期為人民幣8,000萬元）減少所致。服務收入年增45%至人民幣2.57億元。這主要得益於Antora系列新車型的推出以及海外TSP業務的持續成長，該業務約佔服務收入的9%。

Gross profit was RMB292 million, a decrease of 3% year-over-year, which translates into a gross margin of 23%, an increase of 1% sequentially. As competition and pricing pressures across the automotive industry deepens, margins on hardware products will remain challenging over the midterm. As discussed on the last earnings call, to address this challenge, we are maintaining our focus on driving growth momentum in our premium products and balancing sales across our portfolio.

毛利為人民幣2.92億元，年減3%，相當於毛利率為23%，較上一季成長1%。隨著汽車產業競爭和定價壓力的加劇，硬體產品的利潤率在中期仍將面臨挑戰。正如上次財報電話會議中所討論的那樣，為了應對這一挑戰，我們將繼續專注於推動優質產品的成長勢頭並平衡我們產品組合的銷售。

We are also reducing costs through supply chain optimization, improving our overall cost structure and manufacturing strategy, and optimizing operating expenses and capital investments. OpEx during the quarter increased 12% year-over-year. This was primarily driven by an increase in share-based compensation. Excluding share-based compensation, OpEx increased 3% year-over-year due to continued R&D investments in core products and future technologies. This was partially offset by decreases in SG&A expenses, which decreased 21% during the quarter as a result of improved operational efficiencies.

我們也透過供應鏈優化來降低成本，改善整體成本結構和製造策略，並優化營運費用和資本投資。本季營運支出較去年同期成長 12%。這主要是由於股權激勵的增加所致。不計入股權激勵，由於對核心產品和未來技術的持續研發投資，營運支出較去年同期成長 3%。這被 SG&A 費用的減少部分抵消，由於營運效率的提高，SG&A 費用在本季度下降了 21%。

Loss per share was RMB0.84, flat sequentially. Adjusted EBITDA loss was RMB210 million, up from a loss of RMB156 million during the same period last year, primarily attributable to equity investment loss. Compared to the prior quarter, adjusted EBITDA improved by RMB14 million or 6%.

每股虧損為人民幣0.84元，與上一季持平。調整後 EBITDA 虧損為 2.10 億元，高於去年同期的虧損 1.56 億元，主要歸因於股權投資虧損。與上一季相比，調整後 EBITDA 增加 1,400 萬元，即 6%。

Moving on to our balance sheet. As of the end of the second quarter, we had RMB788 million of cash and restricted cash, which gives us the required resources to invest in our future key initiatives, business expansion, and accelerate growth, while we are continuing to improve our working capital and profitability enhancement.

繼續我們的資產負債表。截至第二季末，我們擁有人民幣 7.88 億元現金和限制性現金，這為我們提供了投資於未來關鍵舉措、業務擴張和加速增長所需的資源，同時我們正在繼續改善營運資本和盈利能力增強。

In summary, we continue to drive growth momentum inside and outside the Geely ecosystem, further expand our customer base, and push sales of our premium products in the second half of 2024. We will also continue to optimize our cost structure, operational and fulfillment efficiencies, and operating expense investments.

綜上所述，我們將繼續推動吉利生態系統內外的成長動力，進一步擴大我們的客戶基礎，並推動我們的高端產品在2024年下半年的銷售。我們也將繼續優化成本結構、營運和履行效率以及營運費用投資。

Our global expansion strategy, including R&D, will provide us with the flexibility to mitigate ongoing and the potentially newly emerging geopolitical challenges. I'm highly confident we are on track to gain profitability and let our businesses in a more sustainable position for the longer term.

我們的全球擴張策略（包括研發）將為我們提供靈活性，以緩解當前和潛在新興的地緣政治挑戰。我非常有信心，我們將有望實現盈利，並使我們的業務在長期內處於更可持續的地位。

So that concludes our prepared remarks today, I would now like to hand the call back to the operator to begin the Q&A session.

我們今天準備好的演講就到此結束，我現在想將電話轉交給接線員以開始問答環節。

(Operator Instructions)

（操作員說明）

Jiaqi Zhang, CICC.

張嘉琪，中金公司。

Thank you, management team. My name is Jiaqi Zhang from CICC. I'm very happy to see there is a sustainable growth in the revenue and profits. So great, congratulations on that. I have two small questions regarding the financial results.

謝謝你，管理團隊。我是來自中金公司的張嘉琪。我很高興看到收入和利潤持續成長。太棒了，恭喜你。我有兩個關於財務表現的小問題。

The first one is regarding to the service revenues. We have seen there's a huge increase of service revenue compared to the first quarter. Could you explain what has been contributed to the increase?

第一個是關於服務收入。我們看到，與第一季相比，服務收入有了巨大的成長。您能解釋一下是什麼導致了這一增長嗎？

And the second question is regarding the gross margin. We have seen there is a decrease in the gross margin of the sales of goods and revenues, around about 3.2 PBCT. So could you explain as well what has actually contributed to the decrease? Yes, that's my first question.

第二個問題是關於毛利率。我們看到商品銷售和收入的毛利率有所下降，約 3.2 PBCT 左右。那麼您能否解釋一下到底是什麼導致了下降？是的，這是我的第一個問題。

Thank you, Jiaqi. This is Phil. Thank you for your question. So let me address your first question regarding our service revenue growth. So in Q2, our service revenue was RMB257 million. That is pretty decent in terms of year-year growth, it's 45%. And from the dollar amount is - RMB amount is RMB80 million. So that is primarily due to the launch of the new Antora series vehicle programs. We introduced last time. We supported Volvo to launch EX30, and we further expand the penetration and the market also expanding into a global scale as well.

謝謝你，嘉琪。這是菲爾.謝謝你的提問。那麼，讓我回答您關於我們服務收入成長的第一個問題。所以第二季我們的服務收入是2.57億元。就年增長率而言，這是相當不錯的，為 45%。而從美元金額來看，人民幣金額就是8,000萬元人民幣。所以這主要是由於新的Antora系列車輛計劃的推出。上次我們介紹過。我們支持沃爾沃推出EX30，我們進一步擴大滲透率，市場也擴展到全球。

And that is related to the NRE revenue growth. So EX30 is about RMB75 million more in the current quarter. We also supported Lynk & Co 07 to launch, and LEVC, there's a new model called L380, all this contributed to our NRE revenue growth.

這與 NRE 收入成長有關。因此，EX30 在本季增加了約 7,500 萬元人民幣。我們也支持領克07上市，還有LEVC，有一個新車型叫L380，所有這些都促進了我們NRE收入的成長。

And meanwhile, in Q2, we also generate overseas TSP business, and that is also part of our service revenue growth. So in conclusion, we see a very strong service growth driven by our dedicated focus on the NRE generation follows the new vehicle programs launch.

同時，在第二季度，我們也產生了海外TSP業務，這也是我們服務收入成長的一部分。總而言之，我們看到，在新車計畫推出後，我們對 NRE 世代的專注推動了非常強勁的服務成長。

So your second question is about our gross margin performance. So if we look at our gross margin percentage, it's 23%. It's a 1% improvement sequentially versus Q1 reported. And yes, from a year-over-year perspective, it's declining. And we mentioned that is due to the pricing erosion or pricing pressure from the industry.

所以你的第二個問題是關於我們的毛利率表現。所以如果我們看看我們的毛利率百分比，它是 23%。與報告的第一季度相比，環比提高了 1%。是的，從同比的角度來看，它正在下降。我們提到這是由於行業的定價侵蝕或定價壓力。

So starting from second half of last year, the entire industry got a pricing challenge and all the OEM customers, they would like to maximize their shipment and use pricing as a weapon to do a trade-off. So the entire industry got impacted as well, including Ecarx as a Tier 1 player in the industry.

所以從去年下半年開始，整個產業都面臨定價的挑戰，所有的OEM客戶都希望最大化出貨量，並以定價作為武器來權衡。因此整個行業也受到了影響，包括 Ecarx 作為行業的一級參與者。

But in order to maintain our gross margin performance at 20%-ish, we actually delivered pretty strong in our supply chain management. We optimized our cost structure. At the same time, we drove IP or software or service business, as I mentioned, all those contributed to our overall gross margin performance improvement. So we are able to stabilize our gross margin performance midterm and the longer term. So I hope we answered your question regarding your profitability.

但為了將毛利率維持在 20% 左右，我們實際上在供應鏈管理方面表現相當強勁。我們優化了成本結構。同時，正如我所提到的，我們推動了智慧財產權、軟體或服務業務的發展，所有這些都為我們整體毛利率的改善做出了貢獻。因此，我們能夠穩定中期和長期的毛利率表現。因此，我希望我們能夠回答您有關盈利能力的問題。

Yeah, that's very clear. Thank you. So my second question is that we have seen there’s a very rich variety of vehicles launched with the Geely Group, including in Lynk & Co, Smart, the LEVC, et cetera. So my question is regarding to the strategy of having of competing for the orders from Geely Group. What is the strategy of Ecarx to launch the project with Geely, whether it's for the higher products or for lower priced ones? So what is the strategy for that? How do you choose which project to go with Geely?

是的，這很清楚。謝謝。我的第二個問題是，我們看到吉利集團推出了非常豐富的車型，包括領克、Smart、LEVC 等。所以我的問題是關於爭奪吉利集團訂單的策略。Ecarx與吉利推出這個計畫的策略是什麼，是高階產品還是低價產品？那麼這方面的策略是什麼呢？您如何選擇與吉利合作的專案？

Hi Jiaqi, this is Peter. I'll grab that question. Thank you very much for joining the call today. You look at Ecarx, obviously, we have a long -- a great history with Geely, and we know the organization very well. Recently, a lot of our launches have been on their global products. So we talk about the Smart launches. There are other products in their portfolio that are launching on a global scale. And we've built out that capability in our organization very successfully.

嗨，嘉琪，我是彼得。我會抓住這個問題。非常感謝您今天加入電話會議。你看看 Ecarx，顯然，我們與吉利有著悠久的歷史，我們非常了解這個組織。最近，我們的許多發布都是針對他們的全球產品。所以我們談論 Smart 的發布。他們的產品組合中還有其他產品正在全球推出。我們已經在我們的組織中非常成功地建立了這種能力。

The Volvo EX30 launch was an important launch for us last year. That vehicle is doing very well, especially in Europe, and it continues to expand globally also with the Polestar brands as well. But we're also well positioned and continue to grow with the brands, the core brands, such as the Geely brand and the Lynk & Co brand. So I think we're continuing to have a fantastic relationship with the Geely Group.

沃爾沃 EX30 的發布對我們來說是去年的一次重要發布。該車的表現非常好，尤其是在歐洲，它也繼續透過 Polestar 品牌在全球擴張。但我們也處於有利位置，並繼續與品牌、核心品牌一起成長，例如吉利品牌和領克品牌。因此，我認為我們將繼續與吉利集團保持良好的關係。

Additionally, the company is very focused on continuing to diversify our customer base. We talked about launches coming later this year with FAW. FAW continue to be a very important customer for us, and those critical vehicles are working well throughout our pipeline, throughout our development process. And I would expect that we will continue to deepen our relationship across the FAW Group as we've done with other customers in our space.

此外，該公司非常注重持續實現客戶群多元化。我們討論了今年稍後與一汽推出的產品。一汽仍然是我們非常重要的客戶，這些關鍵車輛在我們的管道和整個開發過程中運作良好。我希望我們將繼續深化我們與一汽集團的關係，就像我們與我們領域的其他客戶所做的那樣。

And then I mentioned in my remarks earlier, we have a strong effort to grow the business globally. So we're participating in a significant number of the RFQs globally. We're working closely with a number of different OEMs across Europe to show our capabilities and build out strong technical solutions that are off of our base tech. So we're quite excited about the progress we're making both with the Geely Group, with our broader customer set in the China market as well as continue to expand the company's position and relationships on a global scale as well.

我在之前的演講中提到，我們大力發展全球業務。因此，我們參與了全球範圍內大量的詢價。我們正在與歐洲許多不同的原始設備製造商密切合作，展示我們的能力，並在我們的基礎技術基礎上建立強大的技術解決方案。因此，我們對與吉利集團、中國市場更廣泛的客戶群以及繼續擴大公司在全球範圍內的地位和關係所取得的進展感到非常興奮。

Right. Thank you for the answer. So for my last question is regarding the product portfolios. We have seen a very rich product portfolios as I'm going through the slides you provided. So I have counted there are 10 domain controllers, I think, for the cockpit and there are three central computers for the central domain. So my question is, could you give us a guidance regarding to what are the targeting price -- targeting vehicle prices for each of these individual platforms? As I guess, there, some of these platforms are pretty overlapped in their performance, et cetera. So could you give us more guidance on this? Thank you.

正確的。謝謝你的回答。我的最後一個問題是關於產品組合的。當我瀏覽您提供的幻燈片時，我們看到了非常豐富的產品組合。我算了一下，駕駛艙有 10 個網域控制器，中央域有 3 個中央電腦。所以我的問題是，您能否為我們提供有關目標價格的指導——每個平台的目標車輛價格？正如我猜測的那樣，其中一些平台的性能相當重疊，等等。那麼您能給我們更多的指導嗎？謝謝。

Yeah, I hope that would hope you look at our product portfolio. I think we're very effective of scaling across the broad set of vehicles that all have different price points in the market. So if you look at the historical products that we've delivered, we've delivered very high end products into vehicles like the Lotus vehicles. That launch that happened in '22 was a very high-end launch with significant capabilities in 3D.

是的，我希望您能看看我們的產品組合。我認為我們在擴大市場上各種價位的車輛方面非常有效。因此，如果您查看我們交付的歷史產品，您會發現我們已經為蓮花汽車等車輛提供了非常高端的產品。22 年的發布是一次非常高端的發布，具有重要的 3D 功能。

We see a similar price point and performance level in the Makalu product that we're launching, that's based on the AMD technology, and that brings very unique capabilities into the Z10 and the Smart vehicles that we're launching first with that car -- with that platform, but I expect that will -- I know that we'll continue to launch across a broader set of vehicles as well.

我們在我們推出的 Makalu 產品中看到了類似的價格點和性能水平，它基於 AMD 技術，並且為 Z10 和我們首先推出的智能汽車帶來了非常獨特的功能 -有了這個平台，但我預計這會- 我知道我們也將繼續推出更廣泛的車輛。

And then we're very strong in delivering extremely cost-effective solutions to the market into more higher volume solutions. So we're -- some of our older E02 Venado solutions are very cost-effective as well as our single Antora solutions that we're recently launching. They include a lot of integration of systems inside the vehicle and provide a very cost-effective solution to the OEM. So I think if you look across, especially our digital cockpit solutions are very mature, and I think we serve -- we are effectively able to serve a broad set of solutions from a very, very high-end performance to very cost-effective solutions as well.

然後，我們非常擅長向市場提供極具成本效益的解決方案，並將其轉化為更多的大量解決方案。因此，我們的一些舊版 E02 Venado 解決方案以及我們最近推出的單一 Antora 解決方案都非常經濟高效。它們包括大量車內系統集成，為 OEM 提供了非常經濟高效的解決方案。所以我認為，如果你放眼望去，尤其是我們的數位座艙解決方案非常成熟，而且我認為我們能夠有效地提供廣泛的解決方案，從非常非常高端的性能到非常具有成本效益的解決方案以及。

Right. thank you for the answer. Yeah. So I will conclude. Thank you.

正確的。謝謝你的回答。是的。所以我會得出結論。謝謝。

Megan Jin, Macquarie.

梅根金，麥格理。

Hi. Good morning. Thanks for taking my questions. I have two questions. First, of course, congratulations on a very good Q2 results. The first question is on the hardware part that what do you think that is the driver on this very robust 40% good sales growth? Is it like more from a growth in the per car value or is it more from the volume? And then what is the largest segment under this hardware? I mean, like which product exactly is the most major product in this segment that's driving the sales?

你好。早安.感謝您回答我的問題。我有兩個問題。首先，當然，恭喜第二季度取得了非常好的成績。第一個問題是關於硬體部分，您認為推動 40% 強勁銷售成長的因素是什麼？是更多來自每輛車價值的成長，還是更多地來自數量的成長？那麼這個硬體下最大的部分是什麼呢？我的意思是，哪一種產品到底是該細分市場中最主要推動銷售的產品？

And that also, congratulations on fulfilling the target of adding around 1 million more vehicles that carry our products ahead of schedule. So maybe I was wondering do you have a new target in terms of like the overall number of vehicles that carry our products? And that actually like I'm curious like how should we think about the second half since we already fulfilled the target ahead of schedule? Thanks. That's my first long question. Thanks.

同時，恭喜您提前完成了增加約 100 萬輛搭載我們產品的車輛的目標。所以也許我想知道您是否有新的目標，例如搭載我們產品的車輛總數？實際上我很好奇，既然我們已經提前完成了目標，我們該如何看待下半年？謝謝。這是我的第一長問題。謝謝。

Thank you, Megan. This is Phil. Yeah, I'm happy to address your question. And Peter, you also can chime in for additional information, okay? So Megan, actually, we are in very good progress of developing and delivering lots of vehicle programs. And I would say that often are on track. For example, we already made huge success by launching Lynk & Co 08, Volvo EX30, and Polestar 4 since last quarter three.

謝謝你，梅根。這是菲爾.是的，我很高興回答你的問題。彼得，你也可以插話以獲取更多信息，好嗎？事實上，梅根，我們在開發和交付大量車輛項目方面取得了非常好的進展。我想說的是，這通常都在正軌上。例如，自上個季度以來，我們推出了領克08、沃爾沃EX30和Polestar 4，並取得了巨大成功。

And when we move into the first half of 2024, we also got Lynk & Co 07, LEVC L380, and the Galaxy E5, right? Galaxy E5 just launched, and we are making good traction as well. There's no delay. And all those programs are widely accepted, appraised by our customers. So as you can see, the Lynk & Co's Z10 with our Makalu solution is also going to launch very soon.

當我們進入 2024 年上半年時，我們也推出了領克 07、LEVC L380 和 Galaxy E5，對吧？Galaxy E5 剛剛推出，我們也取得了良好的進展。沒有延遲。所有這些方案都得到了客戶的廣泛接受和評價。正如您所看到的，採用我們的 Makalu 解決方案的 Lynk & Co Z10 也即將推出。

We foresee that new vehicle programs are coming from FAW as well and we expect SOP by the end of the year. So in summary, I think we have a very good start and we will continue to increase our business expansion in those vehicle programs, including non-Geely business.

我們預計一汽也將推出新車計劃，並預計在今年年底前推出 SOP。總而言之，我認為我們有一個很好的開端，我們將繼續增加這些車輛項目的業務擴張，包括非吉利業務。

And in terms of your question regarding the breakdown -- solution breakdown for our computing platform hardware, right? What is the biggest contributor in terms of the computing hardware platform. So Ecarx -- well, we are open system. So we have a Qualcomm solution. We have Antora series solution. We have Makalu solutions as well.

至於你關於我們計算平台硬體的故障解決方案故障的問題，對吧？計算硬體平台方面貢獻最大的是什麼？所以 Ecarx——嗯，我們是開放式系統。所以我們有一個高通解決方案。我們有Antora系列解決方案。我們也有馬卡魯解決方案。

So in Q2, Qualcomm solution still occupies nearly 80% of our company hardware business. Our Antora series, nearly 20%, and Makalu business just got SOP and we foresee that ramp-up will be coming and the rev mix will increase as well.

所以在第二季度，高通解決方案仍然佔據了我們公司硬體業務近80%的份額。我們的 Antora 系列，接近 20%，和 Makalu 業務剛剛獲得 SOP，我們預計產量將會增加，轉速組合也會增加。

And regarding the price -- ASP, our quantum of vehicle follows solutions, I would say we keep improving our quantum of vehicles through our diversified solution offering. For example, our Antora series, the module -- the pricing will be ranged from RMB400 to RMB1,200. And for traditional IHU is RMB1,200 to RMB1,800, and for our major product line DHU business, the ASP will be ranged from RMB3,000 to RMB13,500. So it's a lot. So we will keep our focus and the shift to those high price premium product to improve our revenue and profitability.

關於價格——ASP，我們的車輛數量遵循解決方案，我想說的是，我們透過提供多元化的解決方案來不斷提高我們的車輛數量。例如我們的Antora系列模組－定價會在400元到1200元之間。傳統IHU為人民幣1,200元至人民幣1,800元，而對於我們主要的產品線DHU業務，平均售價將在人民幣3,000元至人民幣13,500元之間。所以數量很多。因此，我們將繼續關注並轉向那些高價優質產品，以提高我們的收入和獲利能力。

So I think that concludes my answer to your question. And Peter, if you have any new information, please.

我想這就是我對你問題的回答。彼得，如果您有任何新信息，請說。

Yeah. No, Phil. I think you did a great job uncovering. I would just echo that as we look across our customer segments, we see the vast majority of our customers. We have significant growth with both the Geely brands we mentioned and Geely, and Lynk & Co, but significant growth with our shipments with Volvo and Polestar on a global scale. They show a significant year on year performance in our second quarter results. So I think the global expansion and servicing new customers is making a significant impact on the top line to the company.

是的。不，菲爾。我認為你在揭露方面做得很好。我只想重複這一點，當我們審視我們的客戶群時，我們看到了絕大多數客戶。我們提到的吉利品牌以及吉利和領克都取得了顯著增長，但沃爾沃和 Polestar 在全球範圍內的出貨量也取得了顯著增長。他們在我們第二季的業績中表現出了顯著的同比表現。因此，我認為全球擴張和服務新客戶正在對公司的營收產生重大影響。

Thanks so much, Phil. That was very helpful and very clear. Then my second question is on our overseas business. In terms of the expansion, I'm wondering like how to assess the market size as far as to estimate the market size in order to think about like how we repeat the success of our software platform services to Volvo EX30. On other clients, how should we think about like what exactly is the thing that we are doing to them and how competitive it is and how large a market that we look for, and that who are the major competitors?

非常感謝，菲爾。這非常有幫助而且非常清楚。那麼我的第二個問題是關於我們的海外業務。在擴張方面，我想知道如何評估市場規模，以及如何估計市場規模，以便思考我們如何將軟體平台服務的成功複製到沃爾沃EX30。對於其他客戶，我們應該如何思考我們正在為他們做的事情到底是什麼，它的競爭有多大，我們尋找多大的市場，以及誰是主要競爭對手？

And very further away, strategic question is actually on the recent news on Biden proposing to ban the autonomous driving software in the US. I know it's like really far away from us as we're doing business in Europe, and that is not really in autonomous space yet. But I'm wondering like when you are starting to ban this Chinese software in the autos out of this reason of like national security, will these allies follow suit and also use the same reason to kind of ban our Chinese auto software? Like how do we address or think about this geopolitical risk potentially in the future? Yes, that's my second long question. Thank you.

更遠的地方，戰略問題實際上是最近拜登提議禁止美國自動駕駛軟體的消息。我知道這離我們真的很遠，因為我們在歐洲做生意，而且還不是真正的自治領域。但我想知道，當您出於國家安全等原因開始在汽車中禁止這種中國軟體時，這些盟友是否會效仿並使用同樣的理由來禁止我們的中國汽車軟體？例如我們如何應對或思考未來潛在的地緣政治風險？是的，這是我的第二個長問題。謝謝。

Okay. Yes, let me take the question just in two parts here. So in terms of international growth and how we assess the market, the Volvo EX30 that we launched towards the end of last year has been a great proof point for us. We built that -- the system in that vehicle by using our global capabilities to service that opportunity.

好的。是的，讓我在這裡分成兩部分來回答這個問題。因此，就國際成長以及我們如何評估市場而言，我們在去年年底推出的Volvo EX30 對我們來說是一個很好的證明。我們利用我們的全球能力來為該機會提供服務，從而在該車輛中建立了該系統。

So I think we've been clear that we started our international growth as early as late 2000 in setting up our team. So it could be close to four years ago that we started to make those investments. We've built a strong software team in our European location. In addition, have made recent expansions by -- two years ago, opened our international headquarters in London and then opening earlier this year, a site in Germany to continue to cement our position in the global market.

因此，我認為我們早在 2000 年底組建團隊時就開始了國際發展。因此，我們可能是在大約四年前開始進行這些投資的。我們在歐洲建立了一支強大的軟體團隊。此外，我們最近進行了擴張——兩年前，在倫敦開設了我們的國際總部，然後在今年稍早在德國開設了一個辦事處，以繼續鞏固我們在全球市場的地位。

So we're approaching the very large OEM customers here in the European market. We're showing the proof point certainly that we've developed and built our system and software stack from our core technology in China, but we've already shown the capabilities to transition that the global IP and have it as a global offering in the market.

因此，我們正在接觸歐洲市場上非常大的 OEM 客戶。我們確實證明了我們已經利用我們在中國的核心技術開發和建立了我們的系統和軟體堆疊，但我們已經展示了轉換全球智慧財產權並將其作為全球產品的能力。

We've seen Ecarx in a very strong position relative to the ownership of the full software stack and the full-stack solutions that we bring to the market. The capability I mentioned earlier to service both the very, very high end with great capabilities, unique features into the digital cockpit space as well as a very cost-competitive solution. And as we're attacking and having further discussions with customers in the European market, we're talking about both capabilities that we have inside the organization.

我們已經看到，相對於我們推向市場的完整軟體堆疊和全堆疊解決方案的所有權，Ecarx 處於非常有利的地位。我之前提到的能力可以為非常非常高端的數位駕駛艙空間提供強​​大的功能、獨特的功能以及非常具有成本競爭力的解決方案。當我們攻擊歐洲市場的客戶並與客戶進行進一步討論時，我們正在談論我們組織內部擁有的這兩種能力。

So the breadth of vehicles that we have serviced in our core business, I think, is strongly helping our expansion. And I think we'll continue to expand with the major customers throughout the European market. I hope that we can, over the next six months to a year, really start to talk about the successes that we're having in the market here.

因此，我認為，我們在核心業務中提供的廣泛的車輛服務極大地幫助了我們的擴張。我認為我們將繼續與整個歐洲市場的主要客戶一起擴張。我希望我們能夠在接下來的六個月到一年內真正開始談論我們在這裡市場上的成功。

And if I transition somewhat to the geopolitical environment, I think, very much building on similar themes. So we've built a great business in China with more than 1,500 employees that have incredible capabilities. And we've already shown the capability to take the core technology and to expand it globally and to serve the global market from that capability as well as with local investment.

如果我稍微過渡到地緣政治環境，我認為，很大程度上是建立在類似的主題上。因此，我們在中國建立了一家偉大的企業，擁有 1,500 多名能力非凡的員工。我們已經展示了採用核心技術並將其擴展到全球的能力，並利用這種能力以及本地投資來服務全球市場。

And I think you'll continue to see Ecarx doing that in further building our capabilities in the European market and being able to service each customer locally in a very effective way. And that's how we see ourselves continuing to develop. And I think that will start to address the geopolitical concerns of the total market. I think we know that we've got to build local relationships with the various customers in their home countries, and we've done that effectively in Europe already, and we'll continue to grow that capability as we build deeper relationships with the customer set.

我認為您將繼續看到 Ecarx 這樣做，進一步增強我們在歐洲市場的能力，並能夠以非常有效的方式在本地為每個客戶提供服務。這就是我們如何看待自己的持續發展。我認為這將開始解決整個市場的地緣政治擔憂。我認為我們知道我們必須與他們所在國家的各種客戶建立本地關係，我們已經在歐洲有效地做到了這一點，隨著我們與客戶建立更深的關係，我們將繼續增強這種能力。

So we recognize that there are geopolitical challenges in the world, but I think we've got an effective solution and strategy to address them.

因此，我們認識到世界上存在地緣政治挑戰，但我認為我們已經有了有效的解決方案和策略來應對這些挑戰。

Sure. Thanks very much, Peter. It's very clear. That's all of my questions. Thanks again, and congratulations.

當然。非常感謝，彼得。非常清楚。這就是我的所有問題。再次感謝，並恭喜。

Thank you.

謝謝。

Thank you, Megan.

謝謝你，梅根。

[Tony Shen, SPDI].

[托尼·沉，SPDI]。

Yes, thanks, management for taking my questions. This is [Shen Dai Tony] from SPDI. I think I've got two questions here. I think the first question is also going back to the gross margin for the hardware business and also the pricing side. So as we mentioned in the prepared remarks, we still have pricing pressure and pricing erosion from the automakers. And could you -- the management give us some color and outlook into the second half of this year and into the next year, how do we see the price trend and how do we see the gross margin, especially for the hardware segment?

是的，謝謝管理層回答我的問題。我是來自SPDI的[沉代托尼]。我想我這裡有兩個問題。我認為第一個問題也回到了硬體業務的毛利率以及定價方面。因此，正如我們在準備好的評論中所提到的，我們仍然面臨汽車製造商的定價壓力和定價侵蝕。管理階層能否為我們介紹今年下半年和明年的一些情況和前景，我們如何看待價格趨勢以及毛利率，特別是硬體領域的毛利率？

Thank you, Tony. This is Phil. Yes, we observed that the pricing competition is widely observed in the industry. As I mentioned, most OEMs leveraging pricing as a tool to maximize their shipment and market share. And that results margin pressure in the overall supply chain, including Ecarx and many other Tier 1 solution providers. And we foresee that such kind of a trend will continue in the second half of the year. And even when moving to the next year, the challenge in Chinese domestic OEM market will remain unchanged. That is our observation.

謝謝你，托尼。這是菲爾.是的，我們觀察到價格競爭在行業中廣泛存在。正如我所提到的，大多數原始設備製造商都利用定價作為工具來最大化其出貨量和市場份額。這導致整個供應鏈（包括 Ecarx 和許多其他一級解決方案提供者）面臨利潤壓力。我們預計這種趨勢將在下半年持續下去。即使進入明年，中國國內OEM市場的挑戰也不會改變。這是我們的觀察。

But Ecarx as a solution player in the market, we have our strategic plan. First of all, in terms of the operation, we will continue to optimize our cost structure in both hardware and software, and we will further enhance our service performance in our portfolio. Like what I mentioned in quarter two, we have a pretty decent performance from the service revenue. We will continue to do that. As long as we have more, we can generate more demand from the new vehicle customers, the vehicle programs, then we are able to generate or grow our service revenue. So that can help us partially offset the hardware pricing challenge.

但 Ecarx 作為市場上的解決方案參與者，我們有自己的策略計畫。首先，在營運方面，我們將持續優化硬體和軟體的成本結構，並進一步提升我們的產品組合的服務效能。就像我在第二季度提到的那樣，我們的服務收入表現相當不錯。我們將繼續這樣做。只要我們擁有更多，我們就可以從新車客戶、車輛專案中產生更多需求，然後我們就能夠產生或增加我們的服務收入。因此，這可以幫助我們部分抵銷硬體定價挑戰。

And at the same time, Ecarx, we also shift our strategy into our smart manufacturing site, and that purpose is all about how to manage our cost component level, I mean, the cost improvement and at the same time, by how to ensure quality and our delivery capability. And I think through that investment, we should be able to generate more opportunity in terms of hardware cost opportunity.

同時，Ecarx，我們也將我們的策略轉移到我們的智慧製造工廠，這個目的就是如何管理我們的成本構成水平，我的意思是，成本改進，同時如何確保品質以及我們的交付能力。我認為透過這項投資，我們應該能夠在硬體成本方面創造更多機會。

And we also expand our business into the globe. As Mr. Shen and Peter mentioned, our strategy is to become a global Tier 1 -- technology play one -- Tier 1 in the industry. And that means we need to serve not only in top 10 global OEM customers, even top 5 OEM customers as we are trusted solution provider. And I think that play can significantly shift our focus from China-only to the global business. And that can help us enhance our margin pool through a diversified customer base.

我們也將業務擴展到全球。正如沈先生和彼得所提到的，我們的策略是成為全球第一梯隊－技術第一梯隊－產業第一梯隊。這意味著我們不僅需要為全球前 10 名 OEM 客戶提供服務，甚至還需要為前 5 名 OEM 客戶提供服務，因為我們是值得信賴的解決方案提供者。我認為這種遊戲可以顯著地將我們的注意力從僅限中國業務轉移到全球業務。這可以幫助我們透過多元化的客戶群來增強我們的利潤池。

And those multi-different program as well as the shipment, the volume is guaranteed, we should be able to generate economy of scale. And that is our proactive strategy, right, from China and from globalization to mitigate the margin challenge in China market. So the forecast, I think our margin performance momentum will continue. We will keep current 20%-ish gross margin percentage through our proactive actions, as I mentioned. So that momentum will continue, Tony.

而那些多不同的方案以及出貨量、數量有保證，我們應該能夠產生規模經濟。這就是我們從中國和全球化的積極策略，以減輕中國市場的利潤挑戰。因此，我認為我們的利潤率表現勢頭將持續下去。正如我所提到的，我們將透過積極行動維持目前 20% 左右的毛利率。所以這種勢頭將會持續下去，托尼。

Okay. Perfect. That's very clear. And my second question was about our in-house chipset like Antora and Makalu. How these projects will be expanded into the overseas customers? And we also mentioned that we have five new design wins in the quarter. How much of them are from our own designed solutions, including Antora and Makalu? How should we look at into the year of 2025?

好的。完美的。這非常清楚。我的第二個問題是關於我們的內部晶片組，例如 Antora 和 Makalu。這些專案將如何拓展到海外客戶？我們也提到，我們在本季贏得了五項新設計。其中有多少來自我們自己設計的解決方案，包括 Antora 和 Makalu？2025年我們該如何看待？

Yes. I'll grab that question. So certainly, our Antora and Makalu solutions and specifically Antora, if we start there, Antora was launched in '23 with the first major vehicle being Lynk & Co 08. And we're continuing to grow that product set and building out our capabilities on that product line across additional OEMs. We have design wins today in our core market in China that will be launched both across the various brands that we serve that are both brands that serve China as well as -- the Chinese market as well as brands that serve the global market. So I think we're really happy about the progress we're making with that product line.

是的。我會抓住這個問題。當然，我們的 Antora 和 Makalu 解決方案，特別是 Antora，如果我們從那裡開始，Antora 於 23 年推出，第一款主要車輛是 Lynk & Co 08。我們正在繼續擴大該產品集，並在其他 OEM 廠商的產品線上建立我們的能力。今天，我們在中國的核心市場取得了設計勝利，這些設計將在我們服務的各個品牌中推出，這些品牌既服務於中國市場，也服務於全球市場。因此，我認為我們對該產品線所取得的進展感到非常高興。

Additionally, we believe that product line has a potential to work beyond our core market and to service some of the global opportunities. And we are -- I mentioned some of the global RFQs that we are pursuing, and we're using that -- the platform that we've built with a broader software stack to service some of those potential opportunities. So I think that product line, we will, in the long-term, see both design wins in our core market as well as throughout our global expansion activities that we're quite excited about it.

此外，我們相信該產品線有潛力超越我們的核心市場，並為一些全球機會提供服務。我們——我提到了我們正在追求的一些全球詢價，我們正在使用它——我們用更廣泛的軟體堆疊構建的平台來為其中一些潛在機會提供服務。因此，我認為，從長遠來看，我們將在我們的核心市場以及整個全球擴張活動中看到設計的勝利，我們對此感到非常興奮。

The Makalu product is a very unique offering with a tremendous capability and compute platform. It performs at a different price point, where OEMs -- those customers want to be able to invest in the capabilities there. So I think we'll see less volume on that product line, but it does give us a tremendous opportunity, and it builds out our software stack and enables us to even transition to the future extremely high-performance products that we see coming in all of our markets across the global landscape.

Makalu 產品是一款非常獨特的產品，具有強大的功能和運算平台。它以不同的價格點運行，原始設備製造商（這些客戶）希望能夠投資那裡的功能。因此，我認為我們會看到該產品線的銷量減少，但它確實給了我們巨大的機會，它構建了我們的軟體堆疊，使我們甚至能夠過渡到我們看到的未來​​極高性能產品我們在全球範圍內的市場。

So that product line will continue to service very well and we're also able to effectively platform our software capabilities that we will see elements of our software stack used on the Makalu product that will be used far into the future in even more advanced applications that we see coming in the pipeline.

因此，該產品線將繼續提供良好的服務，我們也能夠有效地平台化我們的軟體功能，我們將看到我們的軟體堆疊元素在Makalu 產品上使用，這些元素將在未來更先進的應用程式中使用我們看到即將到來。

Okay. Great. Thanks for the color.

好的。偉大的。謝謝你的顏色。

Xiaoyi Lei, Jefferies.

雷曉毅，傑弗里斯。

Yes, thanks for taking my question and congratulations on getting the overseas order. So my first question, maybe just a follow-up question on the progress of overseas expansion. So do we have any expectations for the proportion of overseas revenue in the next two to three years?

是的，感謝您提出我的問題，並祝賀您獲得海外訂單。所以我的第一個問題，也許只是一個關於海外擴張進展的後續問題。那麼我們對未來兩到三年的海外收入佔比有什麼預期嗎？

I think a management already touched up a bit on how to deal with the possible risks of -- how to deal with geopolitical risks. So I'm just wondering, do we have any plan to add more like local capacities in US and Southeast Asia? Yeah.

我認為管理層已經觸及瞭如何應對可能的風險——如何應對地緣政治風險。所以我只是想知道，我們是否有計劃在美國和東南亞增加更多類似的本地產能？是的。

Yeah. Maybe I'll take that question to start with and talk a little bit about our strategy. And Phil can certainly follow up with some of the metrics and detailed financial numbers if needed. So Ecarx, as I mentioned, we started our global journey as long as four years ago and continue to expand our capabilities globally.

是的。也許我會從這個問題開始，談談我們的策略。如果需要的話，菲爾當然可以跟進一些指標和詳細的財務數據。因此，正如我所提到的，Ecarx 早在四年前就開始了我們的全球之旅，並繼續在全球擴展我們的能力。

We're certainly in a lot of discussions about how we -- strategies that we use to continue to grow our engineering capability to service the European market as well as maybe a little longer term, but also to expand our supply chain capabilities, so that we have effective manufacturing to support our growth on a global scale. So we definitely have all those activities in our pipeline and are continuing to work through those strategies to support the growth activities.

當然，我們正在進行大量討論，討論我們如何使用策略來繼續增強我們的工程能力，以服務歐洲市場，也許是在更長的時間內，同時也擴大我們的供應鏈能力，以便我們擁有高效的製造能力來支持我們在全球的成長。因此，我們肯定已經在進行所有這些活動，並將繼續透過這些策略來支持成長活動。

When you look at the vehicle development cycles, they often can be between two and four years. So as we win programs, move through our development activities and start to launch those, you'll start to see significant revenues along that time horizon, and that's somewhat just the industry cycles. They're certainly getting faster.

當您查看車輛開發週期時，您會發現它們通常在兩年到四年之間。因此，當我們贏得專案、完成我們的開發活動並開始啟動這些活動時，您將開始看到在這段時間內的可觀收入，這在某種程度上只是行業週期。他們的速度肯定越來越快。

One of our capabilities as a business is to be able to use our technology stack, our platforming capabilities to be very effective in short horizon programs. Our China market business is extremely dynamic with very aggressive timelines, and we're able to operate with great quality and great technology in that horizon, and we're bringing that capability to the global market.

作為一家企業，我們的能力之一是能夠利用我們的技術堆疊和平台能力在短期專案中非常有效。我們的中國市場業務充滿活力，時間表非常緊迫，我們能夠在這個範圍內以卓越的品質和先進的技術進行運營，並且我們正在將這種能力帶入全球市場。

But there is somewhat of a different operating model between many of the customers that we serve in the China market and customers that we're having deep partnership discussions with at a global level.

但我們在中國市場服務的許多客戶與我們在全球範圍內進行深入合作討論的客戶之間存在著一些不同的營運模式。

So I think that it will take some time for the revenues to begin showing up in our performance as our China business continues to grow. But we already have vehicles that are launched globally that will continue to grow. And we're working very closely with a number of partners and customers in Europe to continue to expand our business there. So it will definitely yield great progress for us in the future.

因此，我認為隨著我們中國業務的持續成長，收入需要一段時間才能開始體現在我們的業績中。但我們已經在全球推出了一些車輛，並將繼續成長。我們正在與歐洲的許多合作夥伴和客戶密切合作，繼續擴大我們在歐洲的業務。所以它肯定會為我們未來帶來巨大的進步。

Thank you. Do we have any guidance or expectations for the proportion of overseas sales based on order backlog?

謝謝。對於基於訂單積壓的海外銷售比例，我們有什麼指導或預期嗎？

Xiaoyi, this is Phil. So as Peter mentioned, we make good traction in global vehicle programs and the revenue is coming. And overall, by end of 2024, we might not see too much, but the momentum is there, and we have full confidence to grow the business aggressively in the next couple of years.

小毅，這是菲爾。正如彼得所提到的，我們在全球汽車項目中取得了良好的進展，並且收入即將到來。總體而言，到 2024 年底，我們可能不會看到太多，但勢頭就在那裡，我們完全有信心在未來幾年積極發展業務。

Our goal doesn't change. That is by 2026 to 2027 time frame, the business from the international or the global OEM customers will be 40% at least, that is our goal. And we are ready. And we are ready to invest into global R&D, global Smart manufacturing, global delivery aggressively in the next one or two years. And that can build our momentum and build on the foundation to generate growth in the future.

我們的目標不會改變。也就是說，到2026年到2027年的時間範圍內，來自國際或全球OEM客戶的業務將至少佔40%，這是我們的目標。我們已經準備好了。我們準備在未來一兩年內積極投資全球研發、全球智慧製造、全球交付。這可以增強我們的動力，並為未來的成長奠定基礎。

Understood, very clear.

明白了，非常清楚。

My next question is regarding the chip procurement strategy. So we noticed that the government sort of encourages the domestic OEM to increase the procurement ratio from local chip suppliers. I'm just wondering if we will adjust our product line -- adjust our strategy in terms of the chip sourcing strategy in response to this policy?

我的下一個問題是關於晶片採購策略。所以我們注意到政府有點鼓勵國內OEM增加從本土晶片供應商的採購比例。我只是想知道我們是否會根據這個政策調整我們的產品線，調整我們在晶片採購策略方面的策略？

Yes, sure. I'll grab that question. Great question. I think if you look at our strategy, we have a great -- we have a fantastic solution to that need in the market. We have had a deep relationship with the global technology suppliers. We were very early to develop platforms of the Qualcomm technology. We have been talking -- we have been developing this Makalu platform of the AMD technology for approximate -- for more than two years now. And we've certainly been discussing that partnership, and we're now starting to see products from that partnership come to the market and be launched inside the vehicles.

是的，當然。我會抓住這個問題。很好的問題。我認為，如果你看看我們的策略，我們有一個很棒的解決方案來滿足市場的需求。我們與全球技術供應商有著深厚的合作關係。我們很早就開發了高通技術的平台。我們一直在討論——我們一直在開發AMD技術的Makalu平台——大約兩年多了。我們當然一直在討論這種合作關係，現在我們開始看到這種合作關係的產品進入市場並在車輛內推出。

Also, Ecarx as a business established the joint venture, SiEngine with AMD in 2018. And that -- the product -- the first product from that joint venture is the base of the Antora platform. And that product was developed in China, 7 nanometer solution, and is a fantastic product set that we're continuing to grow, both in a very platform solution in the Antora 1000 and the Antora 1000 Pro be able to serve a number of different price points in the market.

此外，Ecarx 作為一家企業於 2018 年與 AMD 成立了合資企業 SiEngine。該合資企業的第一個產品是 Antora 平台的基礎。該產品是在中國開發的 7 奈米解決方案，是一個出色的產品組合，我們正在繼續發展，無論是在 Antora 1000 還是 Antora 1000 Pro 的平台解決方案中，都能夠提供多種不同價格的服務市場上的點。

And we see great progress on that platform as we have multiple OEM projects in our pipeline that are built off of that platform. And as I mentioned earlier, I think we will see that both serve markets very effectively, serve markets inside of China and satisfy that need for local SoC performance, but also we see potential for that product set on a global scale as well. So I think we're extremely well positioned to manage some of those challenges that we see in the market with very effective solutions that we have inside of our product portfolio already.

我們看到該平台取得了巨大進展，因為我們的管道中有多個基於該平台構建的 OEM 專案。正如我之前提到的，我認為我們將看到兩者都非常有效地服務市場，服務中國境內的市場並滿足對本地 SoC 性能的需求，我們也看到該產品在全球範圍內的潛力。因此，我認為我們完全有能力透過我們產品組合中已有的非常有效的解決方案來應對市場上遇到的一些挑戰。

Understood. Thank you. And my last question is regarding the -- our cooperation with FAW. Could you please shed more light on progress?

明白了。謝謝。我的最後一個問題是關於我們與一汽的合作。能否進一步說明進展？

So yeah. So given the NDA with the customer, we might not be able to disclose too much of the details. But Xiaoyi. I think the program is proceeding very smoothly as planned. And I can share some information with you regarding the FAW cooperation. So let's recap the strategic imperative of the cooperation between Ecarx and FAW. FAW basically, they want to build the advanced digital cockpit capability, especially the software operating system, so as to improve the competitiveness and the in-car user experience.

所以是的。因此，考慮到與客戶的保密協議，我們可能無法透露太多細節。但小毅。我認為該計劃按計劃進行得非常順利。我可以跟大家分享一些關於一汽合作的資訊。讓我們回顧一下Ecarx與一汽合作的策略必要性。一汽基本上是想打造先進的數位座艙能力，特別是軟體作業系統，進而提高競爭力和車內使用者體驗。

And from the other angle, FAW really want to improve the adoption rate of Chinese domestic key components so as to guarantee a controllable supply chain. And Ecarx, we would like to diversify our customer base. We want to increase our revenue and profit return from new customers. At the same time, we want to scale out our common and standard business and solution platform.

而從另一個角度來看，一汽也確實希望提高國產關鍵零件的採用率，從而確保供應鏈的可控性。而 Ecarx，我們希望使我們的客戶群多樣化。我們希望增加新客戶的收入和利潤回報。同時，我們希望擴展我們的通用和標準業務和解決方案平台。

So -- and through the engagement, I would say, Ecarx will have huge opportunity to serve multi -- nearly more than 10 vehicle programs, car models in the next two years in FAW Group. And we also target the penetration rates in Hongqi Brand like beyond 50% by 2028 and '29 time frame. And then we open up the opportunity for other brands under FAW, for example, like Bestune and maybe the JV between FAW and the international OEM brands.

因此，我想說，透過參與，Ecarx 將有巨大的機會在未來兩年內為一汽集團的近 10 多個車輛項目、車型提供服務。我們也目標是到 2028 年和 29 年時間框架內紅旗品牌的滲透率超過 50%。然後我們為一汽旗下的其他品牌提供機會，例如奔騰，也許還有一汽與國際OEM品牌的合資企業。

So there are two programs right now under our development, and we are going to launch the vehicle programs by the end of the year. That is our plan. So that is the engagement model. And yeah, so as long as the progress could be announced, then we could announce to the market regarding the cooperation and the results.

目前我們正在開發兩個項目，我們將在今年年底推出車輛項目。這就是我們的計劃。這就是參與模型。是的，只要能公佈進展，我們就可以向市場公佈合作情況和成果。

And Peter, do you have any more to add?

彼得，你還有什麼要補充的嗎？

No, I think you did a great job covering it. And we have a number of vehicles in our pipeline and I think we'll continue to make announcements in the future about how we're deepening the relationship across a broader set of their brands.

不，我認為你在這方面做得很好。我們有許多車輛正在籌備中，我認為我們將來會繼續宣佈如何深化與更廣泛的品牌之間的關係。

Okay.

好的。

That concludes our Q&A session. I will now turn the conference back over to Peter, for the closing remarks.

我們的問答環節到此結束。現在我將把會議轉回給彼得做閉幕詞。

Okay. Well, thank you, everyone. Thank you for the time today and joining our call. We're, as we mentioned a number of times during the discussion today, quite excited about the results, 31% year-on-year revenue growth and expanding our total product and vehicles to almost 7 million to 6.9 million vehicles as of the end of June.

好的。嗯，謝謝大家。感謝您今天抽出時間參加我們的通話。正如我們在今天的討論中多次提到的那樣，我們對結果感到非常興奮，截至年底，收入同比增長 31%，並將我們的產品和車輛總數擴大到近 700 萬至 690 萬輛六月。

So I think we've made great progress as a company, both in the metrics as well as deepening our strategic relationship strategy partners and growing our capabilities with new product set, as well as the discussion around the launch of our manufacturers, our newest manufacturing sites in Fuyang. So we're very pleased with the progress of the organization and anticipate we'll continue to have a very solid year as we go forward through the balance of 2024. To thank you again for your time today.

因此，我認為我們作為一家公司已經取得了巨大的進步，無論是在指標上，還是在深化我們的策略合作夥伴關係、透過新產品集增強我們的能力，以及圍繞我們的製造商的推出、我們最新的製造的討論方面。因此，我們對組織的進展感到非常滿意，並預計在 2024 年餘下的時間裡，我們將繼續擁有非常堅實的一年。再次感謝您今天抽出時間。