Magnachip Semiconductor Corp (MX) 2023 Q4 法說會逐字稿

Thank you for standing by, and welcome to the Magnachip Semiconductor Corporation's Fourth Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, today's program is being recorded.

感謝您的耐心等待，歡迎參加 Magnachip 半導體公司 2023 年第四季財報電話會議。 （操作員指示）提醒一下，今天的節目正在錄製中。

And now I'd like to introduce your host for today's program, Steven Pelayo, Managing Director of the Blueshirt Group. Please go ahead.

現在我想介紹一下今天節目的主持人，Steven Pelayo，Blueshirt Group 的董事總經理。請繼續。

Great. Thank you, Jonathan. Hello, everyone. Thank you for joining us to discuss Magnachip's financial results for the fourth quarter and full year ended December 31, 2023.

偉大的。謝謝你，喬納森。大家好。感謝您與我們一起討論 Magnachip 截至 2023 年 12 月 31 日的第四季度和全年財務業績。

The fourth quarter earnings release that was issued today after the market closed can be found on the company's Investor Relations website. The webcast replay of today's call will be archived on our website shortly afterwards.

今天收盤後發布的第四季度收益報告可以在該公司的投資者關係網站上找到。今天電話會議的網路廣播重播將很快在我們的網站上存檔。

Joining me today are YJ Kim, Magnachip's Chief Executive Officer; and Shin Young Park, our Chief Financial Officer. YJ will discuss the company's recent operating performance, business overview and directional guidance for 2024; and Shin Young will review the financial results for the quarter and provide guidance for the first quarter and full year 2024. YJ will then briefly recap the company's business strategy. There will be a Q&A session following the prepared remarks.

今天與我一起出席的有 Magnachip 執行長 YJ Kim；和我們的財務長 Shin Young Park。 YJ將討論公司近期的經營績效、業務概況以及2024年的方向指引； Shin Young 將審查本季的財務業績，並為 2024 年第一季和全年提供指導。然後，YJ 將簡要回顧公司的業務策略。準備好的發言後將舉行問答環節。

During the course of this conference call, we may make forward-looking statements about Magnachip's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and, therefore, are subject to risks and uncertainties as described in the safe harbor statement found in our SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements.

在本次電話會議期間，我們可能會對 Magnachip 的業務前景和期望做出前瞻性陳述。我們的前瞻性陳述和所有其他非歷史事實的陳述反映了我們截至目前為止的信念和預測，因此受到美國證券交易委員會文件中安全港聲明中所述的風險和不確定性的影響。此類聲明基於截至本協議發布之日公司可獲得的信息，並可能因未來發展而發生變化。除法律要求外，本公司不承擔任何更新這些聲明的義務。

During the call, we also will discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with generally accepted accounting principles but are intended as supplemental measures of Magnachip's operating performance that may be useful to investors. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our current earnings release in the Investor Relations section of our website.

在電話會議期間，我們還將討論非公認會計準則財務指標。非 GAAP 指標並非根據公認會計原則制定，而是旨在作為 Magnachip 經營績效的補充指標，可能對投資者有用。非公認會計原則財務指標與最直接可比較的公認會計原則指標的調節可以在我們網站投資者關係部分的當前收益發布中找到。

With that, I'll now turn the call over to YJ Kim. YJ?

現在，我將把電話轉給 YJ Kim。楊傑？

Hello, everyone. Thank you for joining us today, and welcome to Magnachip's Q4 earnings call.

大家好。感謝您今天加入我們，歡迎參加 Magnachip 第四季財報電話會議。

First, I believe it's important for investors to understand how our financial results fit into the big picture as we undergo a substantial transformation in our business over the next couple of years.

首先，我認為，隨著我們在未來幾年經歷業務的重大轉型，投資者了解我們的財務表現如何融入大局非常重要。

First, we are dramatically shifting priorities in our display business to be laser-focused primarily on China. This strategy builds upon 20 years of OLED driver success, primarily in Korea and follows the industry's dramatic shift to China production. Second, we will be working this year and next to fill idle capacity in our Gumi fab as we transition away from supplying noncore transitional foundry services to higher-margin power products. Third, starting early this year, we began operating on the new structure that streamlines our go-to-market strategy, strengthens the potential for increased shareholder value and also improve transparency for investors.

首先，我們正在大幅調整顯示器業務的重點，並將重點放在中國。該策略建立在 OLED 驅動器 20 年的成功基礎上（主要是在韓國），並跟隨該行業向中國生產的巨大轉變。其次，隨著我們從提供非核心過渡代工服務轉向利潤率更高的電源產品，我們將在今年和明年努力填補龜尾工廠的閒置產能。第三，從今年年初開始，我們開始採用新的架構，以簡化我們的上市策略，增強股東價值增加的潛力，並提高投資者的透明度。

Let me provide more detail on each of these transitions. The first major transition involved China, which is becoming the new center of the OLED display universe. We are executing on our strategy to penetrate this vibrant market with feature-rich OLED standard products, and I'm pleased to say we've made tremendous progress so far. We've laid the groundwork for success by establishing a China-dedicated entity and by building strong working relationship with Chinese panel makers and leading smartphone OEMs.

讓我提供有關每個轉變的更多詳細資訊。第一個重大轉變涉及中國，中國正在成為OLED顯示器領域的新中心。我們正在執行我們的策略，以功能豐富的 OLED 標準產品打入這個充滿活力的市場，我很高興地說，到目前為止我們已經取得了巨大的進展。透過建立專門針對中國的實體以及與中國面板製造商和領先的智慧型手機原始設備製造商建立牢固的合作關係，我們為成功奠定了基礎。

Over the past few quarters, we've doubled our resources and staff in China amassing a team of more than 20 professionals dedicated especially to our OLED display business. In addition, we hired senior advisers from a top 5G semiconductor company, the financial services sector and the China supply chain to help accelerate our progress. And I now personally travel to China on nearly a weekly basis to meet our strategic customers, partners and strategic OEMs.

在過去的幾個季度中，我們在中國的資源和員工數量增加了一倍，組建了一支由 20 多名專業人士組成的團隊，專門致力於我們的 OLED 顯示器業務。此外，我們聘請了來自頂級5G半導體公司、金融服務業和中國供應鏈的高級顧問，以幫助加快我們的進展。現在，我幾乎每週都會親自前往中國，與我們的策略客戶、合作夥伴和戰略原始設備製造商會面。

Our work in China is beginning to pay off. We've already secured 2 smartphone design wins with leading OEMs and expect more on the way. It's part of our strategy to serve the full spectrum of models from mainstream to foldables. I'm confident that the results of our strategy will become apparent beginning later this year with more significant revenue growth expected in 2025.

我們在中國的工作已開始獲得回報。我們已經與領先的 OEM 廠商取得了 2 項智慧型手機設計勝利，並且預計還會有更多勝利。為從主流到可折疊的全系列型號提供服務是我們策略的一部分。我相信，我們的策略成果將從今年稍後開始顯現，預計 2025 年收入將實現更顯著的成長。

The second major transition involves the idle capacity we expected in our Gumi fab, created by the wind down of our transitional foundry services business. We plan to fill the idle capacity with our existing power product portfolio as well as a new slate of next-generation power products that we will introduce over the next several quarters. We believe these products will be on par with some of the best global suppliers of power products.

第二個重大轉型涉及我們預期龜尾工廠的閒置產能，這是由於我們過渡代工服務業務的結束而產生的。我們計劃利用現有的電源產品組合以及我們將在未來幾季推出的一系列新的下一代電源產品來填補閒置產能。我們相信這些產品將與一些全球最好的電源產品供應商相媲美。

As we've said previously, this fab transition will depress gross margins until we can adequately replace the legacy transitional foundry services business with higher-margin power products. And we intend to share updates on our perspective on this transition on a quarterly basis.

正如我們之前所說，這種晶圓廠轉型將壓低毛利率，直到我們能夠用利潤率更高的功率產品充分取代傳統的過渡代工服務業務。我們打算每季分享我們對這一轉變的最新看法。

To help achieve our goals during the transition, we have now streamlined the structure of the company by creating 2 main business entities to better align our product strategies and also to provide more transparency to investors through our new MSS, mixed signal solutions, which includes display and power IC products and PAS, power analog solutions, our traditional power discrete businesses.

為了幫助在過渡期間實現我們的目標，我們現在透過創建2 個主要業務實體來簡化公司結構，以更好地調整我們的產品策略，並透過我們新的MSS、混合訊號解決方案（包括顯示）為投資者提供更高的透明度以及功率IC產品和PAS、功率類比解決方案，我們傳統的功率分立業務。

To help investors better track our business progress, we will break out MSS and PAS revenue as well as gross margin beginning on the Q1 earnings call. The reasons for deciding to separate the standard products business structurally and operate independently are mainly because display and power IC are fabless and power discrete is an IDM business.

為了幫助投資者更好地追蹤我們的業務進展，我們將從第一季財報電話會議開始公佈 MSS 和 PAS 收入以及毛利率。決定將標準產品業務在結構上分離並獨立運營的原因主要是因為顯示和功率IC是無晶圓廠的，而功率離散是IDM業務。

In addition, the separation allows the following benefits. One, increased shareholder value by maximizing the valuation of each business. The separation allows a foundation for a more efficient and transparent business structure that can fuel sustainable growth through strategic financing and investment. Two, strengthened business performance management by establishing independent and responsible management systems. Three, enhanced flexibility in business portfolio and increased strategic responsiveness to environment changes. We are confident that the strategies I've outlined will put us on a path to achieve a sustained recovery over the next 2 years.

此外，分離還具有以下優點。第一，透過最大化每項業務的估值來增加股東價值。此次分離為更有效率、更透明的業務結構奠定了基礎，可以透過策略性融資和投資推動永續成長。二是強化經營績效管理，建立獨立負責的管理體系。第三是增強業務組合彈性，增強對環境變化的策略反應能力。我們相信，我概述的策略將使我們走上未來兩年實現持續復甦的道路。

While we typically provide guidance for 1 quarter only, I feel it's important in the current environment to provide directional guidance for 2024. We currently expect double-digit revenue growth in both the newly organized MSS and PAS businesses.

雖然我們通常只提供 1 季度的指導，但我認為在當前環境下為 2024 年提供方向性指導非常重要。我們目前預計新組成的 MSS 和 PAS 業務將實現兩位數的收入成長。

Overall, we expect total company revenue to be flat to up slightly in 2024 over 2023, primarily due to the phaseout of the transitional foundry services. Gross margin for the consolidated company is expected to be in the range of 17% to 20% for the year, severely impacted by the idle capacity when the transitional foundry services revenue winds down. While the near-term outcome is disappointing, rest assured that my team and I are committed to working every day on behalf of our shareholders to improve the results.

總體而言，我們預計 2024 年公司總收入將與 2023 年持平或略有上升，這主要是由於過渡代工服務的逐步淘汰。預計合併後公司今年的毛利率將在 17% 至 20% 之間，受到過渡代工服務收入逐漸減少時閒置產能的嚴重影響。雖然近期結果令人失望，但請放心，我和我的團隊致力於每天代表股東努力改善績效。

Now that I provided a big-picture context, let's review our Q4 results. Revenue was $50.8 million and gross margin was 22.7%, both near the low end of our guidance range. During the quarter, our OLED business was impacted by slower design win progress than expected due to longer OEM evaluation cycles.

現在我已經提供了整體背景，讓我們回顧一下我們第四季度的結果。收入為 5,080 萬美元，毛利率為 22.7%，均接近我們指導範圍的下限。本季度，由於 OEM 評估週期較長，我們的 OLED 業務受到設計獲勝進度慢於預期的影響。

During Q4, we also embarked on another key OLED project aimed at diversifying our customer base to enter the smartwatch display market. Our power business results were down 20.5% sequentially, primarily due to the ongoing inventory correction in industrial end markets, particularly in China's e-bike market and the solar sector.

第四季度，我們還啟動了另一個重要的 OLED 項目，旨在使我們的客戶群多元化，進入智慧手錶顯示器市場。我們的電力業務業績環比下降 20.5%，主要是由於工業終端市場持續的庫存調整，特別是中國電動自行車市場和太陽能產業。

Now let me provide updates to each of our business under the 2023 financial reporting convention. Beginning with our display business, Q4 revenue was in line with our expectation at $5.2 million, down 30.8% year-over-year and 18.3% sequentially. We received our first pilot production purchase order in China for our first chip from an after-service market player during the December quarter, and we are making progress on many additional fronts. Specifically, Q4 marked the beginning of initial shipments in China of our first OLED DDIC chip that we taped out in 2022.

現在讓我根據 2023 年財務報告公約提供我們每項業務的最新情況。從我們的顯示器業務開始，第四季營收為 520 萬美元，符合我們的預期，年減 30.8%，季減 18.3%。去年第四季度，我們從一家售後服務市場參與者收到了在中國的首個晶片試生產採購訂單，並且我們正在許多其他方面取得進展。具體來說，第四季標誌著我們於 2022 年流片的首款 OLED DDIC 晶片在中國開始首次出貨。

In Q4 2023, we were awarded our first design win and related PO for the after service market. While its immediate financial contribution is expected to be modest, it marks our first pilot production PO in China and is a significant step towards the acceptance of our product capabilities as well as our team's efforts.

2023 年第四季度，我們獲得了第一個設計勝利和售後服務市場的相關採購訂單。雖然其直接財務貢獻預計不大，但它標誌著我們在中國的第一個試生產採購訂單，並且是我們的產品能力以及我們團隊的努力得到認可的重要一步。

Moving on to our current generation of OLED DDIC product. Our third OLED DDIC chips successfully completed design in evaluation at a leading Chinese smartphone OEM and been assigned a high-volume model for launch in Q2 2024. This resulted in a design win with obtaining pilot production PO as a second sole supplier. For this leading Chinese smartphone OEM, we've been qualified and added to their approved vendor list. Moreover, we've been chosen to also work with them on their fold model with our next-generation chip, which we prioritize and will sample next quarter. Additionally, our second chip is still going through a design in evaluation phase at a global smartphone OEM. We will provide an update on this once we receive the status from the OEM evaluation.

繼續討論我們目前一代的 OLED DDIC 產品。我們的第三款OLED DDIC 晶片在一家領先的中國智慧型手機OEM 中成功完成了評估設計，並被指定為將於2024 年第二季度推出的大批量型號。這導致我們作為第二獨家供應商獲得了試生產訂單，從而贏得了設計勝利。對於這家領先的中國智慧型手機 OEM，我們已獲得資格並添加到他們批准的供應商名單中。此外，我們還被選中與他們合作，使用我們的下一代晶片開發折疊模型，我們將優先考慮該模型，並將在下個季度提供樣品。此外，我們的第二個晶片仍在全球智慧型手機 OEM 中進行設計評估階段。一旦我們收到 OEM 評估的狀態，我們將提供相關更新。

Mid last year, we announced that we began developing another OLED DDIC chip targeted for fast-growing foldable smartphone market. Third-party research from China (inaudible) estimates global foldable handsets are projected to grow over 50% year-over-year the next few years and reach over 100 million units by 2027 from just approximately 15 million units today.

去年年中，我們宣布開始開發另一款 OLED DDIC 晶片，針對快速成長的可折疊智慧型手機市場。來自中國的第三方研究（聽不清楚）估計，未來幾年全球可折疊手機預計將年增 50% 以上，到 2027 年，銷量將從目前的約 1,500 萬部增至超過 1 億部。

Finally, we are excited to announce that we partnered with a watch solution maker in China during Q4 to develop a new product targeting the OLED smartwatch display market. This is an adjacent market we are applying our smartphone DDIC technology know-how and development expertise.

最後，我們很高興地宣布，我們在第四季度與中國的一家手錶解決方案製造商合作，開發了一款針對 OLED 智慧手錶顯示器市場的新產品。這是我們正在應用我們的智慧型手機 DDIC 技術知識和開發專業知識的鄰近市場。

The delivery of first sample is expected in mid-2024. This initiative demonstrates our strategy to expand into new high-growth markets with new product offerings that showcase our ability to innovate across segments.

第一個樣品預計將於 2024 年中期交付。這項舉措展示了我們透過新產品拓展新的高成長市場的策略，展現了我們跨細分市場的創新能力。

With regard to our OLED automotive business, we began production shipments to our large Korean panel maker for 3 different car models from 2 top-tier European car manufacturers between May and July 2023. Modest revenue from those devices began in May '23 and is expected to continue for a few years given longer automotive cycles. All these efforts underscore our commitment to innovation and market expansion.

關於我們的OLED 汽車業務，我們在2023 年5 月至7 月期間開始向韓國大型面板製造商生產來自2 家歐洲頂級汽車製造商的3 種不同車型。這些設備的收入於23 年5 月開始，預計將帶來適度收入鑑於汽車週期更長，這種趨勢將持續幾年。所有這些努力都強調了我們對創新和市場拓展的承諾。

Moving on to our power business. Q4 revenue was $36 million, down 22.3% year-over-year and 20.5% sequentially. Sequentially, our power business was impacted by an ongoing inventory correction in industrial end markets, particularly e-bike and solar. We also saw weakness in consumer TV and PC power. On a positive note, we secured 2 new smartphone design wins for our low-voltage MOSFET family, which grew more than 20% sequentially in the fourth quarter for that product family.

繼續我們的電力業務。第四季營收為 3,600 萬美元，年減 22.3%，季減 20.5%。隨後，我們的電力業務受到工業終端市場（尤其是電動自行車和太陽能）持續庫存調整的影響。我們也看到消費電視和個人電腦電源的疲軟。從積極的方面來看，我們的低壓 MOSFET 系列贏得了兩項新的智慧型手機設計，該產品系列在第四季度環比增長了 20% 以上。

While the overall power business results in the fourth quarter were disappointing, we currently expect a gradual recovery in our power business in the first half of the year with increased momentum in the second half. Our major markets such as consumer, computing and communication already underwent a major inventory correction over the last year.

雖然第四季整體電力業務業績令人失望，但我們目前預計上半年電力業務將逐步復甦，下半年動力將增強。去年，我們的消費、計算和通訊等主要市場已經經歷了重大庫存調整。

We continue to focus on execution in Q4. We developed and launched new power products and saw strong momentum in our design win activities. In Q4, we secured a new design win and began mass production for a major U.S. automotive brand that will contribute to revenue growth in 2024. I am extremely proud of the progress we've made in our automotive business as revenue for the full year 2023 is up over 3x compared to 2022. I look forward to building on this momentum in coming years.

我們繼續關注第四季度的執行情況。我們開發並推出了新的電源產品，並在設計獲勝活動中看到了強勁的勢頭。在第四季度，我們贏得了新的設計勝利，並開始為美國主要汽車品牌進行量產，這將為2024 年的收入成長做出貢獻。我對我們​​在汽車業務中的進展（2023 年全年收入）感到非常自豪與 2022 年相比增長了 3 倍多。我期待在未來幾年繼續保持這一勢頭。

We also continue to innovate. In October, we announced 2 new 650-volt super junction MOSFET that reduced the overall footprint by nearly 60% as compared to other products from competitors. These new MOSFETs offer excellent design flexibility, efficient heat dissipation and low resistance characteristics. As a result, they are well suited for various applications that require compact size and high efficiency, such as OLED TVs, servers, lighting products and laptop chargers and adapters.

我們也不斷創新。 10 月，我們推出了 2 款新型 650 伏特超級結 MOSFET，與競爭對手的其他產品相比，整體佔地面積減少了近 60%。這些新型 MOSFET 具有出色的設計靈活性、高效的散熱和低電阻特性。因此，它們非常適合需要緊湊尺寸和高效率的各種應用，例如 OLED 電視、伺服器、照明產品以及筆記型電腦充電器和適配器。

In summary, our power business, our product portfolio is getting stronger as we continue to focus on rolling up our next-generation power products to maintain our momentum of design-ins and wins. These new products will provide the foundation to fill our Gumi fab, achieve better margin and helped us get back to profitability.

總而言之，隨著我們繼續專注於推出下一代電源產品以保持設計和獲勝的勢頭，我們的電源業務和產品組合變得越來越強大。這些新產品將為我們的龜尾工廠提供基礎，實現更好的利潤並幫助我們恢復利潤。

Entire families of our next-generation products will be forthcoming in 2024. We will be releasing the next-generation 650-volt IGBT in the first half 2024 followed by sixth generation super junction MOSFETs and sixth generation IGBTs in Q3 of this year and eighth generation medium voltage MOSFETs and eighth generation low-voltage MOSFETs in Q4 of this year. We expect these next-generation product families to match or surpass the performance of our Tier 1 competitors. This will position us well to compete for high-end industrial and automotive market as well as serve our existing markets such as consumer, computing and communications better. Additionally, we will be introducing a new line of commodity products by end of the first quarter to improve fab utilization.

我們的下一代產品的整個系列將於2024 年推出。我們將在2024 年上半年發布下一代650 伏IGBT，隨後在今年第三季度發布第六代超級結MOSFET 和第六代IGBT，以及第八世代今年第四季將推出中壓 MOSFET 和第八代低壓 MOSFET。我們預計這些下一代產品系列的性能將達到或超過我們一級競爭對手的性能。這將使我們能夠更好地競爭高端工業和汽車市場，並更好地服務於消費、計算和通訊等現有市場。此外，我們將在第一季末推出新的商品系列，以提高晶圓廠利用率。

I'll come back to wrap up the call after Shin Young gives you more details of our financial performance in the fourth quarter and provide Q1 and full year 2024 guidance. Shin Young?

在 Shin Young 向您提供有關我們第四季度財務業績的更多詳細資訊並提供第一季和 2024 年全年指導後，我將回來結束電話會議。申英？

Thank you, YJ, and welcome to everyone on the call. Let's start with key financial metrics for Q4.

謝謝您，YJ，歡迎大家參加電話會議。讓我們從第四季的關鍵財務指標開始。

Total revenue in Q4 was $50.8 million, down 17% sequentially and down 16.7% year-over-year. Revenue from the standard products business was $41.2 million, and revenue from transitional foundry services was $9.6 million. Within standard products, display business revenue was $5.2 million and power business revenue was $36 million.

第四季總營收為 5,080 萬美元，季減 17%，年減 16.7%。標準產品業務的收入為 4,120 萬美元，過渡代工服務的收入為 960 萬美元。標準產品中，顯示業務收入為 520 萬美元，電源業務收入為 3,600 萬美元。

Gross margin in Q4 was 22.7%, down from 23.6% in Q3, mainly driven by lower fab utilization. Compared to the same period last year, gross margin decreased 370 basis points from 26.4%, primarily as a result of unfavorable product mix, lower fab utilization and higher fab costs. Going forward, please keep in mind that there likely will be more volatility in our gross margin due to the relative sizes of the newly organized businesses on a stand-alone basis. In addition, among other things, product mix, fab utilization and input manufacturing costs will impact our quarterly gross margin by business.

第四季的毛利率為 22.7%，低於第三季的 23.6%，主要是由於晶圓廠利用率較低。與去年同期相比，毛利率從 26.4% 下降了 370 個基點，主要是由於產品結構不利、晶圓廠利用率較低和晶圓廠成本較高。展望未來，請記住，由於新組成的業務的獨立規模相對較大，我們的毛利率可能會出現更大的波動。此外，產品組合、晶圓廠利用率和投入製造成本將影響我們按業務劃分的季度毛利率。

As a reminder, our transitional foundry services contract with SK keyfoundry expires at the end of August 2023, and we are planning to wind down these foundry services starting in Q1 2024, and the revenue is expected to be approximately $2 million to $3 million per quarter in the first half of 2024.

提醒一下，我們與 SK keyfoundry 的過渡代工服務合約將於 2023 年 8 月到期，我們計劃從 2024 年第一季開始逐步停止這些代工服務，預計每季收入約為 200 萬至 300 萬美元2024年上半年。

Transitional foundry services accounts for approximately 30% of our Gumi capacity when fully utilized with foundry products. This anticipated decline is significantly impacting our factory utilization rate in Gumi, which is negatively impacting our product gross margin for the power business.

當充分利用代工產品時，過渡代工服務約佔龜尾產能的 30%。這種預期的下降嚴重影響了我們在龜尾的工廠利用率，這對我們電力業務的產品毛利率產生了負面影響。

Turning now to operating expenses. Q4 combined R&D and SG&A was $27.5 million. This compares to R&D and SG&A of $23.7 million in Q3 2023 and $26.2 million in Q4 last year. R&D in Q4 was $15.4 million as compared to $11.6 million in Q3 and $13.7 million in Q4 last year due to higher [mass spec] cost.

現在轉向營運費用。第四季研發和銷售、一般管理費用總計為 2,750 萬美元。相較之下，2023 年第三季的研發和銷售及管理費用為 2,370 萬美元，去年第四季為 2,620 萬美元。由於[質譜]成本較高，第四季的研發費用為 1,540 萬美元，而去年第三季的研發費用為 1,160 萬美元，第四季的研發費用為 1,370 萬美元。

Stock compensation charges including operating expenses were $1.7 million in Q4 compared to $2.1 million in Q3 and $1.5 million in Q4 last year. Q4 operating loss was $15.9 million. This compares to an operating loss of $9.2 million in Q3 and operating loss of $10.1 million in Q4 2022.

第四季包括營運費用在內的股票薪資費用為 170 萬美元，而去年第三季為 210 萬美元，第四季為 150 萬美元。第四季營運虧損為 1590 萬美元。相較之下，2022 年第三季的營運虧損為 920 萬美元，第四季的營運虧損為 1,010 萬美元。

On a non-GAAP basis, Q4 adjusted operating loss was $14.1 million compared to adjusted operating loss of $7.1 million in Q3 and $8.6 million in Q4 last year. Net loss in Q4 was $6 million as compared with a net loss of $1.2 million in Q3 and a net income of $3 million in Q4 last year. Q4 adjusted EBITDA was negative $10 million. This compares to a negative $2.7 million in Q3 and negative $4.8 million in Q4 last year.

以非公認會計準則計算，第四季調整後營運虧損為 1,410 萬美元，而去年第三季調整後營運虧損為 710 萬美元，第四季調整後營運虧損為 860 萬美元。第四季淨虧損為 600 萬美元，而去年第三季淨虧損 120 萬美元，淨利為 300 萬美元。第四季調整後 EBITDA 為負 1000 萬美元。相比之下，去年第三季為負 270 萬美元，第四季為負 480 萬美元。

Our GAAP diluted loss per share in Q4 was $0.16 as compared with diluted loss per share of $0.13 in Q3 and diluted earnings per share of $0.07 in Q4 last year. Our non-GAAP diluted loss per share in Q4 was $0.21. This compares with diluted loss per share of $0.04 in Q3 and $0.36 in Q4 last year.

我們第四季的 GAAP 攤薄每股虧損為 0.16 美元，而去年第三季的攤薄每股虧損為 0.13 美元，去年第四季的攤薄每股收益為 0.07 美元。我們第四季的非 GAAP 攤薄每股虧損為 0.21 美元。相較之下，去年第三季和第四季的攤薄每股虧損分別為 0.04 美元和 0.36 美元。

Our weighted average diluted shares outstanding for the quarter were 38.8 million shares. In Q4, under our new stock buyback program authorization of $50 million, we repurchased approximately 1.1 million shares or $8.2 million. We had about $36.4 million remaining out of the new $50 million program at the end of December 31, 2023.

本季我們的加權平均稀釋後流通股為 3,880 萬股。第四季度，根據我們新的 5,000 萬美元股票回購計畫授權，我們回購了約 110 萬股股票或 820 萬美元。截至 2023 年 12 月 31 日，我們的 5,000 萬美元新計畫還剩約 3,640 萬美元。

Moving to the balance sheet. We ended the quarter with no debt and cash of $158.1 million, down from $166.6 million at the end of Q3 2023. The primary cash outflow during the quarter was approximately $8.2 million of stock buybacks. Net accounts receivable at the end of the quarter totaled $32.6 million, which represents a decrease of 20.6% from Q3 2023.

轉向資產負債表。截至本季末，我們的無債務和現金為 1.581 億美元，低於 2023 年第三季末的 1.666 億美元。本季的主要現金流出約為 820 萬美元的股票回購。截至本季末的應收帳款淨額總計 3,260 萬美元，較 2023 年第三季下降 20.6%。

Our day sales outstanding for Q4 was 59 days and compares to 62 days in Q3. Our average days in inventory for Q4 was 77 days and compares to 61 days in Q3. The absolute dollar value of our inventory was up slightly quarter-over-quarter, while lower cost of sales primarily drove the calculation for days of inventory higher.

第四季的未完成日銷售額為 59 天，而第三季為 62 天。第四季我們的平均庫存天數為 77 天，而第三季為 61 天。我們庫存的絕對美元價值環比略有上升，而銷售成本的下降主要推動了庫存天數的計算。

Specifically, inventories net at the end of the quarter totaled $32.7 million. This compares to $30.8 million in Q3 2023. Lastly, Q4 CapEx was $4.7 million. And for the full year 2023, we spent $7 million in line with our previous estimates that we reaffirmed last quarter.

具體而言，本季末的庫存淨額總計 3,270 萬美元。相較之下，2023 年第三季的資本支出為 3,080 萬美元。最後，第四季的資本支出為 470 萬美元。 2023 年全年，我們花費了 700 萬美元，與我們上季重申的先前估計一致。

Now moving to our first quarter and full year 2024 guidance. Beginning in Q1, we will begin reporting results under the newly organized businesses, MSS and PAS. While actual results may vary, for Q1 2024, Magnachip currently expects consolidated revenue to be in the range of $46 million to $51 million, including approximately $3 million of transitional foundry services.

現在轉向我們的 2024 年第一季和全年指引。從第一季開始，我們將開始報告新組織的業務 MSS 和 PAS 的表現。雖然實際結果可能有所不同，但 Magnachip 目前預計 2024 年第一季的綜合收入將在 4,600 萬美元至 5,100 萬美元之間，其中包括約 300 萬美元的過渡代工服務。

MSS revenue to be in the range of $8 million to $10 million. This compares with MSS equivalent revenue of $8.6 million in Q4 2023. PAS revenue to be in the range of $35 million to $38 million. This compares with PAS equivalent revenue of $32.6 million in Q4 2023. Consolidated gross profit margin to be in the range of 17% to 20%. MSS gross profit margin to be in the range of 40% to 43% which includes the positive impact of expected onetime nonrecurring engineering revenue. This compares with MSS equivalent gross profit margin of 41.3% in Q4 2023 which also included onetime nonrecurring engineering revenue. PAS gross profit margin to be in the range of 15% to 18% due primarily to the expected decline in transitional foundry services revenue. This compares with PAS equivalent gross profit margin of 18% in Q4 2023.

MSS 收入將在 800 萬美元至 1000 萬美元之間。相較之下，2023 年第四季 MSS 等值收入為 860 萬美元。PAS 收入將在 3,500 萬美元至 3,800 萬美元之間。相比之下，2023 年第四季 PAS 等值收入為 3,260 萬美元。綜合毛利率在 17% 至 20% 之間。 MSS 毛利率將在 40% 至 43% 之間，其中包括預期一次性非經常性工程收入的正面影響。相較之下，MSS 2023 年第四季的毛利率為 41.3%，其中還包括一次性非經常性工程收入。 PAS 毛利率將在 15% 至 18% 之間，主要是由於過渡代工服務收入的預期下降。相較之下，2023 年第四季 PAS 的毛利率為 18%。

For the full year 2024, we currently expect MSS revenue to grow double digits year-over-year as compared with MSS equivalent revenue of $44.4 million in 2023. PAS revenue to grow double digits year-over-year as compared with PAS equivalent revenue of $151.3 million in 2023. Consolidated revenue flat to up slightly year-over-year as recovery in MSS PAS is offset by the phaseout of traditional foundry services. Consolidated gross profit margin between 17% to 20% due to idle capacity expected from the phaseout of transitional foundry services. This compares with the consolidated gross profit margin of 22.4% in 2023.

對於 2024 年全年，我們目前預計 MSS 收入將同比增長兩位數，而 2023 年 MSS 同等收入為 4,440 萬美元。PAS 收入將同比增長兩位數，而 2023 年 PAS 同等收入將達到兩位數。 2023 年為1.513 億美元。由於MSS PAS 的復甦被傳統代工服務的逐步淘汰所抵消，合併收入同比持平或小幅增長。由於過渡代工服務的逐步淘汰預計將導致產能閒置，綜合毛利率將在 17% 至 20% 之間。相較之下，2023 年綜合毛利率為 22.4%。

Thank you. And now I'll turn the call back over to YJ for his final remarks. YJ?

謝謝。現在我將把電話轉回給 YJ，聽他最後的演講。楊傑？

I want to emphasize points I made earlier because they are important for investors to understand where we are and where we are headed.

我想強調我之前提出的觀點，因為它們對於投資人了解我們的現狀和前進方向非常重要。

One, our display business is building upon our past success in Korea to focus more squarely in China. As a sign of the importance of the China market, we have formed a dedicated China operating entity enabling us to forge strategic partnerships with key players in the smartphone, TV, automotive and ecosystems. This move strengthens our market presence and fosters valuable relationship within the industry. As we benefit from the strategic initiatives in our China operations, we are optimistic about the trajectory ahead for our display business.

第一，我們的顯示器業務正以過去在韓國的成功為基礎，更加專注於中國。作為中國市場重要性的標誌，我們成立了專門的中國營運實體，使我們能夠與智慧型手機、電視、汽車和生態系統的主要參與者建立戰略合作夥伴關係。此舉增強了我們的市場影響力，並在業界培養了寶貴的關係。由於我們受益於中國業務的策略性舉措，我們對顯示器業務的未來發展軌跡感到樂觀。

Two, we are dealing ahead on with unexpected drop in fab capacity in our Gumi fab as a result of the expected drop-off in transitional foundry services and will provide regular updates on our plan.

第二，我們正在繼續應對因過渡代工服務預計下降而導致龜尾工廠產能意外下降的問題，並將定期更新我們的計畫。

Three, we've separated the structure of the company into 2 entities to increase shareholder value by maximizing the valuation of each segment, strengthening business performance management and enhancing flexibility to respond to changes in the business environment. The move also will dramatically increase our transparency to the investor community.

第三，我們將公司架構拆分為兩個實體，透過最大化各個板塊的估值、加強業績管理、增強應對經營環境變化的靈活性來增加股東價值。此舉也將大大提高我們對投資者群體的透明度。

Thank you to our shareholders for your patience. We appreciate your support as we work to achieve our goals. Now I will turn the call back to Steven. Steven?

感謝我們的股東的耐心等待。我們感謝您在我們努力實現目標時的支持。現在我將把電話轉回給史蒂文。史蒂文？

Great. Thank you. That concludes the prepared remarks section of our call today. Operator or Jonathan, would you now open up the call for questions?

偉大的。謝謝。我們今天電話會議準備好的演講部分到此結束。接線生或喬納森，現在可以打開電話提問嗎？

And our first question comes from the line of Suji Desilva from ROTH Capital Markets.

我們的第一個問題來自羅斯資本市場的 Suji Desilva。

So YJ in the display market in China, you say you have 2 smartphone OEM wins. Are those wins secured directly by you or by the display partner you have? Just trying to understand how those OEM wins are going to be secured going forward.

所以YJ在中國顯示器市場，你說你有2個智慧型手機OEM勝利。這些勝利是由您直接獲得還是由您擁有的展示合作夥伴獲得？只是想了解未來將如何確保這些 OEM 的勝利。

Yes. The -- in China, we sell to the panel customer. And the smartphone OEMs, they also dictate on the -- which DDIC they like to use as well. So as I said, we doubled our resources in the last few quarters. We have more than 20 professionals. And also, we have added 3 more direct OEM sales to smartphone and to OEM and I've also hired 3 advisers to help out from the top 5G semiconductor companies and supply chain, and so forth. So we are using both sales to the panel as well as the smart OEMs, and that's how we're going to accelerate and win more sockets.

是的。 - 在中國，我們向面板客戶銷售。智慧型手機 OEM 廠商也決定他們喜歡使用哪種 DDIC。正如我所說，我們在過去幾季將資源增加了一倍。我們有 20 多位專業人員。此外，我們還增加了 3 個針對智慧型手機和 OEM 的直接 OEM 銷售，我還聘請了 3 名顧問來幫助頂級 5G 半導體公司和供應鏈等。因此，我們同時利用對面板和智慧 OEM 的銷售，這就是我們將加速並贏得更多插座的方式。

Okay. Also, in the display market, can you tell me how many products you have now targeting the China market in total? And what is the after service market? Is that a special market that needs special products?

好的。另外，在顯示器市場，您能告訴我現在總共有多少種產品是針對中國市場的嗎？那麼售後服務市場又是怎麼樣的呢？這是一個特別的市場，需要特殊的產品嗎？

Yes. So let me talk about the after service market. So after service market is like either refurbish a phone or when your screen goes off, then you have to replace. According to market research, that market now is anywhere between 10% to 20% of smartphone market. And as you saw, there's an increase in used smartphones. So I think that's what we are seeing. That's the first question answer.

是的。那我來談談售後服務市場。因此，售後服務市場就像翻新手機一樣，或者當你的螢幕壞了時，你就必須更換。根據市場研究，該市場目前佔智慧型手機市場的 10% 至 20%。正如您所看到的，二手智慧型手機的數量有所增加。所以我認為這就是我們所看到的。這是第一個問題的答案。

And then the app -- what was the -- the number of products we now have in China, we have 3, and I said we're going to have another chip coming out next quarter. And then we are working on the foldable and the mainstream product. That'll be all out this year.

然後是應用程式——我們現在在中國擁有的產品數量，我們有 3 個，我說我們將在下個季度推出另一款晶片。然後我們正在開發可折疊的主流產品。今年就全部結束了。

Okay. Great. And then last question, as you convert the foundry services at Gumi to power, how should we size the revenue opportunity once that's fully converted incrementally for your power business, the opportunity at least, capacity wise?

好的。偉大的。最後一個問題，當您將龜尾的鑄造服務轉變為電力時，一旦您的電力業務完全增量轉變，我們應該如何衡量收入機會，至少是產能的機會？

Yes. So I think there are 2 vectors there. One, is how we're going to fill the fab. The -- how we're going to fill the fab is during the transition. First of all, we're going to have a bunch of new products. As I said today, we have a slew of new generation coming up over this year. So we have a 650-volt IGBT in the first half followed by sixth generation super junction and IGBT in Q3, an eighth generation MV and low voltage in the fourth quarter and then another commodity product line to fill the factory in the fourth quarter. So that is a product strategy to fill. And then in the second half, we will be converting the fab to our products and fill it up. So the -- once all that is achieved, it's -- we expect to -- revenue to go beyond what we did in the past. But it will take a little time.

是的。所以我認為那裡有 2 個向量。一是我們將如何填滿晶圓廠。我們將如何在過渡期間填充晶圓廠。首先，我們將推出一系列新產品。正如我今天所說，今年我們將迎來一大批新一代。因此，我們在上半年推出了650 伏特IGBT，隨後在第三季度推出了第六代超結和IGBT，在第四季度推出了第八代中壓和低壓產品，然後在第四季度推出了另一條商品產品線以填滿工廠。所以這是一個需要填補的產品策略。然後在下半年，我們將把工廠改造成我們的產品，並將它填滿。因此，一旦實現了這一切，我們預計收入將超過我們過去的水平。但這需要一點時間。

Understood. Maybe one last question for Shin Young and I'll go -- I'll come back in the queue. Shin Young, for the -- for the gross margin for MSS, how much of that was NRE benefit. If you could roughly size that, that will be helpful.

明白了。也許我會問 Shin Young 最後一個問題——我會回到隊伍中。 Shin Young，對於 MSS 的毛利率，其中有多少是 NRE 收益。如果你能粗略地估計一下，那將會很有幫助。

It's probably -- the normalized basis, it's probably 30% plus.

標準化基礎上，可能是 30% 以上。

30% of the margin?

30%的保證金？

No. So 41% is just because of that onetime thing. So without that NRE kind of normalized display at this stage is 30-plus, 30%, a couple percentage more than that, yes.

不。所以 41% 只是因為那件一次性的事。因此，如果沒有 NRE，現階段的歸一化顯示比例將超過 30%、30%，是的，比這多幾個百分點。

And our next question comes from the line of Quinn Bolton from Needham.

我們的下一個問題來自李約瑟的奎因·博爾頓。

Nick Doyle on for Quinn. Just a quick one. Will you provide a historical breakout of MSS and PAS?

尼克道爾 (Nick Doyle) 替補奎因 (Quinn)。只是快一點。您能否提供 MSS 和 PAS 的歷史突破？

We will, yes. Technically, like when we report the Q1 quarterly, you're going to see the historical period recast on the same basis.

我們會的，是的。從技術上講，就像我們每季報告第一季一樣，您將看到歷史時期在相同的基礎上進行重述。

Right. So we'd at least see the first quarter, but hopefully, we could get some second and third quarter numbers. Great.

正確的。所以我們至少會看到第一季的數據，但希望我們能得到一些第二季和第三季的數據。偉大的。

So for gross margins, you mentioned we should expect volatility. You're winding down the transitional foundry services, I think, by the end of the second quarter. So how long will that fab be at least 30% underutilized? I guess I'd expect margins to maybe bottom in 2Q and remain low, maybe flat 3Q into 4Q, perhaps. I mean after last quarter, I think, we are expecting margins to bottom in the 3Q, 4Q time frame. So are you kind of pulling that in with maybe an accelerated foundry wind down? I guess, what's the best way to think about the margin pattern?

因此，對於毛利率，您提到我們應該預期波動。我認為，到第二季末，您將逐步結束過渡代工服務。那麼，該晶圓廠至少 30% 的未充分利用率還會持續多久？我想我預計利潤率可能會在第二季觸底並保持在較低水平，也許在第三季到第四季持平。我的意思是，我認為上個季度之後，我們預計利潤率將在第三季、第四季的時間範圍內觸底。那麼，您是否會透過加速代工業務的縮減來推動這項進程？我想，考慮利潤模式的最佳方式是什麼？

We are going to still have some foundry services revenue, like $2 million to $3 million per quarter in Q1 and Q2. So technically, we can't really do anything about the 30% capacity in our Gumi fab. And we're going to wind down after the Q2. So I mean, we're going to see some of the idle capacities in the second half as well until we fully convert that fab capacity to power, the PAS, the product. So you're going to see that the margin kind of depression throughout the year.

我們仍然會有一些代工服務收入，例如第一季和第二季每季 200 萬至 300 萬美元。因此從技術上講，我們對龜尾工廠 30% 的產能確實無能為力。我們將在第二季之後結束。所以我的意思是，我們在下半年也會看到一些閒置產能，直到我們將晶圓廠產能完全轉換為電力、PAS、產品。所以你會看到全年利潤率都在下降。

But I think in the second half, the difference is that we are rolling out by the time all the new generation, which is higher margin and lower cost. So that will be the lever -- or that we'll try to maximize the margins.

但我認為在下半年，不同之處在於我們正在推出所有新一代，這是更高的利潤和更低的成本。所以這將成為槓桿——或者說我們將努力最大化利潤。

Okay. I think I understand. I mean, when you've kind of finished the idling process, maybe the margins bottom in the third quarter and then stay flat until you fill up the fab, that sort of sounds like.

好的。我想我明白。我的意思是，當你完成了閒置過程後，也許利潤率會在第三季觸底，然後保持平穩，直到你填滿晶圓廠，聽起來就像這樣。

So in the power business, you talked about an auto win that will contribute in 2024. So a couple of questions there. Just how do we think about sizing that win? Maybe when will it begin to ramp? What was the main technical driver of that design win and then how does that ramp play out with your Gumi fab utilization? It sounds like that would kind of help in the 3Q, 4Q time frame.

在電力行業，您談到了將在 2024 年做出貢獻的汽車勝利。所以有幾個問題。我們如何考慮如何決定勝利的大小？也許什麼時候會開始加速？該設計獲勝的主要技術驅動因素是什麼？那麼該斜坡如何影響龜尾晶圓廠的利用率？聽起來這對第三季、第四季的時間範圍會有幫助。

So the automotive, as you know, we did not have any automotive business, about 2 calendar years ago, and the '22 was first year, maybe it was 1% or less than 1% revenue. Last year, we had about 5% of revenue. So -- and then this year, we'll still grow high double digits. So that's the about size of the automotive business. So -- but we now have more than 2 dozen of design ins and wins in automotive, and we are still having the momentum.

因此，汽車產業，如您所知，大約 2 年前我們沒有任何汽車業務，而 22 年是第一年，收入可能為 1% 或不到 1%。去年，我們的收入約為 5%。因此，今年，我們仍將實現兩位數的高成長。這就是汽車業務的大概規模。所以，我們現在在汽車領域擁有超過 20 個設計項目和勝利，而且我們仍然保持著這種勢頭。

Our next question comes from the line of Martin Yang from Oppenheimer.

我們的下一個問題來自奧本海默的馬丁楊（Martin Yang）。

My first question is about your customer engagement activities in China. Can you talk about how many customers are you actively engaged with? And are the new wearables and aftermarket wins with the same customer?

我的第一個問題是關於你們在中國的客戶參與活動。您能談談您積極與多少客戶互動嗎？新的穿戴式裝置和售後市場是否贏得了同一個客戶？

Yes. So a very good question. So we are discussed -- so we are discussing with direct panel customer like the panel guys. So we have 2 panel guys we're doing business now. And we are actively engaged with top 5 out of 6 smartphone OEMs directly. And so that's what we are doing.

是的。這是一個非常好的問題。所以我們正在討論——所以我們正在與像小組成員這樣的直接小組客戶進行討論。所以我們現在有兩個小組成員在做生意。我們積極與六家智慧型手機原始設備製造商中的前五名直接合作。這就是我們正在做的事情。

Got it. A question on margins for power discrete products. And how does the current margin compares to historical levels, especially historical peaks? And what needs to happen before we see that discrete product -- power product margin recovers back to where it was?

知道了。關於功率分立產品的利潤率的問題。目前的利潤率與歷史水準（尤其是歷史高峰）相比如何？在我們看到分立產品－電力產品的利潤率恢復到原來的水準之前，需要發生什麼？

I mean as YJ mentioned that like once we convert that 30% of idle capacity for the power discrete, we are going to be rolling out with the new generation power products, series of them, which we're going to have a higher margin. So once we kind of replace the foundry products -- you've seen the negative margin. The thing is ASP was fixed for those products, but the cost was high. The power now has to absorb those fixed costs from those foundries. But if we build that capacity with the higher-margin product based on the new generation product series, we have a potential to go back to the -- our historical kind of high levels.

我的意思是，正如 YJ 所提到的，一旦我們將 30% 的閒置產能轉換為功率分立元件，我們將推出新一代功率產品系列，我們將擁有更高的利潤率。因此，一旦我們更換了代工產品，您就會看到負利潤。問題是這些產品的平均售價是固定的，但成本很高。電力公司現在必須吸收這些代工廠的固定成本。但如果我們利用基於新一代產品系列的更高利潤的產品來建立這種能力，我們就有可能回到歷史上的高水準。

Got it. And do you -- so what else needs to happen fundamentally for you to fully fill that capacity?

知道了。那麼，為了充分發揮這項能力，還需要做些什麼呢？

Yes. So I think that's a very -- we've been saying that, today, that is our top priority, and it's about having the right product portfolio. And so we already had 650-volt super junction in the October release. That's like 60% better than before. We are introducing the new 50-volt IGBT in first half, followed by sixth generation super junction and sixth generation IGBT in the third quarter and eighth generation medium volt and low-voltage MOSFET in fourth quarter. And additionally, we'll have a new line of commodity products on the fourth quarter. So those will try to fill the fab with a better margin and better performance.

是的。所以我認為這是我們今天一直在說的，這是我們的首要任務，那就是擁有正確的產品組合。因此，我們在 10 月發布的版本中已經擁有 650 伏特超級結。比以前好 60%。我們將在上半年推出新型 50 伏特 IGBT，然後在第三季度推出第六代超級結和第六代 IGBT，並在第四季度推出第八代中壓和低壓 MOSFET。此外，我們將在第四季推出新的商品系列。因此，這些公司將努力為晶圓廠提供更好的利潤和更好的性能。

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Steven Pelayo for any further remarks.

謝謝。今天節目的問答環節到此結束。我想將程序交還給史蒂文·佩拉約（Steven Pelayo）以供進一步評論。

Okay. Great. Thank you. This concludes our Q4 earnings conference call. Please look for details of our future events on Magnachip's Investor Relations website. Thank you, and take care.

好的。偉大的。謝謝。我們的第四季財報電話會議到此結束。請在 Magnachip 投資者關係網站上查找我們未來活動的詳細資訊。謝謝你，保重。

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

女士們、先生們，感謝你們參加今天的會議。這確實結束了該程式。您現在可以斷開連線。再會。