Magnachip Semiconductor Corp (MX) 2024 Q2 法說會逐字稿

Thank you for standing by. Welcome to Magnachip Semiconductor Corporation's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. (Operator Instructions)

謝謝你的支持。歡迎參加 Magnachip 半導體公司 2024 年第二季財報電話會議。此時，所有參與者都處於只聽模式。演講者演講結束後，將進行問答環節。（操作員說明）

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

現在我想介紹一下今天節目的主持人，The Blueshirt Group 的 Steven Pelayo。請繼續，先生。

Hello, everyone. Thank you for joining us to discuss Magnachip's financial results for the second quarter ended June 30, 2024. Second 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 is being archived on our website shortly afterwards.

大家好。感謝您與我們一起討論 Magnachip 截至 2024 年 6 月 30 日的第二季財務業績。今天收盤後發布的第二季財報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不久後就會在我們的網站上存檔。

Joining me today are YJ Kim, Magnachip's Chief Executive Officer; and Shinyoung Park, our Chief Financial. YJ will discuss the company's recent operating performance and business overview, and Shinyoung will review financial results for the quarter and provide guidance for the third quarter. 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；以及我們的財務長 Shinyoung Park。YJ將討論公司近期的經營業績和業務概況，Shinyoung將審查本季的財務業績並提供第三季的指導。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.

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。

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. During the call, we also will discuss non-GAAP financial measures.

此類聲明是基於截至本協議發布之日公司可獲得的資訊。並可能因未來發展而發生變更，除非法律要求，本公司不承擔任何更新這些聲明的義務。在電話會議期間，我們還將討論非公認會計準則財務指標。

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 second quarter earnings release in the Investor Relations section of our website.

非 GAAP 指標並非按照公認會計原則制定，而是旨在作為 Magnachip 經營業績的補充指標，可能對投資者有用。的第二季財報發布中可以找到。

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

現在我將把電話轉給 YJ Kim，YJ。

Hello, everyone, and thank you for joining us today, and welcome to Magnachip's Q2 earnings call. Q2 revenue was $53.2 million, down 12.8% year over year, but up 8.4% sequentially. This was above the midpoint of the previous guidance range of $49 million to $54 million. Consolidated Q2 gross profit margin of 21.8% was down 0.4-percentage-points year-over-year, but up 3.5-percentage-points sequentially.

大家好，感謝您今天加入我們，歡迎參加 Magnachip 第二季財報電話會議。第二季營收為 5,320 萬美元，年減 12.8%，但季增 8.4%。這高於先前指導範圍 4900 萬美元至 5400 萬美元的中點。第二季綜合毛利率為 21.8%，年減 0.4 個百分點，但較上季上升 3.5 個百分點。

The overall gross margin result was above our previous guidance range of 17% to 19%. Both MSS and PS gross margins were higher than previous guidance. Shinyoung will provide more details in her section revenue in our standard product business, which is comprised of MSS and PS businesses was $50.8 million, down 1.1% year-over-year, but up 11.6% sequentially. Standard product business gross margin was 23.1%, up nearly 2-percentage-points sequentially.

整體毛利率結果高於我們先前 17% 至 19% 的指導範圍。MSS 和 PS 毛利率均高於先前的指引。Shinyoung 將在我們的標準產品業務部分提供更多詳細信息，該業務由 MSS 和 PS 業務組成，收入為 5080 萬美元，同比下降 1.1%，但環比增長 11.6%。標準產品業務毛利率為23.1%，較上季上升近2個百分點。

Now let me provide more detailed comments for each of our standard product business line. Beginning with MSS, Q2 revenue was slightly above the high end of our guidance at $11.6 million, down 6.2% year-over-year, but up 28.7% sequentially. The quarter-over-quarter revenue growth was due to increased demand from OLED DDICs for China smartphone OEMs, as well as automotive and power IC for LCD TV and OLED IT panels.

現在讓我對我們的每個標準產品業務線進行更詳細的評論。從 MSS 開始，第二季營收略高於我們指引的上限 1,160 萬美元，年減 6.2%，但環比成長 28.7%。營收季增的原因是中國智慧型手機原始設備製造商對 OLED DDIC 以及液晶電視和 OLED IT 面板的汽車和電源 IC 的需求增加。

We continue to collaborate with several OLED panel makers and smartphone OEMs targeting the China market. As a reminder, we have multiple DDICs in various stages of development and customer evaluation. These designs span the entire smartphone market spectrum from the mass market tier to the premium tier segment as well as other display market such as automotive and wearables like smartwatches.

我們持續與多家針對中國市場的 OLED 面板製造商和智慧型手機 OEM 廠商合作。提醒一下，我們有多個 DDIC 處於不同的開發和客戶評估階段。這些設計涵蓋了從大眾市場到高端市場的整個智慧型手機市場，以及汽車和智慧手錶等可穿戴設備等其他顯示市場。

During Q2, we held a formal opening ceremony to mark the launch of our new operations in China under our wholly owned subsidiary, Magnachip Technology Company Limited, or MTC. The goal of MTC is to expand the company's display driver IC and Power IC businesses in China. The event attracted a broad audience, including representatives from existing and prospective customers, strategic investment, portfolio managers, various members of supply chain and government officials.

第二季度，我們舉行了正式開幕儀式，標誌著我們的全資子公司 Magnachip Technology Company Limited（簡稱 MTC）在中國開展新業務。MTC的目標是擴大公司在中國的顯示驅動IC和電源IC業務。該活動吸引了廣泛的觀眾，包括現有和潛在客戶的代表、策略投資、投資組合經理、供應鏈各成員和政府官員。

We recently hired Mr. Bing Lu, as the new Co-President of MTC. With over 25 years in the semiconductor industry, he brings a wealth of experience in scaling China businesses. Mr. Lu has a diverse background spanning mobile phones, automotive home appliance, IoT, PC enterprises, and industrial sectors.

我們最近聘請了 Bing Lu 先生擔任 MTC 的新任聯合總裁。他在半導體行業擁有超過 25 年的經驗，在擴大中國業務方面擁有豐富的經驗。陸先生擁有豐富的背景，橫跨手機、汽車家電、物聯網、PC企業、工業領域。

He has held key business manager roles at Synaptics, Invensense/TDK, Texas Instruments and NXP Semiconductor. We look forward to leveraging Mr. Lu's expertise to drive sales and marketing growth in China.

他曾在 Synaptics、Invensense/TDK、德州儀器 (TI) 和恩智浦半導體 (NXP Semiconductor) 擔任重要業務經理職位。我們期待利用盧先生的專業知識來推動中國的銷售和行銷成長。

Today, we also announced that WM Lee, our General Manager of mixed-signal solutions has decided to retire after more than a decade with the company. We are deeply grateful for WM's years of exceptional service and wish him the very best.

今天，我們也宣布，我們的混合訊號解決方案總經理 WM Lee 在為公司工作了十多年後決定退休。我們對 WM 多年來的卓越服務深表感謝，並祝他一切順利。

In Q2, we secured a purchase commitment from the smartphone design-in that we referenced in our Q1 earnings call. The commitment is for premium OLED smartphone targeted at a leading Chinese smartphone manufacturer. Our plan is to initiate mass production of the chip with potential revenue contributions currently expected to begin by the end of the year.

在第二季度，我們從我們在第一季財報電話會議中提到的智慧型手機設計中獲得了購買承諾。該承諾是針對中國領先智慧型手機製造商的優質 OLED 智慧型手機。我們的計劃是開始大規模生產該晶片，目前預計將在今年年底開始提供潛在的收入貢獻。

This design win is built on 28-nanometer technology and incorporates advanced 8 transistor LTPO panel features. In addition, we continue to make progress with another leading Chinese smartphone OEM and are currently in the final design validation phase. As previously mentioned, we also have been selected to collaborate on this smartphone makers are upcoming with the 2024 model featuring our next-generation chip.

這項設計成果基於 28 奈米技術，並採用了先進的 8 電晶體 LTPO 面板功能。此外，我們繼續與另一家領先的中國智慧型手機原始設備製造商取得進展，目前正處於最終設計驗證階段。如前所述，我們也被選中與這家智慧型手機製造商合作，推出配備我們下一代晶片的 2024 年型號。

In Q2, we've provided samples of this chip, which incorporates improved brightness control and lower power consumption to panel supplier and upon completion, we will proceed with design validation at the smartphone OEM.

在第二季度，我們向面板供應商提供了該晶片的樣品，該晶片結合了改進的亮度控制和更低的功耗，完成後，我們將繼續在智慧型手機 OEM 處進行設計驗證。

In June, we kicked out next-generation OLED driver design with key enhanced IP, including self-Pixar rendering SPR refined color enhancement, color filter, brightness uniformity control and more than 20% reduction in power consumption that previous generation.

6月份，我們推出了具有關鍵增強IP的下一代OLED驅動器設計，包括自皮克斯渲染SPR精細色彩增強、濾色片、亮度均勻性控制以及比上一代降低20%以上的功耗。

We believe more power-efficient DDIC. will be increasingly important as smartphones integrate high powers AI functionality. As well as adopt larger foldable and flexible screens. This chip, which is targeted for feature-rich smartphones in China, is expected to be sample to a broad array of OLED panel makers in Q4.

我們相信 DDIC 更節能。隨著智慧型手機整合高功率人工智慧功能，人工智慧將變得越來越重要。以及採用更大的可折疊和柔性螢幕。該晶片針對中國功能豐富的智慧型手機，預計在第四季度向眾多 OLED 面板製造商提供樣品。

Finally, after taking out in Q1, we sampled in Q2 our first OLED smartwatch DDIC. This opportunity showcases our strategy to expand into new high-growth adjacent markets.

最後，在第一季推出後，我們在第二季度採樣了我們的首款 OLED 智慧手錶 DDIC。這一機會展示了我們拓展新的高成長鄰近市場的策略。

With regard to our automotive DDIC business, revenue increased for the second quarter in a row. The strongest activity is coming from European end customers. Our power IC business, which is included in MSS, so strong sequential growth from LCD TVs and monitors during Q2. Further due to earlier design wins with a major Korean customer, we saw a notable sequential increase for OLED IT panels as a global notebook maker continued to launch new models with OLED display.

汽車DDIC業務收入連續第二季成長。最強的活動來自歐洲終端客戶。我們的電源 IC 業務包含在 MSS 中，因此第二季液晶電視和顯示器的連續成長強勁。此外，由於早期設計贏得了韓國主要客戶的青睞，隨著一家全球筆記本製造商繼續推出配備 OLED 顯示器的新型號，我們看到 OLED IT 面板的數量顯著連續增長。

We continue to collaborate with this customer for upcoming models. And we are developing products for both LCD TV and OLED panels for potential new customers.

我們將繼續與該客戶合作開發即將推出的型號。我們正在為潛在的新客戶開發液晶電視和 OLED 面板的產品。

In summary, within in MSS which executing our strategy and making steady inroads was top tier panel makers and major smartphone OEMs, while also working to drive revenue from adjacent markets in wearables, automotive, TV and IT panels. For Q3, we forecast sequential revenue growth in MSS, driven by previously announced OLED smartphone design wins as well as growth from automotive and the republished smartphone display market.

總而言之，在MSS中，執行我們的策略並取得穩步進展的是頂級面板製造商和主要智慧型手機原始設備製造商，同時也致力於推動可穿戴設備、汽車、電視和IT面板等鄰近市場的收入。對於第三季度，我們預計 MSS 的收入將持續成長，這得益於先前宣布的 OLED 智慧型手機設計勝利以及汽車和重新發布的智慧型手機顯示器市場的成長。

Moving on to PAS, Q2 revenue was $39.2 million, up slightly by 0.6% year over year and up 7.4% quarter over quarter. As I said, before the sequential increase was broad based, so I will share some details by application.

接下來是 PAS，第二季營收為 3,920 萬美元，較去年同期小幅成長 0.6%，季增 7.4%。正如我所說，在環比增長基礎廣泛之前，我將按應用分享一些細節。

The industrial segment saw a strong rebound in solar as issues with excess distributor and customer inventory in China now appear largely resolved. Our new 75A/1200V IGBT has a design opportunity in solar applications and should begin mass production in the second half of the year.

由於中國經銷商和客戶庫存過剩的問題現已基本解決，工業領域的太陽能出現強勁反彈。我們的新型75A/1200V IGBT在太陽能應用中有設計機會，預計今年下半年開始量產。

E-bikes also grew in Q2, and we are well positioned to benefit from the high speed motor market for scooters and motorcycles, where we see an approximately doubling of the bill of materials content compared to a traditional e-bike.

電動自行車在第二季度也有所增長，我們處於有利位置，可以從踏板車和摩托車的高速馬達市場中受益，與傳統電動自行車相比，我們看到該市場的物料清單增加了一倍左右。

Lastly, lighting and other markets such as power tools saw sequential growth. While a relatively smaller contributor to PAS, the auto volume of the automotive segment rebounded sequentially as we build on our past success in Korea and now see additional design wins and mass production ramps targeted for automotive customers in Japan, and China.

最後，照明和電動工具等其他市場持續成長。雖然對PAS 的貢獻相對較小，但隨著我們在過去在韓國取得的成功的基礎上，汽車領域的汽車銷量連續反彈，現在看到針對日本和中國汽車客戶的更多設計勝利和大規模生產。

The end application vary widely and includes IGBTs for automotive heaters and powertrains as well as medium voltage, more spreads for various automotive functions relating to steering, water pumps, compressors, cooling fan, seats, windows, and battery management systems.

最終應用多種多樣，包括用於汽車加熱器和動力系統的 IGBT，以及用於轉向、水泵、壓縮機、冷卻風扇、座椅、車窗和電池管理系統等各種汽車功能的中壓 IGBT。

The communications segment increased sequentially, driven by continued demand for LV MOSFETS for high-end foldables and leading-edge AI smartphones in Korea. We also are seeing incremental design win opportunities for tablets, wearables and China smartphones.

受韓國高階可折疊設備和領先人工智慧智慧型手機對 LV MOSFET 持續需求的推動，通訊領域連續成長。我們也看到漸進式設計為平板電腦、穿戴式裝置和中國智慧型手機贏得了機會。

As we mentioned on our last earnings call, EPS, PAS design pipeline for new awards is much better positions the company well for the next generation of smartphone coming in late 2024 and into 2025. We believe our latest smartphone LV products are well positioned to benefit from industry trend towards foldable screens and increasing AI on chip integration, which requires much lower power consumption than before our latest as we power devices consume 20% less than previous generations.

正如我們在上次財報電話會議上所提到的，新獎項的 EPS、PAS 設計管道使公司能夠更好地為 2024 年底和 2025 年推出的下一代智慧型手機做好準備。我們相信，我們最新的智慧型手機LV 產品處於有利地位，能夠受益於可折疊螢幕和不斷增加的AI 晶片整合的行業趨勢，這需要比我們最新產品之前低得多的功耗，因為我們的設備功耗比前幾代低20%。

In consumer, we saw growth from TV as China brands gear up to increase market share. Further, our Super Junction MOSFET and IGBT products are seeing increased demand in home appliances such as refrigerators and induction cooktops.

在消費領域，隨著中國品牌加緊努力增加市場份額，我們看到了電視的成長。此外，我們的超級結 MOSFET 和 IGBT 產品在冰箱和電磁爐等家用電器中的需求不斷增加。

In summary, the overall Q2 EPS results were in line with our earlier expectation for a gradual recovery in our power business during the first half of 2024, driven in part by inventory reductions in the channel. We believe that aggressive demand will continue in Q3 driven by leaner distribution channels, and design wins for existing and new products, as well as seasonality.

綜上所述，第二季每股盈餘整體結果符合我們先前對電力業務在 2024 年上半年逐步復甦的預期，部分原因是通路庫存減少。我們認為，在更精簡的分銷管道、現有產品和新產品的設計獲勝以及季節性的推動下，第三季的強勁需求將持續。

We are continuing to execute in delivering a strong new product pipeline for power in 2024. We believe many of these new products will have similar to Tier one class performance and will allow us to penetrate new markets in computing and premium OLED TVs. Additionally, the new products will begin to help fill idle Gumi fab capacity in 2025 created by the phase-out of the Transitional Foundry Service Business.

我們將繼續致力於在 2024 年交付強大的電力新產品線。我們相信，其中許多新產品將具有與一級產品類似的性能，並使我們能夠滲透運算和高階 OLED 電視的新市場。此外，新產品將開始協助填補 2025 年因過渡代工服務業務逐步淘汰而產生的閒置龜尾晶圓廠產能。

I will come back to wrap up the call at the senior and give you more details of our financial performance in the second quarter and provide Q3 guidance. Shinyoung?

我將回來結束與高層的電話會議，並向您提供有關我們第二季度財務業績的更多詳細信息，並提供第三季度的指導。新榮？

Thank you, YJ, and welcome, everyone on the call. Let's start with the key financial metrics for Q2. Total revenue in Q2 was $53.2 million, which came above the midpoint of our guidance range of $49 million to $54 million. This was down 4.8% year over year, but up 8.4% sequentially.

謝謝你，YJ，歡迎各位來電。讓我們從第二季的關鍵財務指標開始。第二季的總收入為 5,320 萬美元，高於我們指導範圍 4,900 萬美元至 5,400 萬美元的中點。年減 4.8%，但季增 8.4%。

Revenue from MSS business was $11.6 million, slightly above the high end of our guidance range of $9.5 to $11.5 million. This was down 6.2% year over year, but up 28.7% sequentially. PAS business revenue was $39.2 million, slightly below the midpoint of our guidance range of $38 million to $41 million.

MSS 業務的收入為 1160 萬美元，略高於我們指導範圍 950 至 1150 萬美元的上限。年減 6.2%，但季增 28.7%。PAS 業務收入為 3,920 萬美元，略低於我們 3,800 萬至 4,100 萬美元指引範圍的中點。

This was up 0.6% year over year and up 7.4% sequentially. Revenue from traditional foundry services declined to $2.3 million as we continue to wind down this service as we've explained previously. Consolidated gross profit margin in Q2 was 21.8% above the high end of our guidance range of 17% to 19%, down from 22.2% year-over-year. But up from 18.3% sequentially.

年增 0.6%，季增 7.4%。正如我們之前所解釋的，隨著我們繼續減少這項服務，傳統代工服務的收入下降至 230 萬美元。第二季綜合毛利率為 21.8%，高於我們指引範圍 17% 至 19% 的上限，低於去年同期的 22.2%。但高於上一季的 18.3%。

MSS gross profit margin in Q2 was 34.6% above the upper end of the guidance range of 30% to 33%, down from 36.0% in Q2 2023, and down from 44.6% in Q1 2024. As a reminder, we recognized nonrecurring engineering revenue in Q1 2024. The year-over-year decline was mostly due to unfavorable product mix.

MSS 第二季毛利率為 34.6%，高於指引範圍上限 30% 至 33%，低於 2023 年第二季的 36.0%，也低於 2024 年第一季的 44.6%。提醒一下，我們在 2024 年第一季確認了非經常性工程收入。年比下降主要是由於不利的產品結構。

PAS gross profit margin in Q2 was 19.7% above the upper end of the guidance range of 15% to 17%, down from 23.1% in Q2 2023, but up from 15.4% in Q1 2024. The upside versus guidance was mostly due to stronger than expected US dollar against Korean Won and the sale of reserved inventories primarily for solar applications. The year-over-year decline was mainly due to a lower Gumi fab utilization rate from the wind-down of Traditional Foundry Services.

第二季 PAS 毛利率為 19.7%，高於指引範圍上限 15% 至 17%，低於 2023 年第二季的 23.1%，但高於 2024 年第一季的 15.4%。與指引相比的上行主要是由於美元兌韓元強於預期以及主要用於太陽能應用的保留庫存的銷售。年比下降的主要原因是傳統代工服務的結束導致龜尾晶圓廠利用率下降。

Turning now to operating expenses. Q2 SG&A was $11.7 million, as compared to $11.3 million in Q1 2024 and $12.1 million in Q2 2023. Q2 R&D was $4.7 million as compared to $11.2 million in Q1 2024 and $11.3 million in Q2 last year. As a reminder, R&D expense fluctuates quarter over quarter due to the timing of product development in Q2 this year had higher masks that cost, which was in line with our expectation.

現在轉向營運費用。第二季的銷售、管理及行政費用為 1,170 萬美元，而 2024 年第一季為 1,130 萬美元，2023 年第二季為 1,210 萬美元。第二季研發費用為 470 萬美元，而 2024 年第一季為 1,120 萬美元，去年第二季為 1,130 萬美元。需要提醒的是，由於今年第二季的產品開發時間安排，口罩成本較高，研發費用出現季度波動，符合我們的預期。

Stock compensation charges included in operating expenses were $1.1 million in Q2 compared to $0.9 million in Q1 and $2 million in Q2 last year. Q2 operating loss was $12.8 million. This compares to an operating loss of $13.5 million in Q1, an operating loss of $10.7 million in Q2 2023. On a non-GAAP basis, Q2 adjusted operating loss was $11.6 million compared to adjusted operating loss of $12.6 million in Q1 and our adjusted operating loss of $7.8 million in Q2 last year.

第二季營運費用中包含的股票補償費用為 110 萬美元，而去年第一季為 90 萬美元，第二季為 200 萬美元。第二季營運虧損為 1,280 萬美元。相比之下，2023 年第一季的營運虧損為 1,350 萬美元，第二季的營運虧損為 1,070 萬美元。以非公認會計原則計算，第二季調整後營運虧損為 1,160 萬美元，而第一季調整後營運虧損為 1,260 萬美元，去年第二季調整後營運虧損為 780 萬美元。

Net loss in Q2 was $13 million as compared with a net loss of $15.4 million in Q1 and a net loss of $3.9 million in Q2 last year. Q2 adjusted EBITDA was negative $7.6 million is compared to a negative $8.4 million in Q1 and negative $3.6 million in Q2 last year.

第二季淨虧損為 1,300 萬美元，去年第一季淨虧損為 1,540 萬美元，第二季淨虧損為 390 萬美元。第二季調整後 EBITDA 為負 760 萬美元，而去年第一季為負 840 萬美元，第二季為負 360 萬美元。

Our GAAP diluted loss per share in Q2 was $0.34 as compared with diluted loss per share of $0.4 in Q1 and diluted loss per share of $0.09 in Q2 last year. Our non-GAAP diluted loss per share in Q2 was $0.21 compared with diluted loss per share of $0.28 in Q1 and diluted loss per share of $0.06 in Q2 last year.

我們第二季的 GAAP 攤薄每股虧損為 0.34 美元，去年第一季的攤薄每股虧損為 0.4 美元，去年第二季的稀釋每股虧損為 0.09 美元。我們第二季的非 GAAP 攤薄每股虧損為 0.21 美元，去年第一季的攤薄每股虧損為 0.28 美元，去年第二季的稀釋每股虧損為 0.06 美元。

Our weighted average diluted shares outstanding for the quarter were $38.2 million shares. Under our $50 million stock buyback program authorized in July 2023, we repurchased in Q2 2024 approximately 0.5 million shares for aggregate purchase price of $2.3 million, leaving about $30 million remaining authorization as of June 30, 2024.

本季我們的加權平均稀釋後流通股為 3,820 萬美元。根據我們於2023 年7 月授權的5,000 萬美元股票回購計劃，我們在2024 年第二季回購了約50 萬股股票，總購買價為230 萬美元，截至2024 年6 月30 日，剩餘授權約3000 萬美元。

Moving to the balance sheet, we ended Q2 with cash of $132.5 million, and we also have an additional non-redeemable short-term financial investment of $30 million, which has a maturity date in November 2024. This amount is classified in our balance sheet as short-term financial instruments, net accounts receivable at the end of the quarter totaled $31.2 million, which represents an increase of 2.9% from Q1 2024.

轉向資產負債表，我們第二季末的現金為 1.325 億美元，此外我們還有 3,000 萬美元的額外不可贖回短期金融投資，到期日為 2024 年 11 月。這筆金額在我們的資產負債表中被歸類為短期金融工具，本季末的應收帳款淨額總計 3,120 萬美元，較 2024 年第一季成長 2.9%。

Our days sales outstanding for Q2 was 53 days in comparison to 56 days in Q1. Our average days in inventory for Q2 was 76 days and compares to 71 days in Q1. Inventories net at the end of the quarter totaled $34.8 million and $31.5 million in Q1 2024.

第二季的應收帳款天數為 53 天，而第一季為 56 天。我們第二季的平均庫存天數為 76 天，而第一季為 71 天。截至本季末的庫存淨額總計為 3,480 萬美元，2024 年第一季的庫存淨額為 3,150 萬美元。

Lastly, Q2 CapEx was $0.9 million for the full year 2024, we reiterate our prior CapEx to spend $10 million to $12 million, primarily for our PAS business and Gumi fab. This includes approximately $3 million to $4 million of one-time CapEx for our newly established operating entity in 2021.

最後，2024 年全年第二季的資本支出為 90 萬美元，我們重申先前的資本支出為 1,000 萬至 1,200 萬美元，主要用於我們的 PAS 業務和龜尾晶圓廠。這包括我們 2021 年新成立的營運實體的約 300 萬至 400 萬美元的一次性資本支出。

Now moving to our third quarter and full year 2024 guidance. While actual results may vary, for Q3 2024, Magnachip currently expect consolidated revenue to be in the range of $61.5 million to $66.5 million, including approximately $1.5 million of Transitional Foundry Services.

現在轉向我們的第三季和 2024 年全年指引。雖然實際結果可能有所不同，但 Magnachip 目前預計 2024 年第三季的綜合收入將在 6,150 萬美元至 6,650 萬美元之間，其中包括約 150 萬美元的過渡代工服務。

MSS revenue to be in the range of $14.5 to $16.5 million, up 33.7% sequentially and 46.2% year-over-year at the midpoint. This compares with MSS equivalent revenue of $11.6 million in Q2 2024 and $10.6 million in Q3 2023.

MSS 營收將在 14.5 美元至 1,650 萬美元之間，季增 33.7%，年增 46.2%。相較之下，2024 年第二季的 MSS 等效收入為 1,160 萬美元，2023 年第三季的 MSS 等效收入為 1,060 萬美元。

PAS revenue to be in the range of $45.5 million to $48.5 million, up 19.8% sequentially. And 14.6% year-over-year at the midpoint. This compares with top-tier equivalent revenue of $39.2 million in Q2 2024 and $41 million in Q3 2023. Consolidated gross profit margin to be in the range of 22.5% to 24.5%.

PAS 營收將在 4,550 萬美元至 4,850 萬美元之間，比上一季成長 19.8%。中位數年增 14.6%。相比之下，2024 年第二季的頂級同等收入為 3,920 萬美元，2023 年第三季為 4,100 萬美元。綜合毛利率在22.5%至24.5%之間。

MSS gross profit margin to be in the range of 36.5% to 39.5%. This compared with MSS equivalent gross profit margin of 34.6% in Q2 2024 and 28.8% in Q3 2023.

MSS毛利率將在36.5%至39.5%之間。相較之下，2024 年第二季 MSS 等效毛利率為 34.6%，2023 年第三季為 28.8%。

PAS is gross profit margin to be in the range of 18.5% to 20.5% in comparison with peers, equivalent gross profit margin of 19.7% in Q2 2024 and 28.6% in Q3 2023. 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, consistent with what we communicated at the beginning of the year.

與同業相比，PAS 的毛利率將在 18.5% 至 20.5% 之間，2024 年第二季的毛利率為 19.7%，2023 年第三季的毛利率為 28.6%。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，這與我們年初傳達的信息一致。

PAS revenue to grow double digit year over year as compared with PAS equivalent revenue of $100 to $1.3 million in 2023, consistent with what we communicated at the beginning of the year. Transition of R&D services revenue will decline in 2024.

到 2023 年，PAS 收入將同比增長兩位數，而 PAS 同等收入將達到 1 億至 130 萬美元，這與我們年初傳達的情況一致。2024年研發服務收入轉型將下降。

As expected, we expect this revenue to phase out by the end of the year, consolidated revenue flattish to slightly down compared to prior expectation of flat to up slightly year-over-year. Consolidated gross profit margin between 19% to 22% above our prior expectation of 17% to 20%. This compares with the consolidated gross profit margin of 22.4% in 2023.

正如預期，我們預計該收入將在年底前逐步消失，與先前同比持平或小幅成長的預期相比，綜合收入持平至小幅下降。綜合毛利率在 19% 至 22% 之間，高於我們先前預期的 17% 至 20%。相較之下，2023 年綜合毛利率為 22.4%。

Thank you. 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？

As you know, we are undergoing a transformation of a business that will unfold over the course of two years. The first major transition involves the shifting of priorities to be laser focused primarily in China expansion for our OLED display business. The second major transition involves filling idle capacity in our Gumi fab as a result of the previously disclosed wind-down of the Transitional Foundry Service Business.

如您所知，我們正在進行業務轉型，該轉型將在兩年內展開。第一個重大轉變涉及將重點轉向我們 OLED 顯示器業務在中國的擴張。第二項重大轉型涉及填補龜尾工廠因先前揭露的過渡代工服務業務縮減而導致的閒置產能。

We've already taken initial steps to realize our objective by streamlining the structure of the company by creating separate MSS and PAS businesses to better align our product strategies. More recently, we formed a wholly-owned MTC subsidiary in China with the goal of accelerating our business there.

我們已經採取初步措施來實現我們的目標，透過創建獨立的 MSS 和 PAS 業務來簡化公司結構，以更好地協調我們的產品策略。最近，我們在中國成立了一家全資 MTC 子公司，目標是加速我們在中國的業務發展。

We currently are pursuing multiple OLED design opportunities with panel makers and smartphone OEMs in China. As we've said previously, filling idle capacity in Gumi with Power products is a high priority because of the impact on margins.

我們目前正在與中國的面板製造商和智慧型手機原始設備製造商尋求多個 OLED 設計機會。正如我們之前所說，由於對利潤率的影響，用電力產品填補龜尾的閒置產能是當務之急。

A positive sign is that our power business is expected to show sequential growth again in Q3 as a result of new design wins and leaner channel inventories. Longer term, we have a pipeline of new power products that we expect to begin to contribute to what wafer starts in Gumi over the course of 2025 and beyond.

一個積極的跡像是，由於新設計的成功和通路庫存的精簡，我們的電力業務預計將在第三季度再次出現環比增長。從長遠來看，我們擁有一系列新的電源產品，我們預計這些產品將在 2025 年及以後開始為龜尾的晶圓投產做出貢獻。

Our power business in 2024 is currently forecast to grow by double digits over 2023. We have much work ahead to achieve our objectives, but I'm encouraged that our business strategy are pointing us in the right direction, and I'm committed to take any steps necessary to drive shareholder value.

目前預計我們 2024 年的電力業務將比 2023 年實現兩位數成長。為了實現我們的目標，我們還有很多工作要做，但我感到鼓舞的是，我們的業務策略為我們指明了正確的方向，我致力於採取任何必要的措施來提高股東價值。

Now I will turn the call back to Steven. Steven?

現在我將把電話轉回給史蒂文。史蒂文？

Thank you. That concludes the prepared remarks section of our call today. And operator, you may now open up the call for questions.

謝謝。我們今天電話會議準備好的演講部分到此結束。接線員，現在可以撥打電話提問。

(Operator Instructions)

（操作員說明）

Suji Desilva, ROTH Capital.

蘇吉·德西爾瓦，羅仕資本。

Hi, YJ. Hi, Shinyoung. Congratulations on the progress here from the, all that business is growing again nicely. Can you talk about quite a how many products are supporting that? And how many are still on the come similarly, maybe customers and models, just to give a sense of where we are in fulfilling your pipeline?

嗨，YJ。嗨，新英。恭喜您的進展，所有業務都再次良好成長。您能談談有多少產品支持這一點嗎？還有多少類似的人，也許是客戶和模特，只是為了讓我們了解我們在滿足您的管道方面的進展？

Yeah, this is a very good question. So obviously, see we have multiple design engagement as well as multiple products in development. So in terms of the design model opportunity, we are heavily designing to about four model that will go production in next few quarters. And that includes about smart three smartphones and one a smart watch, obviously that we are also discussing more products as we speak and there are more models in the after service market that we also disclose.

是的，這是一個非常好的問題。顯然，我們有多種設計參與以及多種產品正在開發中。因此，就設計模型機會而言，我們正在大力設計大約四種模型，這些模型將在未來幾季投入生產。其中包括智慧三款智慧型手機和一款智慧手錶，顯然我們還在討論更多產品，我們也揭露了售後服務市場中的更多型號。

In terms of products, we have a two new product that we sampled in Q2, one for the next-generation OLED smartphone and one for smartwatch. And we just taped out the new product that has a next-generation IP, such as the sub-pixel rendering color enhancements, the color uniformity by management and less than 20% power reduction than previous generation, where that will be broadly -- expect to be broadly samples to a multiple panel maker. So those are the pipeline and stages that we have.

在產品方面，我們在第二季度採樣了兩款新產品，一款用於下一代 OLED 智慧型手機，一款用於智慧手錶。我們剛剛推出了具有下一代 IP 的新產品，例如子像素渲染色彩增強、管理色彩均勻性以及比上一代降低不到 20% 的功耗，這將是廣泛的——預計為多個面板製造商提供廣泛的樣品。這些就是我們擁有的管道和階段。

Okay, very helpful. And then on the gross margin side, if I take your full year guide, it would seem like gross margin is declining in the fourth quarter. I just want to make sure my math is correct there.

好的，非常有幫助。然後在毛利率方面，如果我看一下你們的全年指南，第四季的毛利率似乎正在下降。我只是想確保我的數學是正確的。

And then more importantly, what are the drivers for gross margin to improve, and the key ones were 2025, and remind us what the target gross margin is again?

然後更重要的是，毛利率改善的驅動因素是什麼，其中關鍵是2025年，並再次提醒我們目標毛利率是多少？

The gross margin for the full year and the year-over-year decline was mainly due to the phase-out of the transition of R&D services because we had those revenue in the first half and also $1.5 million in Q3. So that's coming down. So the Traditional Foundry Services comprise approximately 20% to 25% of our equipment capacity.

全年毛利率和年減主要是由於研發服務轉型的逐步結束，因為我們上半年有這些收入，第三季也有150萬美元。所以這就下來了。因此，傳統鑄造服務約占我們設備產能的 20% 至 25%。

So, that portion becomes idle. That's kind of impacting our gross margin for the full year so that's the main driver for the decline. But we were actually we came a little higher in Q2 and we called out during the call that there was mainly due to some of the product mix improvement, reversal of some of the reserve inventories and favorable kind of FX impact on us.

因此，該部分變得閒置。這在一定程度上影響了我們全年的毛利率，因此這是下降的主要驅動因素。但實際上，我們在第二季的表現有所提高，我們在電話會議中指出，這主要是由於一些產品組合的改善、一些儲備庫存的逆轉以及外匯對我們的有利影響。

So we kind of have that. And also Q3, we kind of guided flat, almost flat for the PAS. So, at the midpoint for the full year, we raised our guidance range by 200 basis points at the bottom and at the top. So that's what we are seeing the improvement for the full year 2024.

所以我們有點這樣。還有第三季度，我們的指導方針是持平的，對伊黨來說幾乎是持平的。因此，在全年中期，我們將指導區間的底部和頂部上調了 200 個基點。這就是我們看到的 2024 年全年的改善。

And Suji, I forgot to mention that the, I think today in the script, we said the, most of the next-generation OLED DDICs is 20% less power and our LV MOSFET is also 20% less power. This is very critical as we see new smartphone with AI-integrated feature that will draw more power. So this kind of power reduction is really needed for next-generation smartphones.

Suji，我忘了提及，我想今天在腳本中，我們說過，大多數下一代 OLED DDIC 的功耗降低了 20%，我們的 LV MOSFET 的功耗也降低了 20%。這一點非常重要，因為我們看到具有人工智慧整合功能的新型智慧型手機將消耗更多電力。所以下一代智慧型手機確實需要這種功耗降低。

Okay. And then Shinyoung, YJ, the key drivers of gross margin improvement at '25, is that refilling the that refilling the Gumi fab capacity that freed up or are there other elements to it?

好的。然後，Shinyoung、YJ，25 年毛利率改善的關鍵驅動因素是補充龜尾晶圓廠釋放的產能還是還有其他因素？

That is correct. That's the we are going through a transformation, as we pointed out, and we are trying to fill the either capacity in 2025. So new products, new generation products are rolling out as though we're going to help us fulfill our idle capacity like beginning in 2025.

這是正確的。正如我們所指出的，這就是我們正在經歷的轉型，我們正努力在 2025 年填補這兩種能力。因此，新產品、新一代產品正在推出，就好像我們將幫助我們滿足從 2025 年開始的閒置產能一樣。

Okay, great. Thanks.

好的，太好了。謝謝。

Martin Yang, Oppenheimer.

馬丁楊，奧本海默。

Thank you. Thank you taking my question. First, congratulations on recruiting Bing Lu, a very solid higher with strong background. Can you maybe talk about his priority and his responsibility in China?

謝謝。謝謝你回答我的問題。首先恭喜錄用了陸冰，一位非常紮實、背景深厚的高層。您能否談談他在中國的首要任務和責任？

Thank you. Yes, Bing Lu is a very seasoned executive, and as you said, and he has very good proven record in China. So he's the Co-President of MTC. So he is responsible for sales and marketing and business of the MTC, whereas the focus is OLED, driver IC and the power IC.

謝謝。是的，陸兵是一位經驗豐富的高階主管，正如您所說，他在中國擁有非常好的記錄。所以他是 MTC 的聯合總裁。所以他負責MTC的銷售和行銷以及業務，而重點是OLED、驅動IC和電源IC。

Got it. And also a clarifying question regarding your reference to online panels for IT. Is your current involvement with or about your power IC products for those products or are you supplying driver IC for OLED on panels for IT applications?

知道了。還有一個關於您參考 IT 線上小組的澄清問題。您目前是否參與或涉及您的電源 IC 產品，或者您是否為 IT 應用面板上的 OLED 提供驅動器 IC？

Right now, initially, Power IC is the main driver.

目前，最初，電源 IC 是主要驅動力。

Got it. And the next question is regarding your comment on power savings for your new DDIC products. And can you maybe give us more context around what does that 20% power savings mean for the overall panel consumption or in the context of how that translates to overall smartphone power-saving?

知道了。下一個問題是關於您對新 DDIC 產品節能的評論。您能否為我們提供更多背景信息，說明 20% 的節能對於整體面板消耗意味著什麼，或者如何轉化為智慧型手機整體節能？

Yeah. So in the high end smartphone. Now these are either foldables or integrated AI. So that consume a lot more power. So you need to offset the power consumption in many ways. And like today, we have a model that we talked about and then drive IC.

是的。所以在高階智慧型手機中。現在這些要么是可折疊的，要么是整合人工智慧的。所以會消耗更多的電力。所以需要透過多種方式來抵消功耗。就像今天一樣，我們有一個模型，我們討論過然後驅動IC。

So you need to save as much power you can and giving that kind of 20% saving in the next generation would really help out on the high end smartphone. So again, the saving is also a function of the feature. So I think the high end has a lot more functionality and the on-chip integrated, which consume more power. But if you are not to add those things that you're talking a quite significant saving in the actual application

因此，你需要盡可能節省電量，而在下一代產品中節省 20% 的電量對於高階智慧型手機來說確實很有幫助。同樣，節省也是功能的功能。所以我認為高端有更多的功能和片上集成，這會消耗更多的功率。但是，如果您不添加您所說的那些內容，那麼在實際應用程式中會節省相當大的費用

Got it. Thank you. That's it for me.

知道了。謝謝。對我來說就是這樣。

Quinn Bolton, Needham.

奎因·博爾頓，李約瑟。

Nick Doyle on for Quinn Bolton. Thanks for taking my questions. You're lowering the fiscal year revenue target just slightly, you pointed out inventory levels are better. So could you expand on what accounts for that slight change?

尼克·道爾（Nick Doyle）取代奎因·博爾頓（Quinn Bolton）。感謝您回答我的問題。您稍微降低了財年收入目標，並指出庫存水準較好。那麼您能否詳細說明一下是什麼導致了這一微小的變化？

Yeah. So the I think the -- we -- on the power, we are growing 7.4% in Q2 approximately a 20% Q3. So that's quite a very good gross and leaner channel. But so at the same time with that kind of growth, we do see some seasonality. So that's the only thing that we would describe that on the fourth quarter.

是的。所以我認為——我們——在電力方面，我們第二季度成長了 7.4%，第三季成長了 20%。所以這是一個非常好的粗略且精簡的頻道。但在這種成長的同時，我們確實看到了一些季節性。所以這是我們在第四季唯一要描述的事情。

Okay. So just a little more seasonality than typical in December quarter?

好的。那麼，季節性因素是否比 12 月季度的典型情況要多一些？

December quarter is a seasonally low quarter for us before the COVID. When you go to normal cycle.

在新冠疫情爆發之前，12 月季度是我們的季節性低季。當你進入正常週期時。

Right Do you have a view on whether these AI functions can drive a mobile replacement cycle? And mean, I think you just touched on it, but how are you exposed to the trend? Is that mainly in the MSS segment? Or do you have also appears rather well?

對，您對這些AI功能能否帶動手機換機週期有什麼看法？意思是，我想你剛剛談到了它，但是你是如何接觸到這一趨勢的呢？主要是在 MSS 領域嗎？還是你也表現得相當好？

Yeah, in fact, we mentioned about the PAS the low-voltage mindset that is going to all the leading Korean smartphone that has built-in AI. So, our low-voltage MOSFET consumes 20% less than previous generation. So we do see whether it's the OLED DDI or the component in the smartphone in power is requiring that kind of and competitiveness to be a win to the next-generation AI based smartphone or foldable phone, which consumes more power.

是的，事實上，我們提到了 PAS 的低壓思維模式，它將適用於所有內建人工智慧的領先韓國智慧型手機。因此，我們的低壓 MOSFET 的功耗比上一代降低了 20%。因此，我們確實看到，無論是 OLED DDI 還是智慧型手機中的供電組件都需要這種競爭力，才能贏得下一代基於人工智慧的智慧型手機或可折疊手機（這些手機消耗更多電量）。

Okay. And then last one, if I could sneak in. Your gross margins are moving higher. So as they continue to improve have you thought about a quarterly breakeven level? And is that possible in 2025?

好的。然後是最後一個，如果我能偷偷溜進去的話。您的毛利率正在上升。那麼，隨著他們不斷改善，您是否考慮過季度損益平衡水準？到 2025 年這可能嗎？

I mean, we don't really guide for the 2025, but it's really the function of the revenue and the gross margin. So the gross margin is improving as compared with our previous expectations. So some like our moving pieces. So we have more visibility for 2024. So we guided up our gross margin full year guidance by 200 basis points.

我的意思是，我們並沒有真正為 2025 年提供指導，但這實際上是收入和毛利率的函數。因此，與我們先前的預期相比，毛利率正在改善。所以有些人喜歡我們的動人作品。因此，我們對 2024 年有更多的了解。因此，我們將全年毛利率指引上調了 200 個基點。

Going into 2025, definitely new products. That's a rolling out new this year. We're going to help us. They'll fill our capacity, but the utilization rate and all of the manufacturing efficiency and cost and everything we're going to be impacting our 2025 gross margin.

進入 2025 年，肯定是新產品。這是今年推出的新品。我們會幫助我們。它們將填補我們的產能，但利用率以及所有製造效率和成本以及我們將影響我們 2025 年毛利率的一切。

So the quarterly wise revenue, we'll have to see like $50 million, $55 million per quarter-ish. That should be a breakeven for the past business as we've disclosed previously. But again, it's all kind of the function is revenue like and the gross margin.

因此，就季度收入而言，我們必須看到每季 5000 萬美元、5500 萬美元左右。正如我們之前所揭露的，這應該是過去業務的損益平衡點。但同樣，所有這些功能都是類似於收入和毛利率的。

Thanks a lot.

多謝。

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

謝謝。今天節目的問答環節到此結束。我想把程序交還給史蒂文·佩拉約（Steven Pelayo），以便您發表進一步的評論。

Thank you. This concludes our Q2 earnings conference call. Please look for details of our future events on Magnachip's Investor Relations website. Thank you and take care.

謝謝。我們的第二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。