O2micro International Ltd (OIIM) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for joining us today to discuss O2Micro's Financial Results for the third quarter of fiscal year '22. (Operator Instructions) If you would like a copy of the press release we issued this morning, please call Daniel Meiberg at (408) 987-5920, extension 8888, and we will e-mail you a copy immediately. It is also posted on the O2Micro website at www.o2micro.com under the heading, Investors. (Operator Instructions) Please note, this event is being recorded. There will be a replay available for the next 14 days by visiting the O2Micro website under the heading, Investors. With that, gentlemen, you may begin your presentation.

早安，女士們、先生們，感謝你們今天加入我們討論 O2Micro '22 財年第三季的財務業績。 （操作員說明）如果您想要一份我們今天早上發布的新聞稿，請致電 Daniel Meiberg，電話 (408) 987-5920，分機號碼 8888，我們將立即透過電子郵件向您發送一份副本。它也發佈在 O2Micro 網站 www.o2micro.com 的「投資者」標題下。 （操作員說明）請注意，正在記錄此事件。在接下來的 14 天內，您可以造訪 O2Micro 網站的「投資者」標題下重播。先生們，現在您可以開始您的演講了。

Thank you. Good morning, everyone, and thank you for joining O2Micro's Financial Results Call for the third quarter of 2022 ending September 30, 2022. This is Daniel Meiberg, Corporate Communications for O2Micro. I'd like to remind listeners that the discussion of business outlook for O2Micro contains forward-looking statements. Statements made in this release that are not historical fact are forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially due to numerous risk factors. Such risk factors are enumerated in the company's 20F annual filings, our annual reports and other documents filed with the SEC from time to time.

謝謝。大家早安，感謝您參加 O2Micro 於 2022 年 9 月 30 日結束的 2022 年第三季財務業績電話會議。我想提醒聽眾，關於凹凸科技業務前景的討論包含前瞻性陳述。本新聞稿中的非歷史事實陳述屬於聯邦證券法意義內的前瞻性陳述。由於眾多風險因素，實際結果可能存在重大差異。本公司的 20F 年度文件、我們的年度報告以及不時向 SEC 提交的其他文件中都列舉了此類風險因素。

Listeners are referred to the O2Micro earnings press release and the documents filed with the SEC to understand these forward-looking statements and the associated risk factors. These statements made herein are dated information. The company assumes no responsibility to provide updates to this information.

聽眾可參閱 O2Micro 的收益新聞稿和向 SEC 提交的文件，以了解這些前瞻性陳述和相關風險因素。本文中的這些陳述是過時的資訊。本公司不承擔提供此資訊更新的責任。

With me today are Perry Kuo, CFO and Director; Jim Keim, Head of Marketing and Sales and Director; and Sterling Du, O2Micro's Founder, CEO and Chairman. After the prepared remarks from these gentlemen, the floor will be open for your questions.

今天和我在一起的有財務長兼董事 Perry Kuo； Jim Keim，行銷與銷售主管兼總監；以及O2Micro創辦人、執行長兼董事長杜斯特林。在這些先生們準備好發言後，將開始提問。

At this point, I would like to introduce to you, Perry Kuo, CFO of O2Micro for a discussion of the financial highlights of the third quarter of fiscal year 2020 -- sorry, 2022 ending September 30, 2022. Perry?

在此，我想向您介紹凹凸科技首席財務官郭佩里 (Perry Kuo)，討論 2020 財年第三季度的財務亮點——抱歉，2022 年截至 2022 年 9 月 30 日。

Thank you, Dan. We will now review our financial results for Q3 2022. Please note that financial results will be presented on a GAAP basis unless we designate otherwise. The non-GAAP results is gross stock-based compensation expense, onetime charges, nonrecurring gains and losses. Our full GAAP results are available in our press release that was issued earlier today. GAAP revenue in the third quarter of 2022 was $18.2 million. GAAP net loss in the third quarter of 2022 was $1.3 million.

謝謝你，丹。我們現在將審查 2022 年第三季的財務業績。非公認會計原則的結果是基於股票的補償費用總額、一次性費用、非經常性損益。我們完整的 GAAP 業績可在今天早些時候發布的新聞稿中找到。 2022 年第三季 GAAP 營收為 1,820 萬美元。 2022 年第三季 GAAP 淨虧損為 130 萬美元。

If we exclude stock-based compensation of $594,000 and the corporate special project expense of $1.3 million, the non-GAAP net income will be $649,000. GAAP net loss per fully diluted ADS in the third quarter of 2022 was $0.04. Non-GAAP net income per fully diluted ADS was $0.02. Gross margin was 52.3% in Q3. The gross margin reflect the current revenue level and the product mix.

如果我們排除 594,000 美元的股票薪酬和 130 萬美元的公司特別項目費用，則非 GAAP 淨利潤將為 649,000 美元。 2022 年第三季度，根據美國通用會計準則 (GAAP) 計算，每份完全稀釋的美國存託股淨虧損為 0.04 美元。非 GAAP 完全攤薄後每股美國存託股淨利為 0.02 美元。第三季毛利率為 52.3%。毛利率反映了目前的收入水準和產品組合。

R&D expense was $4.6 million or 25.4% of revenue. This amount is gross stock-based compensation expense of $212,000. SG&A expense was $4.6 million or 25.4% of revenue. This amount is gross stock-based compensation expense of $382,000 and a corporate project expense of $1.3 million. The nonoperating income was $615,000. Income tax was $239,000 in the third quarter and is mainly based on the estimated effective tax rate of each principal location.

研發費用為 460 萬美元，佔營收的 25.4%。該金額為基於股票的補償費用總額 212,000 美元。 SG&A 費用為 460 萬美元，佔營收的 25.4%。該金額包括 382,​​000 美元的股票補償費用總額和 130 萬美元的公司項目費用。非營業收入為 615,000 美元。第三季所得稅為239,000美元，主要基於每個主要地點的估計有效稅率。

In Q3 2022, there was no stock repurchase. Q3 2022 revenue by end market breaks down into the following percentages. Industrial was 48% to 50% of revenue. Consumer was 46% to 48% of revenue. Computer was 2% to 4% of revenue. Communication was almost 0. At this moment, I would like to provide some additional information. O2Micro finished the third quarter with $50.3 million in unrestricted cash and short-term investment. This represents cash and cash equivalent of $1.72 per ADS. In addition, O2Micro has no debt.

2022年第三季度，沒有進行股票回購。 2022 年第三季終端市場收入細分為以下百分比。工業佔收入的48%至50%。消費者佔收入的 46% 至 48%。計算機業務佔收入的 2% 至 4%。溝通幾乎為0。 O2Micro 第三季末擁有 5,030 萬美元的無限現金和短期投資。這相當於每份美國存託憑證 1.72 美元的現金和現金等價物。此外，凹凸科技沒有債務。

Account receivable at the end of Q3 was $13 million. Our DSO is 75 days. DSO is more than 60 days, mainly from account mix. Inventory was $22.5 million at the end of the third quarter. This represents 229 days of inventory and inventory turnover was 1.6x in Q3. Net cash provided by operating activities in the third quarter was about $1.8 million.

第三季末的應收帳款為 1,300 萬美元。我們的 DSO 是 75 天。 DSO超過60天，主要來自帳戶組合。第三季末庫存為 2,250 萬美元。這意味著庫存天數為 229 天，第三季庫存週轉率為 1.6 倍。第三季經營活動提供的淨現金約180萬美元。

Capital expenditures were about $590,000 in the third quarter, mainly for R&D, IT equipment and testers. Depreciation and amortization was $971,000 in Q3. At the end of the third quarter of 2022, O2Micro had 345 employees, 60% of which are engineers. Based on current market duration and the best updated managerial rolling forecast, the company has a following guidance for Q4 2022. Net revenue is expected to be $16 million to $19 million as compared to Q3 2022 of $18.2 million. Product gross margin is expected to be in the range of 50% to 52%. R&D expenses, excluding stock-based compensation, are expected to be in the range of $4.5 million to $5 million.

第三季資本支出約59萬美元，主要用於研發、IT設備和測試器。第三季的折舊和攤提為 971,000 美元。截至2022年第三季末，凹凸科技擁有345名員工，其中60%是工程師。根據當前市場持續時間和最佳更新的管理滾動預測，該公司對 2022 年第四季有以下指引。產品毛利率預計在50%至52%之間。研發費用（不含股票薪酬）預計在 450 萬美元至 500 萬美元之間。

SG&A expenses, excluding stock-based compensation and expenses for corporate special projects are expected to be in the range of $4.6 million to $5.1 million. Stock-based compensation is expected to be in the range of $550,000 to $650,000. Nonoperating income expected to be in the range of $300,000 to $400,000, excluding foreign exchange gain or loss. Income tax expense is expected to be in the range of $200,000 to $300,000.

SG&A 費用（不包括股票薪酬和公司特殊項目費用）預計在 460 萬美元至 510 萬美元之間。基於股票的薪酬預計在 550,000 美元至 650,000 美元之間。不計外匯損益，營業外收入預計在 300,000 美元至 400,000 美元之間。所得稅費用預計在 20 萬美元至 30 萬美元之間。

The goal of our management team and the Board of Directors is to maximize shareholder value. We have accomplished this by taking the necessary steps, which included managing operating expenses and monetizing asset on the balance sheet. In regards to our share repurchase program, since 2002, we have repurchased over 20.5 million added shares for $102.2 million. As of the end of Q3, we had $6.7 million remaining in our share buyback authorization. In Q3, we are facing inventory correction due to weaker demand from some selected markets by inflation. We will carefully manage the inventory. The volume process in end and finished goods will be highly controlled based on the market demand and the inventory adjustments.

我們管理團隊和董事會的目標是實現股東價值最大化。我們透過採取必要的措施來實現這一目標，其中包括管理營運費用和將資產負債表上的資產貨幣化。關於我們的股票回購計劃，自 2002 年以來，我們以 1.022 億美元回購了超過 2,050 萬股股票。截至第三季末，我們的股票回購授權還剩 670 萬美元。在第三季度，由於通貨膨脹導致某些選定市場的需求減弱，我們面臨庫存調整。我們將認真管理庫存。最終產品和產成品的數量過程將根據市場需求和庫存調整進行高度控制。

Given the uncertain changes in demand and the macro environment, we are continuously investing in R&D testing capabilities of compressed product for more capacity and cost. And we always watch the expenses carefully and continue to manage cost as needed. Although we believe we have aligned current cost based on current and anticipated revenue levels in Q4, excluding the expenses for corporate projects, the cash breakeven point is expected to be $16 million to $17 million. Returns to shareholders are very much on our minds and will continue to be a focus in the future. We will provide update to the additional measures to enhance shareholder value throughout this year. I would like to thank everyone for participating and turn the call over to Jim Keim to talk more about our business. Jim?

鑑於需求和宏觀環境的不確定變化，我們不斷投資於壓縮產品的研發測試能力，以獲得更多的產能和成本。 我們始終仔細觀察費用並繼續根據需要管理成本。儘管我們相信我們已經根據當前和第四季度的預期收入水平調整了當前成本（不包括公司項目的費用），但現金收支平衡點預計為 1600 萬至 1700 萬美元。股東回報是我們非常關心的問題，並將繼續成為未來的重點。我們將在今年提供有關提高股東價值的額外措施的最新資訊。我要感謝大家的參與，並將電話轉給吉姆凱姆 (Jim Keim)，詳細討論我們的業務。吉姆？

Thank you, Perry. Good morning, everyone. As projected, our Q3 revenue of $18.2 million was lower than Q2 revenue due to inventories that resulted from improving supply chains during Q2, while consumer spending simultaneously slowed for products like power tools, vacuum cleaners and TVs. This combination of events resulted in both ODM and their OEM partners having significant inventories of consumer products that impacted our Q3 revenue and will have ongoing impact on Q4 revenue. Most of these inventories will be cleared by the end of Q4, although some inventories will linger into the first half of next year.

謝謝你，佩里。大家早安。正如預期的那樣，我們第三季的收入為1,820 萬美元，低於第二季的收入，原因是第二季供應鏈改善導致庫存增加，而消費者對電動工具、吸塵器和電視等產品的支出同時放緩。這些事件的結合導致 ODM 及其 OEM 合作夥伴擁有大量消費品庫存，這影響了我們第三季度的收入，並將對第四季度的收入產生持續影響。大部分庫存將在第四季末清理完畢，但部分庫存將持續到明年上半年。

Beyond the inventory issues, we continue to see industrial and automotive market remain strong where we have a growing presence. The slowed demand in consumer products enabled us to not only resolve previous product delinquencies but has enabled us to shift our capacity and resources more rapidly in the higher-end industrial and automotive products where we have focused much of our R&D and design efforts in the past 2 years. Simultaneously, we are continuing to broaden our overall production capability to enable us to support revenue growth across a much broader market and customer base. This includes expansion of wafer supply, assembly and test, including suppliers outside of China and Taiwan.

除了庫存問題之外，我們繼續看到工業和汽車市場仍然強勁，我們的業務不斷成長。消費產品需求放緩不僅使我們能夠解決以前的產品拖欠問題，而且使我們能夠更快地將產能和資源轉移到高端工業和汽車產品上，我們過去將大部分研發和設計工作集中在這些產品上2年。同時，我們正在繼續擴大我們的整體生產能力，使我們能夠支持更廣泛的市場和客戶群的收入成長。這包括擴大晶圓供應、組裝和測試，包括中國和台灣以外的供應商。

Our design activity in both Battery Management and Intelligent Lighting remains robust. This includes engagement with new customers who are leading suppliers of industrial and automotive products, as well as higher end products for consumer designs. In Intelligent Lighting, we completed Q3 with minimal delivery constraints and delinquencies. Working closely with ODMs and OEMs, inventory issues have been well managed. Our design activity remains robust in both monitors and TVs, including expansion into new customers for area backlighting applications.

我們在電池管理和智慧照明方面的設計活動仍然強勁。這包括與工業和汽車產品以及消費設計高端產品領先供應商的新客戶進行接觸。在智慧照明領域，我們以最小的交付限制和拖欠完成了第三季。與 ODM 和 OEM 密切合作，庫存問題得到了很好的管理。我們在顯示器和電視方面的設計活動仍然強勁，包括擴展到區域背光應用的新客戶。

In mini LED, we are moving forward with new products targeted for tablet and notebook, as well as monitor and TV. These activities are proceeding with well-known customers we expect to be in high-volume production in 2023. Finally, we are proceeding forward with multiple customers and advanced products, including new and innovative automotive drive monitor system applications for which we expect to become an industry leader.

在mini LED方面，我們正在推進針對平板電腦和筆記型電腦以及顯示器和電視的新產品。這些活動正在與知名客戶合作，我們預計將在2023 年進行大量生產。商。

In Battery Management, our fundamental business remains strong as we continue to see an expanding customer base and design win activity despite temporary inventory issues. In fact, we are experiencing increased R&D activity, including design wins moving forward with our integrated microcontrollers. While our market position in garden tools, power tools, vacuum cleaners and e-bike remains strong, we see expanding design wins for our Battery Management business in household and industrial energy storage systems that are showing rapid growth as well as automotive applications where we have begun high-volume production with one of our new products.

在電池管理方面，我們的基本業務仍然強勁，儘管存在暫時的庫存問題，但我們的客戶群和設計贏得活動仍在不斷擴大。事實上，我們的研發活動正在增加，包括我們的整合微控制器的設計成果。雖然我們在園林工具、電動工具、吸塵器和電動自行車方面的市場地位仍然強勁，但我們看到我們的電池管理業務在家庭和工業儲能係統以及汽車應用領域的設計不斷擴大，這些系統顯示出快速成長，我們擁有我們的一款新產品開始大量生產。

We strongly believe our new products will continue to drive long-term revenue expansion as we proceed forward. The major customers we have already penetrated can carry our company to higher revenues as we increase our product footprint with them. Major OEMs that already use our products in Battery Management include Bissell, Bosch, Dyson, Electrolux, Hitachi, Honda, Husqvarna, Lexi, LG, Makita, Murata, Panasonic, Philips, Samsung, Stanley Black & Decker, Shark, TTI and Toshiba. Major OEMs that use our lighting products include BOE, Dell, Denso TEN, HP, HiSense, Honda, Hon Hai, JVC Kenwood, Comcast, Lenovo, Microsoft, Mitsubishi, Panasonic, Pioneer, Samsung, Sharp, Skyworth, Sony, TCL, TPV and Toyota.

我們堅信，隨著我們的前進，我們的新產品將繼續推動長期收入擴張。隨著我們擴大產品覆蓋範圍，我們已經滲透的主要客戶可以為我們公司帶來更高的收入。已在電池管理領域使用我們產品的主要OEM 包括Bissell、Bosch、Dyson、Electrolux、Hitachi、Honda、Husqvarna、Lexi、LG、Makita、Murata、Panasonic、Philips、Samsung、Stanley Black & Decker、Shark、TTI 和Toshiba 。使用我們照明產品的主要OEM廠商包括京東方、戴爾、電裝TEN、惠普、海信、本田、鴻海、JVC建伍、康卡斯特、聯想、微軟、三菱、松下、先鋒、三星、夏普、創維、索尼、TCL、冠捷和豐田。

Given our excellent patented technology in key growth areas and excellent customer positioning, we are confident of our ability to continue to grow long-term revenues within this customer base, while also expanding to additional major customers. I will now pass the call over to Sterling Du, our CEO, for closing remarks.

鑑於我們在關鍵成長領域的卓越專利技術和卓越的客戶定位，我們有信心在該客戶群中繼續增加長期收入，同時擴展到其他主要客戶。現在我將把電話轉給我們的執行長斯特林杜 (Sterling Du)，讓其致閉幕詞。

Thanks, Jim. Our revenue for the third quarter of 2022 is within the guidance publicly released on July 29, 2022. We developed high-end analog technology supported advanced power management product in both the Intelligent Lighting and Battery Management markets. Our products are targeted at more complex industrial, consumer and automotive markets, as well as the top-tier customer that will not only expand our customer base but engage with the next-generation product development.

謝謝，吉姆。我們 2022 年第三季的營收在 2022 年 7 月 29 日公開發布的指導範圍內。我們的產品針對更複雜的工業、消費和汽車市場以及頂級客戶，這些客戶不僅會擴大我們的客戶群，還會參與下一代產品的開發。

Let us review the current market trend in which we anticipate some short-term headwind due to the inventory correction. The Russian, Ukraine work disrupted the opportunity of global economy recover from a COVID-19 pandemic. The war between these 2 countries has led to economic challenges, surge in commodity prices, in supply chain disruptions, in fact, in many markets across the globe. The smart TV market, which is our target sector is expected to go to $244 billion in 2026, at a compound annual growth rate of 6.9% according to the business research company.

讓我們回顧一下當前的市場趨勢，我們預計由於庫存調整，短期內會出現一些阻力。俄羅斯和烏克蘭的工作破壞了全球經濟從 COVID-19 大流行中復甦的機會。事實上，這兩個國家之間的戰爭為全球許多市場帶來了經濟挑戰、大宗商品價格飆升、供應鏈中斷。根據商業研究公司的數據，我們的目標產業智慧電視市場預計到 2026 年將達到 2,440 億美元，複合年增長率為 6.9%。

If we compare this number to the previous market estimation, the growth of 4K TV market size is expected to reach USD 380 billion by 2025 and a compound annual growth rate of 21.2% according to the report from Grand View Research. The number indicates how the disrupted market demand and the supply chain challenges and the regional geopolitics risk, which affect us. On the other hand, the increasing popularity of video demand services is a key growth driver of the smart TV market. Video demand is one of the innovative feature that Internet protocol TV gives.

如果將此數字與先前的市場預估進行比較，根據Grand View Research的報告，到2025年，4K電視市場規模預計將成長至3,800億美元，年複合成長率為21.2%。這個數字顯示了市場需求中斷、供應鏈挑戰以及區域地緣政治風險對我們的影響。另一方面，視訊點播服務的日益普及是智慧電視市場的關鍵成長動力。視訊點播是網路電視所賦予的創新功能之一。

In the meantime, the 8K TV started to grow from professional usage such as health care, building, construction, and automotive industry to entertainment consumer sector in coming years, we believe the much higher video experience and a motion for reduction from fast movement will create more business opportunity for our backlighting technology.

同時，未來幾年8K電視開始從醫療保健、建築、建築和汽車行業等專業用途發展到娛樂消費領域，我們相信更高的視訊體驗和減少快速移動的運動將創造為我們的背光技術帶來更多商機。

Here are some highlights of our technologies. The full array local technology will dominate the large screen TVs and desktop monitors. IC will roll out, process the ability to control the dimming through either analog function or (inaudible) want a remote control to further simplify the TV system design if our customers designed to circle different type panel dimming solution with one IC. The upcoming technology, Mini LED issued by multiplying a number of LED chips and mounting this LED dye or subset, therefore, reducing the spacing between each light source and the thickness of the big light. More importantly, they also can significantly increase the number of zones, which could reduce the halo effect and the power consumption. We are seeing that this activity continues to be very active and Mini LED could expand further business opportunity.

以下是我們技術的一些亮點。全陣列本地技術將主導大螢幕電視和桌面顯示器。如果我們的客戶設計使用一個 IC 來實現不同類型的面板調光解決方案，IC 將推出透過類比功能或（聽不清楚）想要遙控器來控制調光的能力，以進一步簡化電視系統設計。即將推出的Mini LED技術透過將多個LED晶片相乘並安裝此LED染料或子集，從而減少了每個光源之間的間距和頭燈的厚度。更重要的是，它們還可以顯著增加區域數量，從而減少光環效應和功耗。我們看到這項活動持續非常活躍，Mini LED 可以進一步擴大商機。

Now let us review our battery market trend. The global power tool market size was value-add USD 32 billion in 2019 and is expected to grow at a compound annual growth rate 4.2% from 2020 to 2027. Tools were activated using the power source apart from the menu label, so much more portable usage, more freedom to do the construction or gardening such as lawn mowing, and DC iron battery market size exceeds the USD 40 billion in 2019 is anticipated to grow at compound annual growth rate of over 15.4% from 2020 to 2026.

現在讓我們回顧一下我國電池市場的趨勢。 2019年全球電動工具市場規模增值320億美元，預計2020年至2027年複合年增長率為4.2%。 （例如割草），直流鐵電池市場規模在2019年超過400億美元，預計2020年至2026年將以超過15.4%的複合年增長率成長。

The surge in demand for electrical vehicle due to the ongoing concern towards increasing pollution level will positively fuel the market growth. However, during the COVID-19 pandemic, construction, manufacturing, hotel, tourist industry are majorly affected. Manufacturing activity are holded or restricted. This led to a decline in manufacturing of various equipment used for electrical power tools, as well as their demand in the market.

由於對污染水平不斷增加的持續關注，對電動車的需求激增將積極推動市場成長。然而，在COVID-19大流行期間，建築業、製造業、旅館業、旅遊業受到重大影響。製造業活動被暫停或限制。這導致用於電動工具的各種設備的製造及其市場需求下降。

Now we are recovering from COVID-19 pandemic. The hotel tourist industry faced the main power shortage. On the other hand, one of the major manufacturer countries, China still are in the COVID-19 restriction. These factors led to the slow recovery and the channel inventory concerns. With a low visibility and various dynamics, it is challenging to forecast when is the end of the inventory correction and yet inventory correction should be improved by end of this year. Though the external market conditions are not ideal, we're confident for our long-term growth with existing growing design win activity.

現在我們正在從 COVID-19 大流行中恢復過來。酒店旅遊業面臨主要的電力短缺。另一方面，主要製造國之一的中國仍處於 COVID-19 限制之中。這些因素導致了渠道復甦緩慢和庫存擔憂。由於能見度較低且動態多樣，很難預測庫存調整何時結束，但庫存調整應該會在今年年底前得到改善。儘管外部市場狀況並不理想，但我們對現有不斷增長的設計獲勝活動的長期成長充滿信心。

We observed a higher number of sales applications continue to grow, and we are getting more market share as extended battery capacity, the freedom of long hours operation with more complicated BMS solution also is driven by quick cost decline as well as the improving of the battery quality and cost. Battery chemistry type will also become more versatile. For example, the rising acceptance of the light electric vehicle will stimulate the demand for the nickel, magnesium, cobalt oxide battery. This battery had wide range application, which include power tool, powertrain for electrical vehicles due to the low cells heating rate, which further foster the market opportunity.

我們觀察到銷售應用數量持續增長，隨著電池容量的擴大，我們獲得了更多的市場份額，更複雜的BMS解決方案的長時間運行自由度也是由成本快速下降以及電池的改進推動的質量和成本。電池化學類型也將變得更加多樣化。例如，輕型電動車接受度的提高將刺激對鎳、鎂、鈷氧化物電池的需求。由於電池發熱率低，該電池具有廣泛的應用範圍，包括電動工具、電動車動力總成，進一步培育了市場機會。

Meanwhile, the high energy density means the higher resolution and faster aided converter are needed. Our analog front end and BMU were designed with our 14 big high accuracy AD converter that could meet the customer needs. Our high accuracy AD converter reached 15 renewal resolution performance, which is beyond the customer expectation. On the other hand, our ARM-based OEM BMS solution enabled the power tool to be connected as one of IoT device. The 5G deployment will further enrich the power tool connectivity.

同時，高能量密度意味著需要更高解析度和更快的輔助轉換器。我們的類比前端和BMU採用我們的14位元高精度AD轉換器設計，可以滿足客戶的需求。我們的高精度AD轉換器達到了15位元更新解析度的效能，超越了客戶的期望。另一方面，我們基於 ARM 的 OEM BMS 解決方案使電動工具能夠作為物聯網設備之一進行連接。 5G的部署將進一步豐富電動工具的連接性。

We expect to continue to grow the business despite the dynamic market situation and short-term inventory correction. We are agnostic for our long-term goal and focus on high-margin, high-performance business. We expanded several new products to the new project to address, one, automotive market, including we started automotive rating quality standard program. We also focus build a second source supply chain to recruit more engineers outside China. We also watched our expense carefully to build the base for the drive future momentum. We will keep the shareholder best interest in mind, especially at current dynamic situation. At this moment, I'd like to thank you for listening to our conference call and return back to Dan. Dan, please?

儘管市場狀況活躍且庫存短期調整，但我們預期業務仍將持續成長。我們對我們的長期目標不可知，並專注於高利潤、高效能的業務。我們將幾種新產品擴展到新項目中，以解決第一，汽車市場的問題，包括我們啟動了汽車評級品質標準計劃。我們也專注於建立第二源供應鏈，以招募更多中國境外的工程師。我們也仔細關注我們的支出，為推動未來動力奠定基礎。我們將牢記股東的最佳利益，尤其是在當前的動態情況下。此時此刻，我要感謝您收聽我們的電話會議並回到丹。丹，請問？

Thank you, Sterling. We'll soon shortly open up the lines for questions. We will not be addressing any privatization related questions on this call. As disclosed in O2Micro International Limited, press release as of March 18, 2022, O2Micro International Limited Board has received a preliminary nonbinding proposal letter nor press release dated September 30, 2022, O2Micro enters into a definitive agreement for going private transaction. Following receipt of the proposal, O2Micro International Limited Board formed a special committee consisting solely of independent directors to evaluate and consider the proposal and proposed transaction and has also engaged its own financial and legal advisers.

謝謝你，斯特林。我們很快就會開放提問熱線。我們不會在這次電話會議上討論任何與私有化相關的問題。截至2022 年3 月18 日，凹凸國際有限公司新聞稿中披露，凹凸國際有限公司董事會已收到日期為2022 年9 月30 日的初步非約束性提案函或新聞稿，凹凸科技已就私有化交易達成最終協議。收到該提案後，凹凸國際有限公司董事會成立了一個僅由獨立董事組成的特別委員會來評估和考慮該提案和擬議交易，並聘請了自己的財務和法律顧問。

The O2Micro International Limited has been making SEC filings and issuing press releases in connection with the proposal and proposed transaction and will continue to do so in pursuant to the requirements of the SEC rules and regulations. We encourage you to periodically check the company's SEC filings for more information regarding the proposal or proposed transaction.

凹凸國際有限公司已就該提案和擬議交易向美國證券交易委員會提交文件並發布新聞稿，並將繼續按照美國證券交易委員會規則和條例的要求這樣做。我們鼓勵您定期檢查公司向 SEC 提交的文件，以獲取有關提案或擬議交易的更多資訊。

Operator, at this point, we would like to open the call to questions.

接線員，現在我們想開始提問。

(Operator Instructions)

（操作員說明）

Our first question for today comes from Theodore O'Neill with Litchfield Hills Research.

我們今天的第一個問題來自利奇菲爾德山研究中心的西奧多·奧尼爾。

Last quarter, in answer to questions about the automotive market, Sterling, you talked about having products related to the so-called driver management system. Can you give us any more insight into how things are going and penetrating the automotive market and the applications for that?

上個季度，在回答有關汽車市場的問題時，斯特林談到了與所謂的駕駛員管理系統相關的產品。您能否讓我們更深入了解汽車市場的進展、滲透情況及其應用？

Yes. Thank you. When we mentioned about the driver monitor, first of all, we are providing the power management IC, which is the PMIC to provide the power to driving the sensor. The particular sensor for the driver monitor system could be two kind. One is infrared. Another is probably the different devices, which is, we do not really know the detail, but we are providing in a synchronous mode to provide the power so that the sensor can send out those invisible light and to collect the driver's facial -- extraction of the facial features to determine the driver's driving conditions.

是的。謝謝。當我們提到驅動監視器時，首先，我們提供電源管理IC，即PMIC，為驅動感測器提供電源。用於駕駛員監控系統的特定感測器可以有兩種。一種是紅外線。另一個可能是不同的設備，也就是說，我們並不真正了解細節，但是我們以同步模式提供電源，以便感測器可以發出那些不可見的光並收集駕駛員的面部 - 提取通過面部特徵判斷駕駛員的駕駛狀況。

So this is -- basically, we are doing this power management IC. And the sensor could be positioned at different places such as steer wheel. We have a copy in the console, different place in the console as long as it can see the driver. So that's why we're providing. Now according to the ISO and ACQ, the different level of the IC in automotive and probably in the lighted requirement level, which is maybe between A and B, that is not crucial in the battery or motor or the particular -- the driving system is more like in a copy management.

所以這基本上是我們正在做的電源管理 IC。並且感測器可以放置在不同的地方，例如方向盤。我們在控制台中有一個副本，在控制台的不同位置只要它可以看到驅動程式。這就是我們提供的原因。現在根據 ISO 和 ACQ，汽車中 IC 的不同級別，可能在照明要求級別，可能在 A 和 B 之間，這對於電池或馬達或特定的驅動系統並不重要。

Even by that, the design activity will be low. And our -- we're also in the mid of the -- middle of the processing ISO-26262 even with this IC we'd like to be providing to the customer. So we estimate still have some time headwind for the first production. But in the meantime, normally, the design period is quite extended. So we are in a design in the activity right now in many of the module makers, yes.

即使這樣，設計活動也會很低。我們也正處於 ISO-26262 處理過程中，即使我們希望向客戶提供這種 IC。所以我們估計第一批生產還需要一段時間。但同時，通常設計週期相當長。因此，我們現在正在許多模組製造商的活動中進行設計，是的。

That's very helpful. My second question is about -- last quarter, you talked about the inventory issue being primarily in power tool and vacuum cleaner. Has any of that -- is that still the case? Is that where the inventory is? Or have other inventory issues surfaced?

這非常有幫助。我的第二個問題是——上個季度，您談到庫存問題主要集中在電動工具和吸塵器。有這樣的情況嗎——現在仍然如此嗎？那是庫存的地方嗎？或是有其他庫存問題出現嗎？

I can answer that, and Jim can jump in. Yes, it is related to different applications. And we do see some recovery of the power tool. We do see that. But it's going to be some of the more clear picture towards the end of the year when we see how the inventory status. Jim, do you care about any comments?

我可以回答這個問題，吉姆可以插話。我們確實看到了電動工具的一些復甦。我們確實看到了這一點。但到今年年底，當我們看到庫存狀況時，情況將會更加清晰。吉姆，你關心任何評論嗎？

Yes. There's still quite a bit of inventory, certainly, we know in the vacuum cleaner channel. I'll also mention there is some inventory in the TV channel, which we do expect to be through here by the end of the year, very early next year. The vacuum cleaner inventory and some of the power tool inventory is more nebulous because of the supply chain nature of those products. And I think it will be the end of the year before we really understand the inventories. But certainly, I think by Q1, we'll be through most of that inventory issue. Those are my comments.

是的。當然，我們知道吸塵器渠道仍然有相當多的庫存。我還要提到電視頻道中有一些庫存，我們確實希望在今年年底、明年年初之前完成這些庫存。由於吸塵器和部分電動工具的供應鏈性質，這些產品的庫存更加模糊。我認為我們要到年底才能真正了解庫存情況。但當然，我認為到第一季度，我們將解決大部分庫存問題。這些是我的評論。

Our next question comes from Tore Svanberg with Stifel.

我們的下一個問題來自 Tore Svanberg 和 Stifel。

So looking at your own inventory, it looks like your inventory days, I think it's the highest I've ever seen them. Just wondering what's your comfort level with inventory days above 200? And what are your plans going forward?

所以看看你自己的庫存，看起來你的庫存天數，我認為這是我見過的最高的。只是想知道您對庫存天數超過 200 天的舒適程度如何？您接下來的計劃是什麼？

Yes. Tore, it's the -- our internal inventory, it's increased by the wafer of which we have contracted with the foundry earlier. So it may probably take until Q1 2023, and of course, it will also depend on our delivery to our account after the 2022. I hope, let's see, by Q1, we can see the decrease in the wafer inventory. In Q3, actually, our inventory for the back end was in process, it has decreased from the Q2. So hopefully this is helpful.

是的。撕下來，這是我們的內部庫存，它是通過我們之前與代工廠簽訂合約的晶圓而增加的。所以可能要到2023年第一季度，當然，這也取決於我們在2022年後交付到我們的帳戶。第三季度，實際上我們後端的庫存在處理中，比第二季度有所減少。希望這會有所幫助。

No, that's very helpful. And a question for you, Jim. You said that the inventory -- the external inventory correction should be complete by the end of the year. Just wondering what gives you that confidence? Is this based on conversations you've had with customers? Or do you expect sell-through to perhaps start improving by then? Any additional color on that type of confidence would be helpful.

不，這非常有幫助。還有一個問題想問你，吉姆。你說庫存－外部庫存修正應該在年底前完成。只是想知道是什麼給了你這樣的信心？這是基於您與客戶的對話嗎？或者您預計屆時銷量可能會開始改善？任何對這種信心的附加顏色都會有幫助。

Okay. I'll be happy to answer that. First of all, I think we've been very fortunate because we have a history of working close with customers. And we have a significant amount of dialogue that's gone on with some of the OEMs directly, even where they use an ODM to help clear up some of the inventory issues. So they have been, I think, very helpful in terms of giving us knowledge of what products they have in their supply chain through the ODMs and also in retail.

好的。我很樂意回答這個問題。首先，我認為我們非常幸運，因為我們有著與客戶密切合作的歷史。我們直接與一些 OEM 進行了大量的對話，即使他們使用 ODM 來幫助解決一些庫存問題。因此，我認為，他們非常有幫助，讓我們了解他們透過 ODM 供應鏈以及零售中擁有哪些產品。

However, I think it's going to be December, January before we really have a good idea of the sell-through for vacuum cleaners, TVs and some other areas. And I think some of the ODMs have expressed that basically they still don't have good clarity into the sell-through in the end market. And I think once we get through the traditional holiday time frame, we'll have a much better idea of, first of all, what the sell-through volumes are and then if there's any inventories that are left that need to be cleared.

不過，我認為要到 12 月、1 月我們才能真正了解吸塵器、電視和其他一些領域的銷售情況。我認為一些 ODM 已經表示，基本上他們對終端市場的銷售情況仍然沒有很好的了解。我認為，一旦過了傳統的假期時間範圍，我們就會更了解，首先，銷售量是多少，然後是否還有需要清理的庫存。

But we've been very fortunate, I think, in the inventory issues. And I'll also mention, Tore, on Perry's comments about our internal inventory. Most of that's in very high-volume products where we're literally the industry standard in both the Battery Management as well as the backlighting area. So the wafer issues in my opinion, are not difficult to clear over the longer term. So those are my comments.

但我認為，在庫存問題上我們非常幸運。托爾，我還要提到佩里關於我們內部庫存的評論。其中大部分是在大批量產品中，我們實際上是電池管理和背光領域的行業標準。因此，在我看來，晶圓問題從長遠來看並不難解決。這就是我的評論。

That's great color. And just one last question. So you're approaching cash flow breakeven again and you're actually guiding OpEx to be up in Q4. So for either one of you, how do you expect to manage OpEx going forward, especially as you navigate around the sort of $16 million to $18 million revenue level?

那顏色真棒。還有最後一個問題。因此，您再次接近現金流盈虧平衡，並且您實際上正在引導營運支出在第四季度上升。那麼對於你們中的任何一個人來說，你們預計如何管理未來的營運支出，尤其是當你們的收入水平在 1600 萬美元到 1800 萬美元之間時？

Yes, the OpEx, I think that the OpEx will be in the stem label as the Q3, Q4 area has just guided. Solid (inaudible) we try to maintain our cash breakeven point in the area of the $16 million to $17 million area. And -- in addition, we do have a lot of the cash in balance sheet. So it's -- I think that it will enable us to pass through this inventory correction period.

是的，OpEx，我認為 OpEx 將在 Q3、Q4 區域剛剛引導的乾標籤中。我們努力將現金收支平衡點維持在 1,600 萬至 1,700 萬美元之間（聽不清楚）。而且——此外，我們的資產負債表上確實有大量現金。所以我認為這將使我們能夠度過這個庫存調整期。

Our next question comes from Lisa Thompson with Zacks Investment Research.

我們的下一個問題來自 Zacks Investment Research 的 Lisa Thompson。

I was just curious about the one statement you made that you have one product in high volume for automotive. Can you describe a little bit what that product is? What it goes into? Or maybe who the customer is?

我只是對您所說的一項聲明感到好奇，即您擁有一種大批量的汽車產品。您能簡單描述一下該產品是什麼嗎？它涉及什麼？或者也許客戶是誰？

So these are first of all that those -- our product called the driver monitor system go to the copy management, which is like monitor the driver's conditions. Those we don't expect that quickly becomes very high volume. There are 2 reasons. One is the qualified cycle is long and slow, come relatively compared to consumer. And second is the deployment of those it also needs some time to deploy and penetrate the different automotive. And this part is not limited to the electrical vehicle. They're going to be hybrid or even gas-powered vehicle. That's good news.

首先，我們的產品稱為駕駛員監控系統，用於複製管理，就像監控駕駛員的狀況一樣。我們預計這些數據不會很快變得非常大。有兩個原因。一是合格週期長且慢，相對於消費者來說。其次是那些的部署，它還需要一些時間來部署和滲透不同的汽車。而且這部分不限於電動車。它們將是混合動力甚至汽油動力車輛。這是個好消息。

So we're providing this power management IC, which is providing support very high accurate power. They will simultaneously driving multiple sensor with a very short time frame so that the license, they can monitor the driver and get accurate reading because the sensor gains is meeting some infrared, and receive those infrared back. So the business model we designed is not ready to go to the vehicle, but go to the module makers. We have multiple design activity with the module maker.

所以我們提供了這個電源管理IC，它可以提供非常高精確度的電源支援。他們會在很短的時間內同時駕駛多個感測器，以便獲得許可，他們可以監控駕駛員並獲得準確的讀數，因為感測器增益會遇到一些紅外線，並接收這些紅外線回來。所以我們設計的商業模式不是準備去整輛車，而是去模組商。我們與模組製造商進行了多項設計活動。

Then thirdly, those IC, although it's in a copy management, they still need some ISO262. But the rating is much -- is lighter one, like AOB label rating, yes. So that would be not a major event. But the 26261 program, you want to qualify, that takes about 18 months to 24 months. That's another thing that will be making these penetration and production state-by-state is not quickly as consumer electronics product market.

第三，那些IC，雖然是複製管理，但還是需要一些ISO262。但評級要低得多——是的，例如 AOB 標籤評級。所以這不會是個重大事件。但26261計劃，你想要獲得資格，大約需要18個月到24個月。這是另一件事，這將使這些滲透和生產各州的速度不像消費性電子產品市場那麼快。

Okay. So it's whoever the module maker finds for a customer as to what cars that's going into, right?

好的。因此，無論模組製造商為客戶找到誰，都可以決定將其安裝到什麼汽車上，對嗎？

Right.

正確的。

Okay. All right. As far as the privatization according to your filings, all I've noticed is that you need to do a shareholder meeting. Is that the only step left to have the vote? Or are there more things that need to happen?

好的。好的。至於根據您的文件進行的私有化，我所注意到的是您需要召開股東大會。這是投票的唯一步驟嗎？或者還有更多的事情需要發生嗎？

So Dan, do you want to comment?

那麼丹，你想發表評論嗎？

So Lisa, could you repeat the question, please?

麗莎，你能重複這個問題嗎？

Right. So according to what I've seen in your filings, it looks like you just need to do a shareholder meeting and a vote on the purchase? Is there any more steps that happened between now and then?

正確的。那麼根據我在你們的文件中看到的情況，看起來你們只需要召開股東大會並對收購進行投票？從現在到那時還有其他步驟發生嗎？

Yes. We will be releasing more information through the proper channels when that happens. Lisa, I'm sorry, we just can't make any comment or won't make any comments on this call.

是的。屆時我們將透過適當管道發布更多資訊。麗莎，很抱歉，我們無法或不會對此通話發表任何評論。

I was just hoping you would help us read the filing, that's all. Okay.

我只是希望你能幫我們閱讀這份文件，僅此而已。好的。

Yes. Sorry about that.

是的。對此感到抱歉。

Just wanted to check. And you're still talking about Q1 closure, right?

只是想檢查一下。你還在談論第一季的關閉，對嗎？

Correct.

正確的。

That was the latest information. Okay.

這是最新的資訊。好的。

I believe so. But again, everything is going to be through the SEC. That's going to be the formal communication. As far as dates go, the world changes quickly.

我相信是這樣。但同樣，一切都將透過 SEC 進行。這將是正式的溝通。就日期而言，世界變化很快。

Right, I saw the forms with the dates blank. So that much I know.

是的，我看到表格上的日期是空白的。我知道的就這麼多。

Okay. Perfect. Thank you, Lisa.

好的。完美的。謝謝你，麗莎。

Thank you. And there are no further questions in the queue. I'd like to turn the call back over to Dan for any closing remarks.

謝謝。並且隊列中沒有其他問題。我想將電話轉回給 Dan，讓其結束語。

Thank you. Thank you, everyone, for your time and attention this morning. Please feel free to contact me at (408) 987-5920, extension 8888 or at ir@o2micro.com with any follow-up questions. Have a wonderful day, everyone, and thank you for your time and attention. Goodbye.

謝謝。謝謝大家今天早上的時間和關注。如有任何後續問題，請隨時致電 (408) 987-5920、分機號 8888 或發送電子郵件至 ir@o2micro.com 與我聯繫。祝大家有美好的一天，感謝您的時間和關注。再見。

The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.

會議現已結束。感謝您參加今天的演講。你們現在可以斷開連結了。