慧榮科技 (SIMO) 2005 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the fourth quarter 2005 Silicon Motion Technology Corporation earnings conference call. My name is Cindy, and I will be your coordinator for today.

各位女士、先生，大家好，歡迎參加矽動力技術公司2005年第四季財報電話會議。我叫辛迪，我將擔任你們今天的協調員。

[Operator Instructions]

[操作說明]

I would now like to turn the presentation over to your host for today's call, Mr. Richard Wei, Chief Financial Officer. Please proceed, sir.

現在，我謹將今天的演講交給本次電話會議的主持人，財務長魏理查德先生。請繼續，先生。

Thank you. Thank you joining our company's call today. We released our results last night and I hope you all had a chance to read it. You can find a copy of the earnings release on our website if you have not seen it yet. Our website also contains a PowerPoint file that includes some of the material that we will be discussing today. Let me just go through some of the [procedures] first.

謝謝。感謝您今天參加我們公司的電話會議。我們昨晚公佈了結果，希望大家都有機會閱讀。如果您還沒有看過收益報告，可以在我們的網站上找到一份副本。我們的網站上還有一個 PowerPoint 文件，其中包含了我們今天將要討論的部分內容。讓我先介紹一些[流程]。

This conference call is also being broadcast live over the internet. A replay of the call will be available at our website, www.siliconmotion.com, under the Investor Relations tab. A telephone replay will also be available from 12 PM on January 26th until 12 PM on February 2nd eastern time. To access replay, please call 888-286-8010 or 617-801-6888, if you're calling from outside the US. The access code will be 78419186.

本次電話會議同時也在網路上進行直播。電話會議的錄音回放可在我們的網站 www.siliconmotion.com 的「投資者關係」標籤下找到。從美國東部時間 1 月 26 日中午 12 點至 2 月 2 日中午 12 點，還將提供電話錄音回放服務。如需收聽重播，請撥打 888-286-8010 或 617-801-6888（如果您從美國境外撥打）。訪問碼為78419186。

Now let me also go through the Safe Harbor statement. Certain statements made during the course of our discussion today may constitute forward-looking statements that are based on management's current expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to different materially, including risks that are - that may be beyond the company's control. For these risks, please refer to the company's fillings with SEC.

現在我也來看看安全港聲明。今天討論過程中所作的某些陳述可能構成前瞻性陳述，這些陳述基於管理層當前的預期和信念，並受到許多風險和不確定性的影響，這些風險和不確定性可能導致實際結果與預期結果存在重大差異，包括一些可能超出公司控制範圍的風險。有關這些風險，請參閱本公司向美國證券交易委員會提交的文件。

Now I'm going to go over our Q4 results quickly, and then I will turn it over to Wallace Kou, our President and CEO, for his remarks on Q1 in 2006. And then we'll wrap up with the Q and A session.

現在我將快速回顧我們第四季的業績，然後我將把發言權交給我們的總裁兼執行長寇偉倫，請他談談 2006 年第一季的情況。最後，我們將進行問答環節。

We had solid sales growth in the fourth quarter and we saw improved momentum in most of our key businesses. Sales grew 14% year-over-year, and 17% sequentially to NT $872 million. That was the equivalent to about $26.1 million US dollars. Unit shipment of mobile storage products, which include controllers for flash memory cards as well as controllers for USB flash disk drives, grew 107% year-over-year, and 24% sequentially to 30 million units. Unit shipments of multimedia SoCs products, which consist of MP3 controllers as well as graphics decipher features, grew 754% year-over-year and 132% sequentially to approximately 947,000 units.

第四季我們的銷售額實現了穩健成長，並且我們的大多數主要業務都呈現出成長勢頭。銷售額年增 14%，季增 17%，達到新台幣 8.72 億元。那相當於大約2610萬美元。行動儲存產品（包括快閃卡控制器和 USB 隨身碟控制器）的出貨量年增 107%，季增 24%，達到 3,000 萬台。包含 MP3 控制器和圖形解碼功能的多媒體 SoC 產品出貨量年增 754%，季增 132%，達到約 947,000 台。

We continue to maintain a balanced approach to revenue growth while sustaining our healthy margins. Our gross margin increased from 52.2% in the third quarter to 53.9% in the fourth quarter. Operating margin increased from 16.3% in the fourth quarter of '04 and 27.8% in the third quarter of '05 to 30.2% in the fourth quarter. Net income increased 164% year-over-year and 15% sequentially to NT $248 million. That's about 7.4 million US dollars. Diluted earnings per ADS in the fourth quarter of '05 were $0.24 US, and that's compared to $0.11 in the fourth quarter of '04 and $0.21 in the third quarter of '05.

我們持續採取平衡的營收成長策略，同時維持健康的利潤率。我們的毛利率從第三季的 52.2% 成長到第四季的 53.9%。營業利潤率從 2004 年第四季的 16.3% 和 2005 年第三季的 27.8% 成長到第四季的 30.2%。淨利年增164%，季增15%，達到新台幣2.48億元。那大約是740萬美元。2005 年第四季每股 ADS 的稀釋收益為 0.24 美元，而 2004 年第四季為 0.11 美元，2005 年第三季為 0.21 美元。

For the full year 2005, our sales totaled $2,686,000,000 New Taiwan dollars and that was approximate 83.6 million US. And that was up 24% from 2004. Gross margin for the full year was 50.0% up from 41.2% in 2004, and operating margins similarly extended from 17.5% in 2004 to 25.2% in 2005. Net income was NT $676 million. That was about 21 million in US, and that was up 152% from 2004. And full year EPS for the ADS was $0.72.

2005 年全年，我們的銷售額總計 2,686,000,000 新台幣，約 8,360 萬美元。這比 2004 年增長了 24%。全年毛利率為 50.0%，高於 2004 年的 41.2%；營業利益率也同樣從 2004 年的 17.5% 提高到 2005 年的 25.2%。淨利為新台幣6.76億元。美國約有 2,100 萬人感染，比 2004 年增長了 152%。ADS 全年每股收益為 0.72 美元。

Now I'll turn over to Wallace.

現在我將把麥克風交給華萊士。

Thank you, Richard. Good morning. Let me start with Q4 [positive] supply situation, as there are near term challenges supply situation high density in NAND Flash memory, which is a key component for our customer. In Q4 '05, our customer have made such a contract whereby with Samsung, [High Nicks] or [Renesis] they were able to secure in-door supply. But however most of our tier two flash memory card and UD players have a difficult time to finding High density flash memory, especially in 4 gigabits mono die, or 8 gigabit two die package.

謝謝你，理查。早安.首先，我想談談第四季度（正面的）供應情況，因為近期高密度 NAND 快閃記憶體的供應情況面臨挑戰，而 NAND 快閃記憶體是我們客戶的關鍵元件。2005 年第四季度，我們的客戶與三星、[High Nicks] 或 [Renesis] 簽訂了合同，從而確保了室內供貨。但是，我們大多數二線閃存卡和UD玩家都很難找到高密度閃存，尤其是4千兆單晶片或8千兆雙晶片封裝。

While supply situation improved in December, customers hesitate to place big orders due to unstable pricing from such manufacturers. In the flash memory card markets, we also had excellent design wins in micro [ASD] cards, which are used in mobile phones. Micro ASD card could be the major fast growing flash memory card in '06, we have enhanced our focus in this growing market and gained market share.

雖然12月份供應情況有所改善，但由於此類製造商的價格不穩定，客戶仍不願下大訂單。在快閃記憶體卡市場，我們在用於手機的微型 [ASD] 卡的設計方面也取得了優異的成績。Micro ASD 卡可能是 2006 年成長最快的快閃記憶體卡，我們加強了對這個不斷成長的市場的關注，並獲得了市場份額。

Now let's look at our product development. In Q4 '05 we extend our [SM2XX] controller family by introducing [SM2's CD5, 2 CD6] products with high performance, high ESD potential with new channel interface. In MP3 full (inaudible) mode our SM2XX can achieve 40 megabytes per second in read, and 34 megabytes per second in write. We set a new performance standard of our MMC Card. These products are needed for high entity camera, as well as the camcorder, and can account for our quick link in consolidating our leading position in the fast growing markets.

現在我們來看看產品開發。2005 年第四季度，我們透過推出 [SM2's CD5, 2 CD6] 產品擴展了我們的 [SM2XX] 控制器系列，這些產品具有高性能、高 ESD 防護能力和新的通道介面。在 MP3 全速（無聲）模式下，我們的 SM2XX 讀取速度可達每秒 40 兆位元組，寫入速度可達每秒 34 兆位元組。我們為MMC卡樹立了新的效能標準。這些產品是高階相機和攝影機所必需的，可以解釋我們為何能夠迅速鞏固在快速成長的市場中的領先地位。

In addition, we also start full production of SN222 [compact five controller], which we believe can bring significant revenue in '06 for us. In addition, our MP3 product turned out to be a bright star for us, especially we saw the severe shortage for high density NAND Flash in Q4. We then made a direction change in late Q3 last year to focus on card reader MP3 player; this type of devices though require building flash memory. We continue to see new design wins from Card Reader MP3 Players.

此外，我們也開始全面生產 SN222 [緊湊型五控制器]，我們相信這將在 2006 年為我們帶來可觀的收入。此外，我們的 MP3 產品也成為了我們的一大亮點，尤其是在第四季度我們看到了高密度 NAND 快閃記憶體的嚴重短缺。去年第三季末，我們調整了發展方向，專注於讀卡機 MP3 播放器；不過，這類裝置需要建置快閃記憶體。我們不斷看到讀卡機 MP3 播放器領域湧現新的設計佳作。

Looking ahead for '06, we are expecting to see some upside potential to enhance our OEM markets, and the increasing supply of NAND flash is likely to be beneficial to us. Therefore we're positioning ourselves to deliver wide ranging support and futures, especially focusing the new coming MLC flash memory from Samsung, Hynix/ST micro as well as AGNs on Renesas, which are also a type of MLC memory.

展望 2006 年，我們預計 OEM 市場將有一些成長潛力，NAND 快閃記憶體供應量的增加可能對我們有利。因此，我們正在積極佈局，以提供廣泛的支援和未來發展，尤其專注於三星、海力士/意法半導體即將推出的新型 MLC 快閃記憶體以及瑞薩電子的 AGN，它們也屬於 MLC 記憶體的一種。

We plan to see continuing growing USB flash disk markets, and we will also enter a card reader controller market in the second half of the year. In the next two quarters, we will ramping up production of [SNCC2], dual functional controller, [SN 281], [MS Pro do it to FP adapter, and SN2 lighting FP controller products]. While seeing the result of early prototype and their outstanding, this is consistent with the ration we set and presented last quarter. For our identification strategy, high volume consumer product is looking well. We are mainly anticipating in growth for the Card reader and MP3 Player market and we anticipate Q1 shipping volume will be higher than Q4 last year.

我們預計 USB 隨身碟市場將持續成長，並且我們將在今年下半年進軍讀卡機控制器市場。在接下來的兩個季度裡，我們將提高[SNCC2]雙功能控制器、[SN 281]、[MS Pro do it to FP適配器]和SN2照明FP控制器產品的產量。從早期原型機的成果及其出色表現來看，這與我們在上個季度設定和提出的比例是一致的。就我們的識別策略而言，高銷量消費品看起來不錯。我們主要預期讀卡機和MP3播放器市場將成長，預計第一季的出貨量將高於去年第四季。

This year [mobile phone] will be the major driver for flash memory card. [Trying to sell the new] mobile phone will have remote fresh flash and memory card,. We believe we are well positioned for the up coming year. Now we welcome your questions. Operator?

今年，手機將成為閃存卡的主要驅動力。 （為了推銷新款手機，）手機將支援遠端刷新快閃記憶體卡和記憶卡。我們相信我們已為來年做好了充分準備。現在歡迎大家提問。操作員？

Thank you.

謝謝。

[Operator Instructions]

[操作說明]

We will wait a moment for a list of questions to compile.

我們將稍等片刻，以便整理出一份問題清單。

And gentlemen, your first question comes from the line of Quinn Bolton from Silicon Motions, please proceed.

各位先生，你們的第一個問題來自 Silicon Motions 的 Quinn Bolton，請繼續。

Good evening guys, nice quarter and nice guidance for 2006. Wanted to see if you could give us some more sort just your sense heading into the March quarter for the supply constraints, especially in the large density side, is that sort of partially behind the 19 to 23% decline in first quarter revenues or do you think that that kind of level is just more seasonal factors, and then I have got a couple of follow-on questions.

各位晚上好，祝你們季度業績良好，2006 年的指導意見也很有價值。我想請您再談談您對三月季度供應限制的看法，尤其是在大密度住宅方面，這是否是導致第一季收入下降 19% 至 23% 的部分原因，或者您認為這種程度的下降僅僅是季節性因素造成的？另外，我還有幾個後續問題。

Q1 revenue decline primarily for seasonality, because we also have -- some customers has certain inventory in the channel, such as the high density flash memory also has unknown its moment, also we saw additional price dropping of [cables] so that's why we believe 20% revenue decline is a reasonable guidance in Q1.

第一季營收下降主要是由於季節性因素，因為我們還有一些客戶在通路中持有某些庫存，例如高密度閃存，其銷售時機尚不確定，此外，我們還看到[電纜]價格進一步下降，因此我們認為第一季營收下降 20% 是一個合理的預期。

Okay, so it looks like - - if prices are dropping looks like their supply situation has been mostly fixed at this point, but guys are holding off making purchases until they see a more stable price environment, is that an accurate characterization?

好的，所以看起來——如果價格下跌，說明他們的供應情況目前基本上已經解決，但是人們都在等待價格環境更加穩定後再進行購買，這種說法準確嗎？

Yes. That's right.

是的。這是正確的。

Okay. Next you guys seem to be pretty well positioned if I recall with Hynix, Hynix seemed to have pretty good NAND numbers when they announced results a day or so ago. Can you just kind of talk about the Hynix relationship and to the extent that they gain share in NAND flash, is that a -- how does that affect your business?

好的。接下來，如果我沒記錯的話，你們和海力士的合作似乎相當有利，海力士在前幾天公佈業績時，NAND 快閃記憶體的數據似乎相當不錯。您能否談談您與海力士的關係，以及他們在 NAND 快閃記憶體領域獲得市場份額後，這對貴公司有何影響？

Well I think we do have very good [storage] with the Hynix, as well as [ASD micro]. I think they've both - the really major gains we are going to see as both Hynix/ASD micro are going to render MLC memory in March. So, it's because the current yield is much better than anticipation, so we believe that's going to drive the global flash memory cost probably down to another 20%, we are going to balances it for our customers who are very close to Hynix. I think the MLC initially promised support for the -- for large density, full sized flash memory card as well as the USB and MP3 product line.

我認為我們在海力士和ASD micro方面都擁有非常好的[儲存]效能。我認為他們倆都有——我們將看到真正的重大進展，因為海力士/ASD micro 都將在 3 月推出 MLC 內存。所以，由於目前的良率遠超預期，我們相信這將使全球快閃記憶體成本再下降 20%，我們將為與海力士關係密切的客戶平衡成本。我認為 MLC 最初承諾支援大密度、全尺寸快閃記憶體卡以及 USB 和 MP3 產品線。

Okay, and then just two more questions. You talked about some gains in the SD card market, can you just sort of talked about are those we made more with the Taiwanese card manufacturers or are you actually gaining share at some of the larger branded OEMs ?

好的，那最後還有兩個問題。您提到在 SD 卡市場取得了一些進展，您能否談談這些進展更多是來自台灣的卡片製造商，還是實際上從一些大型品牌 OEM 廠商那裡獲得了市場份額？

I believe in Q4 we probably shipped about 2.5 million controllers just for micro SD cards. In Q4, because the technology in fabrication for micro SD wasn't mature. So the supply for micro SD card is seeing severe shortage for mobile phone makers. In Q1, I think just in Taiwan probably, there will be around six to seven manufacturers who are able to produce micro SD card. In Korea, there is about an additional four more that are able to ramp up micro SD card. We are well-positioned from those manufacturers who will produce micro SD cards for all the major players in the market, such as Nokia, Motorola, LG, Samsung Mobile and DoCoMo.

我相信在第四季度，我們光是micro SD卡控制器就出貨了大約250萬個。第四季度，因為微型 SD 卡的製造技術尚未成熟。因此，手機製造商正面臨micro SD卡嚴重短缺的問題。我認為在第一季度，光是在台灣地區，可能就會有六到七家廠商能夠生產micro SD卡。在韓國，還有大約四台設備能夠擴充micro SD卡。我們與那些將為市場上所有主要參與者（如諾基亞、摩托羅拉、LG、三星行動和 DoCoMo）生產 micro SD 卡的製造商建立了良好的合作關係。

So you said you shipped 2.5 million micro SD cards-- or controllers-- in the fourth quarter?

所以你說你們第四季出貨了250萬張micro SD卡——或者說是控制器？

We shipped about 2.5 million controllers, which is [inaudible - heavy accent] for micro SD cards in Q4.

我們在第四季出貨了約 250 萬個控制器，這相當於 [聽不清楚 - 重口音] micro SD 卡。

Okay. And then lastly, as the NAND densities move up, can you talk about any opportunities you see in the lower density side, maybe as the [NROM] Flash might come in and fill a void left by the higher capacities on the NAND side?

好的。最後，隨著 NAND 密度的提高，您能否談談您在低密度方面看到的任何機會，例如 NROM 快閃記憶體的出現，可能會填補 NAND 高容量留下的空白？

You mean the NROM? NROM maybe replaces some portions of the NAND Flash memory?

你是說NRO​​M嗎？NROM或許可以取代部分NAND快閃記憶體？

Yes just -- to accept that there are lower -- if there are applications for lower -- an application that might not need two gigabytes or four gigabytes of NAND flash. Is there an opportunity for you to kind of explore--?

是的，只是——要接受存在更小的——如果存在較小的應用程式——例如，某個應用程式可能不需要 2 GB 或 4 GB 的 NAND 快閃記憶體。你是否有機會去探索一下──？

In '06, probably there will be content pre-load type of memory card, which may not need multi-programming right. So that could be an opportunity for a low density NROM Flash or even [E Square] to come to the market with the SD phone factor or MLC phone factor. This is the opportunity for us to try to develop a diversified product line to support this kind of market.

2006 年可能會出現預先載入內容的記憶卡，這種記憶卡可能不需要多程式編程，對吧？所以，對於低密度 NROM 閃存，甚至是 [E Square] 來說，這可能是一個機會，可以與 SD 手機廠商或 MLC 手機廠商一起進入市場。這是我們嘗試開發多元化產品線以支持這類市場的機會。

And that would require effectively sort of an SD like or MLC like controller from Silicon Motion?

那豈不是需要像 Silicon Motion 出品的 SD 或 MLC 控制器嗎？

Ten host the different type storage device.

十台主機分別配備不同類型的儲存設備。

Okay. Okay. Great thanks. Good quarter, guys.

好的。好的。非常感謝。夥計們，這季度過得很好。

And your next question comes from the line of [Pranilla Alia] of Deutsche Bank please proceed

您的下一個問題來自德意志銀行的[Pranilla Alia]，請繼續。

Hi this is [Pranilla Halia from Merrill Lynch] How are you, Richard and Wallace?

大家好，我是美林證券的普拉尼拉·哈利亞。理查和華萊士，你們好嗎？

Hi.

你好。

How are you?

你好嗎？

Good, thanks. Richard, maybe a question for you first. Can you explain how you get to flat operating margins in 1Q with revenues down 21%? If I'm doing the maths right, you are going to need higher growth margins or much reduced OpEx.

好的，謝謝。理查德，或許我先想問你一個問題。你能解釋一下，在第一季營收下降 21% 的情況下，你們是如何實現營業利潤率持平的嗎？如果我計算沒錯，你需要更高的成長利潤率或大幅降低營運成本。

I think our gross margin is probably going to be flattish in Q1. We don't really have a lot of fixed assets because we are a founded company, and so it's not that difficult to get flat gross margin. On the operating side, we do have to reign in some of the expenses a bit to actually reduce the [op expense] in dollar terms to get to the flat up in [margin guidance] and I think it's doable.

我認為我們第一季的毛利率可能會保持穩定。由於我們是一家成立多年的公司，所以固定資產並不多，因此要實現毛利率持平並不難。在營運方面，我們確實需要稍微控制一些開支，以實際減少以美元計的營運支出，從而實現利潤率預期持平或上升的目標，我認為這是可以做到的。

Okay. And then in your revenue guidance for 1Q, can you talk about how much unit -- what unit in ASD [inaudible] you're building in?

好的。那麼，在你們對第一季的營收預期中，能否談談你們在ASD（聽不清楚）的產量是多少？

I think we are probably looking for somewhere around 5% to 10% ASP decline, and you can figure out the units from that.

我認為平均售價可能會下降 5% 到 10%，你可以據此計算出單位數量。

Okay. Richard, again, another one for you. You've given sort of calendar '06, 95 EPS guidance mid point. Surely, there's some revenue and operating margin assumptions related to that. Are you able to give us a feel for what they are?

好的。理查德，又給你一個。您給出了 2006 年的日曆，每股收益預期中位數為 95 美元。當然，這其中涉及一些收入和營業利潤率的假設。您能給我們簡單描述一下它們是什麼嗎？

Yes. I think basically our target is we want to achieve upward margin of about 30%, preferably higher, but 30% will be the win that we are looking for. And looking at our numbers in Q4, by our upping margin moderates 30.2 I believe, and with the right amount of expense control I think we could maintain that type of upping margin in '06.

是的。我認為我們的目標是實現約 30% 的利潤成長，最好更高，但 30% 是我們想要達到的目標。從我們第四季的數據來看，我們的利潤率提升幅度適中，達到 30.2%。我認為，只要控制好支出，我們就能維持 2006 年的利潤率。

I think the first quarter because you are going to have the decline in revenue, so it's harder to reduce the other expenses as a percent of revenue beyond what's already in the fourth quarter '05. And so when you start reading the stock option expense, your real GAAP operating margin will be steady below 30. But I think you can make up for that in later quarters, as you scale your top line, your expenses will not rise at the same rate.

我認為第一季會比較困難，因為收入會下降，所以很難在 2005 年第四季的基礎上進一步降低其他支出佔收入的百分比。因此，當你開始計算股票選擇權費用時，你的實際 GAAP 營業利潤率將穩定在 30% 以下。但我認為，隨著你營收的成長，你的支出不會以同樣的速度成長，所以你可以在後面的幾季彌補這一點。

So full year our internal goal is to achieve 30%, and that's if you get that I think getting the EPS number that we guided should not be difficult.

因此，我們全年的內部目標是實現 30% 的成長，如果能達到這個目標，我認為實現我們預期的每股盈餘目標應該不難。

Okay. Fine question for you Wallace. Can you talk about what fraction of your flash card controllers today going into cell phone parts? You mentioned 2.5 million for SD micro, but there are other standards out there, if you add them all up are you able to say what fraction go into say cell phone cards?

好的。華萊士，你問得好。您能否談談目前貴公司生產的閃存卡控制器中有多少比例被用於手機零件？你提到 SD micro 卡的容量是 250 萬，但還有其他標準，如果把它們全部加起來，你能算出手機卡的容量佔多少比例嗎？

Well, I think in Q4 we probably shipped more than 50% of the flash memory card controller into mobile phone. That's including Mini SD as well as MMC micro and the Micro SD. Now we really tried to focus on Micro SD because Micro SD has really become the fast growing sole factor for the mobile phone. And we see probably in late Q2 to early Q1, in early Q3 the number probably can to reach 6 to 7 million units a month. So that is the larger visibility for us, opportunity.

嗯，我認為在第四季度，我們向手機市場交付的閃存卡控制器可能占到了總出貨量的 50% 以上。這包括 Mini SD 卡、MMC micro 卡和 Micro SD 卡。現在我們確實努力專注於Micro SD卡，因為Micro SD卡已經真正成為手機快速成長的唯一因素。我們預計在第二季末至第一季初，第三季初，銷售量可能達到每月 600 萬至 700 萬輛。所以，這對我們來說是更大的機遇，也是更大的關注點。

The key is micro SD cards, they require really deeper touching technology compared with mini SD and full size SD cards. So, not every single one can jump into the market. So I think we prepare for this type of card growing for almost six months in the past, so that's why from all the of six major manufacturers in Taiwan, and four in Korea, and one in US are currently design win with our controller today. So we anticipate the micro SD card could be a dominant phone factor in the second half of this year, like [CE] the mini SD card.

關鍵在於micro SD卡，與mini SD卡和全尺寸SD卡相比，它們需要更深層的觸控技術。所以，並非每個人都能進入市場。所以我認為，我們為這種類型的顯示卡在過去近六個月裡的發展做好了準備，因此，目前台灣六大廠商、韓國四大廠商和美國一家廠商都贏得了我們控制器的設計訂單。因此我們預計，micro SD 卡可能會像 mini SD 卡一樣，成為今年下半年手機領域的主導因素。

Okay. Hi. Are you able to also give a split on what was the split between mini SD, micro SD and MMCmicro in your 4Q. Is it about even?

好的。你好。您能否也提供一下您第四季mini SD卡、micro SD卡和MMCmicro卡的使用比例？雙方勢均力敵嗎？

We were not able to tell the detail. But I think the-- that means the mini SD is still the highest and then -- well the micro SD that will be MMCmicro.

我們無法告知詳情。但我認為——這意味著 mini SD 仍然是最高的，然後——嗯，micro SD 將會是 MMCmicro。

Okay, great. And one last question, can you give some more color on how soon your new products are expected to ramp, and what impact they'll have on your ASDs and gross margins?

好的，太好了。最後一個問題，您能否詳細說明您的新產品預計何時能夠量產，以及它們將對您的平均銷售價格和毛利率產生什麼影響？

Well, I think MMC in -- in MP3 product line in Q4, we are almost shipping two times higher than Q3, MP3 player controller. In Q1 we anticipate, I think, the volume were moving higher than Q4 last year. We believe in Q2, we will probably be shipping more than 2 to 2.5 million in that quarter. In the new product lines, SM222 CF controllers were also ramping very quickly. We believe we'll probably reach [400k] per month in Q2 time frame.

嗯，我認為 MMC 在——在第四季度的 MP3 產品線中，我們的 MP3 播放器控制器出貨量幾乎是第三季的兩倍。我認為，我們預計第一季的銷售量將高於去年第四季。我們相信，第二季我們的出貨量可能會超過 200 萬至 250 萬件。在新產品線中，SM222 CF 控制器的銷售量也迅速成長。我們相信，在第二季度，我們可能會達到每月[40萬]的銷售量。

For the new product line, which is now in production, probably ramping in next two quarters such as 332 and 281 and 290. And these all have a very good potential. We do secure several major customers in line right now. Now we just have to find two manufacturing processors and make sure it can go out smoothly in the next two quarters.

對於目前正在生產的新產品線，可能會在接下來的兩個季度內逐步提高產量，例如 332、281 和 290。這些都極具潛力。我們目前已經鎖定了幾個重要客戶。現在我們只需要找到兩家生產加工商，並確保產品能在接下來的兩季順利交付。

Now do you expect these to slow the ASD decline and significantly raise your growth margins?

您認為這些措施能否減緩ASD的下滑趨勢並顯著提高您的成長利潤率？

Actually, all these new products I said in Q3, all have a pretty high-- very-- those are our current growth margin performance. Yes I think this should help the gross margin side.

事實上，我在第三季提到的所有這些新產品，它們的成長率都非常高——非常高——這些都是我們目前的成長利潤率表現。是的，我認為這應該有助於提高毛利率。

Okay, great, thanks a lot.

好的，太好了，非常感謝。

And your next question comes from the line of [Meynor Rarith] from Merrimen. Please proceed with your question.

你的下一個問題來自[Meynor Rarith]在《Merrimen》中的一句台詞。請繼續提問。

Thank you and good evening, guys. Do you have a target on your MP3 products, how big it's going to be in 2006 or exiting 2006?

謝謝大家，晚上好。你們對MP3產品的銷售目標有什麼規劃嗎？預計2006年或2006年底的銷售額會達到多大？

We have internal targets, but we definitely want to be a recognized player in this market.

我們有內部目標，但我們絕對希望成為這個市場上公認的參與者。

Okay. And is it going to be-- I guess when you exit 2006, can this business be over 10% of your overall revenue potential?

好的。那麼，到 2006 年底，這項業務能否佔你整體潛在收入的 10% 以上呢？

Absolutely.

絕對地。

Okay.

好的。

Absolutely.

絕對地。

And does that require you to kind of get into the hard drive base MP3 market as well, or is it just basically with the current product road map that you have?

那是否代表你們也要進軍硬碟式 MP3 市場，還是說基本上就按照你們目前的產品路線圖來做？

Well we do have a hard drive base MP3 controller but we don't anticipate hard drive base controller can grow very fast. So we believe probably more than 90% of our shipments will be based on the NAND Flash, or card reader MP3 player.

我們確實有基於硬碟的 MP3 控制器，但我們預計基於硬碟的控制器不會發展得很快。因此，我們相信超過 90% 的出貨量將基於 NAND 快閃記憶體或讀卡機 MP3 播放器。

And when you get to compare your products versus your competitors in the MP3 market, how do you compare or how do you win the business I guess how you - - against some of the established competitors in this MP3 market?

當您將自己的產品與 MP3 市場上的競爭對手進行比較時，您如何與競爭對手抗衡，或者說，您如何贏得業務？我想，您是如何與 MP3 市場上一些老牌競爭對手競爭的？

We are a first generation MP3 product line, but we do not have a complete integration especially AD to a DC to DC converter, as well as audio codec. That's why we have -- we changed the focus to card reader type of MP3 player, because that business will not be impacted by the shortage for NAND Flash. So we start to see strong demand growing in that segment.

我們是第一代 MP3 產品線，但我們還沒有完整的集成，特別是 AD 到 DC-DC 轉換器以及音訊編解碼器。這就是為什麼我們把重點轉向讀卡機式 MP3 播放器，因為這項業務不會受到 NAND 快閃記憶體短缺的影響。因此，我們開始看到該領域的需求強勁成長。

Our second generation product will have all integrated and mixed signal solutions. And we become VDIM 10 support. With our knowledge in the NAND Flash support, I think we are uniquely positioned to support our customers use [inaudible - heavy accent] MLC. Such outcomings are high in Samsungs and Renesas. We probably are the only one can support, diversify a different kind of NAND Flash. So that's our unique [weapon] compared with the competitors in this market.

我們的第二代產品將擁有全整合和混合訊號解決方案。我們獲得了 VDIM 10 支援。憑藉我們在 NAND 快閃記憶體支援方面的知識，我認為我們擁有獨特的優勢來支持我們的客戶使用 MLC。三星和瑞薩電子的這類故障率很高。我們可能是唯一一家能夠支持和推廣不同類型 NAND 快閃記憶體的公司。所以，這就是我們相對於市場上的競爭對手所獨有的[優勢]。

Got it. And when-- can you remind us when the second generation product is going to ramp again?

知道了。可否提醒我們第二代產品何時會再次量產？

Probably in Q2 and in part ramping in Q3.

可能在第二季實現，並在第三季逐步擴大規模。

Okay. Also on the-- I guess we are hearing, obviously, some unstable pricing on the NAND Flash side. Have you seen any impact on pricing on your products at this point in time? Because of what--

好的。另外，顯然我們也聽到了一些關於 NAND 快閃記憶體價格不穩定的消息。目前來看，您的產品價格是否受到了影響？因為什麼——

Customer always doubt and he wants you to lower the price. But I think in-- today's position we probably represent the largest player in some merchant groups. So the pricing in this year, the decline was probably much slower than last year. We see several even players just going to walk away from this market, because the price is not picking up. I think our strategy is very simple. We alter very, very [few] product line, and so we can offer total package for the customer, which horizontally extends for the [pocket]. That's why we can protect our pricing very well.

顧客總是心存疑慮，希望你降低價格。但我認為，就目前的情況來看，我們可能在某些商會集團中佔據著舉足輕重的地位。所以今年的價格下跌速度可能比去年慢很多。我們看到一些參與者甚至打算退出這個市場，因為價格沒有上漲的跡象。我認為我們的策略非常簡單。我們只改變極少的產品線，因此我們可以為客戶提供完整的解決方案，其價格範圍非常廣泛。正因如此，我們才能很好地保護我們的價格。

Great. Thank you.

偉大的。謝謝。

[Operator Instructions]

[操作說明]

And your next question omes from the line of Daniel Amir of WR Hambrecht. Please proceed with your question.

你的下一個問題來自 WR Hambrecht 的 Daniel Amir。請繼續提問。

Hi, happy Chinese New Year. Actually this is Alena. I am calling-- dialing in for Daniel Amir.

您好，新年快樂。其實這是阿萊娜。我正在撥打電話——我是來替丹尼爾·阿米爾接聽的。

Hi Alena.

你好，阿萊娜。

My first question is, do you see market share gains in just the controller front in the last quarter?

我的第一個問題是，您是否認為上個季度僅在控制器領域就取得了市場份額成長？

Yes. Naturally, we believe our probably last year average of our market share around 23% for USB, 2.0 [five disc] controller.

是的。當然，我們相信去年我們在 USB 2.0 [五碟] 控制器市場佔有率的平均值約為 23%。

Okay, thanks. And also, how about what momentum are you seeing in the USB flash front with the major PC market right now?

好的，謝謝。另外，您認為目前主流PC市場中USB隨身碟的發展動能如何？

The competition is a lot. But I think we in-- from March we are going to alter 0.16 micron technology. We've integrated thorough research in then we shall go to that later. And all the new products we alter are going to support all types of NAND Flash, which is also special for ISTP technology. That will enable customers can do different types of applications, such as security encryption, finger print, as well as networking, power meters such as announced by [Excel] Media.

競爭非常激烈。但我認為從三月開始，我們將改變 0.16 微米技術。我們已經進行了深入的研究，稍後會詳細介紹。我們改進的所有新產品都將支援所有類型的 NAND 快閃記憶體，這對於 ISTP 技術來說也是特別的。這將使客戶能夠進行不同類型的應用，例如安全加密、指紋識別以及聯網、功率計等，正如[Excel] Media 所宣布的那樣。

So this will help us reposition strongly. Not only will we continue gaining market share for retail channel, but also we start to gain more market share from major OEMs such as comp PC makers. I think that maybe in Q2 we are going to -- if the customer allows, they can announce with their names, probably from top street PC makers.

這將有助於我們重新確立強而有力的市場地位。我們不僅會繼續擴大零售通路的市場份額，還會開始從大型 OEM 廠商（如電腦製造商）獲得更多市場份額。我認為或許在第二季度，如果客戶允許的話，他們可以公佈他們的名字，可能是來自頂級PC製造商。

Great. Thank you. And my last question is, when can we expect your image sensor products to hit the market?

偉大的。謝謝。最後一個問題是，我們什麼時候可以期待貴公司的影像感測器產品上市？

We are just sampling the PC camera controller, we believe-- because the design cycle is around our four to six months. So we believe we are going to see that happening in Q3 in this year.

我們目前只是在對 PC 攝影機控制器進行樣品測試，我們認為——因為設計週期大約是四到六個月。所以我們相信，這種情況將在今年第三季發生。

Okay. Great, thanks.

好的。太好了，謝謝。

[Operator Instructions]

[操作說明]

And you do have a follow up question coming from the line of Quinn Bolton of Silicon Motion, please proceed.

您還有來自 Silicon Motion 的 Quinn Bolton 的後續問題，請繼續。

Great, thanks. Just wanted, Richard, to ask-- given the lunar New Year holiday, does that help reduce the R&D and SG&A here in the first quarter and help you keep that operating margin flat. Is that part what happens quarter to quarter?

太好了，謝謝。理查德，我只是想問一下——考慮到農曆新年假期，這是否有助於降低第一季的研發和銷售、管理及行政費用，並幫助你們保持營業利潤率不變。這是季度之間發生的情況嗎？

No. You cannot reduce their salary just because they are on holiday. That's not the reason.

不。你不能因為他們休假就降低他們的薪水。這不是真正的原因。

Okay. And then what were tape out costs? I know you introduced a lot of products in late fourth quarter.

好的。那麼，磁帶製作成本是多少？我知道你們在第四季末推出了很多產品。

Yes, right. A lot of the tape outs were done in Q4, right? So Q1 tape outs probably would be a little bit less. And also bonuses, you wouldn't have to accrue as much and there are some-- a portion of your expenses are discretionary. So we can bring that in and that should help you achieve reductions about somewhere around 20%, and that would be where you need to be because your revenues have come down by about 20%.

沒錯。很多磁帶輸出都是在第四季完成的，對吧？所以第一季的磁帶輸出量可能會略少一些。另外還有獎金，你不需要累積那麼多，而且還有一些——你的部分開支是可自由支配的。所以我們可以引入這個措施，這應該可以幫助你實現大約 20% 的減排目標，而這正是你需要達到的目標，因為你的收入已經下降了大約 20%。

Okay, great. Thanks.

好的，太好了。謝謝。

And you have a follow up question coming from the line of [Pranilla Alia] of Deutsche Bank. Please proceed with your question, Mr. Alia.

德意志銀行的 [Pranilla Alia] 還有一個後續問題。阿利亞先生，請繼續提問。

Hi. Just a quick follow-up. Looks like your multimedia storage segment was relatively flat year-on-year in 4Q. Are you able to talk to whether it's reasonable to expect the segment to return to solid growth in calendar '06? And if yes, by how much and what part of that will come from unit versus [inaudible - heavy accent] ASDs?

你好。再補充一點。看來你們的多媒體儲存業務在第四季與去年同期相比基本持平。您能否談談預期該細分市場在 2006 年恢復穩健成長是否合理？如果答案是肯定的，那麼增加多少？其中有多少來自單元，又有多少來自[聽不清楚 - 重口音] ASD？

I think your -- your number's probably grown. We had decent growth in the multimedia segment in Q4.

我想你的——你的數字可能成長了。我們在第四季度多媒體領域取得了不錯的成長。

Unit-wise definitely revenues roughly flat year-on-year, slightly more than flat. Maybe my numbers are wrong but - -

以單位計算，收入肯定與去年同期基本持平，略高於持平水平。也許我的數字有誤，但是——

There is an -- the NTT segment actually growing very nicely for us now. The --

目前，NTT業務板塊的發展勢頭非常強勁。這 -

I was talking of the multimedia storage, so I thought [inaudible - multiple speakers] Flash drives.

我當時在談論多媒體存儲，所以我想到了[聽不清楚 - 多位說話者]閃存盤。

Storage?

貯存？

Yes, storage.

是的，是儲存空間。

The storage device, yes because our Q4 the ASP declined alone.

是的，是儲存設備的問題，因為我們第四季的平均售價單獨下降了。

I'm sorry, are you referring to mobile storage or multimedia SoCs?

抱歉，您指的是行動儲存還是多媒體SoC？

Mobile storage, sorry.

抱歉，是行動儲存。

Okay.

好的。

Mobile storage.

移動存儲。

Yes, the growth in mobile storage was slower in Q4 versus Q4 of 2004, that's correct. And primarily because the ASP, DOD or ASP decline which is closer to 50%. And so we had strong unit growth year-over-year, but because of ASD decline revenue has been kind of - - has not grown as much.

是的，與 2004 年第四季相比，今年第四季行動儲存的成長速度有所放緩，這是正確的。主要原因是平均售價、國防部售價或平均售價下降了近 50%。因此，我們的銷售量較去年同期成長強勁，但由於 ASD 下降，營收成長卻不太理想。

Should we expect a similar trend in calendar '06? Aggressive unit growth but sort of eroded by ASD decline?

我們是否可以預期 2006 年曆也會出現類似的趨勢？單位成長勢頭強勁，但受到ASD下降的影響？

Well, the ASD decline, one major factor really was the phone package change going from package chip to bare dyes, right, and that transition it was about 80% in Q3 and 86% or 87% in Q4, so that's mostly worked its way through, and so I don't see think our ASP decline in '06 will be at the same rate as it was in '05.

嗯，ASD 下降的一個主要因素是手機封裝從晶片封裝變為裸染料封裝，對吧？第三季這一轉變的幅度約為 80%，第四季約為 86% 或 87%，所以這種轉變的影響基本上已經過去，因此我認為 2006 年我們的平均售價下降速度不會像 2005 年那麼快。

Okay. Thanks a lot.

好的。多謝。

[Operator Instructions]

[操作說明]

And gentlemen, there are no other questions waiting in the queue, so I will turn it back to you for any closing remarks.

各位先生，目前沒有其他問題需要提問，所以接下來就交給你們來做總結發言吧。

Okay. Well, thank you very much for your interest in the conference call and the company. We hope to see you again in the near future. Just in case you are interested in the replay, the telephone replay number again will be 888-286-8010 or 617-801-6888, and access code is 7841-9186. You can also listen to the replay on our website. And again, thank you for your interest and we look forward to talking to you again next quarter.

好的。非常感謝您對本次電話會議和公司的關注。我們希望在不久的將來再次見到您。如果您對重播感興趣，電話重播號碼仍然是 888-286-8010 或 617-801-6888，接入碼是 7841-9186。您也可以在我們的網站上收聽重播。再次感謝您的關注，我們期待下個季度再次與您交流。

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect your lines. Please have a good day.

感謝您參加今天的會議。演示到此結束，您可以斷開線路了。祝您今天過得愉快。