Thank you, John, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company; market conditions and trends, including expected growth in the markets we serve; emerging applications using chips or devices fabricated on our substrates; our product mix; our ability to increase orders in succeeding quarters to control costs and expenses, to improve manufacturing yields and efficiencies, to utilize our manufacturing capacity; the growing environmental, health and safety and chemical industry regulations in China as well as global economic and political conditions, including trade tariffs and restrictions. We wish to caution you that such statements deal with future events are based on management's current expectations and are subject to risks and uncertainties that could cause actual results or events to differ materially. These uncertainties and risks include, but are not limited to, overall conditions in the markets in which the company competes, global financial conditions and uncertainties, and COVID-19 and other outbreaks of contagious disease, potential tariffs and trade restrictions, increased environmental regulations in China, the financial performance of our partially owned supply chain companies and the impact of delays by our customers on the timing of sales and their products. In addition to these factors that may be discussed on this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission. These are available online by link from our website and contain additional information on risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website through May 2, 2025. Also before we begin, I want to note that shortly following the close of market today, we issued a press release reporting financial results for the first quarter of 2024. This information is available on the Investor Relations portion of our website.

Thank you, Leslie, and good afternoon to everyone. Revenue for the first quarter of 2024 was $22.7 million. That's up from $20.4 million in the fourth quarter of 2023 and up from $19.4 million in the first quarter of 2023. To break down our Q1 2024 revenue for you by product category, Indium phosphide increased sequentially to $8.1 million. That's reflecting strong growth from data center applications, including AI and continued improvement in passive optical networks. Gallium phosphide also grew to $7.5 million with broad-based improvement across a number of applications. Germanium substrates were $1.4 million, up from the prior quarter with renewed strength in demand for satellite solar cells. Finally, as expected, revenue from our consolidated raw material joint venture companies in Q1 was $5.8 million, down from Q4 as we consumed a greater portion of their output for our growing substrate demand. In the first quarter of 2024, revenue from Asia Pacific was 79%, Europe was 16%, and North America was 5%. The top 5 customers generated approximately 33% of total revenue, and 1 customer was over the 10% level. Non-GAAP gross margin in the first quarter was 27.3% compared with 23.2% in Q4 and 26.9% in Q1 of 2023. For those who prefer to track results on a GAAP basis, gross margin in the first quarter was 26.9% compared with 22.6% in Q4 and 26.3% in Q1. Beyond the near term, we remain confident that we can get back to the mid-30% range as the environment strengthens through higher overall volume, favorable product mix, and the benefits of our recycling programs, along with continued efficiency improvements throughout our business. Moving to operating expense: Total non-GAAP operating expense in Q1 was $8.7 million compared with $7.5 million in Q4 of 2023 and $8.7 million in Q1 of 2023. On a GAAP basis, total operating expense in Q1 was $9.4 million compared with $8.2 million in Q4 and down from $9.5 million in Q1 of 2023. As you've seen from our quarterly run rate in 2023, we had put in a number of constraints in place for OpEx to align with market conditions. As things are beginning to trend up, we're loosening up some of these constraints, which has brought OpEx up from the previous run rates. We do expect to hold it at approximately this level throughout the rest of this year. Our non-GAAP operating loss for the first quarter of 2024 was $2.5 million compared with a non-GAAP operating loss in Q4 2023 of $2.7 million and a non-GAAP operating loss of $3.5 million in Q1 of 2023. For reference, our GAAP operating line for the first quarter of 2024 was a loss of $3.3 million compared with an operating loss of $3.6 million in Q4 and an operating loss of $4.4 million in Q1. Non-operating income and expense and other items below the operating line for the first quarter of 2024 was a net gain of $1.3 million. For Q1 2024, we had a non-GAAP net loss of $1.3 million or $0.03 per share compared with a non-GAAP net loss of $2.8 million or $0.07 per share in the fourth quarter and a non-GAAP net loss in Q1 of 2022 was $2.4 million or $0.06 per share. On a GAAP basis, net loss in Q1 was $2.1 million or $0.05 per share. By comparison, net loss was $3.6 million or $0.09 per share in the fourth quarter and GAAP net loss in Q1 of 2023 was $3.3 million or $0.08 per share. The weighted average basic shares outstanding in Q1 of 2024 was 43.0 million shares. Cash and cash equivalents and investments were $41.3 million as of March 31. By comparison at December 31, it was $52.3 million. Cash is down for two main reasons. First, our revenue billings tended to be back-end loaded in the first quarter as most of China shuts down for Chinese New Year. As a result, Q1 accounts receivable increased by $6.1 million. This is simply a timing issue as most of that cash can be collected in Q2. The second reason for the decline in cash in Q1 was CapEx spending of $5.7 million. This is not new commitments to facilities. This was work done in 2023, and for which payment was due in Q1. As we look to the balance of the year, we expect CapEx to be in the $2 million to $3 million range per quarter, most of which goes towards facilities work, which was done in 2023. One more note on cash: From time to time, we have had outside parties approach us with an interest to invest in our supply chain companies. Currently, interest in China is growing, perhaps related to the change in the economic circumstances in China. We believe that there is real value in these assets to be unlocked and may consider monetizing a portion of them this year. As a reminder, we now have over 10 companies in our supply chain where we have partial ownership shared with industry partners. Depreciation and amortization in the first quarter was $2.2 million. Total stock compensation was $800,000. Net inventory was down $600,000 in the first quarter. This includes inventory added through our recycling program. 33% of the inventory is raw materials, and WIP was 63%, finished goods makes up approximately 4%. The increase in WIP is primarily the result of increased crystal growth in anticipation of higher demand in Q2. With improving demand, we hope to bring our total inventory down by approximately $10 million over the year. This concludes our discussion of our quarterly financial results. Turning to our plan to list our subsidiary, Tong May, in China on the Star Market in Shanghai. We now believe that we have had some significant developments on the issue that the CSRC previously raised, and we believe the likely next step is that the CSRC can resume consideration of our application. As we've said, this is a lengthy process, but we continue to believe that Tong Mei is an excellent candidate for listing.

Thank you, Gary. We believe our business is on a firm path to recovery, as evidenced by the continued growth in our business and solid execution that allowed us to exceed our Q1 revenue and profitability pace. In the first quarter, we achieved 11% sequential growth in our revenues and 29% sequential improvement in our non-GAAP net income. While certain parts of the demand environment remain somewhat soft, all three of our substrate product lines showed improvement, including a 48% growth in Indium phosphide revenue from Q4. Looking individually at these product lines, Indium phosphide once again became our biggest selling material in Q1. Sales were driven by continued recovery in the power market and a meaningful increase in demand related to AI. We view AI as an exciting catalyst for Indium phosphide in the years to come. As AI requires high-speed lasers and detectors for rapid data transfer with increased bandwidth, low attenuation, and low distortion. Today, AI applications are primarily using gallium phosphide, which requires a relatively small amount of substrate material. However, as the industry moves to 800 gig and then 1.6 terabyte speed, we expect that there will be a necessary transition to Indium phosphide. We are already seeing development work happen today with next-generation silicon photonics devices and electro-absorption modulated laser or EML for high-speed data center transceivers. Revenue from these applications contributed to our strong Indium phosphide growth in Q1 and will help drive our expected growth in 2024. Our gallium phosphide revenue grew 24% sequentially in Q1, reflecting increased demand across a broad base of applications, including power amplifiers, HPT applications for wireless switches, high-power lasers, and LEDs. We believe much of the excess inventory in the supply chain has been depleted, and we are benefiting from a desire among our customers to diversify their supply base as the market recovers. For example, today, our share of the HPT market is relatively small, but we believe we have a great opportunity to increase our market share over time and are pleased with early customer traction. In addition, our 8-inch gallium phosphide development efforts have led to groundbreaking advancements in both of our defect densities and yields. We believe this innovation can be applied to our 6-inch gallium phosphide products, allowing us to further enhance our competitiveness across all of our market research. In germanium substrates, demand for satellite solar cells, which were down substantially throughout 2023, is now beginning to recover. Sales increased 25% in Q1 over the prior quarter with renewed strength in Europe and Asia. Finally, coming off three quarters of strong sales in our raw material business, as well as contributions from our recycling efforts, sales from our raw material business declined as we expected in Q1. This decline was primarily the result of our consuming a greater portion of the output from our consolidated joint venture as our substrate business has strengthened. In total, our portfolio joint venture companies continues to provide strategic value to our business, providing many of the critical materials we use to make our products and allowing us to benefit from the cost and efficiency advantages. Now in closing, we are optimistic about the coming year and the growth and expansion of our business. We are seeing tangible signs of recovery across all of our product lines, with new catalysts such as AI providing strong incremental opportunity. We've worked hard over the last two years to pave the way for an exciting future by providing world-class products for a highly dynamic technology landscape, elevating our own business practices to meet the requirements of Tier 1 customers, delivering breakthrough innovations in the development of large diameter gallium arsenide and Indium phosphide substrates, and executing on a recycling program that both advances our ESG commitments and improves our cost structure. We remain focused on business efficiency and accelerating our return to profitability.

Thank you, Morris. In keeping with our comments today, we expect Q2 revenue to be between $25.5 million and $27.5 million. We expect our non-GAAP net loss will be in the range of $0.03 to $0.05, and GAAP net loss will be in the range of $0.05 to $0.07. Share count will be approximately 43.0 million shares. This concludes our prepared comments. Morris and I will be glad to answer your questions now.

Morris, Gary, congrats on the good Q1 results and very happy about Q2 guidance. I want to start with the AI-related question. The Indium phosphide, I think that last time when we spoke about this, you were talking about semi-insulating Indium phosphide wafers potentially being used for some of the high-speed detectors application. But in your prepared remarks, it sounds like you are getting a little bit more upbeat about the high-speed laser type of applications for 800 gig, 1.6 terabyte applications. So can you provide us a little bit of an update on your engagement on these AI applications so far? When do you see the laser application will start to contribute some meaningful revenues for the Indium phosphide business?

Charles, first of all, the order we received from one customer specifically told us is for AI, and that was from selling germanium phosphide. The fact that we're guessing if it was for detectors was a guess, okay? Because usually, Indium phosphide is good semi-insulating either for electronic applications or for high-speed detectors. However, recently in the industry, we also heard some of the EMLs require semi-insulating substrates. So this — whether it's for lasers or for detectors, we all know from what we are making that the customer demand for our product is sort of a slight change from silicon do — I mean sulfate semiconducting substrates. They are usually good for lasers, and now it's for semi-insulating Indium phosphide.

Got it. Well, Morris, thanks for the color you provide. I guess it's something we will continue to chat. And obviously, we don't want to dig more if there's something about your customer you don't want to share. So maybe a second question, maybe for Gary. I think in your prepared remarks, you talked a little bit more about the STAR listing. It sounds like you're making some progress on that front. Can you provide a little bit more color in terms of what kind of progress exactly? And give us a little bit better sense about why you think it's moving forward a little bit more at this time?

So the process of communication with the Shanghai Stock Exchange and CSRC is such that once we send in our applications, they will continue to ask questions. They want us to clarify a few things, and there are things which they express concerns with and we provide them with answers. We think we've made some good progress on the questions they have. And so now we think we are ready to go through the next step, which is to go through their review process again, and they will then look at our whole application and either continue to ask questions or approve.

Congratulations on a really nice guide here. Great to see. To that point here on the guidance, I wonder if you could elaborate on a couple of items here. First of all, just trying to understand the relative growth dynamics of each of your four revenue buckets here. I would assume your deposits are probably your best growth driver, but wondering if you can kind of rank those and whether you expect them all to be growing sequentially.

Yes. So let me first try on the business conditions. Actually, the strongest growth we expect next quarter is going to come from Gallium phosphide and also germanium. Germanium seems to be very strong and raw material is also strong. Indium phosphide actually at this point of the timing that we are projecting flat. One other thing that is interesting about this business environment right now is that wherever the customer wants something, the lead time is extremely short. We usually ask the customer to give us at least a 4 weeks lead time because we need to process the wafers, and sometimes we even have to grow crystal. So the lead time issue is long. We don't have a standard product for offering. But nowadays, customers just want a 2 weeks lead time, which is great. However, it's all prevented from having better visibility.

Maybe we can do this on a follow-up call, Richard, because it gets kind of complicated and I didn't understand exactly what your model is telling you, but we can work on it with you.

Okay. Fair enough. Morris, I did want to follow up on your comment regarding Gallium phosphide being your highest growth driver here. To what degree is this maybe some inventory fill in some product areas that were driven down so hard in the last 1.5 years? And then I think you also mentioned some pickup in the wireless/HPT market. So I'm wondering to what degree that's contributing in this quarter.

Well, first of all, I would say Gallium phosphide was the first product coming down in terms of revenue. I remember it was the second quarter of 2022, Gallium phosphide started to come down. It usually takes 6 weeks before all the inventory gets depleted, so now it's coming back. Indium phosphide takes 3 quarters before it starts to come down. Although the pickup of Indium phosphide last quarter, I attribute that to the new business on AI because I see the PAM business is doing okay but not robust, while telecom business is not great, and data centers are still inventory out there. So I think the AI part of the data center is pulling the demand for us and increasing our revenue by 48% from Q4 to Q1.

I didn't mean to interrupt, Morris, so please continue.

I actually have forgotten. So what was another part of your question?

Yes, I think so. But there is an interesting follow-up to those comments here, which is like how much of your Indium phosphide businesses is AI today? It seems like given these kind of growth rates, it's got to be a pretty substantial part now. Can you quantify that in any way?

Well, I think last quarter was significant. I would say it could be as much as 20%, although it's a little bit difficult for us to really nail it because some customers would tell us and some customers don’t. There are two parts of Indium phosphide, one is semi-insulating and the other semi-conducting. The semi-insulating is usually made for detectors and electronic applications, while semi-conducting is usually low EPD, and good for lasers. They are the dominant demand for Indium phosphide for many years, which is almost like 8-1 in favor of semi-conducting wafers. However, the last 2 or 3 quarters, the trend is reversed. There's so much more demand on semi-insulating Indium phosphide wafers. So it's as if the laser just didn't grow or maybe they still have too much inventory. This new demand for semi-insulating Indium phosphide is growing very strong.

Okay. Very interesting dynamics there. I'm going to ponder that while I ask a couple of other questions here. I guess just a quick one here. You had a 10% customer in the quarter. Can you identify that or at least the sector and whether they've been a 10% customer in the past?

It was an epitaxial house.

So it's actually related to the AI customer, right?

Yes. It was a historically long-term customer for us that does epitaxial growth.

Okay. Fair enough, Gary. Maybe just a couple of last questions here, and I'll ask both of you to put on your long-term lenses here. Or I guess we'll call it a medium-term lens here. But just kind of wanted to conjecture on the opportunity for getting back to breakeven level by the end of this year or early next year? And maybe just as a reminder what that model looks like in terms of revenues and gross margins.

Well, we certainly think that it's a reasonable target and goal to do that maybe this year. So we're not giving up on it.

I would say it's this year. Yes.

It's probably somewhere between $28 million and $30 million a quarter, and we would need to get the gross margins to go up maybe close to 28% and keep the OpEx somewhere around 9.3%, 9.4%. That's GAAP and OpEx, by the way. So we do need some help from Indium phosphide. I mean right now Indium phosphide is only 50% of what we used to do at a peak.

Yes, and the Indium phosphide surge, especially since it's centered in the artificial intelligence area, is happening sooner than we expected.

So the question is what's going to happen in the next two or three quarters. But it's a tremendous opportunity, and there's billions of dollars that are being invested in the hardware side of AI and the software side. So we play in the hardware side, so it’s pretty amazing what's on the horizon.

Okay. One last question, I'll jump on the line here, guys. The short report that came out on your stock early last month, I think we've established pretty well, there's a bunch of malarkey for the most part. But it does bring up an interesting topic that I think it would be very interesting for you to address. And I think it's a risk that a lot of investors bring up with me. And that is related to the STAR listing and the investment by private equity investors. If there's any rejection of the application for whatever reason here, what's the risk? And how do you get around the risk of having to repay that money and then find other ways to finance the company?

Well, as long as we're in the process, they have no right for redemption. And equally important, they don't want to be redeemed. I mean, the last thing they want is their money back. And so they're very willing to be patient and work with us. Everyone was disappointed that it's taken longer than we all expected. But I think the psychology from a Chinese investor point of view is strong.

Hard assets and doing the manufacturing semiconductor or materials job industry is hot in demand in China. That is showing up in the fact that we have other investors interested in acquiring a minority share of our other joint ventures. Even if the IPO takes longer than we thought, I think our assets in China are highly valuable.

These private equity investors are all large and premier institutions, each with an investment of just under $5 million, which represents a relatively small part of their respective portfolios. And so far, since they have to be patient no matter what, they're being patient. Another thing that’s probably interesting to note is that they don’t have any recourse or their investment is not collateralized. So that's why they need to succeed.

Good afternoon, and congrats on both the results and the outlook and especially the growth in Indium phosphide. I think there was a mention of kind of peak levels that you had achieved in Indium phosphide. I think that's getting up towards $20 million a quarter. But at that point, you also had some additional consumer business. Do you think this AI kind of optical data center opportunity can move you back toward peak Indium phosphide levels by itself? And I have a follow-up.

That's a good question. The customer who used our product for consumer products at the time still has one product using it for consumer products, by the way. They didn't go all in completely, and we believe a big dominant supplier for that product. We are also in negotiations and in qualification for yet another product, although I don't know what the launch time is. Talking to their engineers, at one time, they told us they have 11 projects centered around using Indium phosphide in their consumer product devices. So I don't think I'm giving that up, but Indium phosphide just has so many different characteristics such as fire infrared and being used as a detector. So it's unique in its place to be used as a technology device.

When Morris said optical, that means it's got to have the Indium phosphide because the wavelengths can be read by Indium phosphide. We believe we will get back to those levels, Tim. As Morris says, we're not sure on the timing. It very well could get back to that level sooner than we thought because of AI.

Got it. I’d like to hear more about the significant growth you experienced in the first quarter with Indium phosphide. You've mentioned your unique perspective within the ecosystem, and I’m wondering if you could elaborate on the extent and nature of that strength.

The Q1 customer is actually new. I mean they are a customer on other products. But for that application for AI was new, and they're telling us their customer, but I can't repeat it.

We think we understand the architectural needs well enough that there's little doubt in our mind that we're going to end up benefiting and getting into multiple data centers along the big names.

My first question is actually on Gallium arsenide. So you're expecting that to be the main driver from first quarter to second quarter. Just wondering if there are any applications or customers kind of driving this strong growth?

LED is strong for automotive. Lasers are strong, but not as high as at the peak. I would say it's about 50% of the peak level. Automotive is probably 70% to 80% of the peak, and HPT is a new opportunity for us, and we're trying very hard to regain our position in it. If we are successful, we can expect more revenue growth for HPT as well. The China market seems to be fairly strong in Gallium arsenide.

Got it. And just wondering how sustainable your expectation is on Gallium arsenide, I mean are we talking just a few quarters or kind of a multiyear cycle.

I can guarantee it's multiyear. I would say we have probably good visibility, at least to Q3. I mean demand is strong. But as you know, I do worry about the world economy.

Most of our cycles are more than one quarter. Gallium arsenide is more robust than we expected it to be.

Got it. And then just on Indium phosphide for AI applications. Is there any data on market share? How big that is and the market share between you versus competitors?

No, we don't know. There are some public projections on markets that coherent shared publicly in one of their presentations. If you haven't seen that, you might want to take a look because there's some information in there that might give you some insight.

Regarding market share, should we anticipate a roughly equal distribution of one-third each for you and your competitors, or is there a dominant player in the AI space? Can you provide any insights on that?

The customer we have, I think they are giving us all the orders, but I don't know whether our competitors are taking orders from different customers.

On the HPT side of things, if you're successful in getting traction, any idea of what the size of that opportunity might be?

Close to $20 million a year.

Got it. So that's a nice big round number. Similarly, or slightly different question. I think a lot of the focus on Indium phosphide has been around the AI opportunity. But do you have any sense of how close to the point where inventory is normalized? Like is that 2, 3 quarters out? Is it a year out? And any idea in terms of how much revenue you think you’re losing because there's inventory out there right now? What might your revenue look like if that inventory didn't exist, any thoughts?

Yes. I currently find it challenging to estimate because I'm unsure if they are in full production. I would like to see whether they provide us with a 6-month order and if they are increasing that, as it would help me make a better estimate. For now, I'm just excited about the situation and we are doing our best to gather as much information as possible.

You're getting cleared out, and then restoring normal levels, that's probably an early 2025 type phenomenon as you're thinking right now?

Yes, maybe Q4 of this year, but definitely in 2025. It's going to happen. So we can't wait.

Yes. I guess last one for me, Gary. I completely understand that customers don’t want to hold inventory. And so they’re putting in rush orders, which makes it hard on your end to clear out your inventory because you don’t want to turn down business. But I guess given that environment, how confident are you that you can take down inventory by $10 million? Or what are the dynamics involved in that where you're not effectively having to turn down business because you can’t meet those rush orders?

Well, I wanted to take it down $10 million last year. It did come down last year, but not as much as our target. However, I have a couple of reasons that I think it's a realistic target. If you look back at our historical inventory levels compared to our revenue run rate levels, the inventory was in the $60 million range. So the difference is we have more inventory in the consolidated joint ventures now, and our recycling program converts materials, which has a little or no book value. My target is to take down $10 million over the year.

We are excited about it and are trying to enhance our operations to maintain growth.

As there are no further questions in the queue, this concludes our Q&A session. I would like to turn the call back to Dr. Morris Young for closing remarks.

Thank you for participating in our conference call. This quarter, we will participate in the Northland Security Growth Conference until June 25, and I hope to see you there. As always, please feel free to contact me, Gary Fischer, or Leslie Green if you would like to set up a call with us. We look forward to speaking with you in the near future.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.