Good afternoon, everyone, and welcome to AXT's Second Quarter 2024 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief Executive Officer, and Gary Fisher, Chief Financial Officer. My name is Christina and I'll be your coordinator today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Leslie Green, Investor Relations for AXT.

Thank you, Christina, 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, emerging applications using chips or devices fabricated on our substrates, our product mix, global economic and political conditions including trade tariffs and import and export restrictions, our ability to increase orders in succeeding quarters, to control costs and expenses, to improve manufacturing yields and efficiencies, or to utilize our manufacturing capacity. 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 events or results to differ materially. In addition to the matters just listed, these uncertainties and risks include but are not limited to, the financial performance of our partially owned supply chain companies, increased environmental regulation in China, and COVID-19 and other outbreaks of a contagious disease. In addition to the factors just mentioned or that may be discussed in 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 call will be available on our website at axt.com through August 1, 2025. I also want to note that shortly following the close of market today, we issued a press release reporting financial results for the second quarter of 2024. This information is also available on the investor relations portion of our website at axt.com. I would now like to turn the call over to Gary Fischer for a review of our second quarter 2024 results.

Thank you, Leslie, and good afternoon to everyone. Revenue for the second quarter of 2024 was $27.9 million, up 23% from $22.7 million in the first quarter of 2024, and up 50% from $18.6 million in the second quarter of 2023. To break down our Q2 2024 revenue for you by product category, Indium phosphide was $7.7 million, reflecting continued demand from data center applications, including AI, as well as passive optical networks. Gallium arsenide also grew to $9.1 million, with broad-based improvement across a number of applications. Germanium substrates were $2.9 million, up from the prior quarter, with renewed strength and demand for satellite solar cells. Finally, revenue from our consolidated raw material joint venture companies in Q2 was $8.2 million, up substantially from Q1 on growing demand. In the second quarter of 2024, revenue from Asia Pacific was 78%, Europe was 17%, and North America was 5%. The Top 5 customers generated approximately 31.8% of total revenue, and no customer was over the 10% level. Non-GAAP gross margin in the first quarter was 27.6% compared with 27.3% in Q1 and 9.8% in Q2 of 2023. For those who prefer to track results on a GAAP basis, gross margin in the second quarter was 27.4% compared with 26.9% in Q1 and 9.2% in Q2 of 2023. Moving to OpEx, total non-GAAP operating expense in Q2 was $8.9 million compared with $8.7 million in Q1 of 2024 and $7.8 million in Q2 of last year. On a GAAP basis, total OpEx in Q2 2024 was $9.5 million compared with $9.4 million in Q1 of 2024 and $8.6 million in Q2 of 2023. We expect OpEx to hold at approximately this level throughout the balance of 2024. Our non-GAAP operating loss for the second quarter of 2024 is $1.2 million compared with the non-GAAP operating loss in Q1 of 2024 of $2.5 million and the non-GAAP operating loss of $5.9 million in Q2 of 2023. For reference, our GAAP operating line for the second quarter of 2024 was a loss of $1.9 million compared with an operating loss of $3.3 million in Q1 and an operating loss of $6.8 million in Q2 of last year. Non-operating other income and expense and other items below the operating line for the second quarter of 2024 was a net gain of $369,000. The details can be seen in the P&L included in our press release today. For Q2 of 2024, we had a non-GAAP net loss of $800,000, or $0.02 per share, compared with a non-GAAP net loss of $1.3 million, or $0.03 per share, in the first quarter of 2024. Non-GAAP net loss in Q2 of 2023 was $4.2 million, or $0.10 per share. On a GAAP basis, net loss in Q2 was $1.5 million, or $0.04 per share. By comparison, net loss was $2.1 million, or $0.05 per share in the first quarter of 2024. And the GAAP net loss in Q2 of last year was $5.1 million, or $0.12 per share. The weighted average basic shares outstanding in Q2 was $43.1 million. Cash, cash equivalents, and investments increased by $2 million to $43.3 million as of June 30. By comparison, at March 31, it was $41.3 million. Depreciation and amortization in the second quarter was $2.2 million. Total stock comp was $700,000. Net inventory was down slightly in the second quarter to $85.8 million. This includes inventory added through our recycling program. 34% of the inventory is raw materials and WIP is 64%. Finished goods make up only about 2%. With improving demand, we hope to continue to bring our total inventory down in 2024. Okay, this concludes the discussion of our quarterly financial results. Turning to our plan to list our subsidiary, Tongmei in China, on the STAR Market in Shanghai. We continue to make positive progress and have been in active discussions with the Shanghai Stock Exchange. Recent developments have been encouraging. We have kept our application current while many other Shanghai Stock Exchange applicants in the queue have been dismissed for business, financial, or other shortcomings. We expect to continue to work through this process during the summer and hope to have more news in the fall. As we've consistently said, this is a lengthy process but we continue to believe that Tongmei is an excellent candidate for the listing.

Thank you, Gary. Q2 was another solid quarter of growth with our revenue up 23% sequentially and more than 50% year-over-year. In addition, our non-GAAP net loss was smaller than our earlier guidance. We saw good performance in indium phosphide substrates and healthy growth in gallium arsenide and germanium substrates. Our raw material business was also up substantially over Q1. Overall, we're encouraged by the science of adoption in new applications such as AI as well as ongoing broader based market recovery. The magnitude of the revenue improvement is good news; we are encouraged. We're expecting the recovery to be somewhat lumpy quarter-to-quarter as the various segments work their way back to more normalized seasonality. As we come into the second half of this year, we're feeling very good about our progress as a company and our ability to support exciting new growth, new high-value applications. Looking individually at our product lines, indium phosphide grew 67% in Q2 over the same quarter a year ago. That growth has been a function of continued recovery in the power market and a meaningful increase in demand related to high-speed optical connectivity and AI. Today, AI applications are primarily using gallium arsenide VCSEL for shorter-range transmissions, which require a relatively small amount of substrate material. But as the industry moves to 800 gig for medium to long distance transmission beginning in 2025, and then to 1.6 terabit speed, we expect that indium phosphide will be a necessary material. We're already seeing development work happening today with next generation silicon photonics devices and electro-absorption modulated lasers or EMLs for high-speed data center receivers. Those technologies use significantly more material than a gallium arsenide VCSEL. We have strong contribution in Q1 and Q2 from these applications. And while we always caution investors that the timing of pre-production orders can vary, market trends and customer data points give us confidence in the growth potential of these emerging applications over the coming years. Our gallium arsenide outside revenue grew 22% in Q2 and are up 50% from our revenue level in Q4 of 2023. This increase reflects demand across a broad base of applications, including HPT power amplifiers, applications for wireless switches, high-power industrial lasers, and LEDs. Coming off two quarters of strong growth and some fluctuation in the industrial market, we're expecting a moderation of our gallium arsenide sales in Q3. But we don't believe there is much excess inventory in the supply chain. We expect to continue to benefit from strengthening global demand as it occurs. In addition, our gallium arsenide recycling effort has been highly successful. We are now fully licensed and processing materials that we collected over time but did not have the capability to recycle. This is visible to the investment community in both our revenue and gross margin at JinMei, one of our raw material joint venture companies. These efforts also advance our ESG commitments and drive meaningful efficiencies in our manufacturing. Turning to germanium substrates. Demand for satellite solar cells, which was down substantially throughout 2023, is now showing recovery. Our sales more than doubled in Q2 over the prior quarter. With renewed strains in Europe and Asia, a portion of the strains was due to the timing of orders, which fell into Q2 rather than Q3. As such, we don't expect to see quite as strong results in Q3 of this year, but still a significant improvement from this time last year. And finally, our raw material business. It grew more than 40% in Q2, both on growing demand and the success of our recycling effort. Our portfolio of joint ventures, raw material companies, continues to be a strategic value to our business and they are contributing positively to our results. In closing, we are optimistic about the growth and expansion of our business over the coming quarters. Across our portfolio products, the style of recovery are tangible, and though we expect some lumpiness quarter-to-quarter. We have positioned ourselves well for success in this highly dynamic technology landscape. Looking ahead, new catalysts such as AI are providing strong incremental opportunities that are likely to accelerate as we move into 2025. This can significantly benefit our indium phosphide business. Further, we remain highly focused on accelerating our return to profitability and looking forward to reporting to you our progress. With that, I will turn the call back to Gary for third quarter guidance.

Thank you, Morris. In keeping with our comments today, we expect Q3 revenue to be between $25.0 million and $27.0 million. We expect our non-GAAP net loss will be in the range of $0.06 to $0.08 and GAAP net loss will be in the range of $0.07 to $0.09. We expect share count will be approximately 43.1 million shares. Okay, this concludes our prepared comments. Morris and I would be glad to answer your questions now. Christina, operator, you can take over now.

Your first question comes from Charles Shi of Needham. Your line is open.

Good afternoon. For my first question, I'd like to discuss the Q3 guidance. It appears that the midpoint is set at $26 million, which is a slight decrease from the Q2 level. In your preliminary remarks, you mentioned a possible moderation in gallium arsenide and possibly some considerations regarding germanium as well. However, I'm curious about indium phosphide and whether the other two product categories are performing reliably. What is the overall perspective at this moment?

Sure, Charles. I believe raw material prices are likely to remain stable, similar to the second quarter. Regarding indium phosphide, based on the orders we received from AI for the first and second quarters, we do not expect this trend to continue for now. However, since this is a startup business, new orders could arrive at any time. If that happens, we could potentially maintain the same level as in the second quarter, but for the moment, we are not planning on that. Consequently, we are taking a cautious view on indium phosphide providing growth. Additionally, in the telecom and datacom sectors, there is still some inventory to be cleared in the third quarter, which won't contribute to growth. As I mentioned, we experienced strong growth driven by AI applications in the first and second quarters, but we are not expecting that to persist in the third quarter at this time.

Yeah, what I would add too is that the orders are a bit jumping around some. Some of the stuff that we thought was going to come in Q3 came in Q2. But I think the key thing for us is we are getting the orders. We're not losing market share and we're in very close communication with our customers, and there's lots of transparency on both sides. So I think we're in a good spot.

Yeah, Thanks. Morris, I think there are some new languages around your AI opportunity this quarter. I thought we went through this exercise for a few quarters. And I think you and I were thinking maybe the indium phosphide opportunity you were seeing in the prior quarters were more for like photo detectors, some really advanced photo detector. But this quarter sounds like you're gaining some confidence that the indium phosphide substrates are actually going into the optical transceivers. Wonder if there's any new data points that lead to this slight change in how you think about the end application of the indium phosphide?

Well, I'm not entirely certain. We have confidence in the move toward AI, but I'm unclear about the specific application. It pertains to a transceiver. However, we're not currently seeing continued orders from our customer. There seems to be some initial market adoption, and I hope to see more progress later this quarter and definitely in the latter half of the year.

And I'm not sure we're intelligent in terms of knowledge level to know precisely where the indium phosphide is going into AI. There may be more than one application within AI. So…

Yeah, as we discussed with you, I think we know that our end customer definitely told us it's for AI. Our second level, in other words, epi customers are telling us it's for AI and they're also telling us who they are selling to. And end customer application, I don't want to name them now, I discovered this, but I think it's well known. But it's what specific application is used for, we don't know yet.

Absolute knowledge, yeah. When you find out, Charles, let us know though, okay?

Okay. So maybe the last question I still want to ask about this indium phosphide. I think over the past three months, we did hear from some of the optical transceiver companies basing the North America, talking about the potential indium phosphide shortage over the next five years, as well as things like you mentioned the 800 gig plus transceivers ramping up in higher volume. We know you're an important player, but you do have competition. So, want to get your thoughts on whether you see a shortage could be an issue or not, and whether that particular end customer talking about shortage, are they talking about any specific supplier in mind or they're giving a broad market comment which could mean something quite positive for AXT going into the next few years as AI ramps up.

I believe on our end, regarding substrate, we are confident that we possess the best technology for EPD, along with strong commercial availability and the capacity to expand, thanks to our solid supply chain through joint ventures. Our indium phosphide revenue is currently only at half of its peak level, so we are certainly capable of growing back to that point. As you may recall, during the last upcycle, our indium phosphide revenue increased by 50% year-over-year for two consecutive years. Therefore, we do not anticipate any challenges in enhancing our ability to provide more substrate. We are also advancing our 6-inch indium phosphide capabilities while our 4-inch production is performing well. Furthermore, we have implemented two significant technological advancements over the past six months, which have improved our yield and allowed us to enhance the quality of our material while managing costs effectively. If you know anyone who is concerned about a possible shortage of indium phosphide, encourage them to reach out to us so we can establish long-term agreements to ensure supply.

I'm not sure that's my business but thanks for the answers. Thanks, Morris. Thanks, Gary. That's all for me.

Good questions, Charles.

Your next question comes from the line of Richard Shannon from Craig-Hallum Capital Group. Your line is open.

Hi, Morris and Gary. Thank you for answering my questions. I would like to get your perspective beyond the third quarter you just discussed, as your body language appears quite positive regarding most aspects of your business. Could you share any insights on what you anticipate for the fourth quarter? Are you noticing any improvements or potential for improvement in any of the segments? Additionally, at a broader level, what feedback do you get from your conversations with customers regarding their confidence as we head into 2025?

Sure, Richard. From my perspective, we cover a wide range of market segments. If I had to highlight one of my favorites, it would be indium phosphide. The potential for its use in AI is quite exciting. We are in discussions with customers about possibly using it in commercial applications, although I don't have specific timing for that. However, I know our customers are increasing their trial orders from 100 wafers to 200 wafers per month, and whether those orders start coming in the fourth quarter or the first quarter of next year is uncertain. Regarding the PONs and telecom markets, we are hearing that the data center segment is still lagging and the telecom market is struggling. Yet, I believe inventory levels will start to normalize, which could lead to a recovery in both the PONs market and the general data center market. As for gallium arsenide, we are witnessing good growth in high-power transistors as our customers are looking to diversify their supply chains for wireless applications. We hope this trend continues. However, there is some softness in the industrial applications, particularly in LEDs, as customers have mentioned that the third quarter has slowed down a bit, though I cannot predict whether this will persist into the fourth quarter. Likewise, for industrial lasers using gallium arsenide, we have seen a decline in Q3 compared to Q2. I still lack visibility into Q4 for that sector. In satellite communication, Q2 was very strong, but Q3 has shown a slowdown. However, with the advent of low Earth orbit satellites to support the 5G Plus telecom network, there are plans for significant launches, including Elon Musk's proposal for another 40,000 satellites and China's intention to deploy an additional 15,000. This market has substantial growth potential. Nonetheless, I have some concerns about it because germanium, an essential material for our cost of goods sold, is sensitive to price fluctuations. While the growth potential is promising, we need to monitor the costs of raw materials closely. Our raw material supply chain has been strong, showing nearly 40% growth last quarter, and I anticipate that Q3 will maintain that level of supply. Additionally, we have more joint ventures in the supply chain on the horizon, which should provide further growth opportunities.

Yeah. I want to add a perspective that I think is useful and it sort of differentiates us from the traditional sort of chip companies in the semiconductor industry, which is that we have a record where our products and product segments have a very long positive trajectory. So we all know that if you're making chips, you've really got to rotate one out and a new one in, maybe every 18 months. But we first got traction in indium phosphide with passive optical networks back in 2013 and '14, but it's still a market that exists. And so almost all the markets that we touch, while they may go up and down some, the long five to 15-year path is generally upward and to the right. So we think we're well positioned for growth across a number of markets and it gives us the ability to deliver strong results going into 2025. The strong second quarter that we just had puts our first half run rate just over $50 million. So we're now targeting to be in triple digits once again. So that just gives a little color, I think so. Next question.

Thanks for all that. Maybe I'll dig in a little bit on the indium phosphide and AI angle here. Maybe you can give us a perspective of the customer base here and really kind of digging not just into your direct customer but the end customer, which I assume are to a large degree, hyperscalers, to what degree are those Chinese or Western world customers?

I think at this point, we understand it's definitely Western world customers. So the way I understand, Richard, this is, okay, I mean, if I look at it from 25,000 feet up, what is AI? You need competition, you need data source, and lastly, you need to transfer this data very rapidly and a massive amount, okay? I think the first one to go is a short distance, which is VCSEL using the optical cable. And as the short distance communication speeds up, then you're looking at sort of medium range and long range. I think that's where I think indium phosphide will start to shine. And so you're talking about whether it's going to be an EML or silicon photonics. Okay? And as the speed goes up, as the data transfer needs to get more and more, definitely we're confident it's going to grow, okay? And it doesn't need a whole lot of market growth to move our needle, as you know. And I think the other thing is I think if you look at indium phosphide now, it looks like it's sort of waiting for its next growth opportunity. But look at it, I mean, when the consumer products started to grow two years ago, our revenue on indium phosphide zoomed almost 50% year-over-year for two years in a row. And so that shows that we have the capability to make the supply chain satisfied. I mean, customers are very happy with us. I mean the fact that they didn't adopt in the next-generation form is not because of us. And I know there are other customers and other applications potentially that are using indium phosphide such as following eyeball or glucose monitoring…

Consumer applications.

Yeah, consumer applications. It's poised to grow because of its special ability to work in the far infrared range. So it's not because of us. It's material characteristics. It will just shine in certain applications. I think it will come.

Fair enough. Kind of a two-part question. It's probably mostly for Gary, kind of more on the financial side here. But last quarter, you talked about driving inventory down $10 million. This quarter, you just said downwards is $10 million still possible there. And then also on the last conference call, you talked about the potential for hitting breakeven in the fourth quarter. Just curious whether you still think that's possible. Thanks.

Breakeven, I think, is still possible. Again, as we've said before, it's going to depend on volume, of course, and mix. So it's definitely something that we would strive to achieve. So, bringing inventory down remains a priority for us. What clouds the picture a bit is that we've had great success in our recycling program. So, you don't see the full effect of our inventory reduction efforts in the numbers. Our largest target is indium phosphide for inventory reduction. And as our revenue grows, we expect to be in a good position to bring the inventory down. But I have to say openly to the community that it's taking longer than I thought. But we understand why, and we're working it. So, we haven't taken our eye off the ball. It just hasn't happened as quickly as I hoped.

I agree with Gary regarding the indium phosphide inventory. The sudden drop in demand in the third quarter of 2023 forced us to build up inventory to meet customer needs, but then those orders were halted. That’s why we saw the buildup. On the positive side, the indium phosphide we have will retain its value; in fact, it might even increase in value.

Okay. Fair enough. Thanks, guys.

Thanks, Richard.

Your next question comes from the line of Tim Savageaux from Northland Capital Markets. Your line is open.

Hi, good afternoon. I wanted to revisit the topic of capacity and shortages. You mentioned that trial orders for indium phosphide are increasing from 100 to 200 wafers. It seems that much of what has been happening so far has been related to development activities. My first question is whether you have an idea of what production volumes might look like as we progress through the year, in comparison to the trial volumes you just mentioned. I will have a follow-up after that.

I believe most of our customers have provided us with forward guidance. For example, one specific data center customer in silicon photonics informed us about their production plans. They indicated that they might increase their output from about 400 wafers per month to 900 by the fourth quarter, although this could change. Typically, they do meet their commitments. This is just one example of the forecasts we receive. Regarding another pilot production customer, we're looking at a trial order of 100 to 200 wafers. While we're optimistic, they haven't specified when they’ll start full production, but they have provided a volume estimate, which helps us set a forward-looking pricing strategy. It’s uncertain whether we can rely on that entirely, but they are mentioning thousands of wafers. We expect that if they progress from 100 to 200, the minimum threshold for significant discounts would be around 1,000 wafers. However, whether they reach 1,500 or 2,000 is uncertain. Historically, during the last consumer product boom, we saw numbers in the 5,000 range.

We have strong beliefs in the markets for indium phosphide. While we may not have complete visibility on a quarterly basis, we see positive developments on the horizon. Over the past five years, we have significantly upgraded our manufacturing facility in Beijing, where we produce indium phosphide. Customers who have toured the facility have expressed their admiration, and we've increased our production capacity. Therefore, we are not concerned about our total capacity capabilities. We will have sufficient advanced knowledge to make decisions on adding more equipment when necessary; the challenge will be that rather than expanding our facilities, it will focus on equipment. We are prepared to make those changes quickly as a manufacturing company. Overall, we are in a great position, and when the demand arises, it will be quite exciting.

Looking forward to that. You mentioned that you're currently generating less than half of your previous peak revenue from indium phosphide. My question relates to what you just said, which is about the pilot volumes increasing significantly, by factors of 5 or 10. Could you provide an estimate of your maximum quarterly revenue capacity for indium phosphide right now, without needing to add any new equipment or space?

I'll let Morris provide the outlook, but I want to quickly refer back to confirm my memory; we reached an indium phosphide revenue of $17.7 million. We haven't deducted any capacity, so I think it's reasonable to say we could at least achieve $17.7 million again. However, I'm sure Morris would suggest we could exceed that amount.

There are two factors to consider. First, we have significantly improved our yield, which will allow us to produce more wafers and reduce our costs. However, every cycle presents challenges, as customers tend to negotiate for lower prices once they have placed an order. We are prepared to collaborate with customers who send us larger orders. We are achieving savings through better yields and enhanced supply chain management. We have increased our yield of indium phosphide and improved our recycling capabilities. Additionally, we will implement further supply chain enhancements to lower costs, benefiting our customers and ultimately all consumers.

Okay, great. And just one question on gross margins. You performed pretty strongly there in the quarter, I guess, talking about recycling being one of the contributors. But I think you had expected gross margins to come down given product mix, which looks like there's a little bit of upside, but it looks like it came in as expected. So I wonder what the kind of moving parts were for the gross margin strength in the quarter. And likewise, on the guide, you look to be guiding gross margins back down a bit. I wonder what are the factors driving that.

You're accurately following the developments. For the upside surprise that we were pleased with, one contributor was the strong performance of our gallium arsenide recycling program, which gained more traction during the second quarter. We initiated that program in 2023, and it's really starting to show results. This effort is being conducted through our subsidiary JinMei, and their contribution to the consolidated gross margin in Q2 exceeded their typical average. Additionally, we saw improvements in manufacturing efficiencies overall. In our business, it's rarely just one significant factor; it's usually a combination of two, three, or four medium-sized contributors. Efficiencies are one, and the recycling program is another. We are aiming for a slightly conservative approach in our guidance on gross margin, as our tendency is to be cautious given the uncertainties.

Great. Thanks very much.

You’re welcome, Tim. Good questions.

Your next question comes from the line of Dave Kang from B. Riley. Your line is open.

Thank you, good afternoon. First question is on indium phosphide. Just wondering if you have the data on the mix between high-speed optics for AI versus the rest?

Well, actually, at this point, AI is still relatively small. If I were to estimate, it's probably 10% to 12% of indium phosphide.

Okay. Got it. And then my second question is about any market share data. I'm assuming that most of your competitors currently hold the majority of the AI market share. Is that a fair assumption, or is it different for companies like Sumitomo?

I think we might be correct, but we can't be sure since we don't have access to our competitors' data or their financial figures. However, based on feedback from our customers, they seem to be purchasing everything from us.

The reason for that is that our quality in the number of measurements, including EPD, is significantly better than our competitors. Keep in mind, the only serious competitor is Sumitomo, and we are viewed as vastly superior in this particular product. For companies where yield and reliability are crucial, they are choosing AXT. We believe this trend will continue, as we have a substantial lead.

Got it. And just quickly on the Tongmei listing situation. You mentioned zero companies got dropped. I mean, what are the odds that you guys are getting dropped?

I believe the process for going public in China and the requirements for listing on the Shanghai, Shenzhen, or even Beijing Stock Exchanges have changed significantly this year. Two years ago, there were around 500 or 600 companies going public on the STAR Market. This year, there are probably less than 10. Additionally, 300 companies have asked to be removed from the application queue for the STAR Market. We've just updated our application with our six-month results, which is promising. As Gary mentioned, we have addressed one of the key issues the Shanghai Stock Exchange was focused on, so we hope to resolve that soon. With our recent results, we are optimistic about reporting better opportunities in the next three to six months.

Yes, I want to add that you need to refresh your application. Several hundred companies were advised not to proceed because they weren't ready. Some companies attempted to enter in early 2020 with no revenue. Over time, the requirements have increased, but they haven't signaled us to back off. In fact, they have informed our investor bankers that this is a promising offering and they appreciate our strengths. While we can't be certain they won't change their stance, they have had ample opportunity to express negativity and have not done so. This is why we remain hopeful and are committed to pursuing our goals.

Okay. Thank you.

You’re welcome.

And with no further questions, I'll turn the floor back over to Dr. Morris Young.

Thank you for participating in our conference call. This quarter, we will participate in the Needham Virtual SemiCap Growth Conference, the Jefferies Technology Summit, and Evercore ISI Semiconductor, IT Hardware & Networking Conference. We hope to see you there. As always, feel free to contact me, Gary Fischer, or Leslie Green if you would like to set up a call. We look forward to speaking with you in the near future.

Thank you. And this does conclude today's conference call. You may now disconnect. Have a great day.