Good day, ladies and gentlemen, and welcome to Pixelworks, Inc. Third Quarter 2020 Earnings Conference Call. I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, instructions will be given for the question-and-answer session. This conference call is being recorded for replay purposes. I would now like to turn the call over to Pixelworks' CFO, Mr. Elias Nader. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for tuning into today's call. With me on the call, and joining from China is Todd DeBonis, Pixelworks' President and CEO. The purpose of today's conference call is to supplement the information provided in Pixelworks' press release issued earlier today announcing the company's financial results for the third quarter of 2020. Before we begin, I would like to remind you that various remarks we make on this call, including those about our projected future financial results, economic and market trends and our competitive position constitute forward-looking statements. These forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties that may cause actual results to differ materially. All forward-looking statements are based on the company’s beliefs as of today, Thursday, October 29, 2020. The company undertakes no obligation to update any such statements or reflect events or circumstances occurring after today. Please refer to today's press release and our annual report on Form 10-K for the year ended December 31, 2019, and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin, operating expenses, net income loss, and net income loss per share. Non-GAAP measures exclude gain on sale of patents, inventory step-up and backlog amortization, amortization of acquired intangible assets, stock-based compensation expense and restructuring expense. The company uses these non-GAAP measures internally to assess our operating performance. We believe these non-GAAP measures provide a meaningful perspective on our core operating results and underlying cash flow dynamics. But we caution investors to consider these measures in addition to, not as a substitute for, nor superior to the company's consolidated financial results as presented in accordance with GAAP. Also included in the company’s press release are definitions and reconciliations of GAAP to non-GAAP net loss and GAAP net loss – adjusted EBITDA, which provide additional details. With that said, I will now turn the call over to Todd for his opening remarks. Thank you.

Thank you, Elias, and good afternoon to everyone participating on today's call. I'm joining you today from Shanghai. Even though it was a difficult journey during the pandemic and associated travel restrictions, the company has seen increasing activity and opportunities for our technology here, including multiple exciting and recently announced developments. First, as announced last week, we completed the agreement on a private placement to facilitate an investment by MTM-Xinhe Investment Limited in the amount of $6.6 million. MTM is a China-based consortium comprised of strategic investors from the Chinese semiconductor and mobile ecosystem with deep industry experience and expertise. The investment brings significant value to Pixelworks as we continue to prioritize China and Asia as key regions for growth opportunities in our future success. As a financially invested partner, MTM will contribute local resources and relationships that will enhance our ongoing strategic efforts. Separately, we also announced the appointment of Dr. Alan Zhou as Executive VP and President of Pixelworks China, who will oversee and drive the expansion of our operations in the region. With over 30 years of experience in wireless communications, he previously served in multiple roles at global companies such as Qualcomm, Agere Systems, Lucent Technologies, and AT&T Bell Labs. Alan is a significant addition to our team and brings extensive China-based leadership to the Pixelworks organization. In addition to supporting our growing customer engagements in the region, both the appointment of Alan and MTM's investment strengthen our strategic position in China as we execute on our mobile growth initiatives. As outlined in today's press release, our Q3 results were in line with our expectations and reflected the challenging environment, continued impact on end-market demand, especially in our mature markets of projector and video delivery. Other customers have continued to place orders, but demand has continued to be weak, as they attempt to navigate fluctuations in the end-market demand due to the pandemic. Our Mobile business saw sequential growth in the quarter as previous distributor inventory was worked down, and we made initial shipments in support of new phone launches. Notably, we sustained strong gross margin levels near the higher end of our historical range. Our previous restructuring actions along with ongoing cost containment efforts have minimized our cash burn in recent quarters. Although we don't expect a V-shaped recovery, we are beginning to see some signs of improvement in our mature markets. In projectors, demand appears to have bottomed during the third quarter. We've begun to see evidence of a gradual recovery in orders led by near-term improvement in developed markets. Customers have indicated that demand has remained more muted in emerging markets and is unlikely to meaningfully recover until mid-next year. As we said on prior calls, effectively all projector OEMs are responding to the lower total unit volumes by moving upstream to higher-priced projectors with more advanced features. We are mirroring the direction of our customers in terms of pricing, and Pixelworks continues to be a key enabler for many of these advanced features. Overall design activity has remained somewhat healthy across customers' next-generation projects. We currently anticipate a small uptick in projector revenue in the fourth quarter. In video delivery, end demand in the Japanese consumer electronics market remained subdued through the end of the quarter. These customers have given limited clarity on the timing of expected recovery. In the U.S., we have seen increased customer activity for OTA streaming solutions. During the quarter, Sling launched AirTV Anywhere, its newest device to incorporate Pixelworks XCode for transcoding live local ATSC signals to high-quality digital video for viewing on almost any connected mobile or streaming media device. Unique to the AirTV Anywhere product, it includes a one terabyte hard drive with a full digital GDR and is capable of delivering simultaneous streams of OTA content to connected gaming devices, both within and outside of the home. Additionally, unlike previous generations that were sold exclusively online, AirTV Anywhere is being carried on the trucks of Dish authorized installers to provide consumers with the option of a professional onsite setup. Turning to an update on TrueCut, following a brief attempt at a partial reopening in the summer, most of the major studios in the U.S. remain closed due to COVID-related mandates. Although this has significantly curtailed filming, post-production, and in-person meetings in Hollywood, we have continued to advance numerous ongoing discussions and evaluations with prominent studios and streaming service providers. Recently, our team has successfully leveraged Pixelworks' newly opened office in Burbank, California, to host private screenings and demonstrations with prospective partners and customers. As highlighted by several announced developments in the industry, the prevailing environment has significantly increased the importance of streaming and the delivery of content direct to consumers. TrueCut offers a truly unique way to differentiate the direct-to-consumer user experience by providing a comprehensive solution for ensuring that the visual experience created in a professional screening room is replicated in the consumer's living room, regardless of the TV or mobile device the content is watched on. We continue to have a number of advanced discussions underway on new TrueCut opportunities in China, where the government is pushing for the broad universal adoption of a new UHD standard that emphasizes both 4K and high frame rate video. We're trying to be in the mobile-first market, and multiple streaming services along with the prevalence of user-generated content have naturally become the leading drivers of this new UHD standard. Overall, the licensing engagements for our TrueCut solutions are taking longer to materialize, but we are continuing to make important progress. Shifting to our mobile business, as previously mentioned, we saw a return to sequential revenue growth in the third quarter, and we continue to add to our growing list of mobile wins for the year. Since our last conference call, three new phones were launched by two existing OEMs and one first-time mobile customer. In late August, ASUS launched the latest device to incorporate Pixelworks technology, the ZenFone 7 Series Flagship 5G Smartphone, utilizing a 6.67-inch Samsung OLED display with a 90 Hertz refresh rate. The ZenFone 7 leverages a series of Pixelworks visual processing technologies, including HDR tone mapping, high-efficiency color calibration, and dynamic contrast adjustments to provide consumers with an impressive display performance and superior viewing experience. Also, during the quarter, Coolpad released its first-ever mobile device to feature Pixelworks advanced visual processing. The Coolpad Legacy Brisa smartphone, currently available exclusively through Boost Mobile, the Legacy Brisa brings true premium visual quality, including SDR to HDR conversion and enhanced color tuning and accuracy to consumers on a budget. Notably, this well-featured smartphone is priced below $200. Most recently, OnePlus expanded its 8 series lineup introduced earlier in the year and again chose to incorporate Pixelworks technology in the newly launched OnePlus 8T. Building on the recognition garnered from the record-breaking display performance enabled by Pixelworks in the OnePlus 8 Pro, the OnePlus 8T uses a dynamic 120 Hertz AMOLED display coupled with a series of Pixelworks visual enhancement features including our patented high-efficiency color calibration, flesh tone correction, flicker-free screen dimming, and ultra-smooth 8K adaptive brightness. In early September, we unveiled our sixth generation mobile visual processor, the first to incorporate low-power Artificial Intelligence (AI) technology. The AI processing unit built into our i6 processor leverages Pixelworks extensive mobile display and data sets to adaptively optimize overall visual quality and power efficiency by intelligently mapping feature sets and modes across the widest range of apps and use cases for both LCD and OLED displays. This dynamic optimization brings together numerous advanced features, such as upscaling the dynamic range of video and gaming content to the highest possible resolutions and refresh rates, while simultaneously adjusting for optimal contrast, sharpness, brightness, and color temperature of the display based on ambient lighting conditions, content attributes, and display characteristics. In addition to AI-based optimizations that provide the potential for accelerated back-end development and reduced phone-specific customizations in the i6 processor, we further enhanced Pixelworks' leading industry color accuracy with display calibration processing that requires up to 40% lower power than our previous generation mid-range processor. Our sixth-generation visual processor was Pixelworks' first mobile chip to secure design wins before being taped out. In fact, we secured multiple designs across several different OEM customers prior to successfully tape out for sampling. We expect the first designs incorporating our i6 processor to be launched around the year-end, and we continue to gain traction on an increasing number of customer programs planned over the coming year. More broadly within mobile, a number of third-party reviews of multiple previously launched smartphones that incorporate our technology have continued to validate the significant and differentiating value of Pixelworks' visual processing. We are continuing to aggressively develop and introduce additional advanced capabilities as part of each new generation. We are focusing heavily on incremental adoption across both existing and new mobile OEM customers. Several key market trends are strongly aligned to drive an increased need and adoption of our technology. The first is 5G, which enables the delivery of higher quality video content over a cellular connection. As OEMs aggressively push 5G capability down the price curve to more premium and mid-tier devices, our value proposition becomes increasingly relevant on mainstream devices with the potential to have substantially larger unit volumes. Another benefit of 5G is its extremely low latency, which is particularly important for mobile gaming. In fact, we are continuing to see growing interest in utilizing our technology to enable a visually superior gaming experience. Following our initial and ongoing success in dedicated gaming phones, we are observing an emerging trend by OEMs wanting to feature a stronger and more marketable gaming use case on more mainstream, high-performance smartphones. Pixelworks' industry-leading technologies enable exceptional performance for high frame rate gaming while also significantly reducing power consumption compared to relying solely on the device's application processor and associated GPU. As evidenced by my temporary relocation and focused efforts here in China, we continue to be closely engaged with our current and prospective mobile customers. We have a very healthy pipeline of new programs, comprised of next-generation designs with existing customers, as well as active near-term programs with more than one new customer, including a second Tier-one mobile OEM. We're also seeing improving backlog and forecast from our mobile customers. We believe this uptick in demand is a response to improving end-market demand, and expected market share shifts among the leading OEMs. In closing, we are continuing to make tangible progress in our growth initiatives despite a very challenging environment. Our team is critically focused on advancing a growing number of mobile and TrueCut engagements while remaining well-positioned to support current customers as end-market demand recovers. We continue to believe in the value proposition of Pixelworks' technology and our strategies to capitalize on secular market trends in our growth businesses. We expect the fourth quarter to mark the beginning of the turning point and reflect sequential improvement driven by recovery in mobile demand. With that, I'll hand the call over to Elias to review third quarter financials and provide guidance for the fourth quarter.

Thank you, Todd. Revenue for the third quarter of 2020 was $8.2 million, compared to $9.3 million in the second quarter of 2020, and compared to revenue of $18.4 million in the third quarter of 2019. As Todd indicated in his opening remarks, the third quarter of 2020 revenue primarily reflected the inventory corrections in the digital projector and video delivery markets, compounded by lower end-market demand resulting from the global pandemic across each of our target markets. The breakdown of revenue in the third quarter was as follows. Revenue from digital projectors was approximately $4.9 million. Video delivery revenue was approximately $1.9 million. Revenue from mobile was approximately $1.4 million, comprised largely of sales of Iris visual processor and software solutions. Non-GAAP gross profit margin was 55.6% in the third quarter of 2020, compared to 59.2% in the second quarter of 2020 and 53.9% in the third quarter of 2019. The year-over-year increase in gross margin primarily reflects our ongoing initiatives to drive product cost improvements, especially on newer products. Non-GAAP operating expenses decreased to $8.9 million in the third quarter of 2020, compared to $9.3 million last quarter and $10.3 million in the same period last year. The decline in operating expenses reflects a combination of our previously taken actions to reduce cash expenses as well as our ongoing cost containment across our business. Adjusted EBITDA for the third quarter of 2020 was a negative $3.5 million, compared to a negative $2.9 million in the second quarter of 2020 and a positive $0.5 million in the third quarter of 2019. On a non-GAAP basis, third quarter 2020 net loss was $4.5 million or a loss of $0.11 per share, compared to a net loss of $3.9 million or a loss of $0.10 per share in the prior quarter and a net loss of $0.5 million or a loss of $0.1 per share in the third quarter of 2019. Moving to the balance sheet, we ended the third quarter of 2020 with cash, cash equivalents, and short-term investments of approximately $16.8 million, compared to approximately $21.4 million at the end of the second quarter of 2020. The sequential decrease of approximately $4.6 million reflected the net of approximately $3.4 million in cash used for operating activities, $1.9 million for capital expenditures, and the repayments of approximately $400,000 on the outstanding balance of our line of credit, partially offset by approximately $1.2 million in net proceeds generated from the sale of stock through our ATM vehicle during the third quarter. As discussed in our second quarter conference call, we implemented a restructuring plan to further reduce operating expenses and preserve cash. As a result, we expect to record a one-time restructuring charge of approximately $1.6 million in the third quarter. We anticipate these actions to generate an incremental $3.2 million in annualized cost savings beginning in the first quarter. In terms of other balance sheet metrics for the third quarter, day sales outstanding were 60 days at the quarter end, which compared to 58 days at the end of the second quarter. Inventory turns was 3.3 times in the third quarter, up slightly from 3.1 times in the prior quarter. Now, turning to our guidance for the fourth quarter of 2020, as previously indicated, while we believe the near-term environment is likely to remain challenging, with recent feedback from customers indicating that end-market demand has begun to slowly turn the corner in both the projector and video delivery markets. Specific to our mobile business, we anticipate another quarter of sequential growth in the fourth quarter, as we support a combination of existing smartphone wins and ramp up increased shipments associated with customers' planned launches of new devices in the coming months. Based on recent trends and our current backlog, we expect total revenue in the fourth quarter to range between $8.5 million and $10.5 million. We expect non-GAAP gross profit margin in the fourth quarter to be between 48% and 53%. We anticipate operating expenses in the fourth quarter to range between $9 million and $10 million on a non-GAAP basis. Please note that fourth quarter operating expenses will include the first full quarter of benefits from our restructuring plan announced earlier this year. Finally, we expect fourth quarter non-GAAP EPS to be in the range of a loss of $0.09 and a non-GAAP loss of $0.15 per share. That concludes our prepared remarks, and we will now open the call for questions. Operator, please proceed with managing the Q&A session. Thank you, everyone.

Thank you. [Operator Instructions] And our first question comes from the line of Charlie Anderson of Collier Securities. Your question, please.

Yes. Thanks for taking my question. Good morning over there in China, Todd. So I wanted to start with the investment, the strategic investment, and then also the new hire in China. I wondered, Todd, if you could -- obviously, you guys have made good progress in China to date with Iris. But I'm sort of curious, what you see in terms of the relationships and enhancements that you get with the new hire, and when also the new investor? What are some of the relationships that you gain that maybe you didn't have before? Maybe just if you expand on that? And then, I've got a follow-up.

Okay. Good morning. You hear me okay, Charlie?

Absolutely.

I don't know, Alan's pretty well known within the investment community. If you look at Alan's background, he's a -- he got a doctorate from MIT. He came in and really focused on fab development at AT&T Microelectronics. This was a time when both of us were back there, long ago. He traveled around as we were expanding fab capacity around the world, both in China and Madrid. He evolved out of that into effectively running the business in China for Lucent Micro at the time, and then various other companies here. The last, maybe, half a dozen years, he transitioned into an investment role, the last four or five years at a private equity firm here in China that was focused heavily on investment in the compound semiconductor industry, which they call here Semiconductor 3.0. They have a big initiative to try to -- they feel that the table has not been set on market share there, and there's an opportunity for China to participate in a much bigger way. It remains to be seen if they get there. But Alan was focused in this area for the last four or five years. So, I've known Alan for a while. Highly energetic, extremely well connected. If you look at his near term focus, clearly, Alan can come in and help with bringing localized investment to China, and help get our story -- most of our mobile customer base, if -- 90-plus percent of all of our design activity for mobile is here in China. There is some activity outside of China, but still in the Asia domain. Having an investment focused in Pixelworks works on the ground here, and understands the dynamic environment is extremely helpful. Alan actually, prior to joining the company, had been already participating in helping us, and I expect more to come from Alan. So that's probably the background I'd like to give you on Alan. As far as M2M, there is -- so I've been in this business around about 35 years. I remember in the U.S. and in the Valley back in the mid-90s to 2000 there was a feverish ecosystem and financial industry focused on trying to build up a quickly expanding communication semiconductor industry. Here in China, it feels like that all over again. It is actually at a much bigger level. And the way that they go about it is there is a lot of money that may have been initially spurred on by Chinese government investment, but predominantly is leveraged by local private money and various different private equity companies and venture capital companies that go off and focus on different areas of the semiconductor market. Some are focused, as I said previously, in the compound semiconductor industry, some are focused on AI. M2M actually stands for machine-to-machine. They’re focused on technologies that are not completely contingent on the most advanced process technology out there. They have been looking at sensor companies, algorithm-type environments, and companies like us, most of our value comes from systems know-how and algorithm development. We fit into their profile. They’re a very professional organization. They see a long-term horizon with what we're doing. They see the technology trend of high frame rate display in addition to 5G connectivity, and now the rapid expansion of performance mobile gaming here in China and in India, and see this as a long-term trend that Pixelworks is uniquely positioned to participate in. So they wanted to come in quickly. We have a lot of interest in the company, and M2M clearly was going to be a very good partner, and that's why we concentrated on dealing with them.

Great. Thank you. Thank you for the color.

Do you have follow-up, Charlie?

Yeah. For my follow-up, I want to ask about projectors. This time of year, you guys are doing $12 million, $13 million. Now you're down around $5 million. Obviously, there's a big gap to fill there, for all the reasons we're aware of. So I guess I'm curious, in your commentary, it sounded like there are some geographies that are recovering, while others are going to take until mid-next year. So, I wonder, are those geographies that are recovering enough to fill a portion of the gap, a small portion of the gap? Just kind of lay out for us how you think projector trends over the next year? Thanks.

Well, remember, this is one of those markets that has a long reaction time to abrupt movements. Usually, there's not this big of an abrupt movement for a market like projectors. But there are inventories of existing product makeup of all different price ranges from $500 projectors to $10,000, $20,000 projectors throughout the world for large companies like us and others. When you have an abrupt movement like this, the customers will back off. If you go all the way back to the food chain where they buy advanced silicon from us, we are at least six to nine months down the chain from that projector being sold. They had gone into this thing with a fairly robust view that 2020 was actually going to be a rebound year from somewhat of a slow 2019. So they had started at the tailwind of 2019 and 2020 to build up the order book with us and to build up their channel. Then you have this abrupt dislocation in the market. What's happened over the last six months is the industry has basically been holding off on refilling the channel. In addition, they have decided to put their R&D to work to migrate to where they feel the market is going to be. A lot of the new product development is slightly different projectors with high luminance, laser-based connectivity, and high resolution. What they want to do is bleed out the old inventory of all those channels and then fill with new. What you've seen so far is where we're feeling the impacts of that as they bleed off that channel. What they're seeing now is that the uptick is starting to happen in China first and foremost. I've been here a little over a month now, although I spent the first couple of weeks in quarantine, which means I just stayed in the hotel for two weeks. But upon getting out, this place is vibrant and happening. The business is back. They've figured out how to contain at least in the large cities, and the cities are back and vibrant and moving. Tools are back in. The educational tenders are being offered, and you're seeing business here for the projector market. You're starting to see it in the U.S. to some degree. You probably had some inklings of it kicking back off in Europe, although that may slow down again. But emerging markets, you know, Southeast Asia, India, et cetera, they still haven’t bounced back at all. I think that's what the market is seeing, and you know, the inventories will be lean. As the markets pop back on, we should see demand kick back in. We're expecting a rather robust turn back on by Q2 of next year. But, you know, a lot can happen between now and then.

Got you. Okay. Thanks, Todd.

Thank you. [Operator Instructions] The next question comes from the line of Richard Shannon of Craig-Hallum. Your question, please.

Thanks, guys. Thanks for taking questions. Maybe more of a technical question on the guidance for the fourth quarter. I haven’t been able to run the math here in my head or on Excel here very quickly, but the gross margins here at this level and your discussions would suggest most of the growth dollar-wise comes from mobile? Should we expect video up at all? Or should we think about that flat, I guess, looking at from the mid-point of view? And then from an OpEx point of view, it wasn't clear to me the degree to which the restructuring has made an impact in here, because it seems like the midpoint is a little bit higher than last quarter. So, can you kind of help us out on the run rate here, that'd be great.

You want to kick off this one Elias and I can fill in if you need help?

Yes, let me give you a rundown on the OpEx return. In Q4, we will be initiating all the amount increases, so that's-- that has increased in that. We have Iris 7 starting in Q4, we're spending on that in Q4. So, really, if you look at the mid-range of the OpEx guidance, it's about 9.5. That's basically what's happening. Those are the two big ticket items that are happening in the fourth quarter. Okay.

Okay.

I'll take a question regarding the mix and margin. Yeah, I mean, clearly the margin guidance given where we just came out of the last two quarters where the margin was really healthy suggests that a much bigger portion of the revenue is coming out of mobile. We also indicated that projectors sequentially -- we think is going to be sequentially up. So, clearly, video would be flat to down.

Okay, that's helpful. Second question, kind of a -- perhaps a two-parter in mobile here. You talked about some wins with your Iris 6 even before it was taped out? Can you help us understand the reasons for success? How broad will this be -- its success here versus some of the other prior wins? And then are you seeing any benefit from -- to some degree, whatever we're calling it the wind down of Huawei's small business that could help your other customers?

So, I'll take the second question first. Yeah, there's a mad scramble right now, in anticipation that Huawei will have a significant market share loss in the next six months to a year in their consumer business. And so there's a view -- prevailing view that most of those gains – if you look at the last six months of Huawei's business, we don't do business with them, but I am an observer. I think they still maintain a very healthy position in the global market. I think as of the end of Q2, they were the second largest mobile phone manufacturer, but they had concentrated a lot of that growth in their home turf, in China. As they are unable to address the market demand because of supply chain issues, a big chunk of their market is going to go to the other local suppliers, right? This includes Xiaomi, Oppo, and Vivo. As you know, we have concentrated a lot of our efforts on these companies, who are now accelerating to capture some of the market that Huawei held in Europe and Southeast Asia. All these companies were already strong market share participants in India, but they are now looking at opportunities to capture share where they hadn't really participated and improve their position here in China. With that said, I don't think it's just me. We're a small company. But, I think the large participants in this market are probably seeing strong order coverage over the next six months, probably to the tune where they are a little nervous that everybody thinks they're going to win that share. My guess is, my old industry, the RF suppliers and other people are probably seeing very strong order demand, and trying to discern who the winners are going to be and who aren't. And trying not to over-build. But in the near term, it’s going to feel like a very healthy market. Although, for those that will have the downside of not getting business from Huawei, maybe it’s more balanced. For those that weren't doing business with Huawei and only doing business with the others, it’s going to feel healthy. So that’s the market share shift we’re talking about. As far as strong interest in Iris 6, part of this is we've been now participating in the market, we've had enough healthy response, we've had really no negative response that anybody incorporating our solution in the phone. We've had strong positive feedback, for example, from TCL. There was a recent and this company called DxOMark does camera benchmarking, and they have now kicked off a display benchmarking test suite using similar principles. They evaluated all best-in-class phones and one of them was the TCL Pro, which is a $500 phone and they benchmarked it against Apple's top tier, OnePlus and Oppo phones we were in, and Samsung Galaxy S20s. This phone's visual experiences and its benchmarking were in the middle of the pack with some of its user scores better than the 11 Pro. This is due to adding in a very low cost, yet compelling solution from Pixelworks. It has been persistent engagement, strong execution, and it's nice to see that we're starting to earn the trust of some of these customers.

Okay, excellent Todd. I appreciate all the detail. I'll step out of the line.

Thank you. Our next question comes from the line of Suji Desilva of ROTH. Your line is open.

Hi Todd, hi Elias. So maybe following up on following questions with some of the China guys trying to export, take some of the share in Europe and so forth. Is there a difference we should think about your content for domestically targeted phones for China customers versus export phones, or should we think of them as fairly fungible?

Well, a little bit. I wouldn’t let me put it this way. Traditionally, on the tier ones, two customers that are now up in commerce, and I mentioned TCO previously, but no keys in this category and others, they focused on trying to use us to differentiate in the mid-tier pricing. What you'll see is these large tier one OEMs. The first and foremost area that they're trying to expand is in the flagship and high performance arena. If they’re trying to enter Europe, etc., they're trying to take some of that business that Huawei had in the flagship space. You'll see them follow up with mid-tier. Plus, I think, you clearly see a shift to lower ASP phones. I mean, some of the phones here, you know, I've gone around, and I've visited, you know, there are some Xiaomi has stores everywhere now, some others that appeal where people are selling through the quality of a $200 to $500 Android phone here is incredible. I mean, it doesn't have the newest APs, it may not have a 2K 120 hertz display or the best camera subsystem. But it is amazing, it will have a six and a half inch full HD plus screen, it’ll have a pretty good AP, all the connectivity. It’s going to be harder and harder for companies to sell a device over $1,000 just because -- not because people won't want to spend that kind of money, but because the differentiation between a $500 phone and a $1,000 phone is not as great as it once was. It just isn't. There is going to be a lot of effort to go differentiate in this mid-tier pack. But to get back to your original question, I think you'll see these companies go off and try to establish themselves with the flagship and the gaming high performance, but they'll follow up with them.

Got it. Okay. And maybe you could kind of circle back to the investment you got recently from MTM and what the implications are for your China mobile and TrueCut businesses, what that perhaps unlocks in terms of relationships and so forth? We could cover that, again, that'd be helpful.

Well, you know, I'm not going to go into any specifics. Maybe give you just a broad understanding. One of the things I've noticed here is which is different than what I see in the U.S., is as you become a public company, I mean, really, we this company, if you look at today's environment, it's like a startup. We’re a startup that happens to be a public company that has been funding these growth initiatives through, up to this point. Since my tenure here, we’ve been doing it through the cash flow from our mature businesses, right. And by doing some scrappy things with IP, etc., and raising cash outside of looking at external investment. Now, recently, we've gone out outside. The investment industry here, whether it may invest in public or private companies, is very much like, so the private equity is an active participant in a way that Venture Capital is an active participant in private companies in the U.S. This is a nuance that might be lost a little bit. Once you become public in the U.S., most of the investment that comes in are professional investors. Professional investors aren't really trying to help you improve your business. They're trying to figure out how they put your portion of the investment into a portfolio that serves their client base. It's a different dynamic here. They see a big shift going over the next decade. They're betting for the next decade, not for the next quarter or year. They are also well connected with the ecosystem and industry and if they can help your business and thus their investment, they'll do so.

Okay.

I don’t want to be specific here, but I’ve taken investment here for the reasons I just explained.

Okay. Fair enough. All right. Thanks, guys.

Thank you. At this time, I'd like to turn the call back over to management for closing remarks.

All right, well, thanks for the interest. It's early morning here and I'm going to go get a second cup of coffee. Enjoy your afternoon in the U.S. Thank you.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.