00:00We know that the optical module prices have been skyrocketing right amid this
00:04strong demand for AI. Where are you seeing any shortages in terms of raw
00:09materials and components in your supply chain right now? Currently, yes, there are
00:15some raw materials, for example like electrical IC, like a DSP they call that
00:21digital signal process IC. We do see the some shortage at the beginning of this
00:28year. But I believe we saw like for the next summer months, for the next year,
00:37we'll get better. And for the other shortages because the demand, I think, goes
00:46too quick. And for example, like in the fast fast based lasers also has some
00:54shortage. How much is it pushing up your cost of production and how is it affecting
00:59your output and your margins? For sure, the price from the raw material getting
01:09raised up. So... By how many percentage can you give us a guidance? They call like
01:1720 percent, sometimes even like 30 percent. It's a cost of our price. But we try to like
01:28reduce our bump cost and also our fabrication cost to reduce the total cost. But a good thing is like
01:41this year,
01:44the demand right now is huge. And nobody will ask for the lower down the price. So it's good news.
01:51So you can pass on the cost to your client? Yes, yes. Right now, I think it's even.
01:56Let's talk about the speed of transmission because that is crucial in getting your big clients. And right now, the
02:02market
02:02leader is producing mass producing 1.6 T. I believe you're only producing 800 G. How are you able to
02:10close
02:10that technological gap?
02:11First, we start to select the one, I think the one key technology that we call the ceiling
02:23photonics. And we kind of we all in ceiling photonics from 2020. So at that time, we start to build
02:34our own
02:35ceiling photonics platform from end to end to end. That means from like ceiling photonics PDK design,
02:46and the ceiling photonics chip design, and then from ceiling photonics wafer level testing, and then we design and build
02:58our own
02:58ceiling photonics based off the engine and off the transceivers. So that's, uh, uh, uh, I think the
03:05world key technology for, uh, uh, uh, achieving, like, uh, higher speed, uh, obviously, uh, like, uh, 800 G,
03:12and even 1.6 T. Have you secured, uh, uh, long-term, long-term contracts from your clients? Are you
03:19able to share?
03:19What are some of the big clients that you have? Yes. We, uh, right now, we, uh, we have, uh,
03:25several, uh, uh, big, uh,
03:27hyperscalers working with us, and also we are, uh, GDM partners with, um, GDM partner means, uh, joint development
03:37manufacturer. That means we work with our, uh, uh, the, uh, the hyperscalers together to, uh, co-develop the, uh,
03:47the customized, uh, higher speed, our next generation of the transceivers. For example, like the 1.6 T, uh,
03:55of the transceivers, uh, and also the MPU, uh, uh, that, um, that means, uh, uh, uh, near co-packaged,
04:02uh,
04:02uptakes. How much production capacity are you going to add in the coming years? Uh, that's, uh, at least
04:08the triple times, at least. Wow. Okay. And are they all going to be in China, or are you looking
04:13to expand,
04:14open up factories outside China? Uh, uh, for, uh, uh, from right now, we will, uh, uh, uh, uh, China
04:21-based, uh,
04:22uh, part of Ireland first. And, uh, uh, start, uh, uh, from the beginning of next year, we will start
04:29our, uh, uh, overseas, uh, part of Ireland and also we will build our overseas sales network.
04:35Where are you going to open up overseas? Uh, overseas, I think, uh, most likely in, uh, southern
04:41east, uh, Asia. Okay. And which is your most important growth market right now? Is it still the U.S.?
04:46Uh, I believe so, but still, uh, we, we, we, we saw, we already saw the, uh, uh, the,
04:54uh, the, uh, the, uh, even a huge, like, demand from China market.
04:58Can you give us what is the projected annual growth and demand that you are looking at?
05:02Uh, I think, uh, uh, at least the double from, from this year, for them, for, for next year.
05:09Yeah. Double. I believe that you're still relying on some third-party components like your EDA
05:14software for chip design that comes from the U.S. How are you going to secure your supply chain
05:19if there are any geopolitical headbands? Uh, right now, we also have the, uh, uh,
05:25the U.S.-based, uh, uh, foundry to, to develop our own silicon photonics chips. So that means also
05:34we work with, uh, also with, uh, with the U.S.-based partners as well. So we, we work together
05:41with the U.S. customers. So there's, uh, I haven't seen any, like, limitation of
05:46restraint for that EDA software or other stuff.
05:50Your net losses are still expanding. How are you going to close that and, you know,
05:56reach profitability? Uh, uh, I think the current, actually, net loss is from our, our
06:08limited, uh, production, uh, capacity. You know, you know, right now, we, at least,
06:13the triple of our product, uh, line, capacity. We definitely will have, uh, uh, uh, very good
06:19profit. When do you think you can break even? Uh, this year. Okay. Uh, are you concerned
06:26that there has been so much capex going into the AI data center build-out? Are you concerned
06:31that there's a bubble building and maybe you're over committing to this, you know,
06:36big growth rate that you are making assumptions on? I think, uh, probably some, uh,
06:42of the concerns from the plugable, uh, transceivers. And, uh, people are thinking
06:48about, um, maybe they are so over-powering capacity for the plugable transfer. But, uh,
06:55right now we are focusing on the co-packaged optics, for example, MPO and CPO, and all
07:01from the silicon photonic-based, uh, uh, up to interconnect, uh, the products. And we
07:08don't need, like, uh, uh, uh, build our own fiber. We use, uh, like, commercial, uh, uh,
07:16like the fiber. And we can build our own chip. And for, like, silicon photonic-based, uh, uh,
07:25products, uh, interconnection products, we can share the same silicon photonics
07:30platform. So the capex-wise, I think, uh, is not a big issue. How are you going to
07:36compete with the global front-runners, whether it's U.S. companies like Lumentum
07:41or the Chinese ones like Zhongji, you know, like, uh, we don't, like, compete with them.
07:49Um, and I, I think we just use a different, uh, technical solution. Like, for, uh, what
07:55I will talk about just now is that we're all in silicon photonics, the, uh, uh, technical,
08:01like, solution. Wherever, like, the optical transceivers, we all use the silicon photonics,
08:06uh, uh, to build them. And, uh, for, like, uh, MPU, right now we are focused on the MPU and
08:13the CPU is kind of the, uh, optical integration for AIDC. They're all from the silicon photonics
08:19based. We just focus on this, uh, this technical solution, not like the other people. They
08:25have the ML-based solution. They have the different kind of, uh, technical solution. But
08:30for us, we just focus on just one technical solution.
08:34Okay. Thank you so much.
08:35Thank you so much.
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