Ladies and gentlemen, thank you for standing by. Welcome to the Kuahong Semiconductor First Quarter 2026 Annual Conference. Today’s call is hosted by Dr. Peng Bai, Chairman and President, and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised you are in a listen-only mode. However, at the conclusion of the management presentation, there will be a question-and-answer session. At which time you will receive instructions on how to participate. The earnings release and first quarter 2026 summary slides are available to download at our company’s website, www.kuahonggrace.com. We’d also like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Thank you. Good afternoon, everyone. Thank you for joining our Q1 2026 earnings conference. Today, we first have Dr. Peng Bai, Chairman and President, provide an overview of our first quarter performance. We then take you through our financial results in detail and offer guidance for the upcoming quarters. We then open the floor for a question-and-answer session. We then turn it over to Dr. Bai. Thank you, Daniel. Good afternoon, everyone. Thank you for joining our earnings call. Kuahong Semiconductor generated revenue of US$606.9 million in the first quarter of 2026, a year-year increase of 22.2 percent, growth more than 30, 30 percent, a year-year increase of 3.8 percentage points. Both figures were in line with our guidance. Net profit attributable to shareholders of the current company amounted to US$20.9 million, marking substantial year-on-year growth. Despite the rapid capacity ramp-up, the company maintained high capacity utilization rates with strong performance across all process technologies. MCU, standard flash, and BCD products delivered the highest growth rates. The company’s results were supported by sustained efforts in cost reduction and efficiency enhancement, and by positive demand signals started at the beginning of the quarter and become stronger over the course of the quarter. The global semiconductor industry is undergoing accelerated acceleration transformation as AI and related applications play an increasingly central role in market dynamics. The unmistakable positive impact of AI on worldwide semiconductor market demand persists and certainty in the global supply chain landscape makes a more complex market picture that worth analyzing. Kuahong Semiconductor remains steadfast in pursuing its key objective of becoming a founder leader in speciality process technologies with the goal of continuing on market-leading positioning process technology capabilities and sustainably increasing production capacity scale. In the first quarter, the ramp-up of our core capacity progress steadily with this revenue contribution rising to 662.7 percent while our A-in production line maintained strong profitability. Meanwhile, the proposed acquisition of Huawei Micro has been accepted by the Shanghai Stock Exchange in the standard review phase. The acquisition is currently progressing according to the established schedule and is expected to be completed in the second half of the year. Finally, as the veteran of the industry, I remain confident in the brighter future for semiconductor globally and in China. I’m fully committed to making Kuahong Semiconductor increasingly important player in the industry and deliver sustainable value to shareholders. Now, I would like to hand the call over to our CEO, Mr. Daniel Wang, for his comments. Daniel, thank you, Dr. Bai, for your inspiring comments. Now, let me walk you through a summary of our financial performance for the first quarter. We then provide revenue and margin outlook for Q1 2026 before opening the floor for Q&A session. First, let us review our financial results for the first quarter. Revenue was US$606.9 million, 22.2 percent over Q1 2025, primarily driven by increased revenue and improved average selling price, and a 42 percent over Q4 2025.gross margin was thirteen percent, three point eight percent over Q one twenty twenty five. primarily driven by improved selling price and cost reduction efforts, and flat with Q two two hundred twenty twenty five. operating expenses were one hundred five point six million dollars, eight point eight percent over Q one twenty twenty five. primarily due to increased operating expenses for new production line, which eighteen point nine percent lower than Q four twenty twenty five. mainly due to decreased labor costs. other loss net was two point four million dollars, seventy point five percent lower than Q one twenty twenty five. primarily due to foreign exchange gains versus foreign exchange losses in Q one twenty twenty five, partially offset by decreased government subsidies, increased income, and increased finance costs. it was other income net of three four point one million dollars in Q four twenty twenty five. mainly due to increased finance costs and decreased government subsidies. income tax credit was four point seven million dollars, primarily due to reversal of dividend withholding tax for twenty twenty five. net loss for the period was seventy point three million dollars, nearly by sixty six point nine percent compared to Q one twenty twenty five and seven point five percent compared to Q four twenty twenty five. net profit profit attributable shareholders of the parent company was twenty point nine million dollars, four hundred fifty eight point one percent over Q one twenty twenty five and nineteen point nine percent above Q four twenty twenty five. basic earnings per share was um one point two percent, one point two percent. annualized ROE was one point two percent. now let’s take a closer look at Q one twenty twenty six revenue performance. from a geographic perspective, revenue from China was five hundred twenty five point two million dollars, contributing seventy nine point five percent of total revenue, and increase of eighteen point seven percent over Q one twenty twenty five. mainly driven by increased demand and C U other power management C five and I B T products. revenue from North America was eighty five point seven million dollars, increase of fifty one point nine percent over Q one twenty twenty five. mainly driven by increased demand for other power management C and C products. revenue from other Asia was twenty point two million dollars, increase of five point two percent over Q one twenty twenty five. mainly driven by increased demand for C products, partially offset offset by decreased demand for supercharged products. revenue from Europe was twenty one point eight million dollars, increase of forty three point two percent over Q one twenty twenty five. mainly driven by increased demand for smart C I B T and C products, with respect to technology products. revenue from embedded and automation was one hundred eighty four point six million dollars, increase of forty one point seven percent over Q one twenty twenty five. mainly driven by increased demand and C U and smart C’s. revenue from standalone automation was sixty seven point one million dollars, increase of thirty three point two percent over Q one twenty twenty five. mainly driven by increased demand for flash products. revenue from products three was one hundred seventy point nine million dollars, increase of five percent over Q one twenty twenty five. mainly driven by increased demand for I B T and general mass products, partially offset by increased decrease demand, chiefly for supercharged products. revenue from logic and R was seventy four point four million dollars, increase of eleven point four percent over Q one twenty twenty five. mainly driven by increased demand for logic and C S products. revenue from analog and power management C was one hundred seventy three point nine million dollars, increase of twenty five point eight percent over Q one twenty twenty five. mainly driven by increased demand for other power management C products. now let’s turn to our cash flows statement. net cash flows generated from operating activities was one thirty two million dollars, hundred ninety nine percent over Q one twenty twenty five. mainly due to increased receipts from customers. it was forty seven percent lower than Q four twenty twenty five, partially due to increased receipts of government grants and increased payment of labor costs. capital expenditures were nine twenty four point nine million dollars in Q one twenty twenty six, including eight hundred eighty six point one million dollars for power line expenses and thirty point seven million dollars for power age. other cash flows generated from investing activities was sixty seven point nine million dollars in Q one twenty twenty six, including fifty seven point eight million dollars decrease time deposits, ten million dollars interest income, and the hundred thousand dollars proceeds of disposal equipment. net cash flows generated from financing activities was six thirty point seven million dollars, including six hundred forty nine point four million dollars proceeds from bank borrowings and three point three million dollars proceeds from share option exercises, partially offset by four point one million dollars interest payments and one point one million dollars lease payments and point eight million dollars of bank principal repayments. now let’s look at the balance sheet. cash and cash equivalents was four billion eight hundred sixty seven point nine million dollars on March thirty first twenty twenty six, compared to four billion eight hundred ninety three million dollars on December thirty first twenty twenty five. other current assets increased from seven hundred eighty seven million dollars on December thirty first twenty twenty five to eight hundred ninety four point six million dollars on March thirty first twenty twenty six. twenty six million dollars increase in cash and cash equivalents. property plant and equipment was seven billion one hundred five point nine million dollars on March thirty first twenty twenty six, compared to six billion six hundred sixty six point four million dollars on December thirty first twenty twenty five. primarily due to capital expansion in power management, interest bearing debt volumes increased from three billion one hundred ninety point eight million dollars on December thirty first twenty twenty five to three billion eight hundred ninety seven point two million dollars on March thirty first twenty twenty six. primarily due to increased drawdowns of bank borrowings. total assets increased from one fourteen billion four hundred three point eight million dollars on December thirty first twenty twenty five to fourteen billion nine hundred seventy three million dollars on March thirty first twenty twenty six. total liabilities increased to five billion six hundred sixty three million dollars on March thirty first twenty twenty six from five billion two hundred eighty nine point five million dollars on December thirty first twenty twenty five. that ratio increased to thirty seven point nine percent on March thirty first twenty twenty six from thirty six point six percent on December thirty first twenty twenty five. finally let’s take a look at our second quarter. all for Q two twenty six. we expect revenue to be raised from six hundred ninety million dollars to seven hundred million dollars, with a projected gross margin of fourteen percent to sixteen percent. this concludes my financial month. we now begin the Q eight session. operating expenses. operating. 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Okay, thank you. And just uh, looking at the level of price, uh, how how you will expect uh, the level of price change over this year, uh, and the which type of situation may be may be higher change to for the for the price level. So since we have a a worst portfolio of of technology problem, we do see the price changes, price increases, very across the problem. The ones in higher demand uh will see higher price increases. Uh, the ones that the demand are somewhat muted, the will will probably try to stay where it is, or just uh with with very minor increases. The next result is the average. I do see a uh, I do think it will be consistent with the industry average of the ten percent. For instance, some of the year, uh, due to the price increases, it takes time to implement. Yes, the we, increase the prices, is the reform that they forward as the new prices, and so that they will take a a some time to fully materialize all the the increases to have them fully reflected in financial results. But due to course this year, the will definitely will be seeing a average, some will increase more, and some the uh we will we do the many based market is the market and uh, market and if you see other demand can can survive with you, we do tend to increase prices a little more. So some problems may be up twenty percent, twenty five percent, but some will be close to zero and the, five percent average. Uh, I do think the ten percent is reasonable, something or ten fifteen percent this year. Come on there. Thank you.啊。
memory is one of the problems that increases probably over the average. Okay, thank you, Doctor. Thank you.。
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