Yahoo Finance

Question and Answer Session

Operator

And ladies and gentlemen, we will now begin the English question-and-answer session. (Operator Instructions)
Al Wang, HSBC.

Al Wang

This is Al Wang from HSBC. So my first question is, can you share the product mix for the first quarter and the outlook going forward to the second quarter?

Ji Zhao

Okay. Good afternoon, everyone. So the first question is about the Q1 product mix. In the Q1, our DP product line is slightly above 35%. Our PS or high-speed port line is under 50%.
Our TC or soft driver is slightly above 10%, and our tTED is lower than 5%. And then moving forward, we continue to see the strength of our PS product line on the high-speed side. And the DP on the Tecar and soft driver or our integrated solutions are leading to change to recover our DP product line.

Operator

Daniel Jen, Morgan Stanley, please.

Daniel JPY

Hello. Hi, good afternoon, Jack and Yu Ming, could you hear my voice?

Ji Zhao

Yeah, very clear.

Daniel JPY

Yeah, thanks for taking my question. So maybe to start, I want to focus on your guidance on your second quarter outlook. I think during the opening remarks, you mentioned about right now, the tariff is adding some uncertainty on your near-term outlook. While you are guiding the revenue on USD basis sequentially to be flattish. So I'm just wonder because as we can see from the market in the very near term, because of the tariffs, there could be some pull in demand, for example, for PC and also for some of the other devices. And you mentioned about uncertainty.
So I'm just wondering how do you see the tariff impact in your second quarter? Is it a positive? Or is it a negative? And how should we think about if there is any change on our tariff, how will that impact your second quarter guidance? It will be my first question.
Thank you.

Ji Zhao

Okay. Thank you. And I think the bottom-up work we did is at the beginning of the tariff announced on the April 2 time frame. So when we provided those guidance, and the situation remains a lot more unclear at that time. And the team had a kind of dramatic change, we had the reciprocal tariff at the beginning at which the rate was very high.
. And after a few days, we had the 3 months delay, and we immediately see customer request to pull in. And then we heard being announced the PC notebook that get an exemption from the tariff. So while I've been in the Taiwan for week and China as well. And we feel the customer is now getting pretty calm, I want to say.
We do see some points on the Q2. On other hand, customer looking for more long-term solution. However they do to address the potential the tariff and for different areas, this the customer now is getting more rational or solution oriented to address long-term issue. On a particular Q2, and as we said, the uncertainty, those uncertainty could be positive, could be negative. So far, it looks like the more positive than negative for particular Q2.
We don't know what we'll end up with, and we just try to meet, do our best to meet our customer needs because some of them are pretty rushed the point. And longer term, and we actually take a quite conservative view as we think those tariffs in the longer term or uncertainty may will impact customer behavior, I mean, end of customer behavior.
So like many -- our customers, we still remain remain to see what's going on. But in the Q2, at this moment, I wouldn't think more negative than necessary, but I think probably in terms of positive side, and yes, we just try to do our best to meet customer needs. So that's what we have

Daniel JPY

So to follow up, could I ask -- so you mentioned about there are some I think, more negative versus -- I'm sorry, more positive versus negative and you also mentioned about some pull in. So I'm just wondering -- so for our 2Q guidance, essentially, we are looking at flattish. Could you give us what -- which product line is up sequentially or which product line is down sequentially?

Ji Zhao

In terms of each segment, so far, I would think that it's flattish because Q2 in the normal seasonality is a weak period, right? It's a weak Q and so we think the flattish versus Q1 is on the positive side compared with normal seasonality if there were no -- the tariff or nothing, and we're pretty happy with our -- the guidance. . I think we continue to see the -- our PS product take strength and demand is high. And we start to ship our DP integrated solution with -- in the later of Q2.
So I would think though where DP is in the recovery, the period to become our business and with our integrated solution. So overall, I would think the -- in the -- in terms of percentage of business on each segment are more similar as Q1.

Daniel JPY

I see. I see. And to follow up, I also want to console your view of the overall -- maybe the PC market? Because I always remember like I think before the COVID, you were the very first one to call out. The demand for PC will not be just lasting for 1 quarter, it could be last for several quarters.
I always remember your view. So right now, I think we are already maybe 1 year after all these ARPC launch, I think from different platforms.
So I'm just wondering, from your perspective, maybe to -- I think tariff macro is complicated, but just looking at the ARPC or the overall PC market, do you expect ARPC this year or any like Window end of Windows 10 could drive the acceleration of the PC replacement? Or you don't see that? Yes, I'm just wondering, from your perspective, how would you see the market?

Ji Zhao

I think the ARPC in particular and since launch last year and generally a period of momentum of shipments, and we strongly associated with that business. ARPC has been get a more significant applications and I think the demand for ARPC will increase.
One of examples you will see is a concentration segment and which is more towards the high end will be start to replace by ARTC. And I think we will see the new platform with very high the calculation power and I mean very high tops will start to address the first segment on the content creation segment.
There are the AI heavy segment. And those -- the content creation, the tool software are ready to take advantage of the AI provider feature, right? So those are good. And I can identify a few of the particular area, the AI provides the significant productivity improvement and case and create a entertainment, the features and that previously the notebook cannot do.
So those are the first thing. And we are particularly associated with the newer the content creation segment. And we foresee to see those will have a increased demand or those content creation, the PC or notebook will have higher the price because the feature rich, right? Gradually U.S. see the AI think become a hobby for many consumer space, right?
So the -- now we see more and more people to use the ARPC for milli minutes and so on and so forth. And I'm kind of positive to see those will continue. And we -- as we understand, you'll see a few of competing platform come out, try to address the high tops the PC segment, so that will become interesting to observe. And so that's the -- what we view as a positive and it will happen in the high end for content creation segment and so on and so forth.

Daniel JPY

Thank you, Jack. So from your perspective, do you think this high top platform new ARPC will be announced during compu techs?

Ji Zhao

Yes. As for there will be 1 platform with the U.S. with Tower joint design together, and we are glad to associated with the multiple chips on that particular system. And I think we are all very busy to make the -- reach the production. And besides that, we also know other customers and also other OEMs are to work on those areas.
And those content creation demands much high speed, and we will need a lot more high-speed device, and we're happy to see those on will happen.

Daniel JPY

Thank you, Jack. I will be back in the queue.

Operator

Lucas Liu, KGI Securities.

Lucas Liu

Can you hear me?

Ji Zhao

Yes

Lucas Liu

Okay, the first question is a follow up for the overall PC and maybe IT market, and, I would like to ask if you're still confident that like, Windows 10 EOL, and such as the COVID-driven replacement cycle will still be a meaningful tailwind for for the overall PC and IT market for this year and next year.

Ji Zhao

If you talk to the customer, people who like Microsoft, and they think there will -- the cycle will stop. And they are prepared quite a lot of things to enable the next wave of transaction. And certainly, we are happy to see those will happen. However, as we said the tariff situation may impact those transactions and hope that now. But the current platform of PC is gaining getting tired or start to be obsolete.
And in terms of today's the AI or other functionalities. So yes. I think we will see those things happen in particular, the Microsoft push very hard.

Lucas Liu

Got it. It's very clear. And just curious about the recent tighten U.S. tariffs. Is there any -- can you share more about the observable change in customers' behavior?

Ji Zhao

Could you repeat?

Lucas Liu

Can you share more about the change in customer behavior due to the recent tariffs?

Ji Zhao

I actually at the beginning of remarks, I didn't -- we have not seen customers make any significant change on their behavior and you may see some of the pull in in the short term in Q2. And you also see customer stop their new facility outside the Asia and particularly in the Mexico and they will take a longer shipping time, so demands the shipping product earlier. And the afterall, customer pretty calm as I said, and they have developed more long-term solutions. And after all, the U.S. market, which may impact tariffs but impact by tariffs, the percentage is like overall 30 -- 30-something percent of the notebook PC and the customer would just focus on this to address those issues and so we are happy to support them for those transactions.
And so as we talk to our board, our management, we are in California and have a resource in California. It will be very true in the near future. We need FAE to go to Mexico to support their production.
And as we do currently in China, and so it won't be surprised and a customer will ask us to provide support resource over there. And in fact, I had a review with our major distributor. And we also talk about this, how they to arrange the support resource and how we train the support resources, and they are the first line of support resource and how we will support them afterwards.
The first thing is we're in California. So it's okay. We build the support resources in to Mexico. It's pretty convenient for us. We used to do that to support.
There are periods of time, the TV manufacturing in Mexico, and we did not support them. But yes, let's see how the whole manufacturing floor goes, and we are ready to support.

Lucas Liu

Got it. Thanks. And regarding to the pricing pressure issue which we have mentioned in the previous earnings call, is there any change in with the pricing or within the pricing pressure across different product lines?

Ji Zhao

No. The price, the cost always is an important factor for our business. We have not seen particular people ask for price reduction because of tariffs. No. So far, we have not.

Lucas Liu

It's very clear. And another -- we have said that ASIC project maybe a potential gross margin driver in the future. And we have 6 nanometer test chips so far? And are there any notable breakthroughs we see in the ASIC business for Parade?

Ji Zhao

We have been doing the ASIC alliance business for quite a long time, right? And we -- in the Q1, we had our high-speed 6-nanometer test chip come back and not only 6-nanometer, 12-nanometer as well. Both are working very well. And so we verify our high-speed and very happy to see those great results.
We shared our results with our customers, and they are pretty happy. And we pretty much so we will have some chip and built on the 6-nanometer soon. And -- but the project may take a longer time to do. And so yes, 6-nanometer to us is no longer a barrier anymore. And so in fact, we are happy with the 6-nanometer capability for low power and high speed.
And so those are good. And you wouldn't be surprised we will move further and to take a lead on those opportunities in the -- there will be more opportunity come up. And so as -- since we have many high speed the IPs, right? We talk about -- we put more completed high-speed IPs than anybody else. And so customers look at the opportunity and like to work with us for the other opportunities.
So we're happy to work with those Tier 1 customers. Of course, those -- once you do the 6-nanometer or beyond, you have to justify the project size and to justify the mask cost, right? So those are expensive, the customer, or I understand.

Lucas Liu

Okay. The last question following the IC business. And can you share about that basic how well it takes for the projects to take more take off and to take out? And when do we expect to see like projects to have NRE revenue contribution at the earliest?

Ji Zhao

You mean the project, well, the consume those mask costs. I think the project starts on the development to the production 1.5 year to 2 years period. And those are will be higher price to justify high volume to justify the mass cost and you probably won't know the master cost that we're talking about for 6-nanometer, USD 8 million to USD 10 million. And moving forward, more expensive and the wafer also quite expensive. So yes, you have to do significant project to justify that.

Lucas Liu

Got it.
Thank you. I'll be back to the.

Operator

Anthony Lau yuanda.

Anthony Lau

This is Anthony Lau from Yenda in using like continuous trend through the supply chain dynamics. So I have the following 3 questions. So the first one will be like historically that we are extremely consistent to the overall PC market. And we also talk about that the PC vendors or our clients now behaviors had some changes, but not a lot. But overall, do you think in this year for the overall PC market, the seasonal pattern will change a lot comparing to last year?
Do you think maybe second half of this year, PC shipments or orders to be flattish compared to the first half of this year?

Ji Zhao

We hope not. We hope the normal seasonality of the second half much stronger in the first half. That's what we call a normal seasonality. However, this tariff situation change could be base or very quickly. Good thing is the U.S.
new administration and now start to behave more practical or more work with the company worked with the corporation and I would think a lot of people love on them as well.
And if there is any tariff, we hope is a rational small amount, more significant amount allow the industry to behave, change, to make sure end customer would not see the price increase. And if we can achieve those, I don't expect a significant change from the previous years. But certainly, we don't know. And we hope that we wouldn't have the same situation as April 2 because of a April 2, everybody got shocked, that happened before, and we think the administration will be a lot more considerable what our impact would be and to announce to change things. Yes, after U.S.
did not produce any of notebook PC or consumer product at this moment, it didn't make a lot more sense to do this. And because it didn't increase any employment or anything in the U.S. And so rather it may cause the consumer to pay more.
And -- that's -- I don't think the administration -- the current administration wants to see this. So let's keep a positive and hope that, that wouldn't impact. But I knew that include our distributors and others and all product project U.S. will go to the recession in the Q3 and Q4.
And I joke with the people you guys are a lot more than the U.S. and everybody tried to think in the U.S. will be become a recession. I wouldn't do negative on this. And I hope the government will be much more smart not to go to the recent because of tariffs.

Daniel JPY

Yeah.

Unidentified Participant

Strongly agree, and it's really hard to predict the macroeconomic issue or politic issues.

Ji Zhao

Yes. I talked to the Asian distributor. I understand they are all projected U.S. work on the session. I talked about that.

Anthony Lau

Just take -- maybe just turn to our store business, but not just focus on the overall macro dynamics. So if we focus on our high-speed product line, can you provide like any update to the USB for sales contribution this year because we have the complete product portfolio and also can can you also share any kind of changes for the competitive landscape for the USB for repeaters market?

Ji Zhao

We are since our year before introduced. We're doing quite a lot and quickly became our #1 high-speed product line contributor to our revenue, and we'll continue to see in the models because our maturity of product and a bit because the -- our competitors keep finding the issues. And so our approach to the USB retirement, not a single device, we now offer end-to-end product line, which means we will offer not on the notebook soft side will offer on the monitor the receiving side. And so our new product, PS10 USB4 hard and generate a huge interest in those segments. And we are offering a driver for cable.
And so we're basically offer the complete solutions, and we think that strategy works out reasonable well because U.S. before eventually were dominant everywhere. . And in addition, our USB for 280 gigabit per second chip already working with the key the SoC or PC, the CPU suppliers, and they are all in the process test our USB4.2 80 gigabit per second and the test chip. And those are the -- we continue to show our customers that we are capable to do a lot more than the -- what they can expect.
Certainly, on the USB4.2 80 gigabit per second, we might offer more different category device. And so USB will offer a large the end-to-end approach to every piece of USB4 area we will have our device there. So that's our strategy. . Our high-speed side, besides the -- we talk about notebook -- notebook monitor and maybe a down, we are successfully moved to the automotive and quite a lot of automotive wins with our high-speed device.
We penetrated to the server side as well. Our recent acquisition as we discussed the Spectra7, the those ultra high-speed silicon demand solution intend to address the data center the cable market. So those are our total solutions. So those are our approach, we continue to expand our high-speed portfolio.

Anthony Lau

I see. It's very clear, Jack is the elaboration about the high-speed product line outlook in the future is very is very bright. And because we just mentioned about the USB4 for 2 like this repeater. And we are also working with the scale vendors. So because Qualcomm competitors, maybe we can say end vendors plan to launch their CPU in the coming quarters for ARPC.
And are we more optimistic to the overall AIPC market after this vendor's product published in the market? And also can -- can you also -- do you also think like this vendor's product to generate mindful business upside for us in next year?

Ji Zhao

I think we are very positive for their systems. And those systems are so powerful and new systems so powerful. And the typical data request required 2 to 3 retirement device. And in some cases, they even need a driver on a motherboard. And so because those notebook tend to larger size.
And yes, I would think those content creation, the AI-oriented notebook will have a good share of the market and our device associated with it, will have a lot more to go.
And we also see -- we are focusing U.S. before retirement on the system. On those systems, in some cases, they also need PCIe Gen 4, Gen 5 driver and we already have opportunity or design cases and all those the notebook with our, PCIe Gen 5 Gen 5 withdraw. So we are pretty positive to work with those high-end segment, and we think we're working a lot of the shares and just as an emphasis as a company strategy, we think we have a good share of our PC notebook on the high-speed side. We moved to the motor side, we move to the automotive.
We move to the server and those are related. So we are really broadening our high-speed devices.

Anthony Lau

Thank you, Jack. It's very useful and very helpful, and now back to the queue.

Operator

Evelyn Yu, Goldman Sachs

Evelyn Yu

I got 2 questions here. So first of all, I wonder if we can talk a little bit more on our acquisition of Spectra -- so what exactly are our new product or market segments will we be targeting? I think you mentioned a little bit on data center cable market. And I also want to know what kind of synergies should we expect? And how will it be reflected in our revenue or earnings?

Ji Zhao

Okay. The Spectra7 we announced -- in fact, we just closed the deal and either today or yesterday. And so Spectra7 officially not part of Parade. And we are proud of and we are happy at this case. And Spectra7 in particular, the product are in the data center ACC cable.
And they are shipping and all Parade will continue shipping the data center solution for 200 gig the cable, which implies of their parts.
And they already introduced their 112 gigabit per second. So we might jump on the weapon to 400-gig, the cable system. And they have the design ready to tap out for 224-gig system and the device. So we are right after acquisition, we'll take about this 224 device. And they have a very unique design.
And we feel they have the unique edge with patent protected to allow us to market higher-speed ACC cable segment. And this is the new even play did our silicon solutions and for more the USB or lower speed, for example, 56-gig. But for the ultra high speed, we think that their solution has a uniqueness there.
Moving forward, and the team, we will continue looking for the data center, cable solutions, whether the more advanced one and because we are in the silicon germanium and we can imagine to do a lot more than today's.
And the best thing is we have sufficient -- the cash can invest in this area. And yes, we are looking for they are shipping data center device, and we all reach out the fuel for data center, the cable and ROC solutions and our customers or potential customers are happy we acquired Spectra7. And we've got a comment from the customer that they say that Spectra7 had a pretty decent or good technology compared with the competitor. And however, they had financial issues and we pretty come in to for the supporting financial side, and that's the stable financial. That's the customer very much like the what we are doing.
So Yes.

Evelyn Yu

So how should we model their financial potential impact? Or how should we incorporate in our models?

Ji Zhao

The spending side is very limited because there are not too many people there. And the importer is not much expensive. You probably can get a detailed number afterwards, talk to the Yo-Ming certainly, the revenue they are shipping is not that big revenue. And compared with our revenue, so that's not that big. But potentially, we might be able to capture much more as we have a much bigger sales force.
And we know a lot of the people that they have. But they actually have a unique technical ability to reach a lot of the the people who are doing the cable side include the optical side. And with our team with them to attend the just finished the the optical, the OFC conference in the U.S., and we're surprised to see how many people know the Spectra7. And so we're happy with that. And we think, for us, the deal for us to still, and we're glad we did it.
And so let's see how much we can use that asset to grow our business. And we put our sales and the marketing resources together with them in the U.S. side, let's see how we do it. We cannot promise too early, but let's see how we do it.

Evelyn Yu

Okay. So my first -- sorry, second question will be. So previously, you mentioned we faced some competition from TI. I think we mentioned that last time, which impacted our margin somehow for high-speed interface segment. But I would like to know, after the tariffs that China has imposed to the U.S., have you seen any easing competition on this front?
Or have you observed any new opportunities, especially in China market?

Ji Zhao

Yes. Last time when I talked about the TI with a lower price, surprise and the customer fund the TI actually had a buck there. So it's not the call tariff. And it's because of that above and a lot of customers switch back to us. And overall, we hear the whatever the tariffs on the U.S.
the semiconductor.
Also in Shanghai last week, I also heard that the China government did announce it, but China custom did not announce it. And the answer from the China customer was you have to wait to see we announce it. Yes. If you noticed, so far, China cluster has not announced anything for U.S., the chip for tariff so far, is doing as it is. So I really don't want people to do that.
That's the -- it's not ended. So -- so maybe short term, we've benefited some of us, but long term, we wouldn't do any good.

Evelyn Yu

Okay, thank you.

Operator

[Hus] UBS.

Unidentified Participant

Yes, hi, management team. Good afternoon and thanks for hosting the call. A couple of questions from me. The first one is regarding your second half outlook. I understand that there is a lot of turmoil in the market at this stage. But would you be able to provide some initial thoughts as we start to look at second half outlook?
Historically, I think the pattern has been like 43% to 48% in first half versus 52% to 57% in second half. Do you think that is still like a reasonable assumption to make or some pull in already happening in second quarter. And so the second half outlook may not be as strong as seasonality?

Ji Zhao

If you ask me at this moment, I wouldn't -- I think that remains similar as the previous years on the percentage, -- it's because I don't have more information to provide on the tariff on the impact, really, you heard a lot of things and -- but you have not heard materialize anything changed. And this other said, the Taiwan distributors project the U.S. will become a recession in Q3 and Q4. I'm not particularly agree with that.
And so if we ask me today, I was saying the things should be similar as previous years. However, that could be long because it's really subject to the other tariff situation. And yes, I hope U.S. don't go the recession, okay?

Unidentified Participant

Okay. Yes. Just on that, if you could also share your end market exposure within U.S. domestic market versus your rest of role or the China exposure. We understand probably you can share the direct customer exposure, but I just would like to hear your view regarding the end market exposure, if you could share the detail.

Ji Zhao

It is not -- it is like the OEM, the PC and the market. And the OEM depends on who they are and some of them more, some of them less. But overall, probably the extra it's about 3 a little bit more than 30% to the U.S. market. I think we have no reason to think what's the difference from us.
We think we probably will take a similar percentage because we are providing the chips to the older OEMs on PC and notebook market.
The best thing is, at this moment, everything exempt, right? So the -- let's see how it goes. And I would think the people like Apple committed $500 billion of AI, the contribution for U.S., the infrastructure side. Those are the meaningful and hopefully, will become a way for other people to make a decision. Last Trump administration for everything got exempt.

Unidentified Participant

Yes, totally agree on that. So we'll see what is going to happen. But I think just a quick follow-up to your own business. On a full year basis, just based on the historical seasonality and then you expect it play out as it is in the past. Do we think it is reasonable to assume that you will still be able to grow double-digit year-on-year for sales this year?

Ji Zhao

We don't know. And especially on the tariff there. It's to make everybody nervous, but we do think the uncertainty is there, it's will reduce the demand for customers. I hope those uncertainties were getting clarified very quickly and the longer time to hold uncertainty there. The worse for the market.

Unidentified Participant

Sure, sure. Yes. And my second question is really about your profitability. First, on the gross margins. How should we think about the trend for your business as you guided within your long-term range of 42% to 46% for the current quarter?
And given all the major uncertainties and mix shifting toward your largest customer at lower margins, but the price discount, you could also potentially benefit from your boundary partners who are trying to their capacity right now? So would the guidance you just provided for second quarter on the gross margins, do you think it could end up to be in the upper half or the lower half of your -- of your guidance?

Ji Zhao

I would think that our -- keep our long-term gross margin and tax and will be stabilized, which will be good for the analyst for market as well. We certainly hope the gross margin can go up and with our product mix there. The drivers to the gross margin not increase is really the competition on the panel side and the panel side, people are people much more aggressive when willing to sacrifice their gross margin somehow compared with others.
And our solution really is we develop a new architecture, for example, our ink solution and integrated and our tTED, and those start to show the the real revenue strength and we have successfully made a customer to large adoption our tTED solutions.
And so as our Tier 1 customer getting very interested to do those in-cell solution if people are moving panel industry moving to those integrated solutions and we think will be a benefit because the device is so complicated and now have a formwork there and they have a security there.
And it's a lot more sticky for the solution rather than today, the everybody can change everybody. And that's become the price competition is really become headed from the low medium end of China supply.

Unidentified Participant

Yes. And very exactly my follow-up question, just on the competitive landscape in the time -- more and more our. Yes. I mean just more of your peers, no matter is in China or out of China, your display driver IC peers try to penetrate into the high-end timing controller market, along with their display driver ICs. So would you actually be worried about the potential market share shift in the near term with -- especially with your largest customer?

Ji Zhao

That's what we said. No, I don't worry about our largest customer because we keep doing things and getting very significant advance. And I don't think there's a competition there, okay? Let's go very, very deep micron. So I wouldn't worry about our -- the stands customer at all.
And the real thing for our -- for the normal DHL type of customer, the strategy for us to get off the price, the exurban competition there is go with our integrated solution. Okay? We successfully get our -- the in-cell solution. We will have a mass pretty good volume for the tTED device. So those are -- we try to out of the this competition side of it.
Otherwise, it stays with those. Yes, your margin impact a lot. But after the panel, regardless to the panel gross margin is not -- as cannot compete with the high-speed PS part.

Unidentified Participant

Okay. Got it. That's very clear. And my last question for this call is just on the operating expense. Given all the macro events going on, would you update your expectations for full year operating expense outlook for this year?Thanks.

Ji Zhao

No. We didn't do much because Spectra7 cost is kind of very low within our margin of error. So I wouldn't be the that much because that's just a handful of people join us and for the continuity of our -- the product. And -- but we are quite cautioned for the uncertainty of this tariff situation there.
So we didn't try to stay in the cost-sensitive the practice. And so that's the current situation. But we didn't -- we don't think we need do much of the change or so on and so forth. And we hope that we can use the current the resource to deliver our new initiatives and generated significant revenue. And the first one, the PCIe Gen 4 retirement definitely.
We -- the second one will be our USB4 hub and automotive as well.
And then the server and and hopefully, the cable side and the high-speed cable side will provide another leg of revenue growth.

Unidentified Participant

Okay. So just from the absolute amount perspective for your operating expense this year, do you think it will just be stable? Or just will it be undergrowing yourselves this year?

Ji Zhao

No, I think it will be stable, just in a similar as we have provided guidance, we did not the make much of a change. And the guidance we provide already include spending we foresee for Spectra7.

Unidentified Participant

Okay, got it.
Thank you very much. I'll be back in the queue.

Operator

Thank you. And ladies and gentlemen, we will now begin the Chinese question and answer session.
(Spoken in foreign language)

Unidentified Participant

(spoken in foreign language)

Ji Zhao

(spoken in foreign language)

Unidentified Participant

(spoken in foreign language)

Ji Zhao

(spoken in foreign language)
Okay, thank you everyone.

Operator

Thank you.