Jordan Wu: Okay. Thank you, Jerry.
Operator: Our next question comes from Jason Tan with CLSA. Your line is now open.
Jason Tan: Hello, can you hear me?
Jordan Wu: Yes.
Jason Tan: Hello. Yes, thank you for taking my questions. My first question is, can you give us some details on your pricing trend in coming quarters? Do we plan to lower the maybe wafer price or packaging price in coming quarters or in Q1? I mean, maybe for your non-LTA shipment? Thank you.
Jordan Wu: Whether is LTA or non-LTA, I think our foundry partners have made it rather public that they are not about to, in any meaningful way lower this price in this year. And I think the reasoning is quite simple. They are seeing high inventory levels across the port, which their customer need design houses. So by lowering the price, they are unlikely to stimulate the demand. So why bother? So whether it is LTA regulated price or non-LTA finding price, we are not anticipating the display price from foundry to go down in any meaningful way this year. However, when it comes to good new orders I think their doors are always open for specific deal by deal, case by case negotiations. Right? So that is first point about the — on the supply side.
On the demand side, there are, I would say three points I want to mention. One, there are indeed overall price pressure upon us, because the economy, the overall economy, the macro factor is just very bearish and we have all seen our panel customers are losing money. Right? In a rather meaningful way. So I think they are under a lot of cost pressure as well. So such pressure will to some extent be transferred to us. And certainly, I mean, we were not agreed to all their price demands, and there will be a lot of negotiations, but there are some, indeed some price pressure. That is my first point. And my second point is, the products with excess inventory. I’m talking about mainly smartphone TDDI followed by TDDI, primarily in these two areas where across the board we are seeing our peers are having certainly pretty meaningful excess inventory.
So, and the demand is, the demand is ability is not positive either, right? So there will be price competition in order to offload everybody’s inventory level. So that is certainly a price pressure. And we are taking a similar position, right? And not to mention, the inventory will prepare when our cost were as we peak. So the gross margin over here, certainly another pretty in the foreseeable future. So that — all these have been factored in to our guidance or our prospect for the whole year now. So that is the second question. And however, there are other areas where the pricing environment is a lot more healthy. For example, our automotive sector, I talked about the demand and our revenue decline over the last few quarters, but even during those quarters, the price erosion, the extent of price erosion was nothing to compare with.
The same for smartphone and tablet. Smartphone automotive was — has been a lot more stable. And I think we are seeing the same throughout this year, the rest of this year, as we anticipate, as I said earlier, good rebound starting from the second quarter and certainly second half versus the first half. And TDDI certainly we are seeing very strong demand. So there are in this field certain sectors where the price environment is relatively healthy. Our unique timing controller, our WiseEye certainly is unique product areas and some other things, AMOLED as well, more stable comparative. So I would say, last year we suffered quite a bit for large display driver because the market was just not very good. And ditto for smartphone and tablet, TDDI and the bearish environment has still lingers on for smartphone and tablet TDDI, while large panel has been stabilizing, I would say.
Does that address your question, Jason?
Jason Tan: Okay, thank you. And my second question is, during this down cycle, especially demand weakness, do we also see market competitions? I mean, maybe market share pressures for our large display or small display side?
Jordan Wu: I think the pressure comes primarily on large display first. Our strategy has been, I cannot say there’s no such pressure coming from competition, but our strategy for TV has been to form a strong partnership directly with the leading end customer, with the leading end brand customer for their relatively higher models. And certainly even with that we are still subject to certain fluctuations, but I think the competition is a lot less compared to the mainstream TV models vis-Ã -vis general panel maker customers or mainstream monitor or notebook models. For monitor and notebook, what’s interesting to note is that leading, certain leading end customers, especially the Americans are facing the struggle in between the U.S. and China are hedging the effects by asking their supply chain to be away from China and that certainly benefits us somewhat.
But certainly, we are also working very hard with our Chinese ecosystem and suppliers. But there seems be although panel makers are still predominantly Chinese, but when it comes to the components, especially IC components, there is still such discussion. So I think our — certainly we will shift our focus from more towards leading non-China end customers. Although we are all dealing with mainly Chinese panel makers, but leading non-China end customers and less on Chinese end customers. I’m talking about large panel, whether it’s TV, notebook or monitor, I’m talking about large panel. So I think there appears to be this trend and actually, it’s not coincidence, but we, you know before the two governments struggle becomes apparent, before this we have actually strategized ourselves as much by focusing, you know facing shortage, so we do make a choice, we need to bet on certain customers and in a way bet against certain other customers.
And we have been strategizing our sales by forming partnerships within international end customers. So, such strategy kind of plays well when it comes to this new development in between China and the U.S.
Jason Tan: Got it. And my last question is, I know that LTPS, LCD now it’s migrate — is improving on the automotive applications. So do we, can we expect that this kind of migration can boost the adoption rate on the automotive TDDI?
