Magnachip Semiconductor Corporation (NYSE:MX) Q4 2024 Earnings Call Transcript

Magnachip Semiconductor Corporation (NYSE:MX) Q4 2024 Earnings Call Transcript March 12, 2025

Magnachip Semiconductor Corporation beats earnings expectations. Reported EPS is $0.07, expectations were $-0.22.

Operator: Good day, and thank you for standing by. Welcome to the Magnachip Semiconductor Corporation Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. [Operator Instructions]. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Pelayo, Investor Relations. Please go ahead.

Steven Pelayo: Thank you. Hello, everyone. Thank you for joining us to discuss Magnachip’s financial results for the fourth quarter and full year ended December 31, 2024. The fourth quarter earnings release that was issued today before the market opened can be found on the company’s Investor Relations website. A webcast replay of today’s call will be archived on our website shortly afterwards. Joining me today are YJ Kim, Magnachip’s CEO, and Shinyoung Park, our CFO. YJ will discuss the company’s recent operating performance and business overview and Shinyoung will review financial results for the quarter and provide guidance for the first quarter and full year of 2025. There will be a q&a session following the prepared remarks.

During the course of this conference call, we may make forward-looking statements about Magnachip’s business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor statement found in our SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements. During the call, we will also discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of Magnachip’s operating performance that may be useful to investors.

A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth quarter earnings release in the Investor Relations section of our website. So, with that, I’ll now turn the call over to YJ Kim.

YJ Kim: Hello, everyone, and thank you for joining us today, and welcome to Magnachip’s Q4 earnings call. In addition to sharing Q4 earnings results, Magnachip management and the Board of Directors today announced a new strategy to become a pure play power company, focusing its investments on the Power discrete and Power IC businesses to drive profitability and maximize shareholder value. We will host a separate sell side analyst briefing later this morning to provide additional color on our strategy. As part of their strategy, we also announced today that Magnachip is exploring all possible strategic options for the display business. This was an extremely difficult decision for me, the management team and the Board of Directors when considering both our valued customers and employees.

While we have a rich and competitive portfolio of OLED display technology, after a careful review of our business outlook, we’ve determined that the greatest potential for profitable growth lies with our Power Solutions business, including Power discrete and Power IC. Achieving profitability is our highest priority and in the best interest of our shareholders and other stakeholders. As a sign of my own personal commitment to the long-term success of Magnachip’s new strategy, I’m voluntarily cutting my current base salary by 20% and Shinyoung Park, our CFO has also agreed to a 10% voluntary decrease of her current base salary. Until such time as Magnachip achieves positive GAAP operating income for two consecutive quarters. Unlike the display business, which primarily is served by a few panel customers, Magnachip’s power business caters to a broad array of industries and customers that we believe have more stable long-term growth prospects.

We therefore have launched a strategic process for the display business. While our goal is to complete this process by end of Q2 2025, the display business will be classified as discontinued operations beginning with our Q1 2025 financials. Shinyoung will explain this in greater detail later in the call. As mentioned previously, our utmost short-term goal is a return to profitability. By focusing on the Power business, our goal is that Magnachip’s business from continuing operations will achieve quarterly adjusted EBITDA breakeven by the end of Q4 2025 followed by positive adjusted operating income in 2026 and positive adjusted free cash flow in 2027. Each of these targets will act as milestone towards achieving a goal in three years to reach a $300 million annual revenue run rate with a 30% gross margin target.

We’re calling this three-year objective our three-three-three strategy. Magnachip’s power business is now entering a new phase that we call Phase 3. During Phase 1 was our initial market entry and foundation period between 2007 and 2012 and probably focused on mobile phones. Phase 2 was our market expansion into consumer home appliances, computing smartphone, e-bike, solar and lighting. Most of these efforts were aimed at a small portion of the performance segment serving up to 10 kilowatts. Many of our greatest success were in sub 1 kilowatt watt applications such as TV, smartphones and e-bikes. For Phase 3, we are expanding our addressable markets into larger and higher performance markets. These include additional industrial segments such as energy storage, automation and robotics as well as automotive and AI data center opportunities up to 100,000 kilowatt and above.

Our Phase 3 strategy is underway now with today’s launch of series of next generation power products including Gen5 and Gen6 IGBT, Gen6 super junction MOSFETs and Gen8 medium and low voltage MOSFETs. We expect to release over 40 new generation Phase 3 power products in 2025 with 27 new generation products launching in Q1 2025 with fully qualified commercial samples available. And with our current product pipeline, we expect to increase the number of Phase 3 new generation power products to approximately 55 that we expect to introduce in 2026 versus 2025. We expect new generation power products to drive higher revenue per wafer at our Gumi fab. For example, our Gen6 super junction power devices not only deliver superior performance compared to the previous generation, but will also offer 30% more die for wafer.

Therefore, these new products when fully ramped will drive meaningfully higher gross margins compared to the previous generation. These innovative product families will open new high-value market opportunities for Magnachip such as automotive, industrial and AI applications. We are targeting automotive, industrial and AI to represent more than 60% of Magnachip’s future product mix up from 37% in 2024. Notably, we already have ongoing engagement to penetrate automotive markets, which expect to reach over 10% of our revenue by 2027 from less than 5% of our revenue in 2024. To support this transition to high performance new generation products, we will invest $65 million to $70 million over the next three years to upgrade production equipment at our manufacturing facility in Gumi.

When these new power products enter production, we anticipate top line growth and meaningful bottom line improvement. By the end of 2026, we expect almost half of our manufacturing capacity in the Gumi fab will come from these new generation of products. We will discuss all of this in greater detail at today’s analyst briefing. Now let’s step back and review Q4 and 2024 results. Q4 revenue was $63 million up 24% year-over-year and down 5.1% sequentially. Consolidated Q4 revenue was above the midpoint of our guidance range of $59 million to $64 million. Consolidated Q4 gross profit margin of 25.2% was up 2.5 percentage points year-over-year and up 1.9 percentage points sequentially. The overall gross margin result exceeded our guidance range of 21.5% to 23.5%.

Shinyoung will provide more details in our section. Revenue in Q4 for our standard products business was $60.7 million up 47.5% year-over-year and down 5.1% sequentially. Standard products business gross margin was 26.6%, up 2.2 percentage points sequentially. On a full year basis, consolidated revenue increased 0.7% in calendar 2024 versus 2023. Excluding transitional foundry services, our standard product business increased 13% year-over-year with MSS up 22.5% and PAS up 10.2%. Both of these business line gross rates were in line with our guidance for double digit growth provided at the beginning of 2024. Now, I’ll provide more details by business line. Reported PAS revenue was $43.5 million up 33.2% year-over-year and down 8.7% quarter-over-quarter.

The year-over-year increase was primarily driven by the expansion of high end mobility and battery management systems in China, deeper penetration within Korean smartphone as well as increased market share. The sequential decline was mostly due to seasonality in each of our market segments except in communication where we enjoyed meaningful quarter on quarter growth. Within standard products, PAS represented 71.5% of revenue in Q4. The industry and market remains stable to slightly down in 2024 and represented 39% of PAS revenue, a shift towards high speed e-motors and battery management systems with higher bump content offset decline in e-bike demand. Similarly, growth in solar pumps offset weaker solar inverter sales. LED lighting remained steady, while power tools including welders experienced strong growth.

From a product perspective, we benefit from design wins for our Gen5 and Gen6 IGBT and super junction products in solar and motor drive applications. Despite modest year-over-year growth, our revenue in the industry market outperformed the competitors driven by our diversified end market strategy. In consumer, we achieved high single digit growth driven by trends in home appliances for broadening a variable products including refrigerators, cooktops and a new design win in Q4 for air purifiers. TVs were relatively flat year-over-year with notable strengths in Korea offset by declines elsewhere. Overall, the consumer market accounted for 35% of PAS revenue in 2024. The communication market represented 15% of PAS revenue in 2024 and increased more than 50% year-over-year fueled by design wins for battery effect in mainstream and flagship portable and AI enabled smartphones in Korea, along with expanding adoption in wearables, tablets and AI glasses.

Additionally, we gained traction with multiple brands in China and Japan for further strengthening our presence in smartphone, tablet and wearable markets. While a relatively smaller contributor at 8% of PAS revenue, the computing market saw more than 25% growth in calendar 2024 driven by demand from China for PC and laptop power adapters. Finally, the automotive market was less than 5% of PES revenue in 2024 and outperformed the broad automotive market last year declining less than 5%. We strengthened our position in Korea with new design wins driving greater market penetration while ramping up production for multiple automotive customers in Japan and China. Our applications span a wide range of vehicle subsystems with a recent design win for heater application with a China OEM.

This adds to previous wins in power outlets and idle stop co functionality announced last quarter. In summary, the sequential decline in Q4 for PAS was mostly in line with typical seasonal patterns. While the sequential strength in communications was driven by preparation for new product launches. For 2024, the double digit growth was fairly broad based driven by communications, consumer and computing markets, while very slight declines in industrial and automotive relatively outperformed their respective markets. As we have mentioned before, we continue to execute on delivering a strong new product pipeline for power. We believe many of these new products will have similar performance to Q1 suppliers, which will give us an opportunity to penetrate new markets and help fill idle boom effect capacity created by the phase out of the transitional foundry service business.

We will share more details on our power business in the analyst briefing later this morning. Turning to MSS, Q4 revenue was $17.3 million, up 102% year-over-year and up 5.1% sequentially. Including Power IC, MSS represented 28.5% of standard products revenue and slightly exceeded the high end of our guidance range of $15 million to $17 million. ROIC revenue was relatively flat sequentially at $5.4 million and increased 62.4% year-over-year. On a full year basis, total MSS revenue increased 22.5% year-over-year. Now I will turn the call over to Shinyoung to give you more details of our financial performance in the fourth quarter and provide Q1 and full year 2025 guidance.

Shinyoung Park: Let’s start with the key financial metrics for Q4. Total revenue in Q4 was $63 million which came above the midpoint of our guidance range of $50 million to $64 million. This was up 24% year-over-year and down 5.1% sequentially. Revenue from MSS business was $17.3 million, slightly exceeding the high end of our guidance range of $15 million to $17 million. This was up 102% year-over-year and up 5.1% sequentially, primarily due to relative strength in automotive. PAS business revenue was $43.5 million and was in line with the midpoint of our guidance range of $42 million to $45 million. This was up 33.2% year-over-year and down 8.7% sequentially, primarily reflecting seasonality. Revenue from transitional foundry services was down 5.9% sequentially at $2.3 million and down from $9.6 million in Q4 2023 as this business testing wound down as we’ve explained previously.

Consolidated gross profit margin in Q4 was 25.2%, exceeding the high end of our guidance range of 21.5% to 23.5%, up from 22.7% year-over-year and up from 23.3% sequentially. MSS gross profit margin in Q4 was 41.8%, above the high end of the guidance range of 37.5% to 40.5%, up from 41.3% in Q4 2023, and up from 38.7% in Q3 2024. Year-over-year improvement was primarily attributable to higher automotive and Power IC revenue and despite lower than expected mobile display revenue. PAS gross profit margin in Q4 was 20.5%, above the guidance range of 17% to 19%, up from 18.1% in Q4 2023 and up from 19.4% in Q3 2024. The upside versus guidance year-over-year and sequential improvement was mostly due to stronger than expected US dollar against the Korean won.

Turning now to operating expenses, Q4 SG&A was $12 million as compared to $12.1 million Q3 2024 and $12.1 million in Q4 2023. Q4 R&D was $13 million as compared to $14.4 million in Q3 2024 and $15.4 million in Q4 last year. As a reminder, R&D expense fluctuates quarter over quarter due to the timing and number of products in development. Stock compensation charges including operating expenses were $2 million in Q4 compared to $1.8 million in Q3 and $1.7 million in Q4 last year. These charges fluctuate every quarter depending on the timing and the size of stock over grants. Q4 operating loss was $15.7 million. This compares to an operating loss of $11 million in Q3 and an operating loss of $15.9 million in Q4 2023. In Q4 2024, $4.6 million loss was recorded as a one-time non-cash impairment charge associated with the display business in accordance with US GAAP.

In the same period, $2 million was also recorded in other charges, which represents a one-time cumulative financial impact in connection with certain Korea mandated employee benefits. On a non-GAAP basis, Q4 adjusted operating loss was $7 million compared to an adjusted operating loss of $9 million in Q3 and an adjusted operating loss of $14.1 million in Q4 last year. Net loss in Q4 was $16.3 million as compared with a net loss of $9.6 million in Q3 and a net loss of $6 million in Q4 last year. A substantial portion of our net foreign currency gain or loss is associated with the intercompany long-term loans, which are denominated in US dollars and affected by changes in the exchange rate between the Korean won and the US dollar. Therefore, the net loss in Q4 2024 on a GAAP basis had different compared with a year or a quarter ago as the Korean won depreciated relative to US dollar in Q4 2024, whereas the Korean won appreciated during Q3 2024 and Q4 2023.

However, this financial loss, it is not necessarily a relevant measure of our operating performance as we cannot control the size of these acts and the aforementioned net foreign currency gain or loss is a non-cash item. Q4 adjusted EBITDA was negative $2.6 million. This compares to a negative $4.9 million in Q3 and negative $10 million in Q4 last year. Our GAAP diluted loss per share in Q4 was 40% as compared with diluted loss per share of $0.26 in Q3 and diluted loss per share of $0.16 in Q4 last year. Our non-GAAP diluted earnings per share in Q4 was $0.07. This compares with a non-GAAP diluted loss per share of $0.34 in Q3 and non-GAAP diluted loss per share of $0.21 in Q4 last year. Our weighted average non-GAAP diluted shares outstanding for the quarter were 37.7 million shares and 37.5 million shares in Q3 and 38.8 million shares in Q4 2023.

Under our 50 million stock buyback program authorized in July 2023, we repurchased in Q4 2024 approximately 0.7 million shares for an aggregate purchase price of $2.9 million leaving about $24.6 million remaining authorization as of December 31, 2024. Moving to the balance sheet, we ended Q4 with cash of $138.6 million. At the end of Q3, we had a cash of $121.1 million and $30 million non-redeemable short term financial investment, which was transitioned back to cash on November 2024. The primary cash outflow during the quarter was approximately $7.4 million of CapEx and $2.9 million of stock buybacks. Net accounts receivable at the end of the quarter totaled $28.4 million and $28.7 million at the end of Q3 2024. Our days sales outstanding for Q4 was 41 days and compares to 40 in Q3.

Our average days in inventory for Q4 was 60 and compares to 65 in Q3. Inventories net at the end of the quarter totaled $30.5 million and $36.1 million at the end of Q3 2024. Lastly, Q4 CapEx was $7.4 million. As noted previously, our CapEx forecast for the full year 2024 was to spend at the higher end of $10 million to $12 million range, and we spent $11.6 million primarily for our PAS segments and Gumi fab. Now let me provide financial related comments regarding our strategy to become a pure play power company. One, effective January 1, 2025, we transferred the Power IC portion of MSS to Magnachip Semiconductor Limited, our existing Korean operating company where the PAS business line already resides. Together PAS which is our Power Discrete business and Power IC comprise our power solutions business line, which represents Magnachip’s going forward continuing operations.

Two, with our strategy to become a pure play power company, we expect the display business to be classified as discontinued operations beginning in our Q1 2025 financials and reported separately from our continuing operations that will comprise PAS and Power IC business lines. As a reminder, we had wound down transitional foundry services by the end of 2024 and do not expect to report such revenue separately beginning with Q1 2025 financial results. Three, YJ mentioned earlier that we expect over time to achieve higher revenue per wafer and improved product mix at our Gumi fab. To achieve those goals, we currently expect to invest approximately $65 million to $70 million over three years to upgrade the Gumi fab. In 2025, we expect total CapEx including maintenance to be in the range of $26 million to $28 million which includes approximately $14 million to $15 million to upgrade the Gumi fab.

Total CapEx in 2024 was $11.6 million. The depreciation cost from the new investment in the Gumi facility won’t begin to be fully reflected in our financial statements until 2027. At that time, we anticipate that a more robust portfolio of new generation power products will at least partially offset the impact. It is important to note that from a cash management standpoint, the CapEx investment in Gumi will be partially funded through a previously announced $26.5 million of equipment financial credit agreement. This is tied to specific equipment purchases or upgrades in our Gumi fab. This new investment in Gumi is expected to drive development of the new generation power product portfolio and upgrade new tools to optimize product mix and improve gross profit margin.

Four, as a result of the strategy changes, we are making, we are now targeting quarterly EBITDA from continuing operations to be breakeven by end of Q4 2025. To achieve this, we’ll explore and execute all available cost reduction initiatives to align our spending level with a strategy to become a pure play power company, while enabling us to continue to make progress towards our three-three-three strategy. Now moving to our first quarter and full-year 2025 guidance. While actual results may vary, for Q1 2025, Magnachip currently expects consolidated revenue from continuing operations, which includes Power Discrete and Power IC businesses and excludes our formal display business to be in the range of $42 million to $47 million, down 8.9% sequentially due primarily to seasonality, but up 11.5% year-over-year at the midpoint.

This compares with equivalent revenue of $48.9 million in Q4 2024 and $39.9 million in Q1 2024. Consolidated gross profit margin from continuing operations to be in the range of 18.5% to 20.5% due to the seasonal sequential decline in revenue and the wind down of transitional foundry services impacting fab utilization. This compares with equivalent gross profit margin of 23.2% in Q4 2024 and 17.6% in Q1 2024. For the full year 2025, which will set the stage to become a pure play power company, we currently expect consolidated revenue from continuing operations to grow mid to high single digit year-over-year as compared with equivalent revenue of $185.8 million in 2024. Consolidated gross profit margin from continuing operations between 19.5% to 21.5%, reflecting the fact that we have completed the wind down of transitional foundry services and new generation power products will just begin production in the second half 2025.

This equivalent gross profit margin was 21.5% in 2024. Thank you. And now I turn the call back over to YJ for his final remarks.

YJ Kim: The pure play power strategy we announced today focuses on shareholder value and prioritizes a return to profitability supported by clearly articulated and transparent short and medium term financial targets. We see a great market opportunity in power semiconductors, which is greater than 10 times larger than the OLED DDIC market. We have a proven track record in power with design, manufacturing and shipping more than 33 billion units during the past 18 years. The primary goal of our three-three-three strategy are to reach a $300 million annual revenue run rate with 30% gross margin in the next three years. We are excited about the large rollout of our new generation products happening now through 2026. These products address higher value markets with better performance and lower costs.

We are upgrading our Gumi fab to manufacture more of these new generation products. Our plan is to convert the fab to serve 70% of the capacity with new products. These will help optimize our Gumi fab for better profitability. As I’ve said in the past, we are focused on maximizing shareholder value and we believe prioritizing a return to profitability by focusing on the power business offers our shareholders the greatest potential. In addition to our medium term or three year goals, we have set very specific short term milestones after the display business has been discontinued. These milestones including achieving from continuing operations. One, quarterly adjusted EBITDA breakeven by the end of Q4 2025 followed by two, positive adjusted operating income in 2026 and three, positive adjusted free cash flow in 2027.

Now I will turn the call back to Steven.

Steven Pelayo: Let’s open the call for any questions that you may have. Operator, please go ahead.

Q&A Session

Operator: Our first question comes from the line of Suji Desilva with ROTH Capital. Your line is now open.

Suji Desilva: Maybe you could talk first YJ about the power segment, the end markets you think that will most drive the mid-high single digit year-over-year growth in 2025. As a starting point, which end markets you think would be the most best contributors there?

YJ Kim: Yes, in 2025, I think it’s evenly distributed to the strength holding consumer communication and computing, but with the new generation that we just launched 27 new products, we think that will help us grow more into the AI computing area as well as industrial and automotive.

Suji Desilva: And then the profitability targets, the gross margin, Shinyoung maybe what are the drivers of gross margin improvement near term? Just to understand from the power business what are the key elements there of trending gross margin up towards the 30% long-term target?

Shinyoung Park: For the near term, at least for 2025, we gave the annual outlook that’s going to be 100 basis points lower than 2024. And that’s mainly because of the fact that we’ve wound down the traditional foundry services, the fabs we have items that we need. So that’s impacting our utilization. And also, our new power generation product, we’re going to begin production in the second half of 2025. So, that’s the near term outlook. But to achieve the 3-3-3 strategy, we’re going to have a new fab product coming out starting in the second half and more in 2026. And YJ said about half of the 2026 revenue were coming from the new generation power product. So, we’re going to increase the portion of the new by the end of the next year. So, we are going to increase the portion of that and with that more new generation product contribution and also utilizing our Gumi fab with that high end market targeted product we can expand our gross margin in the longer term.

Suji Desilva: Maybe one last question, on the cash balance on the balance sheet and the use of the proceeds. I know you’re going to make use of the cash and then potential proceeds from the restructuring. I know you’re going to have CapEx needs the next few years, but are there any thoughts on the use of the cash, perhaps buybacks or other inorganic activity? Any color there would be helpful.

YJ Kim: So, as you saw today, we announced we’re going to spend $65 million to $70 million upgrading our facility in Gumi and that’s where we’re to richly support quick transition to make the new product and that’s one of the key area of our spending so to improve the profitability and product mix.

Shinyoung Park: That $65 million to $70 million spending will be invested in over three years, not like everything in 2025. And also, as I mentioned, we actually have a $26.5 million of the credit line that we opened with a bank in Korea, which is actually the interest rate is less than 4% and 10 year maturity. So, with a three year interest only and the amortizing payment afterwards. So that we can actually partially fund our intended investment in Gumi fab and that’s — we’re going to manage our cash balance on the balance sheet.

Operator: Our next question comes from the line of Nicholas Doyle with Needham. Your line is now open.

Nicholas Doyle: Thanks for letting me ask the question. Struggling a bit with the calendar ’25 gross margin guide, is the Gumi fab headwind a bit stronger in 2Q or maybe even further into 2025? Or is that greater impact from the underutilization? Or is that the Power IC business just operates lower margin versus display? I mean, I know you talked about these new products ramping and that impacts as well, but any more color would be helpful.

Shinyoung Park: Probably if you look at 2024, we still had $10.6 million of the foundry services revenue, which we produced in our Gumi fab. So, though that foundry service revenue, I mean the portion has negative margin that was actually helping to share the fixed cost in our Gumi fab. Now, we’ve wound down the business completely by the end of Q4 last year. That means about 20% of our Gumi fab and the facility is actually idle. So, that portion has to be converted. But as we explained during the call, we are going to do that not only to just increase the capacity, we are going to upgrade the Gumi facility to support the more to support the higher the new generation power product going forward. So that I mean, transition will take time and that’s why we’re going to invest in Gumi fab over three years.

So, that underutilization from the phase out of transitional foundry services and also the new power products just begin the production in the second half of 2025, were going to impact the 2025 gross margin for the whole company. So, the first half, you’re getting the both impact first half obviously, because we’re going to get the benefit from the new generation power products starting in the second half. You’re going to see a little improvement in second half, but the first half you’re going to see both impacting the utilization rate adversely as seeing that impact for the overall.

Nicholas Doyle: And what kind of OpEx level do you assume to get to that positive adjusted EBITDA by 2Q 2025? Thanks.

Shinyoung Park: So, for the OpEx, I mean, Nick, you know that we are actually a shared service and the overhead function supported both display and power together. So, there’s got to be some efficiency in there too. But roughly speaking, like I think probably 35% to 40% of our OpEx was tied to display business.

YJ Kim: And the other thing, Nick, you asked about Power IC. Power IC is not made in Gumi fab, it’s a pure fabless, and Power IC typically has around 40% gross margin, which is much better gross margin product line.

Operator: Thank you. Our next question comes from the line of Martin Yang with OpCo. Your line is now open.

Martin Yang: First question on power, especially when you look at your approach to high-value markets like industrial AI. Can you maybe talk about, does it require you to take a new go to market strategy? How do you go about attacking those higher value customer base or segments?

YJ Kim: As I explained, initially when we came out with this power business 18 years ago, we addressed less than 100 watt application and with the new generation second generation we went up to 10 kilowatt or mostly 1,000 watt where we became number one in our target accounts. Now with the new generation super junction and Gen8 NB MOSFETs, the products are about 30% to 40% better performance than the previous generation. Yet the cost is we can produce 30% more die per wafer. So, that drives higher data per wafer or lower cost and higher performance. So, with that, we will be able to penetrate into more high value application in the AI server to high end industrial market like energy storage system to automotive inverter where you can get much better ASP and margin.

So, that’s our strategy and we just introduced 27 new products today and full commercial quantified samples are available now. So, our goal is to hit the production by the end of this year with those products.

Martin Yang: My next question is on your display business. When you look at the different strategic alternatives, because this is different from a potential buyout of the company, does it open you to different sets of potential buyers or partners when you explore the display business, alternative solutions?

YJ Kim: So, we are looking at every option possible. So, as you said, the sale of the business or certain assets to the joint venture to partnership to even wind down. So, we’re looking at all options and we’re going to make sure that our customers are happy and they have seamless transition as well as we abide with any regulation of Korean or US regulations.

Martin Yang: Can you maybe talk a little bit more about the timing of decision, any context you could give us why now?

YJ Kim: On the timing, well, as we said, it was very extreme decision for me personally and also to the board and the management. But it is best that we hit the profitability, that’s our number one goal and that’s the highest priority at the best interest of shareholders and stakeholders. So, the power business has a broader range of industry and customers and more stable. We already have more than 200 customers in Asia, whereas the display as you know, it’s really few panel maker are the customers. And depending on their situation, it’s very hard to control the fate of your revenue ramp. So, with that we made a prudent decision to go with the pure play company where we’re going to restore the profitability path as soon as possible as well as broad perspective to grow.

And also, we announced $65 million to $70 million investment. So, I think we cannot afford to invest that in two businesses. We want to do that and progress we will see and where we’re going to turn around more to quicker profitability is our business and more opportunities.

Operator: Thank you. And I’m currently showing no further questions at this time. I’d to hand the call back over to Stevem Pelayo for closing remarks.

Steven Pelayo: Great, thank you. This concludes our Q4 earnings conference call. Following today’s earnings call, we are hosting an analyst briefing where YJ, Shinyoung and other members of management will share more details on today’s announcement. On March 17 and 18, we will be attending the 37th Annual ROTH Conference in Dana Point, California for one on one investor meetings. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representative to register and schedule one on one meetings with the management team. That concludes our prepared remarks for our call today. Operator, you may now pardon me, that concludes our remarks. That’s it. We look forward to meeting with you for future events. And you can find details on those on Magnachip’s Investor Relations website. Thank you and take care.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.