Good morning and welcome to Diodes Incorporated Second Quarter 2009 Financial Results Conference Call. At this time, all participants are in listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded today, Thursday, August 6, 2009. So let's turn the call over to Ms. Leanne Sievers of Shelton Group, the Investor Relations Agency for Diodes. Leanne, please go ahead.

Good morning and welcome to Diodes Second Quarter 2009 Earnings Conference Call. I'm Leanne Sievers, Executive Vice President of Shelton Group, Diodes' Investor Relations firm. With us today are Diodes' President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Richard White; Senior Vice President of Sales and Marketing, Mark King; Vice President of Finance and Investor Relations, Carl C. Wertz. Before I turn the call over to Dr. Lu, I'd like to remind our listeners that management's prepared remarks contains forward-looking statements which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission. In addition, any projection as to the company's future performance represent management's estimate as of today, August 6, 2009. Diodes assume no obligation to update these projections into the future as market conditions may or may not change. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 60 days in the Investor Relations' section of Diodes website at www.diode.com. And now I'll turn the call over to Diodes' President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.

Thank you Leanne. Welcome everyone and thank you for joining us today. I'm pleased to report Diodes' strong second quarter financial results. Revenue exceeded our guidance and increased 33% sequentially to above $104 million. Demand and the order rate continue to improve throughout the quarter. As the production was rented on previous design wins at new customers and the new product were introduced for new application at the existing customers. Revenue in Asia increased 42% from last quarter. As we increased market share at the current and the existing customer for our product Diodes in LCD TVs, LCD panels, set-top box, mobile handsets and notebooks. Also during the quarter, our packaging output was manpowered limited. Therefore, we continually hired in people throughout the quarter to improve economic utilization at all packaging operations. We started in solid margin growth during the quarter. Gross margin was 26.30% for the quarter, which is a 770 basis point improvement over the first quarter gross margin of 18.6%. After broader economic environment and the demand continued to strengthen, we expect our margin will improve further as a result of increased factory utilization and our wafer fabs and the packaging facilities. Also notable in the quarter, we realized the full benefit of the cost spread initiatives. Thus we began implement that last year in response to the global economic environment. As a result, operating expense were held effectively when compared to first quarter level, which contributed to our achievement of profitability on a then GAAP basis in the second quarter. Due to the recent improvement in the economy and thus a greater improvement in the company's performance, we cancelled the temporary cost of reduction effort including falsification and the salary reduction. During the quarter, our continued effort to reduce our capital expenditure as well as our…

Thanks Dr. Lu and good morning everyone. As Dr. Lu mentioned, revenue was a $103.9 million, a 33% increase compared to the $78.1 million last quarter and a 10.4% reduction from the $116 million reported in the second quarter of 2008. Our results exceeded the expectations due to continued improvements in demands and order rates primarily in Asia as well as the further ramping of new design wins. Gross profit for the second quarter 2009 was $27.4 million or 26.3% of revenue compared to $14.5 million or 18.6% in the first quarter of 2009 and $39.6 million or 34.1% in the second quarter of 2008. As Dr. Lu mentioned, this represents a 770 basis point increase, primarily attributable to a significant improvement in utilization at our packaging operations. Our capacity utilization during the quarter was approximately 75%. ASPs in the quarter were on average stable due to tightened capacity. We expect utilization in our packaging facilities to continue to improve in the third quarter to approximately 90% and have room for continued improvement at our wafer fabs. Selling, general and administrative expenses for the second quarter were approximately $15.2 million or 14.7% of revenues, which was a significant decrease on a percent of revenue basis from the $16.1 million or 20.6% of revenue in the first quarter. Research and development expenses for the second quarter were $5.4 million or 5.2% of revenue, which was comparable on an absolute dollar basis to the $5.3 million or 6.8% of revenue in the first quarter. We plan to invest in R&D at similar levels while remaining conscious of market conditions. Total operating expenses amounted to $21.5 million, which was within our expected range and comparable to the previous quarter reflecting the completion of our cost reduction initiatives. We expect the third quarter operating…

Thank you, Rick and good morning. As Dr. Lu and Rick mentioned, our strong second quarter results reflected the continued increase in demand for our products utilizing LCD TVs, mobile handsets, set-top boxes and notebooks. Additionally, our continued focus on new product development and our high level of design win activities resulted in an increase in market share specifically in Asia. We have seen strong gains and new customer penetrations over the past two quarters in hall sensors and MOSFETs for mobile handsets, netbooks and notebooks. As we stated approximately one year ago, it was our goal to further penetrate the cell phone market and I am pleased to report that we have greatly expanded our confidence in cell phones over that time and are starting to see an impact on revenue. We continue to expect a high rate of adoption in the third quarter resulting in further penetration of this high growth market. We also saw expanded production in Q2 of new design wins for our SPR products over a broad base of applications and equipments. We continued our efforts to reposition worldwide channel inventory for future growth during the quarter. Inventory was down 5% in Q2 and 28% year-to-date. And we expect it to remain flat in the third quarter. Regarding pricing, ASPs were on average stable due to the tightened capacity while average unit costs were down due to improved utilization. As mentioned previously, we significantly improved loading at our manufacturing facilities, which we expect will continue in the third quarter and further benefit margin. In terms of segment break out, computing and consumer, each represented 32% of revenue with industrial at 18%, communication 15% and automotive 3%. In regards to geographic break-up, Asia represented 77% of total revenue. Asia revenues increased 42% from the first quarter…

(Operator Instructions). Our first question comes from the line of Gary Mobley from Noble Financial Group.

Hi guys. I'm going to ask some of the questions that I asked on last conference call. I asked last time whether or not you guys can achieve gross margins in the 30% range on peak utilization at 139 a quarter in revenue, if this is how you are turning to buy that line now. So I'm wondering now what your expectation as you do get up to the 130 million per quarter level, what kind of gross margin will like to be.

Well, I think we give the guidance on the third quarter and from there, I think our midpoint of guidance is the 30%. So you already could see from there we should be able to give 30% at any point of what we give to you, then but like I said we -- our capacities is still not fully utilized yet tat that level, it's third quarter level. And I need to be careful to separate from the main capacity to the economic capacity because every time, when we complement capacity, we're more different to economic capacity but I think during speech, I mentioned from main capacity point of view -- main positive capacity point of view, we actually form and the reason is we reduce -- during the Chinese New Year, we reduced almost 30% of people, and we are hiring the people back but it takes time to training them to make them to the production line and to there is a more productive, and when those is continually improved, then profit. Then productivity is getting better, the CPM gets imposed. So that will be continued improvement of CPM, when our operator gets more productive and although continue increase and when our increment utilization gets better. But that's only the second side. From the widespread side of the Diodes, it's a little bit behind, it's behind packages. So we still have a room for improvement of the Diodes campaign to give us more profit. So I think we should be able to get to the 35% our target, when our programs continue growth. I don't know when -- I cannot give a prediction but I am confident that if the loading continues to improve, if the productivity continues to improve, if the wafer fab loading continues to improve, we should be able to get there.

I do have follow-on. What do you think you could have done in revenue if you were personnel constrained in the second quarter, and where shortage of personnel acts as a throttle for your third quarter?

I really cannot give you that number but I can tell you, we actually condense some of the regiments because we do not have enough main capacity to support all the demand. So we have to turn down some demand, some logging, some regiments.

Thank you, guys.

And as we believe the third quarter will continue growth, but we can still look very promising and we'll continue gaining the market share and that's where we'll give the guidance of 10 to 15% growth even we grow 30% in the second quarter; we feel strongly to be able to continue that growth pack in third quarter.

Our next question comes from the line of Joe Whitene of Longbow Research.

Hi. Good morning. Joe calling in for Shawn Harrison.

Yeah, hi Joe.

Hi. First question is Mark, you were walking through the European trend, it sounds like its still mix there which is not surprised. I see a little bit weaker automotives maybe stabilizing a little bit. So what's the estimates you arrived for deals of 10 to 15% sequentially? What does that assume for year-end? Is it a flat quarter or is it another slight step back?

We think we had a pretty bad second quarter and basically we decreased our distributor inventory by 20%. So we're projecting some slight -- we don't project the markets to be yet anything more than flat. But we expect some recovery in our numbers in the European market in Q3.

Okay, that's helpful. And then Mark, again now for the comment that you made, you mentioned there are some efficiencies from the Zetex acquisition yet to come, just hope you can give a little more color on those. Are they cost savings that are going to help operating expenses or are they more synergies that are going to expand the topline, I guess across more geographies?

I think a little bit of both, I mean I think we're putting more and more product over there into our factories although we're quite full. So we're still -- we still have some benefits long term to product end. Of course as we look forward and I got to move out of sub-contracts as an order to put in our facilities that we can't support it. So we have some opportunity there. But I think from a customer, the ability to expand the customer base and the product mix and combining the product lines and selling them as one I think is offering us a lot of advantage going forward also on the topline growth.

So the way to think about that expansion is also the more and more expanded into North America from a geographic perspective?

No, I think in every region. It's the same customers or new customers for Diodes or new customers for Zetex in all regions.

Thanks for that. Last question and then I'll step our here. Rick, the guidance includes operating expense guidance, you guys guided to flat on a percentage basis, just curious looking on longer term, are they temporary cost saving that you guys enacted that will naturally start to kind of fall back as we look at a few quarters or is the kind of flat percentage of sales the most accurate way to model things right now? Thank you.

Yeah, I think what you'll find is that we've resented those temporary things like post vacations and salary reductions. So of course those are going to flow back in, and as we increased the utilization, we'll have additional people that needed to be added. So we see the percent of sales going forward, operating expense as percent of sales going forward as pretty reasonable amount.

Okay. Thanks and congrats on a great quarter guys.

Our next question comes from the line of Steve Smigie of Raymond James.

Great. Thank you. I just want to follow-up on the last question a little bit more. So as we look at to Q4, will there be another sort of -- let's just say your revenue were flat in Q4, would you see a bigger step-up still dollar wise in the OpEx just as more of that stuff comes off or pretty much, everything got taken off starting Q3. So it would be sort of all in there already?

Hey Steve. The thing is we'd really -- we give guidance Q3 but I don't think we have a clear picture on Q4 yet. And we do not -- we hired in the people, if when we say we hired in people, we're more different through manufacturing, wafer fabs and assembling okay. Now for that expense, we start to spend some additional money to R&D and that's what we said, percentage spread instead of dollars spread, but we are very careful. We have not going to go crazy in hiring until we see a clear picture. Our business model is we will keep as a percent of the revenue will keep flat and therefore, if the revenue do not significant grow, we want significantly increase that operational cost.

Okay, that's fair. I guess just in terms of that the balance sheet, you guys are generating some cash flow would expect that to continue to improve. Do you use that to continue to pay down some debt as you have or what's the use of cash there? And where do we see the balance sheet over the next month, a year really as you come to the period you're out where you pay that stuff down just if you give some update on that.

Well, you know the last month, I think last month we worked on convertible front there using the stock. And we are very careful on the cash. And yes, we joined cash but we know this is in moment, cash is the king, and so we're very careful. So I probably will not using the cash we generated to buy those. We might I don't know -- we don't what would be happening, if the opportunity is right, we may buy back some convertible bonds if using either cash or stock but it is really just depend on what kind of opportunity present to us. But we do not really set a goal to buy the convertible bond back using cash or using stock. We don't set that kind of goal. If opportunity is presented the us, look good, then we will take opportunity.

Okay. Last question is just on the revenue side. You saw a huge pickup here in Asia in revenue of raw and guidance is pretty big. Do you think in Q3, you're shipping back to demand and then, you actually need to see meaningful demand pickup, few things going. I know you're capturing a lot of shares, but additive to but how much have you caught up with demand? And how much do you actually see demand sort of picking up in Q3 and going forward?

I think the Q3 growth is based on a pickup on demand and I think we're relatively caught up with demand at an equal level. Clearly, our inventory levels globally at the channels are very, very low at this point. I think I mentioned they were 1.1 to 1.5 months in Asia, which is actually quite lean. And so we decreased our inventory another 20% in Europe and inventory was already low and decreased another 5% of the channel in the U.S. So we're very careful where the product is going right now and it is going into the channel. It's going to customers that are going to take it immediately. So pretty much it's all passed through at this point.

Great, thank you.

Yeah. You remember, we mentioned even in second quarter, due to the main capacity implementation with actual trend in inventory too. So we continue joining inventories. We are now at the base, if you really don't have that much of inventory we can use. So now we 100% rely on our an output from our manufacturing and virtually, our manufacturing, the people we hired in during the April timeframe are able to put in back to production. You think about two months to trending to hiring the people. After we hire, we take about two to three months to training them to put on the production line. And so we now, can we return our sales instead of a huge shipping some of the inventory.

Okay. Thank you.

Our next question comes from the line Tristan Gerra of Robert Baird.

Hi, good morning. I know you don't have too much visibility yet beyond Q3 but what is your visibility beyond your normal three months backlog timeline? And do you think that there's a chance for lead times to further expand now that shipping is back in line with end demand or do you think that you could see some lead time expansion in Q3?

I think we'll still see. I think the industry is going to see some lead time expansion in Q3. The question is how long that lead time expansion will move in to Q4? I think that more -- we're seeing more and more people having issues on their deliveries, even as recent as last night. So I think that there will be some industry extended lead time in Q3, which should be positive on ASPs and the general trend.

Okay. And could you say what your utilization rates were front end and what your expectation will be for Q3?

Our front end, we have to wait for that, one is in the Kansas City, one is Zetex region, -- I mean one is in Zetex in the UK. And we are in the second quarter, in the second quarter actually Zetex is quite low. It's about 40% loaded and in the first set it's almost about, I think it's more than 50% of economic capacity point of view. Now main capacity is a bit higher, but from the economic capacity point of view, we did better than 50% and that's in second quarter. And we look into the third quarter, then Diodes is the both set average probably somewhere up to about 65 to 70%.

Great. That's very helpful. Thank you.

Okay.

Our next question comes from the line of Harsh Kumar from Morgan Keegan.

First of all congratulations, these all are very good numbers, very good job of managing the business.

Thank you.

I have a couple of questions. As you look into your business, there is obviously a tremendous flow that's going on. Do your customers when you talk to them have any visibility into the actual any consumption or are they going by forecast? Any kind of color you can give us on that would be very helpful.

I would say that they are watching the end demand very closely. And I don't think anybody after what they went through in the fourth quarter and the first quarter is being over aggressively with inventory.

Okay.

I would say they are watching their ramp-ups quite tightly also.

So it's pretty tight all the way, very well controlled, it sounds like.

Yeah, even including the building material to us the fixed cost, we even need to train our people to our vendors to get the fixed part we want. So I think the tightening condition is not just run vacation is very close the whole of '09.

Good, good. And then Mark maybe you can answer that. Sounds like there is a little bit of inventory replenishment left in Europe, but for most part would you say that it's that's played out. This is basically we all to manage that pretty first statement.

Yeah, I don't think that there is, in our number so far there is been zero inventory replenishment that's actually been continued inventory decrease at the channel perspective. I think there is clearly opportunities later in the fourth quarter and the in the first quarter where we would want to restructure our inventory back to normal rate. Or I don't think they will ever go back to the previous normal rates because I think everybody is going to be more sensitive to cash in the next round. But clearly we don't to operative it one month in Asia on inventories, when basically Asia is a pool environment. So we need to have more inventories in the channel in Asia. I think there maybe even a little bit more decline in Europe over the next two quarters in inventory. And I believe that North America is right where it needs to be, balanced.

And then, maybe another question for you Mark. Consumer took-off pretty strongly, very strongly is that what is driving September growth more so than computing or is that sort of what you say equally spread?

I don't know. I think they run an effect.

Yeah.

I think we probably had a little bit of extra netbook in Q2. And we probably had a little bit more cell phone in Q3 or in Q2 and the LCD TV's growth really helped the consumer section, so they are balancing. But all of that is looking relatively strong as part of our guidance going in the Q3.

Thanks guys; great quarter, great guidance. I'll get back in the queue.

Our next question comes from the line of Vijay Rakesh of Think Equity.

Hey, hi guys. Good quarter, yes. Just trying to understand on the industrial side, how are things looking? Are you seeing any signs of life there in any of the geographies?

I think the power supply market is looking okay and stand market's looking okay in Asia. I think it's pretty clear that the industrial side in Europe is struggling. And then in North America I don't know I think it's just kind of moving along flat, there is no real decline but there is really no sign of any great increase in those areas.

Got it. And just looking at any guess, demand side here, I mean look at the point of sales trends here in July, August now. How is that held up in U.S., Europe and China?

No. I think that there in Asia POP and POS are going to match. I think Europe, I think that they'll probably pretty close to match. But the POP trend will be up because they need the parts. And in U.S. I think we'll see a slight uptick in both.

Got it. And lastly, when you look at the gross margin side, I know you mentioned the fab loading side should have. But just as Zetex picks up, shouldn't there be a product mix component also to the margin, to gross margin line and shouldn't that help you kind of move above where your historical trend has been?

I think our business motto is, we want to go to 35% TPM. And don't forget we really business motto is profitable growth. We paid more attention to gross margin, growth instead of gross, gross margin percent. We more pay attention gross profit, okay. So if we can grow very fast then we might sacrifice a little bit of either ASP or as a percent, gross margin percent. And so I really don't want to put it say how projected it gets to 35% and 110%, okay. So right now if, we grow at 30, 70%, we are looking at 10 to 15% growth. We're going to continue driving the growth. In helping it, when we grow, we'll put the load in SK and improve the load in our vapor fab. Then appropriate automated genre in coming up vended of the gross margin will be automatic get there. So we don't spend that much of efforts, just look at the percent. I really spent a lot of effort striving for the revenue.

Got it.

Yeah. And when the GTech and the new product come off, product mix will automatically shift. When the GTech product gets to the market, okay and we know GTech product where it can give us a better growth margin. At the same time, when the new product coming up that's even more margin. And when those product mix give us that advantage, the margin will come up. But I'm really striving more on the growth and get more and more revenue and get that growth margins down.

Sure.

Generally more.

Okay, great. Good job there thanks.

Thank you.

Our next question comes from the line of John Vinh of Collins Stewart.

Hey there, congratulations on the quarter guys.

Thank you, John.

First, I just ask you question. Your OpEx side, was there any stock comp in the quarter?

We... in the past, we always put our stock option cost in a packet away from GAAP. But Rick can tell me, I am not allowed to do that. They don't want to do that. So, that could not pick up, okay. So, actually, the option cost is included in that number and do not really pick it up from non-GAAP basis. I don't like it, but Rick is boss here, he can detail me. We cannot pick it up.

As for John to answer your question, there was... in the second quarter 2009, there was approximately $2.2 million of share grand expense, including our issues and stock option expense. And the details of all that will be in our Q, which I think we're getting ready to publish tomorrow or early Monday.

So, if you want to back it also off, you can use that number and --

But we have not done that in our adjusted net GAAP or adjusted income. And if you look at the charge at the back of our earnings release, you can see exactly what we've backed out of operating expense, other income and the tax impact of those and this share grand expense is not there.

Okay. All right. I want to get a coupon guidance, but can you just give us a quick reason why you're not reconciling that your non-GAAP numbers to you're your peers team that kind of back that out?

SEC do not allow us to do that.

Yes. SEC comment weather and we were requested not to do that specifically because it's a recurring expense. And so because it's recurring and has recurred several quarters and years, they do not believe that it's an adjustment necessary. So we agreed that we would not do that.

Okay, fair enough. And --

So what you do is you can add those backup.

If you can go to the Q and find the data and make any adjustments you feel are necessary.

That's right.

Okay, fair enough, fair enough. Of course this is a follow-up question from Mark on channel inventory. To your point, channel inventories have come down substantially last couple of quarters. It seems like they are pretty lean especially in Asia. Why would you not expect to this use of bills a little bit of their inventory into Q3 here as we had in seasonal kind of period here. I expected it won't have a little bit more relative to the first half levels.

I think they are going to try to. It's our goal not to allow them to. We want to make sure that we service as many customers as we possibly can with the product that we have available. And we don't believe that there's enough product available for us to allow them to build inventory. So yes, some of them will win. But our goal will be that we try to maximize, we maximize the product for our customers and then position inventory at times where demand isn't quite as high.

Okay. Does that suggest that if you're successful of doing that, that Q4 could be slightly up from Q3 levels if they don't build any inventory?

Assuming that quarter tracks on POS like we're projecting it so track then that could be an outcome from that.

Okay. And then just to clarify, you talked about being labor constrains on the Q2. Were you labor constrained in July?

Yes.

Okay.

I still feel today, feel in our fully main capacity, fully it's a dignity. That's why even we say we are talking about third quarter 90%. We still are the demand more than what we need, what we can supply.

Okay. So you think you'll be... as you constrained will go away by the end of the quarter?

Well, it depend on the markets. Okay, see the point is nobody have a clear picture on plucking on how we'd be going on. In the second quarter nobody can tell, well you go alone third quarter or even the first quarter. So we digest, we hired in the people by estimates what will be in the first quarter. And the time when you get to there is two days, you are wrong because it takes about two months to three months to be able to put in production line.

Okay.

So, I start to hiring the people in April. And, so those people start to putting specs to '09 in June. But unfortunate is that in the April timeframe when we I look forecast on third quarter, I really don't expect a thirty something percent growth in the second quarter and another 10 to15% growth in fourth quarter. Nobody really forget that kind of growth. Yeah in the 10 to 15 third quarter. And therefore, if you ask, why do I don't hire enough people in April. So, third quarter I should not be people dignity. All I wish I have a crystal ball, but I am not that interested to hiring the people.

Got it.

In April timeframe.

Got it. Okay. And then the last question for me on LCD TVs. Obviously that seem like we have big growth over Q2. How much of that was China domestic versus rest of the world roughly?

To be honest I don't have those --

We cannot really tell. We go to our customer, okay, say Samsung, AUL, and Siemens and those and we really cannot distinguish where their pin will go.

Got it. Okay. Thank you very much.

Our next question comes from the line of Brian Piccioni of BMO Capital Markets.

All right. Can you hear me okay?

Yeah.

Yeah.

Yes, we can.

Thanks for taking my question. As you can imagine most of the questions are probably been asked and answered by now. But I'll give it a shot. You were talking earlier about the capacity utilization. It sounds like its sort of overall capacity utilization is going to be around 90% in the third quarter. We had some questions about that earlier. What sort of capital expenses in this sort of thing are going to be required as you approach a 100%, because obviously you can't by tens of fab or something like that?

When we took in the capacity, we are more talking about packaging capacity. When we say 90%, we're talking about packaging capacity. We've been taking these capacity, you do able to 18, two, three men in each time on different package.

Okay.

So, we are able to do that. And as and we give our forecast of 8 to 12 million on our capital for third quarter.

Okay. It doesn't look like there is any real need for major capital expenses that at this for the foreseeable future anyways, right?

No, but in vapor fab we are okay.

Okay, super. And I think you've answered this about three or four different ways. But just to be sure, you had mentioned earlier that you had turned down some business in the quarter. You had also mentioned that the inventory of your customers is very, very low. And am I correct in saying that you're trying to manage very carefully to ensure that your customers are not over ordering to offset concerns of shortages in the future?

Yeah, I think that we have a pretty clear understanding that our customers are not double ordering.

It was based... sometimes they pay to a money job shift from our factories. So you know if they view in up inventory, they won't do that. And we do as the customer says I need it right away overnight. And it's so well, we need to pay the job shift, they will. So you can see we know the customer is not needy double ordering.

And in the channel, we track the POS run rate versus the order run rate of the distributor by part with them pretty closely. So we can see whether distributors just trying to grab. So we'll watch it relatively closely. Some orders we would hope that they were double orders so that we don't have to deliver our shares. But it's not working on that way.

Okay. That's great new because course string inflection points in the industry that has happened in the past. Thank you very much.

Yeah, that's right. We have enough experienced on that. Don't forget. We are in the semiconductor for a long time.

Thank you.

Yeah.

Our next question comes from the line of Stephen Chin of UBS.

Great. Thanks for taking my question.

Yeah Stephen. How are you?

Hi. I want to review some of the comments about share grand especially in the handset market. Is that coming from new products or is that I think you'll buy new products proprietary to digest where that more commodity orientated products? Were you better able to shift products compared to your peers strongly?

I think we've had some gains in our proprietary products and we've had continued expansion in our standard product. I wouldn't necessarily say all of them are commodity price. We don't really have a significant amount of commodity product in the cell phones because we don't target that part. But there is some that are differentiated or limited in your vendor basis and so on. So we do have some proprietary in the cell phone area also.

Yeah, you know in the past we spoken about above a year ago when we start to introduce call center, we spoken about call centers going to end the deal cell phones as to trip into the cell phone business. And we are successfully but using the whole sense of gain to cell phone business. And now with that relationship, we are able to expand the design wins of much more of products of ours. And therefore we have a good growth in that area.

And related to that from a pricing perspective, is the stable HD environment that you're seeing, is that for underlines for the commodity more into products or is that more of a blended ASP that you are referring to that includes a potentially more proprietary products that are going to production currently.

All right. Right. We've seen actually even in the second quarter and going into the third quarter, we've seen continued declines on some of the most commoditized devices in our area. And we intended to back away from those devices and let that be taken. Now we're starting to see that some of that pricing via past to lack of delivery. So we're going to see where is some changes going could occur in that, in the next month or so. So there is still, let's be clear. We still live in a very competitive pricing environment and most people aren't just full, and most people are never full as we try to keep ourselves. So yes, there is still always pressure on price in our product line. But I think we'll see pretty stable through Q3 and hopefully deep into Q4.

Great. And last one, either for Dr. Lu or for you Mark. Just from on overall government stimulus spending program impact say impact, that's why I think last quarter you mentioned China stimulus programs or rebates for consumer products as this having a big impact. But looking at more on the industrial side, is there much impact so far from infrastructure spending in China and certainly for U.S. whenever you think that comes in the play, how should we look at the impacts in Q3 and probably the rest of this year?

I don't think from an infrastructure standpoint we can see a lot of impacts or find a way to measure that impact. A lot of our product is high volume, lower mix board, medium volume, medium boards and infrastructure will be higher ticket item devices. So I don't think we did see some benefits in China from some of the consumer electronic devices and so forth. I think most of those have run out, but the demand is remaining. The demand for TVs and phones in China is quite good right now. And so, but I don't think we can say anything from an infrastructure standpoint.

Okay.

So you can see a lot of our growth really is not just coming from the market environment growth, okay. Our growth has often coming from new return wins, new customer, new vacations we get into it. So, we separately gain in the market share to roll a down wind, if you remember us a several times. You don't marking over say how many design win. Design win actually took a very good growth, and now it's asking ways they are meaning. And now the rain is start to came in. And as and this way we see our growth, majorly our growth coming from. So, yes, China similar package to sales, but the market is up but then if you look at our growth relative to our comparison, we actually drop much at home than our comparison. We remember 1Q, we only done 10%, why we bought it down much more. And this time on top of that, we are absolutely 30% and now we took in about 10 to 15% growth, that's actually we grow much faster than. And that's our business motto. We want to grow 2x better than our competitor and that's our business motto. And that's again when you go that side actually.

Okay, great. That's very helpful. Good job in the quarter guys.

Thank you.

Ladies and gentlemen, that concludes the Q&A portion of presentation We'd now like to turn the call back over to Dr. Lu.

Well, thank you for all your participation today. Thank you very much. I'll talk to you probably three months later. Operator, you may now disconnect.

Thank you, sir. Thank you, ladies and gentlemen for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.