Greetings. And welcome to the Himax Technologies, Inc. Fourth Quarter and Full Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Powell. Thank you. You may begin.

Thank you, operator. Welcome everyone to Himax’s fourth quarter and full year 2014 earnings conference call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer; and Ms. Jackie Chang, Chief Financial Officer. After the company’s prepared comments, we have allocated time for questions in a Q&A session. If you have not yet received a copy of today’s results press release, please call PCG Advisory Group, LLC at plus 1 (646) 780-8850, or access the press release on financial portals like Bloomberg, Yahoo or Google or you can download a copy from Himax’s website at www.himax.com.tw. Before we begin the formal remarks, I’d like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call. Factors that could cause actual results include, but are not limited to, general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the company; demand for end-use applications products; the uncertainty of continued success in technological innovations; and other operational and market challenges, and other risks described from time-to-time in the company’s SEC filings, including those risks identified in the section entitled Risk Factors in its Form 20-F for the year ended December 31, 2013 filed with the SEC as amended. Except for the company’s full year 2013 financials, which were provided on the company’s 20-F, filed with the SEC on April 15th, the financial information included in this conference call is unaudited and consolidated, and prepared in accordance with U.S. GAAP. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit by independent auditors to which we subject our annual consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. At this time, I would now like to turn the call over to Mr. Jordan Wu. Jordan, the floor is yours.

Thank you, Scott, and thank you everybody for being with us for today’s call. In today's earnings call in addition to reporting our performance in the fourth quarter, I will also summarize our results for 2013 and highlight key milestones we achieved last year. I will then discuss our outlook for the first quarter of 2015 and comment on a few product areas of focus of this year. Our CFO, Jackie Chang, will also provide additional details on our financials. I am pleased to report that our 2014 fourth quarter revenues, gross margin, GAAP and non-GAAP earnings per diluted ADS, all met high end or exceeded our guidance. For the fourth quarter, we reported net revenues of $227.2 million with a gross margin of 24.7%. Fourth quarter GAAP earnings per diluted ADS were $0.091 and non-GAAP earnings per diluted ADS were $0.094. Our revenues – GAAP earnings per diluted ADS all came in at the high end of our guidance, or our gross margin exceeded the guidance for the quarter. In response to market rumors that Himax might miss this Q4 guidance, we pre-announced the Q4 revenues and gross margin on January 14. In respect [ph] pre-announcement, we also provided renewed GAAP earnings per diluted ADS guidance of $0.087 to $0.092, we came in at a higher end of the range. Our fourth quarter revenues of $227.2 million represented a 16.4% increase from the same quarter last year and a 2.2% sequential increase from the previous quarter. Our fourth quarter revenues were the highest since the fourth quarter of 2008. Fourth quarter revenues came in at the high end of our guidance, driven by better-than-expected driver IC sales for TV, smartphones and tablet applications, mainly in the Chinese and Korea markets. Revenues from large panel display drivers were $65.5 million,…

Thank you, Jordan. I will now provide additional details for our fourth quarter financial results. GAAP operating income for the fourth quarter of 2014 was $22.6 million or 10% of sales, up 16.6% year-over-year and up 80.3% sequentially. As Jordan mentioned earlier, the sequential increase was mainly a result of a higher RSU expense booked in the previous quarter. However, non-GAAP operating income still experienced 2.6% sequential growth. Our GAAP net income for the fourth quarter was $15.6 million, or $0.091 per diluted ADS, compared to $15.8 million, or $0.092 per diluted ADS for the same period last year, and $11.1 million, or $0.065 per diluted ADS in the previous quarter. In the last earnings call, we won about a possible negative impact by depreciating NT dollar will have on our income tax. Obviously our fourth quarter bottom line with a total impact of $4.8 million which was $3.2 million higher than the $1.5 million we assumed from providing our EPS guidance last quarter. While our reporting currency is the US dollar, the vast majority of our taxes are incurred in Taiwan on the basis of our NT dollar book, which is the required reporting currency for the Taiwan tax authorities. NT dollar depreciation resulted in foreign exchange gains for our US dollar assets and therefore higher income tax in Taiwan. On the other hand, our income tax will be lower if NT dollar appreciates against the US dollar. In our last earnings call we estimate a $1.5 million of additional income tax charge caused by the NT depreciation based on the exchange rate of 30.55 I want say it of EPS guidance on November 10. However, from November 10 to the year end, NT dollar further depreciated to $31.65 against the US dollar resulting in additional $2.3 million or…

Thank you, Jackie. We are happy that despite a few challenges, we still managed to grow in 2014. Small and medium-sized driver IC remained our largest source of sales. Our market leading position in this business segment enabled us to take advantage of the growing global demand for smartphones and tablets, as well as the industry trend toward higher resolution displays. For our large panel display driver business, we continue to expand our sales to Chinese customers and secured a leading market share in that country. We also gained market share from non-China customers. Meanwhile, our non-driver products continued to outgrow driver ICs and achieve record high revenues. We saw exciting progress on many of our non-driver products. Many of our non-driver products have already penetrated into marquee and globally recognized end customers. Our revenues totaled $840.5 million in 2014, representing a 9.1% increase over 2013. Notably, our customer diversification continued to expand as we added multiple Tier-1 customers across all of our product lines. Small and medium-sized driver sales grew 7.3% and represented 53.1% of our total revenues, another record high. Of the 7.3% growth, tablet and automotives driver ICs showed particular strength, while smartphone driver ICs delivered the modest growth. Tablet driver IC sales grew nearly 10% in 2014. However, sales in the second half of the year declined 20% from the first half, signaling weak overall market demand. Meanwhile, automotive driver IC sales registered the strongest growth in this segment, at approximately 50%, and the momentum is expected to carry over into 2015. We are now the leading suppliers of small and medium-sized driver ICs for panel makers across Taiwan, Korea, China and Japan, covering the vast majority of leading smartphone and tablet end customer names in both China and the international markets. Our leading technology, on…

Thank you, Jordan. In terms of 2014 full year performance, our GAAP operating expenses were $133.2 million for the year, up $15.6 million or 13.3% compared to last year. We have repeatedly indicated since late 2013 we intended to increase our R&D expenses to capture new business opportunities, following several years of stable R&D spending. We believe that such investments will really come to fruition starting in 2015. Due to higher operating expenses, GAAP operating income of $72.7 million represented a 2.2% decrease versus 2013. Non-GAAP net income for 2014 was $76million, or $0.442 per diluted ADS, up from $71 million, or $0.414 per diluted ADS, for 2013. The increase in non-GAAP net income was mainly the result of an $8.6 million net gain from the disposal of an investment in the second quarter. Non-GAAP net income and non-GAAP earnings per diluted ADS grew 7% and 6.9% year-over-year, respectively. Our cash, cash equivalents and marketable securities were $187.8 million at year end, compared to $128.1 million at the same time last year and $147.4 million a quarter ago. This is at historical high in our cash position since the second quarter of 2009. On top of the above cash position, restricted cash was $130.2 million at the end of the quarter. The restricted cash is mainly used to guarantee the company's short term loan for the same amount. We continue to maintain a very strong balance sheet and we remind that, that we remain a debt free company. Inventories as of December 31, 2014 were $166.1 million, down from $177.4 million a year ago and up from $157.1 million a quarter ago. The higher inventory was due to the expected customer restocking of driver ICs for all panel sizes, CMOS image sensor and a few other non-driver products after Chinese…

Thank you, Jackie. Following a successful business transformation in 2013, we delivered strong operational and financial results in 2014. Himax continues to execute on our strategy of becoming a more diversified company with regard to product offerings, as well as customers. We are very pleased to be experiencing growth in both our driver and non-driver business segments. We are particularly excited about the prospects for our LCOS micro display and WLO products, which are integral parts of the eco-system for the rapidly emerging head mounted display products and next-generation cameras for mobile devices. Equally exciting is our market leading single-chip solutions for pure in-cell touch display, which we believe will soon become mainstream in portable and wearable devices. In summary, Himax is at a significant inflection point, with many of our non-driver products ready to enter the consumer market after many years of product development and R&D. Looking into 2015, despite the current softness in China's smartphone and tablet markets, which is worsened by fewer working days due to the timing of Chinese New Year, we are excited about our full year outlook and believe that it will experience strong growth across all our business segments. We anticipate 2015 to be another year of continuous revenue and earnings growth. Following a few years of revenue decline, large panel driver IC sales should be a major growth engine for us in 2015. We expect our large panel drivers in the first quarter of 2015 to register strong growth compared to the same period last year, at approximately 25%. We should continue to benefit from the display capacity expansion in China, where we are market leader in driver IC sales. Furthermore, we expect to grow market share in the non-China large panel market in 2015. On the technology front, we remain a…

Thank you. [Operator Instructions] Our first question is coming from the line of Jaeson Schmidt with Lake Street Capital Markets. Please proceed with your question.

Hey, guys. Thanks for taking my questions. Jordan, I am wondering if you could just talk about how confident you are in your visibility for this year and what kind of gives you that confidence by product line?

Thank you, for the question. I think, if you look at our guidance for Q1, I mean, obviously the visibility is partly covered. So you can argue, it started to be a very below to start a New Year. However, I am going to emphasize that we are – we are excited as ever for the prospect of the whole year. I think the Q1 witness is primarily driven by the very slow tablet and smartphone demand. And I think we have actually said repeatedly in our previous calls and over this course, so we are shifting our growth focus into large panel, because in particular in a high end, 4K TV and the products, the engine [ph] delivery is much higher and we do enjoy a very strong competitiveness. On the top of the fact that, our – the market we clearly have the leading market share by each hand, is still expanding our capacity, large panel and we also penetrate into customers switch, well, not customers – products in the past in both Taiwan and Korea. So we are very steady and above this. Now, in small panel business, growing and I told above the witness in smartphone and tablet, so our focus is to really penetrate into the newer areas, i.e., in in-cell touch and actually before in in-cell touch, we expect to see good sales growth on cell touch, which is rising with a traditional technology in between the tradition of touch panel and the in-cell touch. So in-cell touch is the opponent target and I mentioned in my prepared remark that we expect to start lot of business in in-cell touch integrated to rise with touch panel controllers in the second half of the year. And I did mention in the prepared remarks was on…

Okay. Thanks, to that detail. And can you remind me, what your current LCOS and wafer level capacity is at?

Hello. Yes, Jaeson. Our LCOS capacity is probably at 300,000 units per month and our WLO because we got out, really the government cleared the new technology where we acquired the array main field opportunity have to step in the major launches into a meaning of design. So, depending on where they provide to or provide for, capacity equip and in the quarter around 900,000 per month.

So, its good thing for the company getting a response, because it really depends for us and very large the own customers expectation, which I fortunate to be, we are not really in a position to come along with details yet. But you mentioned LCOS produced from the panel capacity, is perhaps, it really depend upon, quite an excitement you are talking about. So it’s actually a very similar story. Although, here certainly the, probably safe as its, don’t vary as much, excuse me, I am having a cold throat this year, so actually I am having a hard time which I always and I apologize for that. And a couple of that for the customers that, very special applications which we acquire longer part of time and number of part of step and as a result it will depend on our product mix. But I think we'll see – we didn’t see – we are not going to be in shortage of capacity overall. However we'll be expanding probably now in CapEx, largely because for their customers special requirements, we require new equipment to handle. So that’s why there we are probably in new equipments there and large part of this equipment is even from the certain customers. So we are probably part of the equipment and customers are probably part of the equipment. And all this at halt, we'll be able to provide you more details as this out flows. But within this year we are going through different stages of engineering rounds, that hopefully leading to most of that shipped with multiple customers. So it’s really a very sudden year for us on this.

Okay. Great. Thanks, a lot guys.

Thank you, Jaeson.

Thanks.

Thank you. Our next question is coming from the line Suji De Silva with Topeka Company. Please proceed with your question.

Hi, Jordan. Hi, Jackie. So in terms of the tablet and smartphone driver market, can you talk about what percent of those roughly are white box rates versus the high end Tier 1?

It probably happened into – through other lines, because you know, helping you would fringing within white box, because in China actually many men at this global mode consider white box. They are actually competing with leading global demands. And as a company our customer base or the market we serve primarily is the branded bucket in China, either in China. Certainly we almost put a lot of attention on them. So our cute white box is actually rather small.

Okay. Great. And then looking at LCOS and WLO, can you give sense maybe how many customers order magnitude do you think you'd be shipping to like during 2015, if you can give us a sense of how that's going to ramp up and diversify?

Shipping, if you count, overall in engineering’s bundle that’s a luck, but if you change very early some goals and sort of small, some how a small volume is leading to much up change, kind of shipment, then probably you'll talk about three to five.

Okay. Great. And last question on the large panel for China TV, can you…

All right. I would say, design ways, those numbers is much, much bigger than this. So we are seeing a heavy, industry heavy weight, as well as niche players focusing on AMOLED [ph] is great, engaging us. So we are actually, totally level for our new designs simultaneously.

Okay…

I hope that…

Sure. And then large panel versus small panel, what that would be model makers or TV makers that will be affected by the same tightening in markets similar to China or as a phone and tablet guys or they not affected there?

Not exactly, what we mean by government team and its program, in particular for smartphone, we talk about the government sponsored subsidy for LCOS, for operators to get the customer subscription and because of the current change of tax valuation in China last year, the industry have changed fundamentally. So I will also share this space, first through from operators will be much to operate, while those from retail service obviously its worst, with new invention e-commerce will outpace the traditional approach. And by saying that actually, I have to say quite a bit of our customer base in China who are the local leading trend then, are actually struggling with how they have to change their strategy because they are bit ambitionary of the old approach. And certainly I believe because they have technology, advantage, they have capacity advantage, they have the financial results advantage, so very soon they have good job. But I think currently they are – kind of little bit probably in the middle. And certainly with showing first view of iPhone probably from Q4 last year till now, certainly help our overall few customer base as well.

Okay. Great. Thank you, guys.

Thank you. Our next question is coming from the line of Daniel Heyler with Bank of America Merrill Lynch. Please proceed with your question.

Thanks. Good evening, Jordan and Jackie. Jordan, how you feel better. I wanted to talk about…

Thank you.

The, thanks, the mobile situation, if you could elaborate a bit more because I heard kind of two messages, on the one hand, you said that you – should see a snap out coming in and large predominant and handy side you're focusing on large panel. So, maybe give us sense of what kind of order of snap backing we should see in the second quarter in the mobile display drivers?

First and more foremost, I want to emphasize that we believe we are not covering for a lot shares, lot of market share in smartphone, China or international. So that is very problematic. I will say that, we also have to admit the availability traffic developed at the moment, if you, I can elaborate on this from two perspective. One is phone makers and the other one is China motor makers. In terms of phones makers, I told upon the interest of iPhone, certainly the global poor economy or the rest of the economy. The government policy I also mentioned in the previous question. And certainly for export market, we still are very uncertain, current foreign exchange situation. Phone makers are very reluctant to all the detail of their inventory because all their costs are essentially in RMB. So they are feeling actual conscious in business. And certainly we, the very month over from the past Chinese governments they are tightening quite a policy which are driving out smaller players. So all these impacting phone makers market. On the motor maker side, we are seeing more actually capacity, i.e., more panel demand coming from new fabs of [indiscernible] except from a high end in particular from Japan and also to that extent from China. And so, phone maker see auto makers, motor market is picking up capacity, expanded. So that is yet another reason for phone makers to be conscious of their certain demand through motor makers. And motor makers feel that – are very positive in building their inventory position. So, probably I'll finish that line, seeing a very, very solid demand from their phone maker customers. They are not eventualized from cost of bus, because all I see for last time of our LCD module. So I think one, so I mentioned quite a few factors affecting the stability of cell phone, panel market in total. So, one, in those uncertainties can clear their money situation to improvise. I think we have been cautious. However, I think Chinese premier sales through were the companies that certainly have opportunity to watch very closely. We are still hopeful that there will be good surprise in the Chinese New Year sales through. In that essence, their industry momentum may change dramatically. So, we took and we – some of our customers are watching this very, very closely. So we are kind of making our sales prepared. However, even in this call we don’t want to be – found to be overly committed about this. But longer term – so I think in terms of certainty shift, we are putting a lot more focus on in sale parts, off sales parts and more bit [indiscernible]

Okay. Thanks, Jordan. You had a very strong margin, congratulations on the gross profit margin. And what you said it was driven by mix improvement, what should we think as the year progresses, it seems that you have, your mix continues to improve. So should we see an upside to the margin as the year progresses as you mix improve?

I think the Q1 margin improvement is driven primarily by the change of mix for smartphone and smartphone in particular is coming for smartphone expenditure, product sales, so tend to be at large panel, and those driver in that, in particular these trend, so not changed the mix. Well, we don’t expect the margin to go down totally not go down, but eventually from here certainly we – is part of hard to predict like the margin can improvise as part of what we are seeing right now. And certainly, higher than percentage should help mix our corporate gross margin and the three year which I mentioned, in-cell touch, LCOS and WLO, is flow through, you take those they were all contributing rather significantly to our gross margin.

So your new areas, which your are – what about your corporate average in terms of gross profit margin?

I am sorry, can you repeat the question?

That you indicated, and your last statement that you said, out cost should contribute significantly to gross profit margin as that way around?

Yes, I said the three areas of our R&D and the promotion, new product focuses in-cell touch, LCOS and WLO, is a growth as we hope they should. They will all contribute clearly to our corporate gross margin.

Okay. And then as you look at the – you mentioned an inflection point for head-mounted and LCOS, is that a volume and inflection point expected from one industry headed away, or should we expect to a few industry heavy weight to come in this year?

Really it had come on two months on the – our customers, in those plan, and on top of the fact that these products being so new, they are certainly involved. But why I compare these with smarphone customers, we're looking to vary so far industrial rounds, bid into much potential. And hopefully this will happen within the year.

Your inflection point is…

And its certainly not deduction, compared to if you compare that to last year, the year before growth in our LCOS, our revenue can primarily go in our income due to that space. Certainly which is a significant inflection point. And we creep, we or our customer’s creep, we ahead delaying by a month or two or even a quarter. However, I think if you look from next year’s perspective, I think we do have a pretty heavy growth for [indiscernible] considering the amount of efforts we have all put in and the degree of maturity this product is now visible to be.

Right. So last one, real quick, and so in the event that, let's say, lot of things come together on LCOS relatively quickly. Would you be asking some customers maybe their upfront in the CapEx to meet that kind of demand or are you planning to do all that CapEx yourself. Maybe walk us through maybe brokerage scenario, how you're going to fund that CapEx and how quickly you can add it?

Its [indiscernible] then we thought. We've added the customer. And we do expect next year CapEx certainly next year and we didn’t see there will be compared to next year more minor CapEx increase, partially probably ourselves and partially from the – by our customer. But…

And what is the CapEx for this year?

To really increase, major increase next year, rather than in this year. Because we do have more or less sufficient CapEx to handle this year. However, as I mentioned earlier that total customers, specialty price require these equipments which we call CapEx and top of that is funding by the customer themselves. But this year, next year we don’t expect requirements or capacity expansion.

Okay. And your year end capacity target is what again, your 300,000 now until the year end or…

Yes. 300,000 is what we present right now. However, we feel that customers are on penalty side recurring long-term profits from their long-term profit space which can be reduced by as much as half. However, that also means our ASP could be higher by as much as total.

But I guess, could you clarify, just clarify, could you add about the…

Yes, actually, we are going to settle refinancing, within our premises take over the entire menu right now of our premises, so that we can remain in our space or premier. Its well right now being expanded, right, so this is a very shocking solution and now our customers are happy because we are able to provide such a short end solution. But certainly next year, I think there will need for us to acquire additional end which we have – we have negotiated during the year with [indiscernible] owner and also even new buildings. I think it’s all very, very possible next year.

Okay. Thank you, Jordan.

Thank you. Our next question is coming from the…

Let me just prove to, okay, and this I think is a very important question, I am sure, very concerned about this. We didn’t see it, we will try to scrutiny as much as equipment as possible within our own efficient premises, right. So there is no requirement that we are building as such and there will be certain CapEx probably by on our own and certain CapEx probably by our customers, but all this equipment will be equipped into the additional career we are building within our current premise. Next year you won’t be surprise if we are to acquire [indiscernible] and build new buildings to complete CapEx requirement. That will be really the capacity expansion. Next question please?

Thank you. [Operator Instructions] Our next question is coming from the line of Tom Sepenzis with Northland Capital Markets. Please proceed with your question.

Thank you for taking my question. I guess, one will have to do, you mentioned in your comments that from your [indiscernible] you expect that to accelerate this year, even the growth rate can accelerate this year. Those were up very close to 100% in 2014. So does that mean end of the year you expect them in terms to double again this year?

Your voice is a bit on and off, so can you repeat?

Yes. I am sorry. You mentioned in your prepared comments that you expect the image sensors to accelerate this year, is that the growth rate is going to accelerate because that was up 100% year-over-year in 2014, so does that mean you're expected to double again in 2015?

Probably, out of pocket, yes.

Great. Thank you.

Thank you.

Thank you. Our next question is coming from the line of Jerry Su with Credit Suisse. Please proceed with your question.

Hi, Jordan and Jackie. Thanks for taking my question. Just question, my question is on the gross margin, I think first in Q1 you guided gross margin will increase by 1% to 1.5%. Can you tell us how much of that is from NIE and then as far smartphone mix or smartphone, recall versus second quarter or mix increased, does that mean that your gross margin took you – could pullback again?

The smartphone percentage is certainly going to decline. So small panel, with us head to a small panel exceeding 60% of overall sales. However, let me call that, including Q4 last year in previous quarter, right now, for Q1 we are looking at small panel to be down to a low 35%. Small and medium type panel, I am sorry, small and medium type panel driver. Last May quarter has exceeded more than half, including last quarter and this quarter we are looking at only 35%. So that is major decrease. Our last panel in Togo [ph] I can't recall how many quarters, maybe so 30%. But this quarter we are looking at somewhere around 35%. So last year had made major difference. In terms of NIE certainly…

NIEs about a similar with Q4, in the Q1 guidance. So again Jerry to engine your attention NIE would remain same level, right, but because of a lower revenue, because we guided 18% to 22% a sequential decline, certainly that would contribute to a higher margin for the company. However, your second quarter about smartphone is they do rebound, where their guiding, quarter the corporate gross margin down. I think there will be some impact because I think smartphone was around 28% of our revenue in the fourth quarter, while in the first quarter we exactly to be down to around 7% through 1Q. So these states do perform better in our guidance, you are only talking, in fact our corporate gross margin by maybe 5% or 10%, so that will lower the improvement of 1% to 1.5% in the guidance to maybe around 1%.

All right. So basically higher than…

Our gross margin improvement because our product mix has shifted.

Okay. Got it. Thank you.

Thank you. [Operator Instructions] Our next question is coming from the line of Don Sue with JLS Capital [ph] Please proceed with your question.

Hi, Jordan. Hi, Jackie. Thanks for taking my question. Just one question really on CapEx again, can you explain or quantify what amount CapEx are you intend to spend this year and also in relation to that, can you quantify on a like-for-like basis, the out cost capacity which is 300,000 per month now, what would it look when you exit 2015?

I think here is first question.

You were bit on my roof as well. Your first question is about CapEx, we do of course, what is exact is exactly the question?

You can tell us what the overall CapEx spend for this year?

Well, our CapEx claim is around $40 million this year. That was to mention already to you, for the year, compare it I think about $11 million last year. So yes, we do have a plan in CapEx of $40 million this year.

Okay. Understand. And in relation to that, in terms of your out cost, I know WLO capacity, I know its – that’s a topic under – there is some cost asset, but you know, like-for-like basis, thoroughly how close it, 300,000 per month, what could it look like by the end of the year, just roughly?

By the end of the year, it will be the same. However we are adding three equipments to cope with certain processes which require new equipment to handle. So its – within this field we are now really expanding our CapEx as such. But as I said earlier, if everything comes as plan, then next year there will be major requirements to extend our capacity. But this year, I am encouraged, we're sitting all pretty idle phase right now hence doing primarily R&D. So it is in fact pretty much end of the volume of the year. However, we achieve – to add new equipments both for LCOS and probably much more so WLO to cope with certain processes that requires for certain customers special requirements.

Okay. Got you then, WLO is a 900,000 per month now?

Yes.

Thank you. We do have a follow-up question coming from the line of Jerry Su with Credit Suisse. Please proceed with your question.

Hi, Jordan and Jackie. Thanks for taking my question again. I look at your inventory level in Q4 was up sequentially, and you mentioned that it was in preparation of another recovery, of course smartphone related to 1Q. But I just want to ask per your thought that I think that for materialize the order panel touching has been declining quite significantly, in the past two quarters. So preparing these kind of inventory enter in Q2, do you think that you'll see some inventory or pricing risks?

Certainly. Yes, always it’s true. However, that another esthetical risk cushioned by the tightening of foundry capacity right now. So, we have to balance both perspectives. And also I think we also have to I mean, by talking to a lot of customers they actually requested that we kept the inventory prepared for them because they are watching, clearly after Chinese New Year, albeit, so up to Q1 they could be probably rebound and certainly [indiscernible] community either. So that is why our efficiency was too prepared.

Okay. And then if that’s the case, the pricing wise, you'll be – it’s already guarantee or you'll be negotiated at the later date?

In many cases, not entirety, but in many cases for our customers, as of total prepared, with a certain amount and we [indiscernible] but certainly not all places, by in many cases this will be the place.

Okay. Perfect. That’s all. Thank you.

Thank you, Jerry.

Thank you. [Operator Instructions] I would now like to turn the floor back over to Mr. Wu, CEO of Himax Technologies for any additional concluding comments.

Well, thank you everybody for taking the time, and for being particular for many questions. As a final note, Jackie, our CFO, will host [indiscernible] conferences in the US in the coming month. And we'll announce the details as soon as they come about. And you may want to contact our IR department and/or Scott Powell if you are interested in meeting with us in person. And thank you again and have a nice day.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.