Good day, ladies and gentlemen and welcome to the Himax Technologies Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn this conference over to John Mattio, U.S. based Investor Relations for Himax technologies, you may begin.

Thank you, operator. Welcome everyone to Himax's third quarter 2015 earnings 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 and a Q&A session. If you have not yet received a copy of today's results, please call Lamnia International at 203-885-1058 or access the press release on financial portals or download a copy from Himax's website at www.himax.com.tw. Before we begin the formal remarks, I would 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 results and events 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, the state of the semiconductor industry, market acceptance and competitiveness of the driver and non-driver products developed by Himax, demand for end use application products, the uncertainty of continued success in technological innovations, as well as 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, 2014, filed with the SEC as amended. Except for the company's full year of 2014 financials, which were provided in the company's 20-F, filed with the SEC on April 2015. The financial information included in this conference call is unaudited and consolidated and prepared in accordance with U.S. GAAP accounting. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor to which the Company subjects its 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. I would now like to turn the call over to Mr. Jordan Wu. Jordan, the floor is yours.

Thank you, John and thank you everybody for being with us for our earnings call on which we will detail results from the third quarter and provide our fourth quarter guidance and outlook. Our CFO, Jackie Chang will also give more specifics on our financial performance after my own review. Our 2015 third quarter revenue was $165.6 million higher than the guided $154 to $160.7 million. Gross margin came in at 21.8% compared to our approximate 22.3% guidance. Third quarter net losses per diluted ADS were $1.1 and our GAAP earnings [indiscernible] were $1 which we guided – while we guided GAAP losses of $1.5 to $2.09 and non-GAAP earnings of $1 to $1.06. We will review the currency exchange was variable which affected our net income a bit later in our financial review. Now let's begin with our sales numbers. Our third quarter revenue of $165.6 million represented a 2.1% sequential decrease from the previous quarter and a 25.1% decrease from the third quarter of 2014. Overall our driver IC sales came in better than guided guidance across all applications during the quarter. Net cash between our guidelines and actual shipments mainly came from our shareholder toward the quarter end. Being the driver IC industry leader we are capable, responded to such short term shipping scheduling changes and therefore penetrated from the inflow of rush orders. Let's now review our various business segments in greater detail. Revenue from our large panel display drivers was $50.5 million, a decrease of 6.9% sequentially, and down 17.5% from the third quarter of 2014. Large panel driver IC accounted for 30.5% of our total revenues for the third quarter, compared to 32.1% in the last quarter and 27.5% a year ago. Although the overall large panel revenue decreased year-over-year, our driver IC business…

Thank you, Jordan. GAAP operating expenses were $38.5 million in the third quarter of 2015, up 22.6% from the previous quarter and down 7.8% from a year ago. The significant sequential increase was caused by the higher RSU expense in the third quarter which was considered in our guidance. We managed to keep our year-to-date GAAP operating expenses flat year-over-year while we continued to pursue new business opportunities. As an annual practice, we reward employees with annual bonuses at the end of September each year which always leads to an increase in the third quarter GAAP operating expenses compared to the other quarters of the year. This year, the annual bonus compensation, including shares and cash payout, totaled $5 million, out of which $4.5 million was vested immediately and expensed in the third quarter of 2015. In comparison, the annual bonus compensation was much higher at $15.1 million last year, out of which $9.3 million was vested immediately. Excluding the RSU charge, our third quarter operating expenses were $34 million, up 8.3% from the previous quarter and up 4.6% from the same quarter 2014. Both increases were related to increased salary expenses caused by higher engineering headcount, annual salary raises, and continued project tape-outs. This is in line with the repeated indications we made before that despite ongoing expense control in response to macro uncertainty we are still expanding in our LCOS and WLO businesses. The combined total headcount of the two areas is expected to be up by around 200 during 2015. GAAP operating loss for the third quarter of 2015 was $2.5 million or minus 1.5% of sales, compared to operating income of $8.9 million last quarter and $12.6 million the same period last year. Excluding share-based compensation and acquisition-related charges, non-GAAP net income for the third quarter…

Thank you, Jackie. The past three quarters have been marked by macro uncertainties and soft demand across consumer electronics in general. Amidst the unfavorable market environment, we continue to solidify our leading position through technology advancement and customer engagement. In the meantime, we are still working closely with top tier partners in developing products which are exploring new frontiers of technologies. Himax stands out from our peers because of such innovative and forward looking activities. Our confidence in growth opportunities are further reaffirmed by the progress of our core business, such as TDDI products for smartphones and tablets, and market share gains for large panel driver ICs. Our LCOS and WLO businesses are still in small volume, entered pilot production with a top tier customer in the third quarter. Equally important for LCOS and WLO, we are pleased to see quite a few new project engagements with exciting potentials during the quarter, some of which involve applications other than head mounted displays. With that, I will now provide our fourth quarter guidance followed by a more detailed outlook. For the fourth quarter of 2015 we expect revenue to be between flat to 5% up compared with the previous quarter. Gross margin is expected to be flat to slightly up from the previous quarter. depending on our final product mix. GAAP earnings attributable to shareholders are expected to be in the range of $0.01 to $0.03 per diluted ADS based on 172 [indiscernible]. Now let me provide you with some details behind our guidance and trends that we see developing in our business. In our large panel driver sector we are pleased to report that after a slow third quarter our driver IC for TVs will regain momentum in Q4 as a result of increase in shipments to Chinese panel customers…

[Operator Instructions] Our first question comes from the line of Jaeson Schmidt of Lake Street Capital. Your line is now open.

Hey guys, thanks for taking my questions. There has been a lot of concern regarding over capacity and pricing pressure within the flat panel industry. So just wondering if you could talk a bit about your confidence in your visibility, especially on the large panel segment?

Thank you, Jaeson. Total capacity is good and bad for industry for the obvious reasons, but it is positive because we provide small capacity meeting more demand potential for driver IC in spite because on the capacity, when there is lot of excess capacity competition at least to full pricing which leads this to sometimes in a loss making for our customers which may in turn lead to pricing pressure for us. Now I'd like to emphasize the good news for Himax is that they are happening in China primarily. I should say exclusively and China is the place where we enjoy comparatively speaking, a high volume share compared to Taiwan, Korea and Japan. So the capacity expansion is to our benefit. Now, I mean obviously we cannot control our customers too, all we can do is to play with it. So far we are pooling right now at the time when our customers in China some of which are expanding very, very aggressive as we speak, what we can do is to make sure we continue to build the market share with first customers and we continue to also lead in few design wins, especially design wins are planned for the new capacity, the downside of which sometimes is that we have to sacrifice our short-term gross margin a bit in order to secure our position in the long-term. So it is good and back and again, all we can do is to make sure we get the most out of it. And you are right in this the impact is primarily on large panel.

Okay. Thank you. And then looking at the, can you go to the LCOS segment, can you give us a sense of how the design win pipeline has expanded or help us quantify the number of customers that you’re working with?

Design win, firstly on the number of customers I mean not every panel maker is our customer, is our record statement, we can make. In terms of design wins, I believe you are referring to primarily large panel, interestingly…

Sorry, I was talking about LCOS.

Okay sorry, sorry. I totally missed that. We have actually yes we speak during the quarter and throughout the half this year we are seeing increasing new project engagement with many of which we have the potential. And I mean, certainly you want to carry this [indiscernible] especially for AR, we advertise AR versus CR because when the requirement is for especially very, very small, we have a major advantage. When, on display size is not such a critical issue than we do have other competing technologies, although we are still one of the major players. So when display size requirement is very tight which is also the case for AR we have literally now come to this in the marketplace right now. And the customers spend across leading brand names. For obvious reason, I cannot disclose their identity and details of their progress, but we have major coverage in the leading brand name market and also quite less mentioned, but equally important I believe, is the niche players. There are many of them actually some involving helmet for motor bikes or bicycles for other things. So, I think while we are still, we mentioned about inflexion, we are in inflexion point because our product has, our technology has proven to attainable mass production during this quarter with a top end customer which requires the amount of toughest technological skill requirement. We are actually also very diligent in trying to – try to get as much design coverage as possible at this early stage. So there is actually a lot of activities under the water. We are, now [indiscernible] here and there, we are showing samples here and there, we are continuing inquiries just about every week. But unfortunately in terms of real volume shipment and revenue contribution we still have to wait a little bit. But I said in my earlier remarks that we will definitely start to see mass production from at least one of the key customers whose product we have identified primarily in business and industrial applications, not consumer right away, but that will be a very good start for our base line volume next year, but again at this stage design win is very, very important.

Okay, great. And the last one from me, just Jackie, wondering if you could comment on how OpEx should ramp going forward?

Well, I think that we had indicated in the past that we will manage and control our operating expenses this year. I think we will probably end up flat this year and going forward I think for 2015, we probably will not exceed more than 5% of the total operating expenses, but for the full – on 2015 is our salary is up 6.7% year-over-year. Our projected stock unit is actually down 50% year-over-year. So our take out is up 24% year-over-year because we do have more new projects. So that never slow down, but in other SG&A area we have less depreciation, less bad debt write off and also other areas where we manage the operating expense to be down around 5.6% year-over-year.

Okay. Thanks a lot guys.

Thank you, Jaeson.

Thank you. Our next question comes from the line of Suji De Silva of Topeka. Your line is now open.

Hi guys. So my first question is on the large panel and driver business, can you talk about what kind of pricing declines you are seeing there versus typical and your confidence that the fourth quarter gross margin can stabilize given the pricing you are seeing?

Large okay if I understand you correctly Suji, you are talking about driver ICs for large panel, the growth prospect versus the market, is that right?

No it’s the pricing Jackie, the declines you’re seeing there versus typical?

The pricing pressure okay. Well we are the leader and the component supplier for major Taiwanese and Chinese OEMs, while the China OEM, the China panel makers expand their capacity we are experiencing pricing pressure, but I think the added volumes also without the added capacity will be greater in the overall contribution margins versus the pricing pressure. So I think looking forward the add volumes should more than compensate the large margin I guess.

Okay.

Okay. The pricing pressure is quite severe. There is no secret about it. And I think this started from third quarter this year and is very bad this year, this quarter and we mentioned in our prepared remarks that we expect this pressure to overhang into next year. We try to alleviate some more pressure by passing pressure on to our suppliers which are also suffering from their own capacity and so that always helps. And I think, you know shorter in particular with the mid pricing pressure were two – we have two – we can upgrade two [indiscernible] with our customers especially all those who are expanding their capacity first. So, what we do in discussing with probably negotiating our pricing with our customers, on the other hand we are also trying to secure new design-wins and short-term [indiscernible] return. And I think it is fair to say that we are the first top of customer we did, for many of key Chinese customers when they try to negotiate pricing slash short-term allocation and long-term design, we - so is now something that we want to avoid rather we have to choose a few proactively.

Okay, great. And then on the small panel side for Smartphones are you seeing the Korean customer here adjusting their inventories into the year and versus the end demand is that one of the factors here impacting the fourth quarter?

I think Korean end customer in the fourth quarter it will continue to go down for us compared with the third quarter although third quarter for us is our, from Chinese and first quarter it will be the opposite. And I think certainly, end customers from Korea are losing market share overall in the marketplace and what works for us is that they are switching to AMOLED and our main supply to them have been on the area of silicon in attached. Certainly, we are catching up from the AMOLED products so, but in the meantime we are trying to effect a mobile strategy in the China market. However, in AMOLED with biding Korean customer in terms of progress, we have been qualified technically by Korean customer which is the major good news, especially when you are thinking about Chinese using their AMOLED effects aggressively. So, been able to get qualified by Korean bidding customer will be a major plus for our future and our business opportunity in China. Having said that though, in terms of AMOLED share order from Korea has been delayed for some business issues, but we certainly we remain the technology leader in AMOLED.

Okay, and my last question was for Jackie perhaps the tax rate. How should we think about the fourth quarter the tax, should we think about it the rate or dollar amount and then how you just modeling there in 2016? Thanks.

Well, I think that our tax rate considering the unbeatable [ph] exchange rate situation, the overall tax rate this year would be somewhere around 35.3% to 36%, unfortunately, because our overall operating income has also declined this year, but I think going forward with improvement in our non-driver business next year that should help offset the losses, make sure that’s really helped the tax rate back to a normal level that’s probably around anywhere from 27% to 30% assuming the exchange rate remained the same and that our operating incomes will improve next year.

Understood, thanks guys.

Thank you, our next question comes from the line for Jerry Su of Credit Suisse. Your line is now open.

Thanks for taking my question. Just want to follow up a bit on the large size as Jordan mention there, there are some price in pressure. Now when we look at your guidance Q4 large sizes revenue seems to be growing double digits. I think – just that the mix is also going up, but you also guided margins to improve sequentially. I just want to figure out the listening that large sized margins you are seeing some recovery because you are closed down or is there any other reasons for your gross margin to be effective Q4?

Thank you, Jerry. The answer is the last size because of pricing pressure. The overall gross margins were declined somewhat despite the fact that we actually have swapping a lot of cost value activities. The reason why we are guiding for the gross margin to be slightly up is primary because of a new income coming from non-driving sectors primarily from AMOLED and that be overall which is the indication of the increase in, development activities we are seeing right now.

Okay, got it thank you. And then, my second question is on the small medium size, you have mentioned about AMOLED opportunity, but when we look at china besides the aggressive capacity expansion on large size, I think it is so odd that panel makers there are several other panel makers including Taiwanese and Chinese have announce several LTPS fab that will be build into the next two years as well. So, how do you look at your position and also your opportunity in these LTPS more capacity in the next some few years?

We have always been a major player in providing LTPS drivers and typically when panel customers pick up all their new build for AMOLED. It is also particularly in device addition of built in fully capacity as well. So, winning the two can actually there is been a lot activity if we open the total - and AMOLED that the expansion to be clear value in price and especially in earlier stage of the new phase cost production go and poll the opportunity and accordingly technology matures for AMOLED that you know - the portion of decrease in AMOLED portion will picked up. So again we have always been the major player in looking we have always been the major player in built in [indiscernible] driver IC for years. So first we will be there with good news for us because entry player is higher and margin is better and [indiscernible] is better. And we don’t want to we wish to not down play the importance of AMOLED new capacity especially in China. They are strongly being incentivized by the government to build such capacities seeing the success of [indiscernible] and Korea makers and certainly they have no other reasons to catch up all on that gap they currently have. And such a low that project inevitably evolved basic design, I mean designs for which we will always, which is our [indiscernible] income for development. And we have been the vendor of choice for several of our every single Chinese customer's view these new air molded projects. So we have customers and now you can counter the CEO and there will be more to come the next year. Having said that the volume for AMOLED will be primary the [indiscernible] story or may be at best late 2016 but [indiscernible] changeable industry. It provides all the [indiscernible] to us. China is our home turf. We will hack [ph] compared to our peers being Korea market and [indiscernible] less competition and better margins. So in are always we seems by value incomes for development and we have been the vendor are always for [indiscernible] for every single Chinese customers building new AMOLED projects. So, we have a customer value income for this year and we will be more to come few year haven’t said that the volume for AMOLED that we have the primary at probably [indiscernible] for maybe [indiscernible] the 16. But it is very [indiscernible] changeable industry, it provides all the benefits for us, you know China, is the home [indiscernible] we are the head compared to pears in the Korea market and, [indiscernible] employees less competition and better margin. So, in [indiscernible] you will Chinese and we will play a very important role in the high end smartphone in every market going forward, that's how we see it. So we are putting a lot of resources into AMOLEDs right now. Although, as I said, if we see something would see media results this year or even next year.

Okay, got it. Last question is on the guidance, I think revenue guided factor up 5%, but as you also mentioned some rush order in – of September I think industry just not real peers also mentioned that. I don’t know if you provide these guidance do you consider any rush order for November and also December or these could be something outside for your Q4 guidance.

Firstly, we are seeing rush orders right now. I mentioned now in my prepared remarks. Having said that, our guidance for Q4 has stopped for the [indiscernible] consideration potential for rush orders. So…

Okay, got thank you.

So we are guiding for how we are seeing right now.

Okay, thank you, got it.

Thank you, our next question comes from the line of Tom Sepenzis of Northland Securities. Your line is now open.

Yes, hi, I was just wondering if you could maybe go a little bit further in terms of AMOLED and when you think that that will become a contributor to your revenue in next year is that second half or are we looking at even beyond that?

I'd say it would primarily be a 2017 story in terms of bottom line. However, we expect to see a lot of design activities, high incomes next year.

Okay, thank you. And then, in terms of the non-driver products, I think you stated that you expect that segment to be down in December that does that mean the units will be LCOS and WLO units are lower than you were previously expecting for the quarter?

Okay Tom, I think our WLO and LCOS shipment will increase in the fourth quarter. However, although we didn’t really put out the formal forecast for the fourth quarter or guidance for the fourth quarter especially for LCOS and WLO we do expect that business to increase high digits [ph] in the fourth quarter. It maybe or may not be as high as quite some of the analysts have projected being that we do we believe in half of the analyst's projections which is the number is pretty high.

I think ASP is probably higher, but volume is significantly lower. So…

Great.

So to give you a clear picture for LCOS, the first three quarters that we see here has been development designs, so for which we are seeing now - development fees from our key customers, we have mentioned by – September we [indiscernible] have our own production and they will go through various stages so for pretty mass production in volumes. And then, we expect it will be next year to start the mass production officially. Obviously, I cannot comment too much on the factory the projection provided to you by the customer because that we are, are we giving the way their launch finance [indiscernible], but I want to emphasize that, the fact is that in the first year or two the application will be targeted primary for business the industrial uses. We mean, we shouldn’t expect consumer launches any time soon. So I guess, volume wise we should not be adding up all the volume. Having said that, though when I look at analyst reports, although we cannot give any comments specifically on the figures as Jackie mentioned earlier, I think our ASP across those LCOS and WLO are much higher meaning our share in the value chains for the hardware device is probably much higher than the outsider [indiscernible]. However, the short term volume is perhaps lower.

Thank you. I appreciate the color. And then just lastly in terms of gross margins next year, how should we be thinking about that with the current pressure that you are seeing in CMOS image sensors and the DDIC business?

I think our and probably reasons why we are suffering from some pressure this country forces on gross margins. One of the reasons was that our long diver segment contributed to less of our total revenue as I indicated earlier. CMOS image sensors has been the main issue and so on and so forth. We do believe next year non-driver sector will recover percentage wise and volume wise and grading wise. But how that will play against the pricing pressure for driver IC I think is difficult to tell. So I'm going to comment on the margin strength of next year yet. [indiscernible] and our major customers in our new fabs and demand for their NOLs and their P&L pressure is all about [indiscernible]. I think – but I think it is fair to say that we expect continuous pricing pressure from driver IC. Having said that we hope our margin will recover out of more in our incomes from LCOS, WLO and some more shipments for LCOS and WLO as well as other sectors of our non-driver business.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Anthony Stoss of Craig-Hallum. Your line is now open.

Hey Jordan and Jackie,two part question here, on can you discuss your CapEx plans over the next several quarters specific to WLO and also if you could comment about where you stand yield wise right now in WLO? And maybe Jordan if you won’t mind sharing with us can we have the unit bases right now production wise where you stand? Thank you.

We [indiscernible] based on indications from our customers. Bear in mind we put in about not just [indiscernible] we are also putting in a lot of things. We are not putting just a partly of coals we are also putting out our happy old elf. And we mentioned earlier we have an expansion plan and we have secure piece of land go through our headquarters so that we feel going ahead [indiscernible] but compared to the potential revenue and profit both WLO and LCOS should be considered as right with no [indiscernible] requirement and depreciation further. So we have not [indiscernible] business. And it is also fair to say that our current capacity coupled with our current demand is already quite or our current forecast is already quite high, so in the major addition to our few customer forecast where push outs in too aggressive expansion. However, this will all depend on our customer flows and the results testified here are receptions [ph] and so on. So I can only say we were polling in due course, but they are today our certainties and better on current plan. We have planned to up to $40 million in the next 12 to 18 months. Okay, this is based on indications from our customers. They may change.

Okay then current yields right now?

Roughly, because we too pretty leveraging significantly and compared to our balance sheet so we were not too equity raised for this. Excuse me, your next question?

The total yields on WLL Jordon if you are already kind of suggesting our give us a sense of where you are at and where you hope to get? Thanks.

It is – I really cannot disclose the yield, it is classified for us. But it is fully sufficient for mass production level. And so [indiscernible], but it is something that our customers pay a lot of attention to. So we are afraid of saying it. It is more than sufficient for mass production.

Thank you.

Yes, thank you for your calls.

Thank you. Our next question comes from the line of Charlie Chan of Morgan Stanley. Your line is now open.

Hi there. Thanks for taking my questions. So I wanted to understand a little bit there on your LCOS [indiscernible] capacity. It seems like you already have sort of capacity for LCOS already. So where would you still need to buy new tools for the LCOS? Does that mean that your previous capacity is not honorable for the new project?

Okay, it is a slightly complicated issue because when we say capacity it is apparently very large deal customers for this size. And we have stated in the past that [indiscernible] capacity for our standard products is 300K per month, but if it is [indiscernible] probably the LCOS within 200K. Now because of certain technical reasons our effect is and local customer specs our effective capacity for the major customer for which we are going though kind of production right now is [indiscernible] has said that in terms of number of units. However, that is because they are panel size and fabrication for the panel is much more competitive, it is much higher panel size is much larger. So if you look at, if you compare this with our [indiscernible] in our 300K monthly standard product [indiscernible] the value for this new customer, this key customer of ours is actually higher compared with the standard products. Now, in addition to that some customers also require customized equipments to meet their special product needs, so we should be certainly to invest. And actually some special customized equipments are actually invested by our customers as well in the equipments located in our fabs. So in terms of our current capacity as compared to our customers current forecast for next year we can handle their forecast, but we are tight, so and this is a very early stage. So any change in their perception may lead to us expanding our capacity and for which we need to get prepared and our customers want us to get prepared.

Okay, thank you. So my next question is regarding your view on the Augmented Reality so much appreciate that you share your view and the first, my question would be for the industrial and that business. In your observation why not this Augmented Reality ties to consumer application as well, because we see several application, gaming seems to quite [indiscernible]. So what would be the global [indiscernible] out there for the consumer application to take over, is that cost issue, software issue, or any technical issue, can you share your view with us?

I think all of your thoughts, [indiscernible] certainly the hardware device, you know, if you like the [indiscernible] and certainly there are, plenty of room for improvement. In fact, we are in discussion with our key customers for next generation and we are actually currently engaged by several of our key customer for next generation as well. And we certainly are [indiscernible] in the last revolution increased the [indiscernible] reduce the call consumption and reduce the cost. Hopefully, we spend probably for our service well. So first and our panel display and optics aside, other aspects of the hardware also has a lot of room for improvement in my view. Bear in mind, first customers are there is no difference so [indiscernible] and they are a lot taking off applications and all the profits. So again point number one, hardware, cost wise and performance wise I think there is a lot of room for improvement. And equally important the applications and applications involved firstly you'll need to know what is going to be the [indiscernible]. And before it is launched nobody knows right? So people are doing all kinds of research and trying all kinds of things, but really before it is really launched nobody knows. So and that is one of the reasons why I think our customers corrected the taking the cautious view as of this point. And what you know about the apps you need to have somebody to [indiscernible] the apps and that is why you know probably shipments and when our key customers start mass production will go to app developers who are very, very important [indiscernible] for our customers to go and [indiscernible]. I think the number of our key customers, front end customers, they have been doing promotion of this and that and releasing new applications and product improvements and I think overall the reception has been positive. But I think, okay you know, for [indiscernible] the product needs to be improved and they are still in the early stage.

Okay, I see and then lastly a very quick question to Jackie. So Jackie, if you are there without the NRE revenue what would be the fourth quarter gross margin level?

With NRE?

Without…

Without NRE the gross margin for the fourth quarter?

Yes.

Okay, what we [indiscernible].

Okay, okay, okay, that is good enough. Okay, thank you very much. Thank you.

Thank you. Our next question comes from the line of Bob Evans of Pennington Capital. Your line is now open.

Good morning and thank you for taking my questions. I want to make sure I heard you correctly, but as it relates to next year due to pricing pressure in various businesses, you expect gross margin to be down but can you give any quantification in terms of how far down? And then secondly, [indiscernible] we don’t expect any major production ramp until 2017, is that correct?

Well, I guess we didn’t say our, we are projecting for the gross margin for the whole company to go down next year. We are saying some drive IC most likely price pressure will continue and certainly that will have a negative impact on gross margin. However, we tried to offset that by increasing non-driver revenue and also by increasing NRE income. So, and I think it is, I mean we are still in November this year, so it is something difficult to quantify if actually the total price pressure. I think it is just prudent for us the management to [indiscernible] so to speak and in fact we are discussing with certain of our large panel key customer on pricing for fourth quarter and again the pressure versus – but also we have already started to reduce our cost and certainly it was hard given our margin as well. So we still [indiscernible].

,:

For the record, no that is a wrong message.

Okay, all right, thank you.

Thank you.

Thank you. And I am showing no further questions at this time. I'd like to hand the call back over to management for any closing remarks.

Thank you everybody and as a final note, Jackie Chang, our CFO will maintain this marketing activity and attend our future investment conferences in the U.S. And we will announce the details as they come about. So please contact our IR Department and/or John Mattio if you are interested in speaking with the management. And thank you again and have a nice day.