Good afternoon. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the MagnaChip Semiconductor’s Third Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn the call over to Robert Pursel. Please go ahead sir.

Thank you, Stephanie. Good afternoon and thank you for joining us for MagnaChip’s third quarter 2013 earnings conference call. A copy of the press release issued today is available on our Investor Relations website. A 72-hour telephone replay will be available shortly after today’s call and this webcast will be archived in the company website for one year. Access information is provided in today’s press release. Joining us today are Sang Park, MagnaChip’s Chairman and CEO; and Margaret Sakai, Executive Vice President and Chief Financial Officer. Sang will begin the call with an overview of our third quarter business highlights and Margaret will discuss our financial results. Following Margaret’s financial discussion, Sang will provide our fourth quarter guidance, after which we will open the call for questions. During the course of this conference call, we may make forward-looking statements about MagnaChip’s business outlook, including statements regarding our expectations for revenue, target gross and operating margins, as well as cost savings for 2013 and beyond. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and, therefore, are subject to risks and uncertainties as described in the Safe Harbor discussions found in today’s press release. During the call, we will also discuss non-GAAP financial measures. The non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in today’s press release. I would now like to turn the call over to Sang Park for a review of our third quarter business. Sang?

Thank you, Robert. We deliver another quarter of solid result, a 11th consecutive quarter of meeting or exceeding our financial guidance. Revenue of $217.8 million was up 1.2% sequentially and gross margin of 33% was same as last quarter. We met our revenue and gross margin guidance through the combination of product and customer diversification, and the successful launch of our new product line for our Power Solutions division. Our smartphone related revenue grew quarter-to-quarter due to the expansion of AMOLED display driver in high-end smartphone and from an increase of sales to mid-to-low end smartphone customers. Revenue from this mid-to-low end category increased by 150% quarter-to-quarter and we are currently working with that 8 mid-to-low end smartphone makers. Our Power Solutions segment continue to be a growth driver for us. In the third quarter, Power represented 19% of total revenue, which is up from last quarter 17% and 15% from third quarter 2012. Our newly introduced Super Junction MOSFET products grew to more than 10% of power revenue this quarter and we have a strong pipeline of new design-ins. In the Display segment, our recently introduced sensor product are gaining traction with our four designs under customer evaluation. We expect to announce several design wins by the end of this year. We expect our AMOLED revenue will be tripled this year from the last year and we believe that we’ll continuously grow in 2014. For our Foundry segment, we have a strong pipeline of new product and the customers’ on the development. We currently have 17 new projects in design-in phase with a 35 more project in the pipeline. Nearly half of these projects are targeting automotive, green energy and industrial market. Geographically, the majority of new engagements are coming from U.S. and European foundry customers. And we expect…

Thank you, Sang. Let me provide some financial highlights and discuss key developments during the quarter. Adjusted EPS, a non-GAAP measurement, was $0.76 per diluted share for the third quarter compared to a $0.71 in the previous quarter. We have reported $2 of adjusted EPS year-to-date in 2013, a record for the company. A reconciliation of the non-GAAP financial measures to GAAP measures can be founded in today’s press release. In July, we completed a private offering of $225 million of new senior notes and we paid all of our outstanding 2018 notes. As a result, we reduced the coupon to 6.625% and expanded the maturity by three years to 2021. During this quarter, we repurchased 1.2 million shares of our common stock for a total of $25 million under our common stock repurchase program announced in July of this year. We also completed a successful secondary offering of 1.7 million shares, which reduce the ownership by our largest shareholder to below 12% of total outstanding shares. MagnaChip did not receive any proceeds from the offering. Third quarter revenue of $217.8 million and a gross margin of 33%, represented the 11th consecutive quarter we met or exceeded our guidance. Now turning to our statement of operations. Revenue for the third quarter of $217.8 million represented a sequential increase of 1.2%. Revenue by segment for the third quarter was $103.1 million for foundry services, $73.2 million for Display Solutions and $41 million for Power Solutions. Revenue from premium products continued to increase for both Display and Power Solutions. Gross margin was a $71.9 million or 33% of revenue for the third quarter. The gross margin was flat compared to the prior quarter because of lower fab utilization which was offset by virtual mix of premium products. We expect this trend to…

Thank you, Margaret. For our Q4 guidance, when we consider current billings and bookings, our booking trend as well as the market dynamics, we expect that our revenue will be in the range of $193 million and $203 million. The December quarter is historically slow for the consumer market and this quarter it is slightly lower than typical seasonality due to the smartphone inventory correction. This inventory correction caused a dip in our expected fab utilization for Q4. We currently expect our Q4 utilization to be in the low 80% range. However, looking into our design pipeline and forecast from customers, we expect 2014 will be a growth year with a historical seasonality recovering in Q2. Based on this revenue level and our manufacturing utilization forecast, we anticipate gross margin will be in the range of 29% to 31%. So Stephanie this concludes our prepared remarks, we will now open the call for questions.

(Operator Instructions) Your first question comes from the line of Blayne Curtis with Barclays.

This is Chris Hogan [ph] joining on for Blayne Curtis. And thanks very much for taking my question. I guess first if you could just provide a little more color on what you are expecting from the individual segments in the fourth quarter that would be really helpful.

Okay, we’ll do that for the DSP Display Solutions, it’s a flat to slightly down and Power Solutions flat to slightly up and our Foundry slightly down.

Thanks very much. I guess that is my follow-up. Are you still expecting the overall AMOLED market to double next year. Many changes to that – your expectations there?

What market?

AMOLED.

The AMOLED market, sorry.

Yeah, we definitely think that it’s going to increase next year.

Do you still see, I think you’d mentioned last time, you see it roughly doubling. Does that still hold?

I think that we grew quite nicely this year. In my statement, I’ll say our revenue tripled compared to the last year. So we still think that it's going to grow next year.

Perfect, thank you very much.

You’re welcome.

Your next question comes from the line of Mehdi Hosseini with Susquehanna. Mehdi Hosseini – Susquehanna Financial Group LLLP: Thanks for taking my question. And Sang, you talked about the smartphone inventory correction. Some of your peers have also talked about inventory flash as one particular handset OEM. Can you please elaborate or share with us some more detail if this is more a high end or is still some ex-inventory in the China, or a combination or any additional color you could provide will be great and I have a follow-up.

Well, we do have inventory correction by Foundry customer. And I believe that it will reverse new feature and this is not one customer. It’s a number of customer, but one of the customer goes to not only high-end and also to many various products. Mehdi Hosseini – Susquehanna Financial Group LLLP: Would it be fair to say that it’s one or two a specific non-Chinese customers?

It is non-Chinese. We don't do any foundry for the Chinese customer. Mehdi Hosseini – Susquehanna Financial Group LLLP: Okay. And then when you look...

And I’m pretty positive it is inventory correction, so... Mehdi Hosseini – Susquehanna Financial Group LLLP: I see, so to that end, when we look into the first half of next year, if the inventory correction is over and maybe some of the new programs beginning to materialize in the first-half and accelerating the second half. How would you describe the seasonality especially, specifically on the Q1 and I know it's a little bit early, but we're just trying to figure out to what extent Q1 could be positively impacted if inventory correction ends in Q4?

Typically Q1 is the fourth quarter for us, since we’re heavily skewing the consumer market. And what we are expecting in Q1 is a little more, little soft like a historical, but not more than that. That's current expectations, but just looking at our design pipeline and just looking at our forecast from customer, and winning more sockets into smartphone and particularly mid-to-low end smartphones and the non-smartphone applications. We're making a good progress, that's one of the reason that we believe starting from the Q4 of next year and our revenue recovering and we will go into 2014. Mehdi Hosseini – Susquehanna Financial Group LLLP: You mean Q2 not Q4, correct?

Yes, Q2.

Yes, Q2, I’m sorry. Mehdi Hosseini – Susquehanna Financial Group LLLP: Okay. Thank you.

Thank you, Mehdi.

Your next question comes from Ross Seymore with Deutsche Bank. Ross C. Seymore – Deutsche Bank Securities, Inc.: Hi, thanks for letting me ask a question. First, just a clarification thing and your answer to an earlier question about the segments, just to make sure that I kind of understand what the adjectives mean, it seems like if the display in the power sides are flat up or down a little bit, that the foundry side to get the midpoint of your range has to be down somewhere in the 15% to 20% sequential range. If that math is correct, that seems a little more than slightly, is that, first is the math correct and is that just purely that inventory dynamic you are talking about?

Well, I say that Display Solutions will be flat to slightly down and the power is flat to slightly up, and foundry businesses are slightly down. Ross C. Seymore – Deutsche Bank Securities, Inc.: Okay. But I guess just to make the math work that they are slightly down since, I don't know what your definition slightly is, but it seems like it’s down 15% to 20% it seems more than slightly. I guess the question just is if that math is somewhat correct more so than harping on the math, it’s more about the drivers of it. Could you get into a little bit about what those drivers are, is it just the inventory dynamic?

Ross C. Seymore – Deutsche Bank Securities, Inc.: And then I guess one last clarification, when you were describing the foundry business in your prepared comments, you said they would return to growth in the second half of next year and then later on you said you expected kind of normal seasonality with what I would assume to be the sequential growth and foundry would actually begin in the second quarter. When you were talking about returning to growth in the second half is that year-over-year growth that you were referring to or is the foundry business by the comments you gave likely to not return to either sequential or year-over-year growth into the second half?

Based on current pipeline we have, we’re anticipating that year-to-year we’re going to grow our foundry business in second half. Ross C. Seymore – Deutsche Bank Securities, Inc.: Okay. And then just two quick housekeeping ones for Margaret. One, what are you expecting for OpEx in the fourth quarter and then interest expense in the fourth quarter as well and then I’ll go away. Thank you.

Okay. For the OpEx for the fourth quarter, we are expecting between $40 million to $42 million level in terms of dollars and rest are targeting as our total revenue 18% to 19%, and in the fourth quarter that interest expenses are around the $4.2 million to $4.3 million level depending on the number of days. Ross C. Seymore – Deutsche Bank Securities, Inc.: Great, thank you.

You’re welcome. Thanks Ross.

Your next question comes from Suji De Silva with Topeka. Suji De Silva – Topeka Capital Markets: Hi, Sang. Hello, Margaret. In terms of the gross margin, the drop here is that primarily driven by utilization. And if so what’s the utilization now and as a mix of factor there at all?

Well, utilization for the Q3, we ended 89%. And as I say in my statement, Q4 currently we project low 80s. So the gross margin caused mostly by fab utilization and also again a product mix. And in the foundry, we do more Asian customers foundry and U.S. customers’ foundry in Q4. Suji De Silva – Topeka Capital Markets: Okay, that’s very helpful. And then Sang looking ahead the 35 projects you have in the foundry pipeline, how is that compared to the last few quarters to understand how the pipeline is growing for you?

It is tough to compare quarter-to-quarter but about a year ago that’s a list about three times higher. Suji De Silva – Topeka Capital Markets: Great. All right thanks for the color, Sang.

Thank you, Suji.

Your next question comes from Rajvindra Gill with Needham & Company. Rajvindra Gill – Needham & Company: Yes, thanks for taking my questions. Just going back to the gross margins, can you provide any details outside of the utilization rate about the margins expanding on the power management side given the ramp of the premium products and how should we look at the power gross margins going forward?

Quarter-to-quarter our power margin is growing again though we don’t disclose any percentage by any business unit, but quarter-to-quarter our power is improving and gross margin decline is caused by foundry business. Rajvindra Gill – Needham & Company: So if this is a decline in foundry, which is higher margin and lower utilization, what are the drivers for margin to pick that up again in Q1 and Q2 and Q3 because that’s a significant drop-off in gross margins sequentially in Q4?

It is the inventory correction I believe and that’s one of the reason that we believe that we’ll be improving as our fab utilization gets higher. Rajvindra Gill – Needham & Company: So, do you think you’ll get back to the Q3, Q2 levels or higher?

Our mid-term, the business goal and model it’s not changing. We’re confident with the product mix and product shift that we do, yes, we will… Rajvindra Gill – Needham & Company: Thank you very much.

You’re welcome.

(Operator Instructions) Your next question comes from the line of Jay Srivatsa with Chardan Capital Markets. Jay Srivatsa – Chardan Capital Markets, LLC: Thanks for taking my question. So couple of questions Sang, in terms of foundry customers you mentioned 35 new projects. Maybe can you give us a little bit more detail of these new customers and if so how many new customers and then also what segment are you making these products for, is it again in the handset side or is it diversified in other areas, any color you can provide would be appreciated?

Jay Srivatsa – Chardan Capital Markets, LLC: Okay, in terms of the sensor business, you said you expect some design wins by the end of the year. Can you give us a little bit more detail on – are these specifically the Hall sensors or the temperature sensors or is it a mix and again what is the end-product that these sensors are going into?

Well, it goes into mid-to-low end and then some of the major high-end too. It’s a most demanding sensor product by customer now is e-Compass and also we are talking to many customers on the Hall sensor, but we are confident we’ll have a design win and hopefully little bit of revenue generating by year-end from e-Compass. Jay Srivatsa – Chardan Capital Markets, LLC: Okay, now your power revenues despite the weakness in the TV and PC business seem to be growing. Is it a reflection of the product mix or are you seeing a strength in other segments that I didn’t mention just now?

It’s the power or display? Jay Srivatsa – Chardan Capital Markets, LLC: Power.

Power.

Power, okay. Power business sort of flat to flat, but new product Super Junction MOSFET which we introduced in second quarter and within or about two quarters generating 10% of our power revenue so that's the growth. Jay Srivatsa – Chardan Capital Markets, LLC: But I’m sorry, power you were up almost $5 million quarter-to-quarter. So that's pretty significant, it’s not flat.

No what I’m saying is excluding our Super Junction MOSFET. Jay Srivatsa – Chardan Capital Markets, LLC: Okay, okay.

It’s slightly growing, but the Super Junction MOSFET helps us to grow a little bit. Jay Srivatsa – Chardan Capital Markets, LLC: Okay. Last…

So that’s – sorry, so that's the sort of story of our power growth. We introducing new family of power product, we did Super Junction MOSFET and we are looking into and we’ll introduce Generation V MOSFET and also PMIC and high-power module. So we have a line of new product and will help us to grow our power product continuously. Jay Srivatsa – Chardan Capital Markets, LLC: Okay, in terms of the TV business, what's your view for next year Sang, and it's been week almost all the year, but if it appears there is 4K TVs and ultra-HDTVs coming out, what is the outlook for next year and how do you see yourself participating in that?

Well obviously, the TV market has been slow. We’re anticipating the next year UHD TV, which used to 4 times more driver IC depending on size of panel and that's going to help us to grow and that's our anticipation. Jay Srivatsa – Chardan Capital Markets, LLC: Okay, I mean the last question on the buyback, do you expect to continue the buyback this quarter or are you taking a pause or can you give us any color there?

As you are looking at the justification on return calculates to our, whatever the numbers, yes, we will. Jay Srivatsa – Chardan Capital Markets, LLC: Okay, thank you. Good luck.

Thank you.

Your next question comes from Nick Gaudois with UBS. Nicolas J. Gaudois – UBS Securities Ltd.: Yes, hi. Can you hear me?

Yes, we do. Nicolas J. Gaudois – UBS Securities Ltd.: Good. Okay, so first question is just coming back to this place a little bit, could you give us some color on how much AMOLED and mobile are of total revenues and once you talked about the correction in smartphones, obviously we are and our panel business is starting to see declining of capacity utilization rates to your customer at least one of your two major customers, but maybe not the other one. In that correction poorly will continue at least into Q1. So maybe first time the standard innovates how you can buffer that, and if you are buffering these its effectively your mobile expert rate is helping and I’ve got two follow-ups. Thank you.

Nick, we don't disclose the AMOLED revenue either dollars or percentage because it's a single customer, but that business has been really helped us this year and balancing with TV and large panel business. So we are continuously growing our mobile related. We were much less participating in this business last year. We are into flagship this year and we expect that we're going to be in two flagship model next year. So for us this is a continuously growing market opportunity. Nicolas J. Gaudois – UBS Securities Ltd.: Okay, and so effectively when you refer to a 2 flagship design wins and that's for models coming out in Q1 and Q3 respectively next year?

Again, we're not allowed to give specifically in models, but they do have more than two models. So... Nicolas J. Gaudois – UBS Securities Ltd.: , :

I think that we want to define as a premium product versus commodity products and current premium product, let me look up the numbers real quick percentage, percentage is above 26%, it’s same as the last quarter, but the next quarter we think it’s going to go up. Nicolas J. Gaudois – UBS Securities Ltd.:

Again though we’re not allowed to use any names. We’re continuously negotiating, but our product is well underway and we’re getting our their designs and hopefully we get to engage into revenue generating starting from early next year. Nicolas J. Gaudois – UBS Securities Ltd.: Okay, that sounds great. And last question, I guess, just going back to your gross margin longer-term, I mean obviously saying you’ve been in this business for a very long time, inventory corrections as a risk factor of life in the semi industry. So to some extent, what’s you are guiding for in Q4 is kind of from a trough level, you just exit to the peak level. How is that not to some extent redefining a little bit of your gross margin targets medium-term and in other words if it is not would any trajectory back to what you were considering to be a business model basically being largely mix related going forward?

Maybe let me trying to answer the question and if I haven’t then you can ask me again. Again the Q4 down on gross margin is strictly driven by inventory, correction related utilization and plus the customer mix. Again that we know their inventory is reasonably well-positioned. So we expect that it’s going to recover and sooner or later and that’s one of the reason plus that we have strong pipeline of other business opportunity and we feel comfortable in maintaining our mid-term business model for the gross margin. Nicolas J. Gaudois – UBS Securities Ltd.: Well I guess if I was to push back a little bit allowed to be, you could say 33%, plus 34% is a big cycle that margin guidance you just provided is cycle trough. In the next two to three years, you will see or new customers will see at some point inventory corrections again. So how are we going to divert from this range basically long-term?

Again, though we have a new line of product such as sensors and LED lightings and this product give us the higher margin, okay and we are looking at years to – I’m sorry. Nicolas J. Gaudois – UBS Securities Ltd.: Please go ahead, please.

Yes, so we will continuously improving our margin and because of our so called premium new product and plus that we continuously expanding our customer base for foundry for the commodity product and that’s going to help us maintaining reasonable utilization rate. When you compare fourth quarter utilization hours to even our competitor into foundry sector. Our utilization is still higher. The reason is our business model and we have a very diversified customers and product base. Nicolas J. Gaudois – UBS Securities Ltd.: Got it. So effectively, you’re banking on further diversification on customers especially for foundries and then receiver makes for new parts…

Yes. Nicolas J. Gaudois – UBS Securities Ltd.: Thank you very much.

Thank you, Nick.

Your next question comes from Terence Whalen with Citi. Terence Whalen – Citigroup Global Markets Inc.: Hi, good afternoon. Thanks for taking my question. The first question is a pretty straight forward question. What portion of sales were smartphone related in the quarter?

It’s around 40%. Terence Whalen – Citigroup Global Markets Inc.: And then Sang, can you help us understand what amount of that, I think you made a comment that the mid-to-low end grew about a 150% sequentially. What portion of that 40% is mid-to-low end and I do look at the business you know maybe two to three years out how would you expect that that would evolve?

Well that’s somewhere around maybe 20% of the smartphone. How it’s going to grow actually we think it’s going to grow, if these product coming from existing, this revenue is coming from the existing product, but we do have a sensor, we do have a new family product that we’re going to introduce to the mid-to-low end. And I think that we’re going to grow in the sector, but we will be selective and focus and due to the margin challenge. And so but we’re anticipating it’s going to grow. Terence Whalen – Citigroup Global Markets Inc.: Okay, terrific. And then if I could switch gears I think that Margaret mentioned in her prepared comments that accounts receivable increased because distributor sales increased. Can you give us some insight into how much distributor sales increased and just remind us roughly as a percentage of sales how much distributors are account for? Thanks.

This quarter as our sales to distributor compared to last year was around 7% to 8% of the increase and then total is a little bit higher of 30%.

But this quarter, the linearity in sales is moral toward into the end of the quarter so which is pushing out the account receivable. And then so that’s the sort of add to it. Terence Whalen – Citigroup Global Markets Inc.: Understood, yes we’ve seen that with a lot of other reports this quarter as well. The next question I had was just thinking about gross margin heading into the first half, it seems like we’re interface with the foundry business where we’re expecting declines sequentially perhaps into the first quarter and maybe even in second quarter. I’ve seen that remains our highest gross margin business. I guess my question is are there enough other elements going on within the mix of power and within the mix of display to compensate for that or are we in general to anticipate a fairly suppress gross margin trajectory in the first half.

Well, good question Terence. So as you know, we are meeting or exceeding our last 11 quarter guidance. So obviously, we do have a potential upside, but it’s not in our announcement. It could happen both again the visibility into the market is still limited and high-end phones again that whether it’s going to help us. We remain to be same. So we do have a lot of product, new product opportunity and hopefully that’s going to help us. But according to the customer forecast and obviously utilization, we see it is improving after fourth quarter. Terence Whalen – Citigroup Global Markets Inc.: Okay, terrific. And then my last question, it’s a little bit of a longer-term oriented question on the foundry business. You’ve obviously had pretty large trough to peak swings in foundry, as you sign down new customers and as it is new customers supplied increasing dollar content into rapidly growing tier 1 platforms. We are seeing tier 1 decelerate, I think you are calling in an inventory correction. I think there is an attempt to delineate how much of this pressure is also just now sort of intrinsic in the business of being connected to tier 1. I guess my question as going forward. When you talk about the re-acceleration in the foundry business, you are talking about a lot of the profile of that growth being auto industrial, being U.S. long-held customers. I understand that’s an effort to improve the gross margin of that business, but does that also signify that using factors less of an opportunity with the fabulous smartphone suppliers going forward. In other words, will the constitution of growth take a different shape in foundry as we see acceleration at some point in the second half 2014?

Well, what we fear is we like to and we’re willing to continuously support smartphone related demand. At the same time, we need to diversify into non-smartphone as well. And at this time and with only pipeline we have, which is mostly underdevelopment, we can really divide what percentage coming from which market as of today. But our intention is continuously supporting both. Terence Whalen – Citigroup Global Markets Inc.: Okay, terrific thanks. Best of luck.

Thank you, Terrance.

Thank you.

Your last question comes from the line of Mehdi Hosseini with SIG. Mehdi Hosseini – Susquehanna International Group: Yes, just two quick follow-up. Sang, can you elaborate on the book-to-bill for Q3?

You mean Q4? Mehdi Hosseini – Susquehanna International Group: Q3 and Q4.

Since our business model is very mixed, there is not a one single book-to-bill ratio that I can give to you. Foundry has its own and our extended product has a different ratio. But it’s on track as of today. Mehdi Hosseini – Susquehanna International Group: On track meaning that is it parity or below parity?

Including our guidance. Mehdi Hosseini – Susquehanna International Group: Okay. And then just a quick follow-up on the Power Solution, the mix has increased from 15% of the total revenue in 2012 to almost 18% in 2013. Do you see that mix reaching 20% in 2014 or would you expect it to exceed 20%?

Mehdi, we’re anticipating it’s going to grow, but we looked into give you any specific guidance, but definitely power is going to grow next year. Mehdi Hosseini – Susquehanna International Group: Okay, thank you.

Thank you.

At this time we have refill [ph] a lot of time for questions. I’ll turn it back over to management for closing remarks.

Thank you Stephanie. Our next earnings release and conference call is scheduled for January 28th, 2014. So please look for details of this and other upcoming financial events on MagnaChip’s Investor Relations website at www.magnachip.com. Thank you for joining us today.

Thank you this concludes today’s conference. You may now disconnect.