Thank you for standing by, and welcome to the Magnachip Semiconductors Corporation's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this program is being recorded. And now I'd like to introduce your host for today's program, Mike Bishop with Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone, and thank you for joining us to discuss Magnachip's financial results for the fourth quarter and year-end December 31, 2025. The fourth quarter earnings release that was issued today after the close of market can be found on the company's Investor Relations website. The webcast replay of today's call will be archived and available on our website shortly afterwards. Joining me today are Camillo Martino, Magnachip's Chief Executive Officer; and Shin Young Park, our Chief Financial Officer. Camillo will discuss the company's recent operating performance and business overview, and Shin Young will review the results for the quarter and provide guidance for the first quarter of 2026. There will be a Q&A session following the prepared remarks. During the course of this conference call, we may make forward-looking statements about Magnachip's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore, are subject to risks and uncertainties as described in the safe harbor statement found in our SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as otherwise required by law, the company does not undertake any obligation to update these statements. During the call, we'll also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of Magnachip's operating performance that may be useful to investors. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth quarter earnings release in the Investor Relations section of our website. With that, I'll now turn the call over to Camillo Martino. Camillo?

Thank you, Mike, and good afternoon, everyone. I would like to open with a comment I made last quarter. Specifically, Magnachip has a strong foundation, a strong history in power, our reputation for reliability and quality and relationships with customers who care about performance and execution. Looking back at 2025, we have implemented many changes to lay the foundation to improve the financial and go-to-market fundamentals, which we believe will result in a positive and consistent recovery over time. We are investing responsibly in areas where we see great potential while staying disciplined and realistic about what it takes to turn a power semiconductor business around. I would like to look back on Q4 and 2025, highlighting what we have completed and we will provide more detail on our go-forward operating strategy. First, a quick review of the quarter. For Q4, revenue was $40.6 million and gross margin was 9.3%. For the full year, revenue was $178.9 million and gross margins were 17.6%. Consistent with our comments from our last earnings call, our results continue to reflect 3 realities. Pricing pressure on legacy products remains intense, especially in China. Factory loading and utilization was a headwind, although we saw utilization slightly above in Q4, what we had said during last quarter's earnings call. We need highly competitive products to win. This is a very important reality. And when we do have competitive products, we can absolutely win. That's the core point behind our product strategy. Shin Young will walk through the financial details and guidance later, moving to the more important changes that we have made during 2025. Over the past year and especially over the past several months, we have taken 3 meaningful actions. Firstly, we significantly reduced our cost structure. We exited the display business, and we resized…

Thank you, Camillo, and welcome, everyone, on the call. Let's start with key financial metrics for Q4 and full year 2025. Quarter Q4 consolidated revenue from continuing operations, which includes Power Analog Solutions and Power IC was $40.6 million, approximately at the midpoint of our guidance range of $38.5 million to $42.5 million. This was down 17% year-over-year and down 11.7% sequentially on an apples-to-apples basis. This compares with the equivalent revenue of $48.9 million in Q4 2024 and $45.9 million in Q3 2025. For the full year 2025, total consolidated revenue from continuing operations was $178.9 million compared with $185.8 million in 2024, representing a 3.7% year-over-year decline. This reserve was consistent with our prior guidance, which anticipated an approximately 3.8% year-over-year decrease. Revenue from Power Analog Solutions in Q4 was $36.8 million, down 15.3% year-over-year and down 11.4% sequentially, primarily due to competitive pricing pressure on our older generation products, which was especially intense in China. The $2.7 million onetime sales incentive was recognized as a reduction in revenue in Q4 2025 as part of our efforts reduced elevated inventory levels in the channel, primarily in China. For the full year 2025, revenue from Power Analog Solutions was $160.5 million compared with $166.8 million in 2024. This 3.8% year-over-year decline was primarily due to intensified pricing pressure on our older generation products, partially offset by revenue growth in low-voltage MOSFET attributable to market share gains. Revenue from Power IC in Q4 was $3.8 million. This was down 30.4% year-over-year and down 14.5% sequentially. The sequential decline was due mainly to customer order pulls in Q3 from Q4. Revenue from Power IC for the full year 2025 was $18.4 million, down 3.4% year-over-year compared with $19 million in 2024. In Q4, consolidated gross profit margin from continuing operations was…

Thank you, Shin Young. We are committed to executing on the 6 foundational pillars we emphasized earlier. We have implemented a new go-forward strategy and many of the necessary changes to position Magnachip for future success and value creation. I want to thank our employees for their continued hard work and dedication and our investors and partners for their patience and support as we return the company to growth. I will turn the call to the operator to open the call for questions. Operator?

And our first question for today comes from the line of Suji Desilva from ROTH Capital.

First, a question on the gross margin guidance. I know there was a gross margin inventory reserve hit in 4Q. Are you assuming a similar impact or are you assuming an impact Shin Young in 1Q? Or is that 14% to 16% range a pure range without expected?

That did not include the onetime incentive that we did executed in Q4 '25. So had we excluded Q4's onetime impact, Q4 margin would be like 15%. So like we are expecting the Q1 2026 to be the similar range, and that's mainly driven by the utilization and also the pricing pressure. So that's actually impacting us our gross margin at this time. Our revenue, still the vast majority of that is older generation product. We are still feeling the pricing pressure, especially in China.

Understood. Okay. That helps. And then on the operating expense savings from the restructuring, it will flow through you said -- I think you said SG&A, right, the $2 million run rate, and that would be -- we see that benefit toward the end of '26? Or when would that step down? What's the linearity of that step down?

Well, that's actually -- it's going to be the continuing basis. So we started in Q4 2025. I just quantified the annualized impact is at $2 million plus, and we are going to see the full impact in 2026. And I'm hoping that, that's going to minimize the investment that we are going to do in R&D to support the go-forward strategy operating the strategy.

Okay. And then a question for yourself or maybe Camillo. The geographic exposure, as you bring these new products to market and the new focus segments, does that move your business out of China where it's competitive price-wise? Or does it stay in China in less price competitive markets? What's the shift there as you go to new products and new markets versus the competitive China market right now?

Look, it's very clear that we have some very, very important, strategically important and very large customers right here in Korea. And so I think it's important that we do an excellent job in servicing their needs for the next many, many years. So to me, it's -- they're here, they're in our backyard, let's deliver the value that we can realize together. It's not a strategy of moving away necessarily from any one country. It's more about focusing more of Korea because we're right here. And clearly, at the same time, we are a global company. We have sales offices in every country, every major country around the world. And so we're going to continue to service them as well. But frankly, I would expect to have a higher percentage of our revenue coming from Korea because they're very close to us, right, very, very close, and we want -- and really service them extremely well.

Okay. That's very helpful. And then last question on the silicon carbide effort. Can you tell us where you are in that? Is that in development effort? Do you have the technologies in-house that you need? Do you have to invest or partner to get there? And what products or end markets might you target with silicon carbide?

So I don't want to disclose what products we're developing. I would say that we're in development. We are in development, absolutely. We're building the team as well as we are speaking. And to some of our key customers, we're sharing some of that information with them under NDA. At the same time, I would say that this is a long-term plan. This is not a 12-month plan. Clearly, silicon carbide is going to take many years first to develop and then potentially, we're going to look for ways to potentially manufacture either in-house or maybe in the short term, we may go to an outside fab in the short term. So we're looking at everything there. But very clearly, as I stated in my prepared remarks, silicon carbide is a very, very important part of our future road map. If you look at the market segments that we are pursuing, if you look at the key customers that we are deepening our relationships with, silicon carbide is very, very important for them.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mike Bishop for any further remarks.

Thank you, everyone, for participating on today's call. We appreciate your support of Magnachip. Operator?

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.